FORM OF PASS THROUGH TRUST AGREEMENT
Published on October 30, 2002
EXHIBIT 4.2
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PASS THROUGH TRUST AGREEMENT
Dated as of _______________, 200__
between
SOUTHWEST AIRLINES CO.
and
WELLS FARGO DELAWARE TRUST COMPANY,
as Trustee
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TABLE OF CONTENTS
PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of ______________,
200___ (the "Basic Agreement"), between SOUTHWEST AIRLINES CO., a Texas
corporation (the "Company"), and WELLS FARGO DELAWARE TRUST COMPANY, a Delaware
banking corporation, as Trustee, is made with respect to the formation from time
to time of separate Southwest Airlines Co. 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.
WITNESSETH:
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, subject to the terms of any
related Intercreditor Agreement, 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, 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; and
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;
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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 or unless the context
otherwise requires:
(1) the terms used herein that are defined in this Article I
have the meanings assigned to them in this Article I, 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, or by the rules
promulgated under the Trust Indenture Act, have the meanings assigned
to them therein;
(3) all references in this Basic Agreement to designated
"Articles", "Sections", "Subsections" and other subdivisions are to the
designated Articles, Sections, Subsections 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, Subsection or other
subdivision;
(5) unless the context otherwise requires, whenever the words
"including", "include" or "includes" are used herein, it shall be
deemed to be followed by the phrase "without limitation"; and
(6) 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.
Act: Has the meaning, with respect to any Certificateholder,
specified in Section 1.04(a).
Affiliate: Means, with respect to any specified Person, 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, directly or indirectly, to direct
the management and policies of such Person, whether through the
ownership of voting securities or by contract
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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: Means, with respect to the Certificates of
any series, any Paying Agent or Registrar for the Certificates of such
series.
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: Means, with respect to the
Certificates of any series, a beneficial interest in the Certificates
of such series, ownership and transfers of which shall be made through
book entries as described in Section 3.05.
Business Day: Means, with respect to the Certificates of any
series, any day other than a Saturday, a Sunday or a day on which
commercial banks are required or authorized to close in Dallas, Texas,
New York, New York, or, so long as any Certificate of such series is
outstanding, the city and state in which the Trustee or any related
Loan Trustee maintains its Corporate Trust Office or receives and
disburses funds.
Certificate: Means any one of the certificates executed and
authenticated by the Trustee, substantially in the form of Exhibit A
hereto.
Certificate Account: Means, with respect to the Certificates
of any series, the account or accounts created and maintained for such
series pursuant to Section 4.01(a) and the related Trust Supplement.
Certificateholder or Holder: Means, with respect to the
Certificates of any series, the Person in whose name a Certificate of
such series is registered in the Register for Certificates of such
series.
Certificate Owner: Means, with respect to the Certificates of
any series, for purposes of Section 3.05, 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: Has the meaning set forth in the introductory
paragraph hereof, or its successor in interest pursuant to Section
5.02, or (only in the context of provisions hereof,
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if any, when such reference is required for purposes of compliance with
the Trust Indenture Act) any other "obligor" (within the meaning of the
Trust Indenture Act) with respect to the Certificates of any series.
Controlling Party: Means the Person entitled to act as such
pursuant to the terms of any Intercreditor Agreement.
Corporate Trust Office: Means, with respect to the Trustee or
any Loan Trustee, the office of such trustee in the city at which at
any particular time its corporate trust business shall be principally
administered.
Cut-off Date: Means, with respect to the Certificates of any
series, the date designated as such in the Trust Supplement
establishing such series.
Definitive Certificates: Has the meaning, with respect to the
Certificates of any series, specified in Section 3.05.
Direction: Has the meaning specified in Section 1.04(a).
Equipment Notes: Means, with respect to the Certificates of
any series, all of the equipment notes issued under the Indentures
related to such series of Certificates.
ERISA: Means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor federal statute.
Escrow Account: Has the meaning, with respect to the
Certificates of any series, specified in Section 2.02(b).
Escrowed Funds: Has the meaning, with respect to any Trust,
specified in Section 2.02(b).
Event of Default: Means, in respect of any Trust, an Indenture
Event of Default under any Indenture pursuant to which Equipment Notes
held by such Trust were issued.
Fractional Undivided Interest: Means the fractional undivided
interest in a Trust that is evidenced by a Certificate relating to such
Trust.
Indenture: Means, with respect to any Trust, each of the one
or more separate trust indenture and security agreements or trust
indenture and mortgages or similar documents described in, or on a
schedule attached to, the Trust Supplement and an indenture having
substantially the same terms and conditions which relates to a
Substitute Aircraft, as each such indenture may be amended or
supplemented in accordance with its respective terms; and "Indentures"
means all of such agreements.
Indenture Event of Default: Means, with respect to any
Indenture, any Indenture Event of Default (as such term is defined in
such Indenture).
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Initial Regular Distribution Date: Means, with respect to the
Certificates of any series, the first Regular Distribution Date on
which a Scheduled Payment is to be made.
Intercreditor Agreement: Means any agreement by and among the
Trustee, as trustee hereunder with respect to one or more Trusts, one
or more Liquidity Providers and a Subordination Agent providing, among
other things, for the distribution of payments made in respect of
Equipment Notes held by such Trusts.
Issuance Date: Means, with respect to the Certificates of any
series, 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 such lease may be amended, supplemented or otherwise
modified in accordance with its terms; and "Leases" means all such
Leases.
Letter of Representations: Means, with respect to the
Certificates of any series, an agreement among the Company, the Trustee
and the initial Clearing Agency.
Liquidity Facility: Means, with respect to the Certificates of
any series, any revolving credit agreement, letter of credit or similar
facility relating to the Certificates of such series between a bank or
other financial institution 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: Means, with respect to the Certificates of
any series, a bank or other financial institution that agrees to
provide a Liquidity Facility for the benefit of the holders of
Certificates of such series.
Loan Trustee: Means, with respect to any Equipment Note or the
Indenture applicable thereto, the bank or trust company designated as
loan or indenture trustee under such Indenture, and any successor to
such Loan Trustee as such trustee; and "Loan Trustees" means all of the
Loan Trustees under the Indentures.
Note Documents: Means, with respect to the Certificates of any
series, the Equipment Notes with respect to such Certificates and, with
respect to such Equipment Notes, the related Indenture, Note Purchase
Agreement and, if the related Aircraft is leased to the Company, the
related Lease and the related Owner Trustee's Purchase Agreement.
Note Purchase Agreement: Means, with respect to the
Certificates of any series, 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; and
"Note Purchase Agreements" means all such agreements.
Officer's Certificate: Means a certificate signed, (a) in the
case of the Company, by the Chairman or Vice Chairman of the Board of
Directors, the President, the Chief
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Executive Officer, any Vice President or the Treasurer of the Company,
signing alone, or (b) in the case of the Trustee or an Owner Trustee or
a Loan Trustee, a Responsible Officer of the Trustee or such Owner
Trustee or such Loan 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 of the Company one of whose principal duties is furnishing
advice as to legal matters, (ii) Vinson & Elkins L.L.P. or (iii) such
other counsel designated by the Company and reasonably acceptable to
the Trustee and (b) in the case of any Owner Trustee or any Loan
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: When used with respect to Certificates of any
series, means, as of the date of determination, all Certificates of
such series theretofore authenticated and delivered under this
Agreement, except:
(i) Certificates of such series theretofore cancelled
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 payment of 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: Means, with respect to any Equipment Note,
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: Means, with respect to any Equipment Note, 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 related Indentures.
Owner Trustee's Purchase Agreement: Has the meaning, with
respect to the Certificates of any series if the related Aircraft is
leased to the Company, specified therefor in the related Lease.
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Paying Agent: Means, with respect to the Certificates of any
series, the paying agent maintained and appointed for the Certificates
of such series pursuant to Section 7.12.
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 after the date of
acquisition thereof or such lesser time as is required for the
distribution of any Special Payments on a Special Distribution Date.
Person: Means any person, including any individual,
corporation, limited liability company, partnership, 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 the Certificates of any
series as of any date, (i) the original aggregate face amount of the
Certificates of any 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 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 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 held in the Trust and the
distribution thereof to be made on such Distribution Date.
Postponed Notes: Means, with respect to any Trust or the
related series of Certificates, 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: Means, with respect to any Trust or the
related series of Certificates, 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 Cut-off
Date) for payment by the Trustee of such purchase price and issuance of
the related Equipment Note (subject to subsequent change from time to
time in accordance with the relevant Note Purchase Agreement), 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
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than one Business Day prior to such new Transfer Date (subject to
subsequent change from time to time in accordance with the relevant
Note Purchase Agreement).
Potential Purchaser: Has the meaning, with respect to any
Certificateholder, specified in Section 6.01(b).
PTC Event of Default: Means, with respect to the Certificates
of any series, any failure to pay within ten Business Days of the due
date thereof: (i) the outstanding Pool Balance of such series of
Certificates on the date specified in any Trust Supplement for such
payment or (ii) interest due on the Certificates of such series on any
Distribution Date (unless the related Subordination Agent shall have
made an Interest Drawing or Drawings (as defined in the related
Intercreditor Agreement), or a withdrawal or withdrawals pursuant to a
cash collateral account under such Intercreditor Agreement, with
respect thereto in an aggregate amount sufficient to pay such interest
and shall have distributed such amount to the Trustee).
Purchasing Certificateholder: Has the meaning, with respect to
any Certificateholder, specified in Section 6.01(b).
Record Date: Means, with respect to any Trust or the related
series of Certificates, (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
final distribution with respect to such series, the 15th day (whether
or not a Business Day) preceding such Special Distribution Date.
Register and Registrar: Means, each with respect to the
Certificates of any series, the register maintained and the registrar
appointed pursuant to Sections 3.04 and 7.12.
Regular Distribution Date: Means, with respect to
distributions of Scheduled Payments in respect of any series of
Certificates, each date designated as such in this Agreement, until
payment of all the Scheduled Payments to be made under the Equipment
Notes held in the Trust have 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: Means, with respect to any Trustee, any
Loan Trustee and any Owner Trustee, any officer in the Corporate Trust
Department of the Trustee, Loan 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.
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Responsible Party: Means, with respect to the Certificates of
any series, the person designated as such in the related Trust
Supplement.
Scheduled Payment: Means, with respect to any Equipment Note,
(i) any payment of principal or interest on such Equipment Note (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) or (ii) any payment of interest on the
Certificates of any series with funds drawn under the Liquidity
Facility for such series, which payment represents the installment of
principal on such Equipment Note at the stated maturity of such
installment, the payment of regularly scheduled interest accrued on the
unpaid principal amount of such Equipment Note, or both; provided,
however, 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, as amended, or, if at any time after the execution of 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.
Selling Certificateholder: Has the meaning, with respect to
any Certificateholder, specified in Section 6.01(b).
Special Distribution Date: Means, with respect to the
Certificates of any series, each date on which a Special Payment is to
be distributed as specified in this Agreement.
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), (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: Means, with respect to the
Certificates of any series, the account or accounts created and
maintained for such series pursuant to Section 4.01(b) and the related
Trust Supplement.
Specified Investments: Means, with respect to any Trust,
unless otherwise specified in the related Trust Supplement, (i)
obligations of, or guaranteed by, the United States Government or
agencies thereof, (ii) open market commercial paper of any corporation
incorporated under the laws of the United States of America or any
state thereof rated at least P-2 or its equivalent by Moody's Investors
Service, Inc. or at least A-2 or its equivalent by Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc., (iii)
certificates of deposit issued by commercial banks organized under the
laws of the United States or of any political subdivision thereof
having a combined capital and surplus in excess of $100,000,000 which
banks or their holding companies have a rating of A or its equivalent
by Moody's Investors Service, Inc. or
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Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc.; provided, however, that the aggregate amount at any
one time so invested in certificates of deposit issued by any one bank
shall not exceed 5% of such bank's capital and surplus, (iv) U.S.
dollar-denominated offshore certificates of deposit issued by, or
offshore time deposits with, any commercial bank described in clause
(iii) above or any subsidiary thereof and (v) repurchase agreements
with any financial institution having combined capital and surplus of
at least $100,000,000 with any of the obligations described in clauses
(i) through (iv) above as collateral; 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.
Subordination Agent: Has the meaning specified therefor in any
Intercreditor Agreement.
Substitute Aircraft: Means, with respect to any Trust, 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.
Transfer Date: Has the meaning assigned to that term or any of
the terms "Delivery Date", "Funding Date" or "Closing Date" in a Note
Purchase Agreement, and in any event refers to any such date as it may
be changed from time to time in accordance with the terms of such Note
Purchase Agreement.
Triggering Event: Has the meaning specified therefor in any
Intercreditor Agreement.
Trust: Means, with respect to the Certificates of any series,
the trust under this Agreement.
Trustee: Means Wells Fargo Delaware Trust Company, a Delaware
banking corporation, or its successor in interest, and any successor or
other trustee appointed as provided herein.
Trust Indenture Act: Except as otherwise provided in Section
9.06, means, with respect to any particular Trust, the United States
Trust Indenture Act of 1939, as in force at the date as of which the
related Trust Supplement was executed.
Trust Property: Means, with respect to any Trust, (i) subject
to any related Intercreditor Agreement, 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) funds from time to time
deposited in the related Escrow Account, the related Certificate
Account and the related Special Payments Account and, subject to the
related Intercreditor Agreement, any proceeds from the sale by the
Trustee pursuant to Article VI hereof of any such Equipment Note, (iii)
all rights of such Trust and the Trustee, on behalf of the Trust, under
any Intercreditor Agreement, including, without limitation, all monies
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receivable in respect of such rights, and (iv) all monies receivable
under any Liquidity Facility for such Trust.
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.
Section 1.02. Compliance Certificates and Opinions. Upon any
application or request by the Company, any Owner Trustee or any Loan 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 Loan Trustee, as the case may be, shall furnish to the
Trustee (i) an Officer's 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
(ii) 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 one or more other such
Persons as to
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other matters and any such Person may certify or give an opinion as to such
matters in one or several documents.
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. Directions of Certificateholders. (a) Any
direction, consent, request, demand, authorization, notice, waiver or other
action provided by this Agreement in respect of the Certificates of any series
to be given or taken by Certificateholders (a "Direction") 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 or, in the case of Certificates evidenced by a Book-Entry Certificate,
by any electronic transmission or other message, whether or not in written
format, that complies with the Clearing Agency's applicable procedures; and,
except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee and,
when it is hereby expressly required pursuant to this Agreement, to the Company
or any Loan 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 or
proxy shall be sufficient for any purpose of this Trust Agreement and conclusive
in favor of the Trustee, the Company and the related Loan Trustee, if made in
the manner provided in this Section 1.04.
(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 under this Agreement, Certificates owned by
the Company or any Affiliate thereof 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 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, and (ii) if
any amount of Certificates of any series so owned by any such Person have been
pledged in good faith, such Certificates shall not be disregarded if the pledgee
13
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 or any
Affiliate thereof.
(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 Direction. 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 of the applicable series in connection
therewith. If such a record date is fixed, such Direction 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 Direction, and for
that purpose the Outstanding Certificates shall be computed as of such record
date; provided, however, that no such Direction by the Certificateholders on
such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Agreement not later than one year after such
record date.
(e) Any Direction by the Holder of any Certificate shall bind
the Holder of every Certificate issued upon the transfer thereof or in exchange
therefor or in lieu thereof, whether or not notation of such Direction 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.
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES:
ACQUISITION OF TRUST PROPERTY
Section 2.01. Amount Unlimited; Issuable in Series. (a) The
aggregate principal amount of Certificates which may be authenticated and
delivered under this Basic Agreement is unlimited. 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
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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 3.06);
(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 Special Distribution Dates applicable to the
Certificates of such series;
(7) if other than as provided in Section 7.12(b), the
Registrar or the Paying Agent for the Certificates of such series,
including any Co-Registrar or additional Paying Agent;
(8) if other than as provided in Section 3.01, the
denominations in which the Certificates of such series shall be
issuable;
(9) the specific form of the Certificates of such series
(including the interest rate applicable thereto) and whether or not
Certificates of such series are to be issued as Book-Entry Certificates
and, if such Certificates are to be Book-Entry Certificates, the form
of Letter of Representations, if any or if other than as provided in
Section 3.05, whether and the circumstances under which the 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);
(10) a description of the Equipment Notes to be acquired and
held in the related Trust and of the related Aircraft and Note
Documents;
15
(11) provisions with respect to the terms for which the
definitions set forth in Article I hereof or the terms of Section 11.01
hereof require further specification in the related Trust Supplement;
(12) any restrictions (including legends) in respect of ERISA;
(13) whether such series will be subject to an Intercreditor
Agreement and, if so, the specific designation of such Intercreditor
Agreement;
(14) whether such series will have the benefit of a Liquidity
Facility and, if so, the specific designation of such Liquidity
Facility;
(15) whether there will be a deposit agreement or other
comparable arrangement prior to the delivery of one or more Aircraft
and, if so, any terms appropriate thereto; 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 of the Certificates of such series
which may 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 or waiver of any conditions precedent set forth in such Trust
Supplement.
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 Note Purchase Agreements in the form delivered to the Trustee by the
Company and shall, subject to the respective terms thereof, perform its
obligations under such Note Purchase Agreements. 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 the Equipment Notes contemplated
to be purchased by the Trustee under the related Note Purchase Agreements and,
concurrently therewith, the Trustee shall purchase, pursuant to the terms and
conditions of the Note Purchase Agreements, such 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 3.06 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 part
16
of the related Trust an amount equal to the purchase price of such Postponed
Notes (the "Escrowed Funds"). The portion of the Escrowed Funds so deposited
with respect to any particular Postponed Notes shall be invested by the Trustee
at the written direction and risk of, and for the benefit of, the Responsible
Party in Specified Investments (i) maturing no later than any scheduled Transfer
Date relating to such Postponed Notes 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 such Postponed Notes will not be issued, 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 or more occasions and the satisfaction or waiver of the closing
conditions specified in the applicable Note Purchase 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
Responsible Party 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 Responsible Party. The
Responsible Party 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 Responsible Party will pay (in immediately available funds) to the
Trustee an amount equal to the interest that would have accrued on any Postponed
Notes with respect to such Certificates, 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 not less than 15 days
following the date of such notice, (i) the Responsible Party 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 Responsible
Party 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.
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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 not less than 15 days following such Cut-off
Date (i) the Responsible Party shall pay to the Trustee for deposit in such
Special 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 Responsible Party
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 Trust Property to be acquired pursuant to Section 2.02
hereof and the related Note Purchase Agreements and shall declare that the
Trustee holds and will hold such right, title and interest 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 the acceptance of each
Certificate of such series issued to it under this Agreement, each initial
Holder 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, 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 any Aircraft (as defined
in the respective Indentures) by bidding such Equipment Notes or otherwise, or
taking any action with respect to any such Aircraft 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 placed thereon as may be
required to comply with the rules of 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 determined by the Trustee or the officers
executing such Certificates, as evidenced by the Trustee's or respective
officers' execution of the Certificates.
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Except as provided in Section 3.05, the definitive
Certificates of such series shall be typed, 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 officers executing such
Certificates, as evidenced by their execution of such Certificates.
Except as otherwise provided in the related Trust Supplement,
the Certificates of each series shall be issued in minimum denominations of
$1,000 or integral multiples thereof except that one Certificate of such 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.
Section 3.02. Authentication of Certificates. (a) On the
Issuance Date, the Trustee shall duly execute, authenticate and deliver
Certificates of each series in authorized denominations equaling in the
aggregate the aggregate principal amount of the Equipment Notes that may be
purchased by the Trustee pursuant to the related Note Purchase Agreements, and
evidencing the entire ownership of the related Trust. Thereafter, the Trustee
shall duly execute, authenticate and deliver the Certificates of such series as
herein provided.
(b) 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 the date of their authentication.
Section 3.03. Temporary Certificates. Until definitive
Certificates are ready for delivery, the Trustee shall execute, authenticate and
deliver temporary Certificates of each series. Temporary Certificates of each
series shall be substantially in the form of definitive Certificates of such
series but may have insertions, substitutions, omissions and other variations
determined to be appropriate by the officers executing the temporary
Certificates of such series, as evidenced by their execution of such temporary
Certificates. If temporary Certificates of any series are issued, the Trustee
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 office or
agency of the Trustee designated for such purpose pursuant to Section 7.12,
without charge to the Certificateholder. Upon surrender for cancellation of any
one or more temporary Certificates, the Trustee shall execute, authenticate and
deliver in exchange therefor a like face amount of definitive Certificates of
like series, in authorized denominations and of a like
19
Fractional Undivided Interest. Until so exchanged, such temporary Certificates
shall be entitled to the same benefits under this Agreement as definitive
Certificates.
Section 3.04. Transfer and Exchange. The Trustee shall cause
to be kept at the office or agency to be maintained by it in accordance with the
provisions of Section 7.12 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 such Certificates of each series and transfers and
exchanges of such Certificates as herein provided.
All Certificates issued upon any registration of transfer or
exchange of Certificates of any series shall be valid obligations of the
applicable Trust, evidencing the same interest therein, and entitled to the same
benefits under this Agreement, as the Certificates of such series surrendered
upon such registration of transfer or exchange.
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 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. 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 or exchange shall be
cancelled and subsequently destroyed by the Trustee.
Section 3.05. 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 (d) below. As to the Certificates of any
20
series, unless and until definitive, fully registered Certificates (the
"Definitive Certificates") have been issued pursuant to Subsection (d) below:
(i) the provisions of this Section 3.05 shall be in full force
and effect;
(ii) the Company, the Paying Agent, the Registrar and the
Trustee may deal with the Clearing Agency Participants for all purposes
(including the making of distributions on the Certificates) as the
authorized representatives of the Certificate Owners;
(iii) to the extent that the provisions of this Section 3.05
conflict with any other provisions of this Agreement (other than the
provisions of any Trust Supplement expressly amending this Section 3.05
as permitted by this Basic Agreement), the provisions of this Section
3.05 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 (d) below, the Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and receive
and transmit distributions of principal, 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
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 (d)
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) Unless and until Definitive Certificates of a series are
issued pursuant to Subsection (d) below, on the Record Date prior to each
applicable Regular Distribution Date and Special Distribution Date, the Trustee
will request from the Clearing Agency a securities position listing setting
forth the names of all Clearing Agency Participants reflected on the Clearing
Agency's books as holding interests in the Certificates on such Record Date.
21
(d) 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 discharge properly 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, 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 such 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 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.
(e) Except as otherwise provided in the related Trust
Supplement, the Trustee shall enter into the applicable Letter of
Representations with respect to such series of Certificates and fulfill its
responsibilities thereunder.
(f) The provisions of this Section 3.05 may be made
inapplicable to any series or may be amended with respect to any series in the
related Trust Supplement.
Section 3.06. 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 destroyed, lost or stolen Certificate has been acquired by a
bona fide purchaser, and provided, however, that the requirements of Section
8-405 of the Uniform Commercial Code in effect in any applicable jurisdiction
are met, 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 and bearing a number not contemporaneously
outstanding.
In connection with the issuance of any new Certificate under
this Section 3.06, the Trustee shall require the payment of a sum sufficient to
cover any tax or other governmental
22
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 3.06
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.
The provisions of this Section 3.06 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.07. Persons Deemed Owners. Prior to due presentment
of a Certificate for registration of transfer, the Trustee, the Registrar and
any Paying Agent may treat the Person in whose name any Certificate is
registered (as of the day of determination) as the owner of such Certificate for
the purpose of receiving distributions pursuant to Article IV and for all other
purposes whatsoever, and none of the Trustee, the Registrar or any Paying Agent
shall be affected by any notice to the contrary.
Section 3.08. Cancellation. All Certificates surrendered for
payment or transfer or exchange shall, if surrendered to the Trustee or any
agent of the Trustee other than the Registrar, be delivered to the Registrar for
cancellation and shall promptly be cancelled by it. No Certificates shall be
authenticated in lieu of or in exchange for any Certificates cancelled as
provided in this Section 3.08, except as expressly permitted by this Agreement.
All cancelled Certificates held by the Registrar shall be destroyed and a
certification of their destruction delivered to the Trustee.
Section 3.09. Limitation of Liability for Payments. All
payments and distributions made to Certificateholders of any series in respect
of the Certificates of such series 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 for any payment or
distribution due to such Certificateholder pursuant to the terms of this
Agreement and that it will not have any recourse to the Company, the Trustee,
the Loan Trustees, the Owner Trustees or the Owner Participants, except as
otherwise expressly provided herein or in the related Intercreditor Agreement.
The Company is a party to this Agreement solely for purposes
of meeting the requirements of the Trust Indenture Act, and therefore shall not
have any right, obligation or liability hereunder (except as otherwise expressly
provided herein).
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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 such 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 (under an Intercreditor
Agreement, if applicable) with respect to the Certificates of such series, the
Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of
such Scheduled Payment in such 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 (under an Intercreditor
Agreement, if applicable) with respect to the Certificates of such series, the
Trustee, upon receipt thereof, shall immediately deposit the aggregate amount of
such Special Payments in such Special Payments Account.
(c) The Trustee shall present (or, if applicable, cause the
Subordination Agent to present) to the related Loan Trustee of each Equipment
Note 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
related 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 all or any part of the Scheduled Payments due on the
Equipment Notes held (subject to the Intercreditor Agreement) 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 Fractional
Undivided Interest in the Trust held by such Certificateholder) of the total
amount in the applicable Certificate Account, except that, with respect to
Certificates registered on the Record Date in the name of a Clearing Agency (or
its nominee), such distribution shall be made by wire transfer in immediately
available funds to the account designated by such Clearing Agency (or such
nominee).
(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 any Special Payments due on the
Equipment Notes held (subject to the Intercreditor
24
Agreement) 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 applicable 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 Fractional Undivided Interest in the related Trust held by such
Certificateholder) of the total amount in the applicable Special Payments
Account on account of such Special Payment, except that, with respect to
Certificates registered on the Record Date in the name of a Clearing Agency (or
its nominee), such distribution shall be made by wire transfer in immediately
available funds to the account designated by such Clearing Agency (or such
nominee).
(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 15 days prior to
the Special Distribution Date for the Special Payment resulting from such
redemption or purchase, which Special Distribution Date shall be the date of
such redemption or purchase. In the event that the Trustee receives a notice
from the Company that Postponed Notes will not be purchased by the Trustee
pursuant to Section 2.02, such notice of Special Payment shall be mailed as soon
as practicable after receipt of such notice from the Company and shall state the
Special Distribution Date for such Special Payment, which shall occur 15 days
after the date of such notice of Special Payment or (if such 15th day is not
practicable) as soon as practicable thereafter. In the event that any Special
Payment is to be made pursuant to the last paragraph of Section 2.02(b) hereof,
there shall be mailed on the Cut-off Date (or, if such mailing on the Cut-off
Date is not practicable, as soon as practicable after the Cut-off Date), notice
of such Special Payment stating the Special Distribution Date for such Special
Payment, which shall occur 15 days after the date of such notice of such Special
Payment (or, if such 15th day is not practicable, as soon as practicable
thereafter). 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, stating the Special Distribution Date
for such Special Payment which shall occur not less than 15 days after the date
of such notice and as soon as practicable thereafter. Notices mailed by the
Trustee shall set forth:
(i) the Special Distribution Date and the Record Date therefor
(except as otherwise provided in Section 11.01),
(ii) the amount of the Special Payment (taking into account
any payment to be made by the Company pursuant to Section 2.02(b)) for
each $1,000 face amount Certificate and the amount thereof constituting
principal, premium, if any, and interest,
(iii) the reason for the Special Payment, and
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(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 time 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
cancelled, 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, the Trustee will
include with each distribution of a Scheduled Payment or Special Payment, as the
case may be, to Certificateholders of the related series a statement setting
forth the information provided below. Such statement shall set forth (per $1,000
aggregate principal amount of Certificate as to (i) and (ii) below) the
following information:
(i) the amount of such distribution hereunder allocable to
principal and the amount allocable to premium, if any;
(ii) the amount of such distribution hereunder 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 a
Clearing Agency or its nominee, if the Company so requests, 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 Agency's books as holding
interests in the Certificates on such Record Date. On each Distribution Date, if
the Company so requests, 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.
(b) Within a reasonable period of time after the end of each
calendar year but not later than the latest date permitted by law, except to the
extent otherwise provided in the related Trust Supplement, 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) above 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 a
Clearing Agency or its nominee, such statement and such
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other items shall be prepared on the basis of information supplied to the
Trustee 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 the holders of interests in the
Certificates in the manner described in Section 4.03(a).
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 distributed on the date received shall, to the extent
practicable, be invested in Permitted Investments by the Trustee 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 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 Person or convey, transfer or lease
substantially all of its assets as an entirety to any Person unless:
(a) the Person formed by such consolidation or into which the
Company is merged or the Person that acquires by conveyance, transfer
or lease substantially all of the assets of the Company as an entirety
shall be (i) a corporation, limited partnership, limited liability
company or other Person organized and validly existing under the laws
of the United States of America or any state thereof or the District of
Columbia, (ii) a "citizen of the United States" as defined in 49 U.S.C.
Section 40102(a)(15), as amended, and (iii) a United States
certificated air carrier, if and so long as such status is a condition
of entitlement to the benefits of Section 1110 of the Bankruptcy Reform
Act of 1978, as amended (11 U.S.C. Section 1110), with respect to the
Leases or the Aircraft owned by the Company;
(b) the Person 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
27
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 and of this Agreement
applicable to the Certificates of each series to be performed or
observed by the Company; and
(c) the Company shall have delivered to the Trustee an
Officer's Certificate of the Company and an Opinion of Counsel of the
Company 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.
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 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 Person had been named as the Company
herein. In the event of any such conveyance, transfer or lease of substantially
all of the assets of the Company as an entirety, the Company or any successor
Person which shall have become such in the manner prescribed in this Section
5.02 shall be released and discharged from its liability in respect of this
Agreement and any Note Document applicable to the Certificates of such series to
which it is a party and may be dissolved and liquidated.
ARTICLE VI
DEFAULT
Section 6.01. Events of Default. (a) Exercise of Remedies.
Upon the occurrence and during the continuation of any Indenture Event of
Default under any Indenture, the Trustee may (i) to the extent it is the
Controlling Party at such time (as determined pursuant to the related
Intercreditor Agreement), direct the exercise of remedies as provided in such
related Intercreditor Agreement and (ii) if there is no related Intercreditor
Agreement, direct the exercise of remedies or take other action as provided in
the relevant Indenture to the extent that it may do so as the holder of the
Equipment Notes issued under such Indenture and held in the related Trust.
(b) Purchase Rights of Certificateholders. At any time after
the occurrence and during the continuation of a Triggering Event, each
Certificateholder of Certificates of certain series (each, a "Potential
Purchaser" and, collectively, the "Potential Purchasers") will have certain
rights to purchase the Certificates of one or more other series, all as set
forth in the Trust Supplement applicable to the Certificates held by such
Potential Purchaser. 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,
28
without premium, but including any other amounts then due and payable to the
Certificateholders of such series under this Agreement, any related
Intercreditor Agreement or any other Note Document or on or in respect of the
Certificates of such series; provided, however, that if such purchase occurs
after a Record Date, such purchase price shall be reduced by the amount to be
distributed hereunder on the related Distribution Date (which deducted amounts
shall remain distributable to, and may be retained by, the Certificateholder as
of such Record Date); provided, further, that no such purchase of Certificates
of such series shall be effective unless the purchasing Certificateholder (each,
a "Purchasing Certificateholder" and, collectively, the "Purchasing
Certificateholders") shall certify to the Trustee that contemporaneously with
such purchase, one or more Purchasing Certificateholders are purchasing,
pursuant to the terms of this Agreement and the other Agreements, if any,
relating to the Certificates of a series that are subject to the same
Intercreditor Agreement (such other Agreements, the "Other Agreements"), the
Certificates of each such series that the Trust Supplement applicable to the
Certificates held by the Purchasing Certificateholder specifies may be purchased
by such Purchasing Certificateholder. 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 be subject to the terms of this Section
6.01. By acceptance of its Certificate, each Certificateholder (each, a "Selling
Certificateholder" and, collectively, the "Selling Certificateholders") of a
series that is subject to purchase by Potential Purchasers, all as set forth in
the Trust Supplement applicable to the Certificates held by the Selling
Certificateholders, agrees that, at any time after the occurrence and during the
continuance of a Triggering Event, it will, upon payment of the purchase price
specified herein by one or more Purchasing Certificateholders, forthwith sell,
assign, transfer and convey to such Purchasing Certificateholder (without
recourse, representation or warranty of any kind except for its own acts), all
of the right, title, interest and obligation of such Selling Certificateholder
in this Agreement, any related Intercreditor Agreement, the related Liquidity
Facility, the related Note Documents and all Certificates of such series held by
such Selling 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 Purchasing
Certificateholder shall assume all of such Selling Certificateholder's
obligations under this Agreement, any related Intercreditor Agreement, the
related Liquidity Facility and the related 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 any Selling Certificateholder to
deliver any Certificates of such series and, upon such a purchase, (i) the only
rights of the Selling Certificateholders will be to deliver the Certificates to
the Purchasing Certificateholder and receive the purchase price for such
Certificates of such series and (ii) if the Purchasing Certificateholder shall
so request, such Selling 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 Purchasing Certificateholder 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 Purchasing Certificateholder.
Section 6.02. Incidents of Sale of Equipment Notes. Upon any
sale of all or any part of the Equipment Notes held in the Trust made either
under the power of sale given under this Agreement or otherwise for the
enforcement of this Agreement, the following shall be applicable:
29
(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 held in the Trust, and upon compliance with the terms
of sale, may hold, retain, possess 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 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 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 of the
principal of, premium, if any, or interest on any Equipment Note held in the
related Trust, or if there shall be any failure to pay Rent (as defined in the
relevant Lease) under any Lease 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 related
Intercreditor Agreement and any related Note Documents (subject to rights of the
applicable Owner Trustee or Owner Participant to cure any such failure to pay
principal of, premium, if any, or interest on any Equipment Note or to pay Rent
under any Lease 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 Lease 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 related 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 such Intercreditor Agreement, or exercising any trust or power
conferred on the Trustee under this Agreement or such Intercreditor Agreement,
including any right of the Trustee as Controlling Party under such Intercreditor
Agreement or as holder of the Equipment Notes held in the related Trust;
provided, however, 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,
30
(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 related
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 Loan Trustee to waive any past Indenture Event of Default under any
related Indenture and its consequences, and thereby annul any Direction given by
such Certificateholders or the Trustee to such Loan 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 held in the related Trust, 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 the
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 Loan
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
Event of 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 related
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 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
31
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) 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 7.03(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 shall
have been given to the Trustee during such 60-day period by
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 whatsoever
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 with respect 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.
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, however,
that neither this Section 6.09 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.
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ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities. (a) Except
during the continuance of an Event of Default in respect of a Trust, the Trustee
undertakes to perform such duties in respect of such Trust as are specifically
set forth in this Agreement, and no implied covenants or obligations shall be
read into this Agreement against the Trustee.
(b) In case an Event of Default in respect of a Trust has
occurred and is continuing, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement in respect of such Trust, and use the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
(c) No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that
(1) this Subsection shall not be construed to limit the effect
of Subsection (a)of this Section 7.01; and
(2) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts.
(d) Whether or not herein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section 7.01.
Section 7.02. 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, any related Owner
Participants, the related Loan 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, 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 shall determine that the withholding of such notice is in
the interests of the Certificateholders of the related series. For the purpose
of this Section 7.02 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 7.03. Certain Rights of Trustee. Subject to the
provisions of Section 315 of the Trust Indenture Act:
33
(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 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 Officer's Certificate of the Company, any related Owner
Trustee or any related Loan 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 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
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, 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; and
34
(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.
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates. 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 7.15, the Trustee makes no representations as to
the validity or sufficiency of this Basic Agreement, any Equipment Notes, any
Intercreditor Agreement, the Certificates of any series, any Trust Supplement or
any Note Documents, except that the Trustee hereby represents and warrants that
this Basic Agreement has been, and each Trust Supplement, each Certificate, each
Note Purchase Agreement 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 7.05. 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,
if applicable, may otherwise deal with the Company, any Owner Trustees or the
Loan Trustees with the same rights it would have if it were not Trustee, Paying
Agent, Registrar or such other agent.
Section 7.06. Money Held in Trust. Money held by the Trustee
or the Paying Agent in trust under this Agreement 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 7.07. 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); and
(2) except as otherwise expressly provided herein or 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), 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 7.15; and
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(3) to indemnify, or cause to be indemnified, the Trustee with
respect to the Certificates of any series, pursuant to the particular
sections of the Note Purchase Agreements specified in the related Trust
Supplement.
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 (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. If the Trustee reimburses itself from the Trust Property of such
Trust for any such tax, it will mail a brief report within 30 days 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.
Section 7.08. 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 $75,000,000 (or a combined capital and
surplus in excess of $1,000,000 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 and having a
combined capital and surplus of at least $75,000,000). 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 7.08 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 7.08 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 7.09.
Section 7.09. 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 7.10.
(b) The Trustee may resign at any time as Trustee of any or
all Trusts by giving prior written notice thereof to the Company, the Authorized
Agents, the related Owner Trustees and the related Loan Trustees. If an
instrument of acceptance 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.
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(c) The Trustee may be removed at any time by Direction of the
Certificateholders of the related series holding Certificates 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 Loan 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, if applicable, after written request therefor by
the Company or by any Certificateholder who has been a bona fide
Certificateholder for at least six months; or
(2) the Trustee shall cease to be eligible under Section 7.08
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 itself 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 defined below) 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 another state, or
jurisdiction within a state, within the United States of America. 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 Direction 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 Loan Trustee and the retiring Trustee, then the successor Trustee of
such Trust so
37
appointed shall, with the approval of the Company of such appointment, 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 7.10. Acceptance of Appointment by Successor. Every
successor Trustee appointed hereunder shall execute 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 Trust Property held
by such retiring Trustee in respect of such Trusts hereunder, subject
nevertheless to its lien, if any, provided for in Section 7.07. Upon request of
any such successor Trustee, the Company, the 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 as co-Trustees of the same
Trust and that each such Trustee shall be Trustee of separate Trusts.
No institution shall accept its appointment as a Trustee
hereunder unless at the time of such acceptance such institution shall be
qualified and eligible under this Article VII.
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Section 7.11. 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, however, that such corporation shall be otherwise qualified and
eligible under this Article VII, 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 7.12. Maintenance of Agencies. (a) With respect to
each series of Certificates, there shall at all times be maintained an office or
agency in the location set forth in Section 12.04 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 this Agreement may be served;
provided, however, that, if it shall be necessary that the Trustee maintain an
office or agency in another location with respect to the Certificates of any
series (e.g., the Certificates of such series shall be represented by Definitive
Certificates and shall be listed on a national securities exchange), the Trustee
will make all reasonable efforts to establish such an office or agency. 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 Loan Trustees (in the case of any Owner Trustee or Loan Trustee,
at its address specified in the Note Documents or such other address as may be
notified to the Trustee) 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 $1,000,000, 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
39
succeeding to the corporate trust business of any Authorized Agent, shall be the
successor of such Authorized Agent, if such successor corporation is otherwise
eligible under this Section 7.12, 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 Loan 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 7.12 (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 agency has been terminated or who shall have ceased
to be eligible under this Section 7.12. The Company shall give written notice of
any such appointment made by it to the Trustee, any related Owner Trustees and
the related Loan 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 7.13. 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 7.13. 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 7.14. Registration of Equipment Notes in Trustee's
Name. Subject to the provisions of any Intercreditor Agreement, the Trustee
agrees that all Equipment Notes to be purchased by any Trust 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 in trust for the
benefit of the Certificateholders of such series, 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, as the case may be.
40
Section 7.15. Representations and Warranties of Trustee. The
Trustee hereby represents and warrants that:
(a) the Trustee is a Delaware banking corporation organized
and validly existing in good standing under the laws of the State of
Delaware;
(b) the Trustee has full power, authority and legal right to
execute, deliver and perform this Agreement, any Intercreditor
Agreement and the Note Purchase Agreements and has taken all necessary
action to authorize the execution, delivery and performance by it of
this Agreement, any Intercreditor Agreement and the Note Purchase
Agreements;
(c) the execution, delivery and performance by the Trustee of
this Agreement, any Intercreditor Agreement and the Note Purchase
Agreements (i) will not violate any provision of any United States
federal law or the law of the state of the United States where it is
located 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 Note Purchase
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 the United States where it is
located regulating the banking and corporate trust activities of the
Trustee; and
(e) this Agreement, any Intercreditor Agreement and the Note
Purchase 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, however, 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 7.16. 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 present
or future taxes or similar charges are required to be withheld with respect to
any amounts payable in respect of the Certificates of such series, to
41
withhold such amounts and timely pay the same to the appropriate 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 after the payment thereof, it will deliver to each such
Certificateholder of such series appropriate documentation showing the payment
thereof, together with such additional documentary evidence as such
Certificateholders 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 7.17. 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 or the related Note Documents or (ii) as Trustee
hereunder or in its individual capacity and which arises out of acts or
omissions which are not contemplated by this Agreement.
Section 7.18. 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 each 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 7.12.
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 7.12 or Section 8.01, as the case may be, and 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 7.12 or Section 8.01, as the case may be, upon receipt of a
new list so furnished.
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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
such 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; and
(d) furnish to the Trustee, not less often than annually, a
brief certificate from the principal executive officer, principal
financial officer or principal accounting officer as to his 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).
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ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.01. Supplemental Agreements Without Consent of
Certificateholders. Without the consent of the Certificateholders, the Company
may (but will not be required to), and the Trustee (subject to Section 9.03)
shall, at the Company's request, at any time and from time to time, enter into
one or more agreements supplemental hereto or, if applicable, to an
Intercreditor Agreement or a 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 other matters contemplated by Section
2.01(b); or
(2) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants of
the Company herein contained or of the Company's obligations under any
Intercreditor Agreement or any Liquidity Facility; 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 conferred upon the Company in this Agreement, any Intercreditor
Agreement or any Liquidity Facility; or
(4) to correct or supplement any provision in this Agreement,
any Intercreditor Agreement or any Liquidity Facility which may be
defective or inconsistent with any other provision herein or therein or
to cure any ambiguity or to modify any other provision with respect to
matters or questions arising under this Agreement, any Intercreditor
Agreement or any Liquidity Facility, provided, however, that any such
action shall not materially adversely affect the interests of the
Certificateholders of any series; to correct any mistake in this
Agreement, any Intercreditor Agreement or any Liquidity Facility; or,
as provided in any Intercreditor Agreement, to give effect to or
provide for a Replacement Liquidity Facility (as defined in such
Intercreditor Agreement); or
(5) to comply with any requirement of the SEC, any applicable
law, rules or regulations of any exchange or quotation system on which
the Certificates of any series are listed or of any regulatory body; or
(6) to modify, eliminate or add to the provisions of this
Agreement, any Intercreditor Agreement or any Liquidity Facility to
such extent as shall be necessary to continue the qualification of this
Agreement, any Intercreditor Agreement or any Liquidity Facility
(including any supplemental agreement) under the Trust Indenture Act or
under any similar Federal statute hereafter enacted, and to add to this
Agreement, any Intercreditor Agreement or any Liquidity Facility 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 Basic Agreement was executed or any corresponding provision
in any similar Federal statute hereafter enacted; or
44
(7) to evidence and provide for the acceptance of appointment
under this Agreement, any Intercreditor Agreement or any Liquidity
Facility by a successor Trustee with respect to one or more Trusts and
to add to or change any of the provisions of this Agreement, any
Intercreditor Agreement or any Liquidity Facility as shall be necessary
to provide for or facilitate the administration of the Trust, pursuant
to the requirements of Section 7.10; or
(8) to provide the information required under Section 7.12 and
Section 12.04 as to the Trustee; or
(9) to make any other amendments or modifications hereto,
provided, however, that such amendments or modifications shall apply to
Certificates of any 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.
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 such series (including consents obtained in connection
with a tender offer or exchange offer for the Certificates) evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in such Trust, by Direction of said Certificateholders delivered to the Company
and the Trustee, the Company may (with the consent of the Owner Trustees, if
any, relating to such Certificates, which consent shall not be unreasonably
withheld), but shall not be obligated to, 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 or any
Liquidity Facility to the extent applicable to such Certificateholders or of
modifying in any manner the rights and obligations of such Certificateholders
under this Agreement, any Intercreditor Agreement or any Liquidity Facility;
provided, however, that no such 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 on 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
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 included 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
45
(3) alter the priority of distributions specified in the
Intercreditor Agreement in a manner materially adverse to the interests
of the Certificateholders of any series; or
(4) reduce the specified percentage of the aggregate
Fractional Undivided Interests of such Trust that 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; or
(5) modify any of the provisions of this Section 9.02 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 of
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 Direction of such
Certificateholders under this Section 9.02 to approve the particular form of any
proposed supplemental agreement, but it shall be sufficient if such Direction
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.
Section 9.05. Effect of Supplemental Agreements. Upon the
execution of any agreement supplemental to this 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
46
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 (or beneficial
owner through the Subordination Agent) of any Equipment Notes (or as a
prospective purchaser of any Postponed Notes) in trust for the benefit of the
Certificateholders of any series or as Controlling Party under an Intercreditor
Agreement, receives (directly or indirectly through the Subordination Agent) a
request for a consent to any amendment, modification, waiver or supplement under
any Indenture, other Note Document or any other related 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 the
Certificateholders of such series a Direction as to (a) whether or not to take
or refrain from taking (or direct the Subordination Agent to take or refrain
from taking) any action which a holder of (or, with respect to Postponed Notes,
a prospective purchaser of) such Equipment Note or a Controlling Party has the
option to direct, (b) whether or not to give or execute (or direct the
Subordination Agent to give or execute) any waivers, consents, amendments,
modifications or supplements as a holder of (or, with respect to Postponed
Notes, a prospective purchaser of) such Equipment Note or as Controlling Party
and (c) how to vote (or direct the Subordination Agent to vote) any Equipment
Note (or, with respect to a Postponed Note, its commitment to acquire such
Postponed 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 (or in directing the Subordination Agent in any of the
foregoing), (i) other than as Controlling Party, the Trustee shall vote for or
give consent to any such action with respect to such Equipment Note (or
Postponed Note) in the same proportion as that of (A) the aggregate face amounts
of all Certificates actually voted in favor of or for giving consent to such
action by such Direction of Certificateholders to (B) the aggregate face amount
of all Outstanding Certificates and (ii) as Controlling Party, the Trustee shall
vote as directed in such Certificateholder Direction by the Certificateholders
of such series evidencing a Fractional Undivided Interest aggregating not less
than a majority in interest in the Trust. 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 such
Holder's consent to such Direction prior to one 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, with respect to the Certificates of any series, in its own
discretion and at its own direction, consent and notify the relevant Loan
Trustee of such consent (or direct the Subordination Agent to consent and notify
the Loan Trustee of such consent) to any amendment, modification, waiver or
supplement under any related Indenture or any other related Note Document if an
Event of Default hereunder shall have occurred and be
47
continuing or if such amendment, modification, waiver or supplement will not
materially adversely affect the interests of the Certificateholders of such
series.
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 with respect to such Trust shall terminate upon the distribution to
all Holders of 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 such Trust;
provided, however, that in no event shall such Trust continue beyond one hundred
ten (110) years following the date of the execution of the Trust Supplement with
respect to such Trust (or such other final expiration date as may be specified
in such Trust Supplement).
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 later 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 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 of
such series after any Regular Distribution Date (or Special Distribution Date,
as the case may be) of such series, as 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 60 days' notice from the
Company, is one
48
month prior to the escheat period provided under applicable law) after the final
distribution date with respect thereto, the Trustee shall pay to each Loan
Trustee the appropriate amount of money relating to such Loan 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. 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 12.04. 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
or telecopy, and any such notice shall be effective when delivered or received
or, if mailed, three days after deposit in the United States mail with proper
postage for ordinary mail prepaid,
49
if to the Company:
Southwest Airlines Co.
2702 Love Field Drive
Dallas, Texas 75235
Attention: Vice President-Finance and
General Counsel
Facsimile: (214) 792-4022
Telephone: (214) 792-4000
if to the Trustee:
Wells Fargo Delaware Trust Company
919 N. Market St.
Wilmington, DE 19801
Attention: Corporate Trust Services
Facsimile: (302) 575 2006
Telephone: (302) 575 2002
(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 a notice or communication is mailed in the manner
provided above within the time prescribed, it is conclusively presumed to have
been duly given, whether or not the addressee receives it.
(e) 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.
(f) 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.
(g) 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 Loan Trustee.
Section 12.05. Governing Law. THIS BASIC AGREEMENT HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND, TOGETHER WITH ALL TRUST
50
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 12.06. 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 the related Trust,
or of the Certificates of such series or the rights of the Certificateholders
thereof.
Section 12.07. 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. If any provision of this Agreement
limits, qualifies or conflicts with another provision which is required to be
included in this Agreement by the Trust Indenture Act, the required provision
shall control.
Section 12.08. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 12.09. 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 assigns,
whether so expressed or not.
Section 12.10. 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 12.11. 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 12.12. 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 12.13. Communication by Certificateholders with Other
Certificateholders. Certificateholders of any series may communicate with other
51
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 312(b) of the Trust Indenture Act. The Company, the Trustee
and any and all other persons benefited by this Agreement shall have the
protection afforded by Section 312(c) of the Trust Indenture Act.
Section 12.14. Intention of Parties. The parties hereto intend
that each Trust be classified for U.S. federal income tax purposes as a grantor
trust under Subpart E, Part I of Subchapter J 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.
52
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first written above.
SOUTHWEST AIRLINES CO.
By: _______________________________________
Name:
Title:
WELLS FARGO DELAWARE TRUST
COMPANY,
as Trustee
By: _______________________________________
Name:
Title:
EXHIBIT A
FORM OF CERTIFICATE
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to 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)
SOUTHWEST AIRLINES CO. ____________ PASS THROUGH TRUST
Pass Through
Certificate, Series __________
Final Regular Distribution Date: _____, ____
evidencing a fractional undivided interest in a
trust, the property of which includes certain
equipment notes each secured by Aircraft owned by or
leased to Southwest Airlines Co.
Certificate
No.____________ Fractional Undivided Interest representing ._____% of
the Trust per $1,000 face amount
THIS CERTIFIES THAT __________________, for value received, is
the registered owner of a Fractional Undivided Interest, having a face amount of
$___________ (________ dollars), in the Southwest Airlines Co. Pass Through
Trust, Series [___] (the "Trust") created by Wells Fargo Delaware Trust Company,
as trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement dated as
of ___________, 200___ (the "Basic Agreement"), as supplemented by Trust
Supplement No. _______ thereto dated __________, 200_ (collectively, the
"Agreement"), between the Trustee and Southwest Airlines Co., a corporation
incorporated under Texas law (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 "___% Southwest Airlines Co. Pass Through
Certificate, Series ____" (herein called the "Certificates"). This Certificate
is issued under and is subject to the terms, provisions and conditions of the
Agreement. By virtue of its acceptance hereof, the
____________
(1.) This legend to appear on Book-Entry Certificates to be deposited with
The Depository Trust Company.
2
Certificateholder of this Certificate assents to and agrees to be bound by the
provisions of the Agreement and any related Intercreditor Agreement. 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 or will be
secured by, among other things, a security interest in aircraft 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.
Subject to and in accordance with the terms of the Agreement
and any related Intercreditor Agreement, from funds then available to the
Trustee, there will be distributed on each __________ and ___________ (a
"Regular Distribution Date"), commencing on _________, 200_, 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 and any related Intercreditor 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 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 of 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
3
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 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 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 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 minimum denominations of $1,000 Fractional Undivided Interest
and integral multiples thereof except that one Certificate may be issued 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.
4
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.
THIS CERTIFICATE AND THE AGREEMENT HAVE EACH BEEN DELIVERED IN
THE STATE OF NEW YORK AND SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES AND
CERTIFICATEHOLDERS HEREUNDER AND THEREUNDER SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS.
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.
SOUTHWEST AIRLINES CO.
By: WELLS FARGO DELAWARE TRUST COMPANY,
as Trustee
By: _________________________________
Title: _________________________________
Dated: __________________________
[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred to
in the within-mentioned Agreement.
WELLS FARGO DELAWARE TRUST
COMPANY,
as Trustee
By: __________________________________
Authorized Officer