1
EXHIBIT 4.20
EXHIBIT A-1 to
Note Purchase Agreement
FORM OF LEASED AIRCRAFT PARTICIPATION AGREEMENT
2
CONFIDENTIAL: Subject to Restrictions on Dissemination
Set Forth in Section 8 of this Agreement
===============================================================================
PARTICIPATION AGREEMENT
Dated as of _______
Among
ATLAS AIR, INC.,
Lessee,
[ ],
Owner Participant,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Not in its individual capacity
except as expressly provided herein,
but solely as Owner Trustee
and
WILMINGTON TRUST COMPANY,
Not in its individual capacity
except as expressly provided herein,
but solely as Mortgagee under the Trust
Indenture, Subordination Agent under the
Intercreditor Agreement and Pass Through Trustee
under each of the Pass Through Trust Agreements
----------------------------
One Boeing Model 747-47UF Aircraft
Bearing Manufacturer's Serial No.
and U.S. Registration No. ______
===============================================================================
3
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS AND CONSTRUCTION.......................................................................2
SECTION 2. PARTICIPATION IN LESSOR'S COST; ISSUANCE OF EQUIPMENT NOTES; TERMINATION OF OBLIGATION
TO PARTICIPATE.....................................................................3
2.1 Participation in Lessor's Cost................................................................3
2.2 Nature of Obligations of Participants.........................................................3
2.3 Termination of Obligation to Participate......................................................3
SECTION 3. COMMITMENT TO LEASE AIRCRAFT......................................................................4
SECTION 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST; POSTPONEMENT OF SCHEDULED
DELIVERY DATE......................................................................4
4.1 Notices of Scheduled Delivery Date............................................................4
4.2 Payment of Lessor's Cost......................................................................4
4.3 Postponement of Scheduled Delivery Date.......................................................5
4.4 Closing ......................................................................................6
SECTION 5. CONDITIONS PRECEDENT..............................................................................6
5.1 Conditions Precedent to Obligations of Participants...........................................6
5.2 Conditions Precedent to Obligations of Owner Trustee.........................................14
5.3 Conditions Precedent to Obligations of Mortgagee.............................................15
5.4 Conditions Precedent to Obligations of Lessee................................................15
5.5 Post-Registration Opinion....................................................................16
SECTION 6. REPRESENTATIONS AND WARRANTIES...................................................................17
6.1 Lessee's Representations and Warranties......................................................17
6.2 Owner Participant's Representations and Warranties...........................................21
6.3 First Security's Representations and Warranties..............................................24
6.4 WTC's Representations and Warranties.........................................................27
SECTION 7. COVENANTS, UNDERTAKINGS AND AGREEMENTS...........................................................31
7.1 Covenants of Lessee..........................................................................31
7.2 Covenants of Owner Participant...............................................................33
7.3 Covenants of First Security and Owner Trustee................................................36
7.4 Covenants of WTC.............................................................................38
7.5 Covenants of Note Holders....................................................................40
7.6 Agreements...................................................................................41
-i-
4
Page
----
SECTION 8. CONFIDENTIALITY...................................................................................49
SECTION 9. INDEMNIFICATION AND EXPENSES......................................................................50
9.1 General Indemnity............................................................................50
9.2 Expenses ....................................................................................58
9.3 General Tax Indemnity........................................................................59
9.4 Payments ....................................................................................72
9.5 Interest ....................................................................................72
9.6 Benefit of Indemnities.......................................................................72
SECTION 10. ASSIGNMENT OR TRANSFER OF INTERESTS..............................................................73
10.1 Participants, Owner Trustee and Note Holders................................................73
10.2 Effect of Transfer..........................................................................78
SECTION 11. REFUNDING AND CERTAIN OTHER MATTERS..............................................................79
11.1 Refunding Generally.........................................................................79
11.2 Limitations on Obligation to Refund.........................................................81
11.3 Execution of Certain Documents..............................................................81
11.4 ERISA ......................................................................................81
11.5 Consent to Optional Redemptions.............................................................82
SECTION 12. SECTION 1110 ....................................................................................82
SECTION 13. CHANGE OF CITIZENSHIP............................................................................82
13.1 Generally ..................................................................................82
13.2 Owner Participant...........................................................................83
13.3 Owner Trustee...............................................................................83
13.4 Mortgagee ..................................................................................84
SECTION 14. CONCERNING OWNER TRUSTEE.........................................................................84
SECTION 15. MISCELLANEOUS ...................................................................................84
15.1 Amendments .................................................................................84
15.2 Severability ...............................................................................85
15.3 Survival ...................................................................................85
15.4 Reproduction of Documents...................................................................85
15.5 Counterparts ...............................................................................86
15.6 No Waiver ..................................................................................86
15.7 Notices ....................................................................................86
15.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE............................................87
15.9 Third-Party Beneficiary.....................................................................88
15.10 Entire Agreement...........................................................................88
15.11 Further Assurances.........................................................................89
ANNEX, SCHEDULES AND EXHIBITS
ANNEX A - Definitions
-ii-
5
SCHEDULE 1 - Accounts; Addresses
SCHEDULE 2 - Commitments
SCHEDULE 3 - Certain Terms
EXHIBIT A - Opinion of special counsel to Lessee
EXHIBIT B - Opinion of corporate counsel to Lessee
EXHIBIT C - Opinion of corporate counsel to Airframe
Manufacturer
EXHIBIT D - Opinion of special counsel to Owner Trustee
EXHIBIT E - Opinion of special counsel to Mortgagee and
the Loan Participants
EXHIBIT F - Opinion of special counsel to Owner
Participant
EXHIBIT G-1 - Opinion of special counsel in Oklahoma City,
Oklahoma
EXHIBIT G-2 - Opinion of special counsel in Oklahoma City,
Oklahoma
EXHIBIT H - Form of Assignment and Assumption Agreement
EXHIBIT I - Form of Opinion
EXHIBIT J - Form of Guaranty Agreement
-iii-
6
PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT, dated as of, (this "Agreement"), among (a)
ATLAS AIR, INC., a Delaware corporation ("Lessee"), (b) [ ] ("Owner
Participant"), (c) FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, except as expressly provided
herein, but solely as Owner Trustee (this and all other capitalized terms used
but not defined herein shall have the respective meanings ascribed thereto in
Section 1) (in its capacity as Owner Trustee, "Owner Trustee" or "Lessor," and
in its individual capacity, "First Security"), (d) WILMINGTON TRUST COMPANY, a
Delaware banking corporation, not in its individual capacity, except as
expressly provided herein, but solely as Mortgagee under the Trust Indenture (in
its capacity as Mortgagee, "Mortgagee" and in its individual capacity, "WTC"),
(e) WILMINGTON TRUST COMPANY, not in its individual capacity, except as
expressly provided herein, but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements, (each, a "Pass Through Trustee") and (f)
WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly
provided herein, but solely as Subordination Agent under the Intercreditor
Agreement ("Subordination Agent").
RECITALS
A. Owner Participant and First Security, concurrently herewith, are
entering into the Trust Agreement, pursuant to which, among other things, Owner
Trustee agrees to hold the Trust Estate for the use and benefit of Owner
Participant upon and subject to the terms and conditions set forth therein.
B. Lessee and Airframe Manufacturer have entered into the Purchase
Agreement, pursuant to which, among other things, Airframe Manufacturer has
agreed to manufacture and sell to Lessee and Lessee has agreed to purchase from
Airframe Manufacturer, certain aircraft, including the Aircraft.
C. On the Delivery Date, Lessee and Owner Trustee will enter into the
Purchase Agreement Assignment, pursuant to which, among other things, Lessee
will assign to Owner Trustee its right to purchase the Aircraft from Airframe
Manufacturer upon and subject to the terms and conditions set forth in the
Purchase Agreement and the Purchase Agreement Assignment.
7
-2-
D. Pursuant to each of the Pass Through Trust Agreements, on the
Issuance Date the Pass Through Trusts were created and the Pass Through
Certificates were issued and sold.
E. Pursuant to the Note Purchase Agreement, each Pass Through Trustee
has agreed to use a portion of the proceeds from the issuance and sale of the
Pass Through Certificates issued by each Pass Through Trust to purchase from the
Owner Trustee, on behalf of the related Pass Through Trust, the Equipment Note
bearing the same interest rate as the Pass Through Certificates issued by such
Pass Through Trust.
F. Owner Trustee and Mortgagee, concurrently with the execution and
delivery hereof, have entered into the Trust Indenture for the benefit of the
Note Holders, pursuant to which, among other things, Owner Trustee agrees (1) to
issue Equipment Notes, in the amounts and otherwise as provided in the Trust
Indenture, the proceeds of which will be used to pay a portion of Lessor's Cost
and (2) to mortgage, pledge and assign to Mortgagee all of Owner Trustee's
right, title and interest in the Trust Indenture Estate to secure the Secured
Obligations, including, without limitation, Owner Trustee's obligations under
the Equipment Notes.
G. On the Delivery Date, Lessor and Lessee will enter into the Lease,
pursuant to which, among other things, Lessor shall lease the Aircraft to Lessee
and Lessee shall lease the Aircraft from Lessor upon and subject to the terms
and conditions set forth therein.
H. The parties hereto wish to set forth in this Agreement the terms and
conditions upon and subject to which the aforesaid transactions shall be
effected.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS AND CONSTRUCTION
Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference, and shall be construed and
interpreted in the manner described, in Annex A.
8
-3-
SECTION 2. PARTICIPATION IN LESSOR'S COST; ISSUANCE OF EQUIPMENT NOTES;
TERMINATION OF OBLIGATION TO PARTICIPATE
2.1 PARTICIPATION IN LESSOR'S COST
Subject to the terms and conditions of this Agreement, on the Delivery
Date, Owner Participant and each Pass Through Trustee shall participate in the
payment of Lessor's Cost as follows:
(a) Owner Participant shall participate in the payment of
Lessor's Cost for the Aircraft by making an equity investment in the
beneficial ownership of the Aircraft in the amount in Dollars equal to
Owner Participant's Percentage multiplied by Lessor's Cost; and
(b) Each Pass Through Trustee shall make a non-recourse secured loan
to Owner Trustee to finance, in part, the Owner Trustee's payment of
Lessor's Cost in the amount in Dollars equal to such Pass Through Trustee's
PTT Percentage multiplied by Lessor's Cost, such loan to be evidenced by
one or more Equipment Notes, dated the Delivery Date, issued to the
Subordination Agent as the registered holder on behalf of each such Pass
Through Trustee for the related Pass Through Trust by Owner Trustee in
accordance with this Agreement and the Trust Indenture, in an aggregate
principal amount equal to the Commitment of each such Pass Through Trustee.
2.2 NATURE OF OBLIGATIONS OF PARTICIPANTS
The obligations hereunder of each Participant are several, and not
joint, and a Participant shall have no obligation to make available to Owner
Trustee any portion of any amount not paid hereunder by any other Participant.
The failure by any Participant to perform its obligations hereunder shall not
affect the obligations of Lessee toward the other Participants, except to the
extent provided in Section 5.4.
2.3 TERMINATION OF OBLIGATION TO PARTICIPATE
Notwithstanding any other provision of this Agreement, if the Closing
does not occur on or before the Commitment Termination Date, the Commitment of
each Participant and its obligation to participate in the payment of Lessor's
Cost shall expire and be of no further force and effect; provided, that
9
-4-
the liability of any Participant that has defaulted in the payment of its
Commitment shall not be released.
SECTION 3. COMMITMENT TO LEASE AIRCRAFT
Subject to the terms and conditions of this Agreement, concurrently
with the issuance of the Equipment Notes on the Delivery Date, Owner Trustee
shall purchase and accept delivery of the Aircraft under and pursuant to the
Purchase Agreement and the Purchase Agreement Assignment, and thereupon Owner
Trustee shall lease the Aircraft to Lessee, and Lessee shall lease the Aircraft
from Owner Trustee, under the Lease.
SECTION 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST; POSTPONEMENT
OF SCHEDULED DELIVERY DATE
4.1 NOTICES OF SCHEDULED DELIVERY DATE
Without limiting its obligations to the Loan Participants under Section
1(b) of the Note Purchase Agreement, Lessee agrees to give Participants, Owner
Trustee, and Mortgagee at least one Business Day's written notice of the
Scheduled Delivery Date, which notice shall set forth Lessor's Cost and the
amount of each Participant's Commitment. Each Participant agrees that making
available its respective Commitment shall constitute a waiver of such notice.
Owner Trustee and Mortgagee shall be deemed to have waived such notice if WTC
shall have received from each Participant funds in the full amount of its
respective Commitment.
4.2 PAYMENT OF LESSOR'S COST
(a) Each Participant agrees, subject to the terms and conditions of
this Agreement, to make the Dollar amount of its respective Commitment
available, by wire transfer of immediately available funds to WTC's account
no. [ ] at Wilmington Trust Company, Wilmington, Delaware
ABA # ▇▇▇▇▇▇▇▇▇ (contact: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇), reference Atlas Lease, at or
before 12:00 Noon, New York City time, on the Scheduled Delivery Date. All
such funds made available by each Participant to WTC shall, until payment
thereof to Airframe Manufacturer as provided in Section 4.2(b)(ii) or
return thereof to the respective Participant as provided in Section 4.3.2,
be held by WTC in trust for the benefit of the respective Participant, as
10
-5-
the sole and exclusive property of the respective Participant and not as part of
the Trust Estate or the Trust Indenture Estate.
(b) Subject to the satisfaction, or waiver by the applicable party, of
the conditions precedent set forth in Section 5, and simultaneously with
the receipt by the parties hereto of all amounts to be paid to them on the
Delivery Date pursuant to this Section 4.2, Owner Trustee shall:
(i) purchase, take title to, and accept delivery of, the Aircraft;
(ii) in consideration of the transfer of title to the Aircraft to
Owner Trustee, direct WTC to pay the funds made available to WTC hereunder
by the Participants to Airframe Manufacturer, which payments in the
aggregate shall be equal to Manufacturer's Purchase Price, by wire transfer
of immediately available funds to Airframe Manufacturer's account set forth
in Schedule 1;
(iii) execute an application for registration of the Aircraft with the
FAA and Lease Supplement No. 1, in each case with respect to the Aircraft;
(iv) execute the Trust Indenture and the initial Trust Indenture
Supplement and issue the Equipment Notes to the Subordination Agent in
accordance with Section 2.1(b);
(v) lease the Aircraft to Lessee, pursuant to the Lease; and
(vi) take such other action as may be required to be taken by the
Owner Trustee on the Delivery Date by the terms of any Operative Agreement.
4.3 POSTPONEMENT OF SCHEDULED DELIVERY DATE
4.3.1 POSTPONEMENT
If for any reason whatsoever the Closing is not consummated on the
Scheduled Delivery Date, Lessee may, subject to the provisions of Section 1(e)
of the Note Purchase Agreement, by telephonic notice, given by 5:00 p.m., New
York City time (such telephonic notice to be promptly confirmed in writing by
personal delivery or facsimile), on the Scheduled Delivery Date
11
-6-
to each Participant, Owner Trustee and Mortgagee, designate a Delayed Delivery
Date, in which case each Participant shall comply with its obligations under
Section 4.2(a) on such Delayed Delivery Date.
4.3.2 RETURN OF FUNDS
WTC shall on the Scheduled Delivery Date or the Delayed Delivery Date
promptly return to each Participant that makes funds available to it in
accordance with Section 4.2(a) such funds, together with interest or income
earned thereon, if the Closing fails to occur on the Scheduled Delivery Date or
Delayed Delivery Date, as applicable, provided that any funds made available by
the Loan Participant shall be returned on such Scheduled Delivery Date.
4.4 CLOSING
The Closing shall occur at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other place as the parties shall
agree.
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTICIPANTS
The obligation of each Participant to make the Dollar amount of its
respective Commitment available for payment as directed by the Owner Trustee on
the Delivery Date is subject to satisfaction or waiver by each such Participant,
on or prior to the Delivery Date, of the conditions precedent set forth below in
this Section 5.1; provided, that it shall not be a condition precedent to the
obligation of any Participant that any document be produced or action taken that
is to be produced or taken by such Participant or by a Person within such
Participant's control; provided, further, that Sections 5.1.2(iii), (xv) and
(xxiii) (H) shall not be conditions precedent to the obligation of Loan
Participant and Sections 5.1.15 and 5.1.16 shall not be conditions precedent to
the obligation of Owner Participant.
5.1.1 NOTICE
Such Participant shall have received the notice described in Section
4.1 or, in the case of a Delayed Delivery
12
-7-
Date, 4.3, when and as required thereby, or shall have waived such notice.
5.1.2 DELIVERY OF DOCUMENTS
Such Participant shall, except as noted below, have received executed
counterparts of the following agreements, instruments, certificates or
documents, and such counterparts (a) shall have been duly authorized, executed
and delivered by the respective party or parties thereto, (b) shall be
reasonably satisfactory in form and substance to such Participant and (c) shall
be in full force and effect:
(i) the Lease; provided, that only Mortgagee shall receive the sole
executed chattel paper original thereof;
(ii) Lease Supplement No. 1; provided, that only Mortgagee shall
receive the sole executed chattel paper original thereof;
(iii) the Tax Indemnity Agreement; provided, that only Owner
Participant and Lessee shall receive copies of the Tax Indemnity Agreement;
(iv) the Trust Agreement;
(v) the Trust Indenture;
(vi) the initial Trust Indenture Supplement;
(vii) the Purchase Agreement Assignment;
(viii) the Consent and Agreement and the Engine Consent and Agreement;
(ix) the Equipment Notes dated the Delivery Date; provided, that only
the Subordination Agent shall receive the authenticated Equipment Notes;
(x) an excerpted copy of the Purchase Agreement to the extent relating
to Airframe Manufacturer's or Engine Manufacturer's respective warranties
or related obligations or any right in the Purchase Agreement assigned to
Owner Trustee pursuant to the Purchase Agreement Assignment; provided, that
only Owner Trustee and Mortgagee shall receive copies of such agreements
(copies of which may be inspected by Participants and their respective
special counsel on the Delivery Date, but after the Delivery
13
-8-
Date such copies shall be retained by Owner Trustee and Mortgagee and may
be inspected and reviewed by Owner Participant or Loan Participant or their
respective counsel if and only if there shall have occurred and be
continuing a Lease Default or Lease Event of Default);
(xi) the Bills of Sale;
(xii) an invoice from Airframe Manufacturer to Owner Trustee in
respect of the Aircraft in the amount of Lessor's Cost of the Aircraft;
(xiii) an appointment of authorized representatives by Owner Trustee
to accept delivery of the Aircraft, and an acceptance thereof by such
representatives in each case, dated the Delivery Date;
(xiv) the broker's report and insurance certificates required by
Section 11 of the Lease;
(xv) an appraisal or appraisals from an Appraiser, which appraisal or
appraisals shall be reasonably satisfactory in form and substance to Owner
Participant; provided, that only Owner Participant and Lessee shall receive
copies of such appraisal or appraisals;
(xvi) (A) a copy of the Certificate of Incorporation and By-Laws of
Lessee and resolutions of the board of directors of Lessee and/or the
executive committee thereof, in each case certified as of the Delivery
Date, by the Secretary or an Assistant Secretary of Lessee, duly
authorizing the execution, delivery and performance by Lessee of the Lessee
Operative Agreements required to be executed and delivered by Lessee on or
prior to the Delivery Date in accordance with the provisions hereof and
thereof; (B) an incumbency certificate of Lessee, Owner Participant, First
Security and WTC as to the person or persons authorized to execute and
deliver the relevant Operative Agreements on behalf of such party; and (C)
a copy of the Certificate of Incorporation or Articles of Incorporation and
By-Laws and general authorizing resolutions of the boards of directors (or
executive committees) or other satisfactory evidence of authorization of
Owner Participant, First Security and WTC, certified as of the Delivery
Date by the Secretary or an Assistant or Attesting Secretary of Owner
Participant, First Security and WTC, respectively, which authorize the
execution, delivery and performance by Owner Participant, First Security
and WTC,
14
-9-
respectively, of each of the Operative Agreements to which it is a party,
together with such other documents and evidence with respect to it as
Lessee or any Participant may reasonably request in order to establish the
consummation of the transactions contemplated by this Agreement and the
taking of all corporate proceedings in connection therewith;
(xvii) an Officer's Certificate of Lessee, dated as of the Delivery
Date, stating that its representations and warranties set forth in this
Agreement are true and correct as of the Delivery Date (or, to the extent
that any such representation and warranty expressly relates to an earlier
date, true and correct as of such earlier date);
(xviii) an Officer's Certificate of First Security, dated as of the
Delivery Date, stating that its representations and warranties, in its
individual capacity and as Owner Trustee, set forth in this Agreement are
true and correct as of the Delivery Date (or, to the extent that any such
representation and warranty expressly relates to an earlier date, true and
correct as of such earlier date);
(xix) an Officer's Certificate of Owner Participant, dated as of the
Delivery Date, stating that its representations and warranties set forth in
this Agreement are true and correct as of the Delivery Date (or, to the
extent that any such representation and warranty expressly relates to an
earlier date, true and correct as of such earlier date);
(xx) an Officer's Certificate of WTC, dated as of the Delivery Date,
stating that its representations and warranties, in its individual capacity
or as Mortgagee, a Pass Through Trustee or Subordination Agent, as the case
may be, set forth in this Agreement are true and correct as of the Delivery
Date (or, to the extent that any such representation and warranty expressly
relates to an earlier date, true and correct as of such earlier date);
(xxi) an application for registration of the Aircraft with the FAA in
the name of Owner Trustee; provided, that only special counsel in Oklahoma
City, Oklahoma shall receive the sole executed copy thereof for filing with
the FAA;
(xxii) the Financing Statements;
15
-10-
(xxiii) the following opinions of counsel, in each case dated the
Delivery Date:
(A) an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special counsel to
Lessee, substantially in the form of Exhibit A;
(B) an opinion of Lessee's Legal Department, substantially in the
form of Exhibit B;
(C) an opinion of corporate counsel to Airframe Manufacturer,
substantially in the form of Exhibit C;
(D) an opinion of Ray, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special counsel to
Owner Trustee, substantially in the form of Exhibit D;
(E) an opinion of Morris, James, Hitchens & ▇▇▇▇▇▇▇▇ LLP, special
counsel to Mortgagee and the Loan Participants, substantially in the
form of Exhibit E;
(F) an opinion of ___________, special counsel to Owner
Participant, substantially in the form of Exhibit F;
(G) an opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇, special counsel in Oklahoma
City, Oklahoma, substantially in the form of Exhibit G-1; and
(H) an opinion of ___________, special tax counsel to Owner
Participant, with respect to certain tax consequences of the
transactions contemplated hereby; provided, that only Owner
Participant shall receive such opinion;
(xxiv) a copy of a current, valid Standard Certificate of
Airworthiness for the Aircraft duly issued by the FAA;
(xxv) the Participants and their respective counsel shall have
received copies of such documents and papers as such Participants may
reasonably request, other than (A) in the case of any Loan Participant,
excerpted copies of the Purchase Agreement, provided that special counsel
for any Loan Participant may inspect the Purchase Agreement in connection
with the transactions contemplated hereby or as a basis for such counsel's
closing opinion,
16
-11-
and (B) in the case of parties other than Owner Participant and its special
counsel, the Tax Indemnity Agreement.
5.1.3 OTHER COMMITMENTS
Each other Participant shall have made available the Dollar amount of
its Commitment as directed by Owner Trustee in accordance with Section 4.
5.1.4 VIOLATION OF LAW
No change shall have occurred after the date of this Agreement in any
applicable Law that makes it a violation of Law for (a) Lessee, any Participant,
Subordination Agent, Owner Trustee or Mortgagee to execute, deliver and perform
the Operative Agreements to which any of them is a party or (b) any Participant
to make the Dollar amount of its Commitment available or, in the case of any
Loan Participant, to acquire an Equipment Note or to realize the benefits of the
security afforded by the Trust Indenture.
5.1.5 TAX LAW CHANGE
In respect of Owner Participant, no Adverse Change in Tax Law shall
have been enacted, promulgated or issued on or prior to the Delivery Date. Owner
Participant agrees to consider promptly, and to consult with Lessee concerning
any such Adverse Change in Tax Law and to advise Lessee and Loan Participant
promptly if Owner Participant determines that an Adverse Change in Tax Law which
has been enacted or promulgated or, if proposed, has a substantial likelihood of
becoming effective, would cause Owner Participant to elect not to close with
respect to the Aircraft. At any time on or before the Delivery Date, Owner
Participant may notify Lessee and Loan Participant that Owner Participant elects
not to close as a result of the enactment, promulgation or issuance of any
Adverse Change in Tax Law on or before the Delivery Date, specifying such
Adverse Change in Tax Law; and failure to give such notice on or before the
Delivery Date shall preclude Owner Participant from not closing with respect to
such Aircraft as a result of any Adverse Change in Tax Law.
5.1.6 REPRESENTATIONS, WARRANTIES AND COVENANTS
The representations and warranties of each other party to this
Agreement made, in each case, in this Agreement and in any other Operative
Agreement to which it is a party, shall be true and accurate in all material
respects as of the
17
-12-
Delivery Date (unless any such representation and warranty shall have been made
with reference to a specified date, in which case such representation and
warranty shall be true and accurate as of such specified date) and each other
party to this Agreement shall have performed and observed, in all material
respects, all of its covenants, obligations and agreements in this Agreement and
in any other Operative Agreement to which it is a party to be observed or
performed by it as of the Delivery Date.
5.1.7 NO EVENT OF DEFAULT
On the Delivery Date, no event shall have occurred and be continuing,
or would result from the sale, mortgage or lease of the Aircraft, which
constitutes a Lease Default or Lease Event of Default, or a Default or Event of
Default.
5.1.8 NO EVENT OF LOSS
No Event of Loss with respect to the Airframe or any Engine shall have
occurred and no circumstance, condition, act or event that, with the giving of
notice or lapse of time or both, would give rise to or constitute an Event of
Loss with respect to the Airframe or any Engine shall have occurred.
5.1.9 TITLE
Owner Trustee shall have good title (subject to filing and recordation
of the FAA ▇▇▇▇ of Sale with the FAA) to the Aircraft, free and clear of Liens,
except (a) the rights of Lessee under the Lease and Lease Supplement No. 1, (b)
the Lien created by the Trust Indenture and the initial Trust Indenture
Supplement, (c) the beneficial interest of Owner Participant created by the
Trust Agreement, (d) Liens permitted by clause (d) (solely for taxes not yet
due) of Section 6 of the Lease and (e) Liens permitted by clause (e) (solely for
amounts not yet due) of Section 6 of the Lease.
5.1.10 CERTIFICATION
The Aircraft shall have been duly certificated by the FAA as to type
and airworthiness in accordance with the terms of the Purchase Agreement.
18
-13-
5.1.11 SECTION 1110
Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee of
Owner Trustee under the Trust Indenture), shall be entitled to the benefits of
Section 1110 (as currently in effect) with respect to the right to take
possession of the Airframe and Engines as provided in the Lease in the event of
a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor.
5.1.12 FILING
On the Delivery Date (a) the FAA Filed Documents shall have been duly
filed for recordation (or shall be in the process of being so duly filed for
recordation) with the FAA in accordance with the Act and (b) each Financing
Statement shall have been duly filed (or shall be in the process of being so
duly filed) in the appropriate jurisdiction.
5.1.13 NO PROCEEDINGS
No action or proceeding shall have been instituted, nor shall any
action be threatened in writing, before any Government Entity, nor shall any
order, judgment or decree have been issued or proposed to be issued by any
Government Entity, to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or any other Operative Agreement or the
transactions contemplated hereby or thereby.
5.1.14 GOVERNMENTAL ACTION
All appropriate action required to have been taken prior to the
Delivery Date by the FAA, or any governmental or political agency, subdivision
or instrumentality of the United States, in connection with the transactions
contemplated by this Agreement shall have been taken, and all orders, permits,
waivers, authorizations, exemptions and approvals of such entities required to
be in effect on the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been issued.
5.1.15 NOTE PURCHASE AGREEMENT
The conditions precedent to the obligations of the Loan Participants
and the other requirements relating to the Aircraft and the Equipment Notes set
forth in the Note Purchase Agreement shall have been satisfied.
19
-14-
5.1.16 PERFECTED SECURITY INTEREST
On the Delivery Date, after giving effect to the filing of the FAA
Filed Documents and the Financing Statements, Mortgagee shall have received a
duly perfected first priority security interest in all of Owner Trustee's right,
title and interest in the Aircraft and the Lease, subject only to Permitted
Liens.
5.1.17 NO LESSEE MATERIAL ADVERSE CHANGE
Since , , there shall not have been any event, condition
or circumstance that could materially and adversely affect Lessee's business or
consolidated financial condition or its ability to observe or perform its
obligations, liabilities and agreements under the Lessee Operative Agreements.
5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF OWNER TRUSTEE
The obligation of Owner Trustee to direct the WTC to apply the
Commitments to pay Lessor's Cost on the Delivery Date is subject to satisfaction
or waiver by Owner Trustee, on or prior to the Delivery Date, of the conditions
precedent set forth below in this Section 5.2.
5.2.1 NOTICE
Owner Trustee shall have received the notice described in Section 4.1
or, in the case of a Delayed Delivery Date, 4.3, when and as required thereby,
or shall have waived such notice.
5.2.2 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Owner Trustee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Owner Trustee.
5.2.3 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 5.1.4, 5.1.6, 5.1.7 and
5.1.11 shall have been satisfied unless the
20
-15-
failure of any such condition to be satisfied is the result of any action or
inaction by Owner Trustee.
5.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF MORTGAGEE
The obligation of Mortgagee to authenticate the Equipment Notes on the
Delivery Date is subject to the satisfaction or waiver by Mortgagee, on or prior
to the Delivery Date, of the conditions precedent set forth below in this
Section 5.3.
5.3.1 NOTICE
Mortgagee shall have received the notice described in Section 4.1 or,
in the case of a Delayed Delivery Date, 4.3, when and as required thereby, or
shall have waived such notice.
5.3.2 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Mortgagee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Mortgagee.
5.3.3 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 5.1.4, 5.1.6, 5.1.7 and
5.1.11 shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Mortgagee.
5.4 CONDITIONS PRECEDENT TO OBLIGATIONS OF LESSEE
The obligation of Lessee to lease the Aircraft on the Delivery Date is
subject to the satisfaction or waiver by Lessee, on or prior to the Delivery
Date, of the conditions precedent set forth below in this Section 5.4.
5.4.1 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Lessee, except
as specifically provided therein, and shall be satisfactory to Lessee, unless
the failure
21
-16-
to receive any such agreement, instrument, certificate or document is the result
of any action or inaction by Lessee.
5.4.2 SALES TAX
Lessee shall be satisfied that no sales, use, value added, goods and
services or like tax, and no stamp tax duty, is payable with respect to the
delivery of the Aircraft on the Delivery Date to the extent that Lessee has
liability therefor under Section 9.3.
5.4.3 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 5.1.3 (as to all
Participants), 5.1.4, 5.1.5, 5.1.6, 5.1.7 (as to Defaults or Events of Default
not constituting Lease Defaults or Lease Events of Default, respectively),
5.1.8, 5.1.9, 5.1.10, 5.1.11, 5.1.12, 5.1.13 and 5.1.14 shall have been
satisfied or waived by Lessee, unless the failure of any such condition to be
satisfied is the result of any action or inaction by Lessee.
5.4.4 TAX LAW CHANGE
No Adverse Change in Tax Law shall have been enacted, promulgated or
proposed on or prior to the Delivery Date. Lessee agrees to consider promptly,
and to consult with Owner Participant concerning, any such Adverse Change in Tax
Law and to advise Owner Participant and Loan Participant promptly if Lessee
determines that an Adverse Change in Tax Law which has been enacted or
promulgated or, if proposed, has a substantial likelihood of becoming effective,
would cause Lessee to elect not to close the transactions contemplated by the
Lease and this Agreement. At any time on or before the Delivery Date, Lessee may
notify Owner Participant and Loan Participant that Lessee elects not to close
the transactions contemplated by the Lease and this Agreement as a result of the
enactment, promulgation or proposal of any Adverse Change in Tax Law on or
before the Delivery Date, specifying such Adverse Change in Tax Law.
5.5 POST-REGISTRATION OPINION
Promptly upon the registration of the Aircraft and the recordation of
the FAA Filed Documents pursuant to the Act, Lessee will cause ▇▇▇▇▇ & ▇▇▇▇▇▇▇,
special counsel in Oklahoma City, Oklahoma, to deliver to Lessee, each
Participant, Owner Trustee and Mortgagee a favorable opinion or opinions
addressed to each of them with respect to such registration and recordation.
22
-17-
SECTION 6. REPRESENTATIONS AND WARRANTIES
6.1 LESSEE'S REPRESENTATIONS AND WARRANTIES
Lessee represents and warrants to each Participant, Subordination
Agent, Owner Trustee and Mortgagee that:
6.1.1 ORGANIZATION; QUALIFICATION
Lessee is a corporation duly incorporated, validly existing and in good
standing under the Laws of the State of Delaware and has the corporate power and
authority to conduct the business in which it is currently engaged and to own or
hold under lease its properties and to enter into and perform its obligations
under the Lessee Operative Agreements. Lessee is duly qualified to do business
as a foreign corporation in good standing in each jurisdiction in which the
nature and extent of the business conducted by it, or the ownership of its
properties, requires such qualification, except where the failure to be so
qualified would not give rise to a Material Adverse Change to Lessee.
6.1.2 CORPORATE AUTHORIZATION
Lessee has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by its Certificate of Incorporation or By-Laws) to
authorize the execution and delivery of each of the Lessee Operative Agreements,
and the performance of its obligations thereunder.
6.1.3 NO VIOLATION
The execution and delivery by Lessee of the Lessee Operative
Agreements, the performance by Lessee of its obligations thereunder and the
consummation by Lessee on the Delivery Date of the transactions contemplated
thereby, do not and will not (a) violate any provision of the Certificate of
Incorporation or By-Laws of Lessee, (b) violate any Law applicable to or binding
on Lessee or (c) violate or constitute any default under (other than any
violation or default that would not result in a Material Adverse Change to
Lessee), or result in the creation of any Lien (other than as permitted under
the Lease) upon the Aircraft under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, lease, loan or other material
agreement, instrument or document to which Lessee is a party or by which Lessee
or any of its properties is bound.
23
-18-
6.1.4 APPROVALS
The execution and delivery by Lessee of the Lessee Operative
Agreements, the performance by Lessee of its obligations thereunder and the
consummation by Lessee on the Delivery Date of the transactions contemplated
thereby do not and will not require the consent or approval of, or the giving of
notice to, or the registration with, or the recording or filing of any documents
with, or the taking of any other action in respect of, (a) any trustee or other
holder of any Debt of Lessee and (b) any Government Entity, other than the
filing of (x) the FAA Filed Documents and the Financing Statements (and
continuation statements periodically) and (y) filings, recordings, notices or
other ministerial actions pursuant to any routine recording, contractual or
regulatory requirements applicable to it.
6.1.5 VALID AND BINDING AGREEMENTS
The Lessee Operative Agreements have been duly authorized, executed and
delivered by Lessee and, assuming the due authorization, execution and delivery
thereof by the other party or parties thereto, constitute the legal, valid and
binding obligations of Lessee and are enforceable against Lessee in accordance
with the respective terms thereof, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, receivership, moratorium and other
similar Laws affecting the rights of creditors generally and general principles
of equity, whether considered in a proceeding at law or in equity.
6.1.6 LITIGATION
Except as set forth in Lessee's most recent Annual Report on Form 10-K,
as amended, filed by Lessee with the SEC on or prior to the Delivery Date, or in
any Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by Lessee
with the SEC subsequent to such Form 10-K and on or prior to the Delivery Date,
no action, claim or proceeding is now pending or, to the Actual Knowledge of
Lessee, threatened, against Lessee, before any court, governmental body,
arbitration board, tribunal or administrative agency, which is reasonably likely
to be determined adversely to Lessee and if determined adversely to Lessee would
result in a Material Adverse Change.
6.1.7 FINANCIAL CONDITION
The audited consolidated balance sheet of Lessee with respect to
Lessee's most recent fiscal year included in Lessee's
24
-19-
most recent Annual Report on Form 10-K, as amended, filed by Lessee with the
SEC, and the related consolidated statements of operations and cash flows for
the period then ended have been prepared in accordance with GAAP and fairly
present in all material respects the financial condition of Lessee and its
consolidated subsidiaries as of such date and the results of its operations and
cash flows for such period, and since the date of such balance sheet, there has
been no material adverse change in such financial condition or operations of
Lessee, except for matters disclosed in (a) the financial statements referred to
above or (b) any subsequent Quarterly Report on Form 10-Q or Current Report on
Form 8-K filed by Lessee with the SEC on or prior to the date hereof.
6.1.8 REGISTRATION AND RECORDATION
Except for (a) the registration of the Aircraft with the FAA pursuant
to the Act in the name of Owner Trustee, (b) the filing for recordation (and
recordation) of the FAA Filed Documents, (c) the filing of the Financing
Statements (and continuation statements relating thereto at periodic intervals),
(d) the taking of possession and retention by Mortgagee of the original
counterparts of the Lease and Lease Supplement No. 1 and (e) the affixation of
the placards referred to in Section 7.1.3 of the Lease, no further action,
including any filing or recording of any document (including any financing
statement in respect thereof under Article 9 of the UCC) is necessary in order
to establish and perfect the right, title or interest of Owner Trustee, and the
Mortgagee's security interest, in the Aircraft and the Lease, as against Lessee
and any other Person, in each case, in any applicable jurisdictions in the
United States.
6.1.9 CHIEF EXECUTIVE OFFICE
The chief executive office (as such term is defined in Article 9 of the
UCC) of Lessee is located [at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇] or [at
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇].
6.1.10 NO DEFAULT
No event which, if the Aircraft were subject to the Lease, would
constitute a Lease Default or Lease Event of Default has occurred and is
continuing.
25
-20-
6.1.11 NO EVENT OF LOSS
No Event of Loss has occurred with respect to the Airframe or any
Engine, and, to the Actual Knowledge of Lessee, no circumstance, condition, act
or event has occurred that, with the giving of notice or lapse of time or both
would give rise to or constitute an Event of Loss with respect to the Airframe
or any Engine.
6.1.12 COMPLIANCE WITH LAWS
(a) Lessee is a Citizen of the United States and a U.S. Air Carrier.
(b) Lessee holds all licenses, permits and franchises from the
appropriate Government Entities necessary to authorize Lessee to lawfully
engage in air transportation and to carry on commercial air cargo service
as currently conducted, except where the failure to so hold any such
license, permit or franchise would not give rise to a Material Adverse
Change to Lessee.
(c) Lessee is not an "investment company" or a company controlled by
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
6.1.13 SECURITIES LAWS
Neither Lessee nor any person authorized to act on its behalf has
directly or indirectly offered any beneficial interest or Security relating to
the ownership of the Aircraft or the Lease or any interest in the Trust Estate
and Trust Agreement, or any of the Equipment Notes or any other interest in or
security under the Trust Indenture, for sale to, or solicited any offer to
acquire any such interest or security from, or has sold any such interest or
security to, any person in violation of the Securities Act or any applicable
state securities laws.
6.1.14 BROKER'S FEES
No Person acting on behalf of Lessee is or will be entitled to any
broker's fee, commission or finder's fee in connection with the Transactions,
except for fees payable to Lessee's Advisor, if any.
26
-21-
6.1.15 SECTION 1110
Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee
under the Trust Indenture), is entitled to the benefits of Section 1110 (as
currently in effect) with respect to the right to take possession of the
Airframe and Engines as provided in the Lease in the event of a case under
Chapter 11 of the Bankruptcy Code in which Lessee is a debtor.
6.2 OWNER PARTICIPANT'S REPRESENTATIONS AND WARRANTIES
Owner Participant represents and warrants to Lessee, Loan Participant,
Subordination Agent, Owner Trustee and Mortgagee that:
6.2.1 ORGANIZATION, ETC.
Owner Participant is a corporation duly incorporated, validly existing
and in good standing under the Laws of the OP Jurisdiction, has the corporate
power and authority to conduct the business in which it is currently engaged and
to own or hold under lease its properties and to enter into, and perform its
obligations under the Owner Participant Agreements, and has a tangible Net Worth
(exclusive of goodwill) greater than $75,000,000.
6.2.2 CORPORATE AUTHORIZATION
Owner Participant has taken, or caused to be taken, all necessary
corporate action (including, without limitation, the obtaining of any consent or
approval of stockholders required by its Certificate of Incorporation or
By-Laws) to authorize the execution and delivery of each of the Owner
Participant Agreements, and the performance of its obligations thereunder.
6.2.3 NO VIOLATION
The execution and delivery by Owner Participant of the Owner
Participant Agreements, the performance by Owner Participant of its obligations
thereunder and the consummation by Owner Participant on the Delivery Date of the
transactions contemplated thereby, do not and will not (a) violate any provision
of the Certificate of Incorporation or By-Laws of Owner Participant, (b) violate
any Law applicable to or binding on Owner Participant or (c) violate or
constitute any default under
27
-22-
(other than any violation or default that would not result in a Material Adverse
Change to Owner Participant), or result in the creation of any Lien (other than
as provided for or otherwise permitted in the Operative Agreements) upon the
Trust Estate under, any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, lease, loan or other material agreement, instrument
or document to which Owner Participant is a party or by which Owner Participant
or any of its properties is bound.
6.2.4 APPROVALS
The execution and delivery by Owner Participant of the Owner
Participant Agreements, the performance by Owner Participant of its obligations
thereunder and the consummation by Owner Participant on the Delivery Date of the
transactions contemplated thereby do not and will not require the consent or
approval of, or the giving of notice to, or the registration with, or the
recording or filing of any documents with, or the taking of any other action in
respect of, (a) any trustee or other holder of any Debt of Owner Participant and
(b) any Government Entity, other than the filing of the FAA Filed Documents and
the Financing Statements.
6.2.5 VALID AND BINDING AGREEMENTS
The Owner Participant Agreements have been duly authorized, executed
and delivered by Owner Participant and, assuming the due authorization,
execution and delivery by the other party or parties thereto, constitute the
legal, valid and binding obligations of Owner Participant and are enforceable
against Owner Participant in accordance with the respective terms thereof,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar Laws affecting the
rights of creditors generally and general principles of equity, whether
considered in a proceeding at law or in equity.
6.2.6 CITIZENSHIP
On the Delivery Date, Owner Participant is a Citizen of the United
States.
6.2.7 NO LIENS
On the Delivery Date, there are no Lessor Liens attributable to Owner
Participant in respect of all or any part of the Trust Estate.
28
-23-
6.2.8 INVESTMENT BY OWNER PARTICIPANT
Owner Participant's beneficial interest in the Trust Estate is being
acquired by it for its own account, for investment and not with a view to any
resale or distribution thereof, except that, subject to the restrictions on
transfer set forth in Section 10, the disposition by Owner Participant of its
beneficial interest in the Trust Estate shall at all times be within its
control.
6.2.9 ERISA
No part of the funds to be used by Owner Participant to acquire or hold
its interests in the Trust Estate to be acquired by it under this Agreement
directly or indirectly constitutes assets of a Plan.
6.2.10 LITIGATION
There are no pending or, to the Actual Knowledge of Owner Participant,
threatened actions or proceedings against Owner Participant before any court,
governmental body, arbitration board, administrative agency or tribunal which,
if determined adversely to Owner Participant, would materially adversely affect
the ability of Owner Participant to perform its obligations under the Owner
Participant Agreements.
6.2.11 SECURITIES LAWS
Neither Owner Participant nor any person Owner Participant has
authorized to act on its behalf has directly or indirectly offered any
beneficial interest in or Security relating to the ownership of the Aircraft or
any interest in the Trust Estate, or any of the Equipment Notes or any other
interest in or Security under the Trust Indenture for sale to, or solicited any
offer to acquire any of the same from, any Person in violation of the Securities
Act or applicable state securities Laws.
6.2.12 BROKER'S FEES
No Person acting on behalf of Owner Participant is or will be entitled
to any broker's fee, commission or finder's fee in connection with the
Transactions.
29
-24-
6.3 FIRST SECURITY'S REPRESENTATIONS AND WARRANTIES
First Security represents and warrants to Lessee, Owner Participant,
Loan Participant, Subordination Agent and Mortgagee that:
6.3.1 ORGANIZATION, ETC.
First Security is a national banking association duly organized,
validly existing and in good standing under the Laws of the United States,
holding a valid certificate to do business as a national banking association
with banking authority to execute and deliver, and perform its obligations
under, the Owner Trustee Agreements.
6.3.2 CORPORATE AUTHORIZATION
First Security has taken, or caused to be taken, all necessary
corporate action (including, without limitation, the obtaining of any consent or
approval of stockholders required by Law or by its Articles of Association or
By-Laws) to authorize the execution and delivery by First Security, in its
individual capacity and as Owner Trustee, of each of the Owner Trustee
Agreements, and the performance of its obligations thereunder.
6.3.3 NO VIOLATION
The execution and delivery by First Security, in its individual
capacity and as Owner Trustee of the Owner Trustee Agreements, the performance
by First Security, in its individual capacity and as Owner Trustee, of its
obligations thereunder and the consummation by First Security in its individual
capacity and as Owner Trustee on the Delivery Date of the transactions
contemplated thereby, do not and will not (a) violate any provision of the
Articles of Association or By-Laws of First Security, (b) violate any Law of the
State of Utah or federal banking law applicable to or binding on Owner Trustee
or First Security governing its banking and trust powers or (c) violate or
constitute any default under(other than any violation or default that would not
result in a Material Adverse Change to First Security, in its individual
capacity or as Owner Trustee), or result in the creation of any Lien (other than
the Lien of the Trust Indenture) upon any property of First Security, in its
individual capacity and as Owner Trustee, or any of its subsidiaries under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, lease, loan or other material agreement, instrument or document
30
-25-
to which First Security, in its individual capacity and as Owner Trustee, is a
party or by which First Security, in its individual capacity and as Owner
Trustee, or any of its properties is or may be bound or affected in any material
respect.
6.3.4 APPROVALS
The execution and delivery by First Security, in its individual
capacity and as Owner Trustee, of the Owner Trustee Agreements, the performance
by First Security, in its individual capacity and as Owner Trustee, of its
obligations thereunder and the consummation by First Security, in its individual
capacity and as Owner Trustee, on the Delivery Date of the transactions
contemplated thereby do not and will not require the consent, approval or
authorization of, or the giving of notice to, or the registration with, or the
recording or filing of any documents with, or the taking of any other action in
respect of, (a) any trustee or other holder of any Debt of First Security or (b)
any Government Entity governing its banking and trust powers, other than the
filing of the FAA Filed Documents and the Financing Statements.
6.3.5 VALID AND BINDING AGREEMENTS
The Owner Trustee Agreements have been duly authorized, executed and
delivered by First Security, in its individual capacity or as Owner Trustee, as
the case may be, and constitute the legal, valid and binding obligations of
First Security, in its individual capacity and as Owner Trustee, and, assuming
the due authorization, execution and delivery thereof by the other party or
parties thereto, are enforceable against First Security, in its individual
capacity and as Owner Trustee, in accordance with the respective terms thereof,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar Laws affecting the
rights of creditors generally and general principles of equity, whether
considered in a proceeding at law or in equity.
6.3.6 CITIZENSHIP
On the Delivery Date, First Security is a Citizen of the United States.
31
-26-
6.3.7 CHIEF EXECUTIVE OFFICE
The chief executive office (as such term is defined in Article 9 of the
UCC) of Owner Trustee is located at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇.
6.3.8 TITLE
On the Delivery Date, Owner Trustee shall have received whatever title
to the Aircraft as was conveyed to it by Airframe Manufacturer.
6.3.9 NO LIENS; FINANCING STATEMENTS
On the Delivery Date, there are no Lessor Liens attributable to First
Security or Owner Trustee in respect of all or any part of the Aircraft, Trust
Estate or the Trust Indenture Estate. Except for the Financing Statements, it
has not, either in its individual capacity or as Owner Trustee, executed any UCC
financing statements relating to the Aircraft or the Lease.
6.3.10 LITIGATION
There are no pending or, to the Actual Knowledge of First Security,
threatened actions or proceedings against First Security or Owner Trustee before
any court, governmental body, arbitration board, administrative agency or
tribunal which, if determined adversely to First Security, would materially
adversely affect the ability of First Security or Owner Trustee to perform its
obligations under the Owner Trustee Agreements.
6.3.11 SECURITIES LAWS
Neither First Security, nor any person authorized to act on its behalf,
has directly or indirectly offered any beneficial interest or Security relating
to the ownership of the Aircraft or any interest in the Trust Estate or any of
the Equipment Notes or any other interest in or security under the Trust
Indenture for sale to, or solicited any offer to acquire any such interest or
security from, or has sold any such interest or security to, any person other
than the Participants, except for the offering and sale of the Pass Through
Certificates.
32
-27-
6.3.12 EXPENSES AND TAXES
There are no Expenses or Taxes that may be imposed on or asserted
against the Trust, the Trust Estate or any part thereof or any interest therein,
the Trust Indenture Estate, Lessee, Owner Participant, any Pass Through Trustee,
Subordination Agent, Owner Trustee or Mortgagee (except, as to Owner Trustee,
Taxes imposed on the fees payable to Owner Trustee) under the laws of the State
of Utah in connection with the execution, delivery or performance of any
Operative Agreement by Owner Trustee or in connection with the issuance of the
Equipment Notes, which Expenses or Taxes would not have been imposed if Owner
Trustee had not (x) had its principal place of business in, (y) performed (in
its individual capacity or as Owner Trustee) any or all of its duties under the
Operative Agreements in or (z) engaged in any activities unrelated to the
transactions contemplated by the Operative Agreements in, the State of Utah.
6.4 WTC'S REPRESENTATIONS AND WARRANTIES
WTC represents and warrants (with respect to Section 6.4.10, solely in
its capacity as Subordination Agent) to Lessee, Owner Participant and Owner
Trustee that:
6.4.1 ORGANIZATION, ETC.
WTC is a Delaware banking corporation duly organized, validly existing
and in good standing under the Laws of the State of Delaware, holding a valid
certificate to do business as a Delaware banking corporation with banking
authority to execute and deliver, and perform its obligations under, the
Mortgagee Agreements, the Pass Through Trustee Agreements and the Subordination
Agent Agreements.
6.4.2 CORPORATE AUTHORIZATION
WTC has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by Law or by its Certificate of Incorporation or By-Laws)
to authorize the execution and delivery by WTC, in its individual capacity or as
Mortgagee, as a Pass Through Trustee or as Subordination Agent, as the case may
be, of the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements and the performance of its obligations
thereunder.
33
-28-
6.4.3 NO VIOLATION
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, as a Pass Through Trustee or as Subordination Agent, as the case may
be, of the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements, the performance by WTC, in its individual
capacity or as Mortgagee, as a Pass Through Trustee or as Subordination Agent,
as the case may be, of its obligations thereunder and the consummation on the
Delivery Date of the transactions contemplated thereby, do not and will not (a)
violate any provision of the Certificate of Incorporation or By-Laws of WTC, (b)
violate any Law applicable to or binding on WTC, in its individual capacity or
(except in the case of any Law relating to any Plan) as Mortgagee, as a Pass
Through Trustee or as Subordination Agent, or (c) violate or constitute any
default under (other than any violation or default that would not result in a
Material Adverse Change to WTC, in its individual capacity or as Mortgagee, as a
Pass Through Trustee or as Subordination Agent), or result in the creation of
any Lien (other than the Lien of the Trust Indenture) upon any property of WTC,
in its individual capacity or as Mortgagee, as a Pass Through Trustee or as
Subordination Agent, or any of WTC's subsidiaries under, any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract, lease,
loan or other agreement, instrument or document to which WTC, in its individual
capacity or as Mortgagee, as a Pass Through Trustee or as Subordination Agent,
is a party or by which WTC, in its individual capacity or as Mortgagee, as a
Pass Through Trustee or as Subordination Agent, or any of their respective
properties is bound or may be affected in any material respect.
6.4.4 APPROVALS
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, as a Pass Through Trustee or as Subordination Agent, as the case may
be, of the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements, the performance by WTC, in its individual
capacity or as Mortgagee, as a Pass Through Trustee or as Subordination Agent,
as the case may be, of its obligations thereunder and the consummation on the
Delivery Date by WTC, in its individual capacity or as Mortgagee, as a Pass
Through Trustee or as Subordination Agent, as the case may be, of the
transactions contemplated thereby do not and will not require the consent,
approval or authorization of, or the giving of notice to, or the registration
with, or the recording or filing of any documents with, or the taking of any
other action in respect
34
-29-
of, (a) any trustee or other holder of any Debt of WTC or (b) any Government
Entity, other than the filing of the FAA Filed Documents and the Financing
Statements.
6.4.5 VALID AND BINDING AGREEMENTS
The Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements have been duly authorized, executed and delivered
by WTC and, assuming the due authorization, execution and delivery by the other
party or parties thereto, constitute the legal, valid and binding obligations of
WTC, in its individual capacity or as Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, and are enforceable against WTC, in its
individual capacity or as Mortgagee, a Pass Through Trustee or Subordination
Agent, as the case may be, in accordance with the respective terms thereof,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar Laws affecting the
rights of creditors generally and general principles of equity, whether
considered in a proceeding at law or in equity.
6.4.6 CITIZENSHIP
WTC is a Citizen of the United States.
6.4.7 NO LIENS
On the Delivery Date, there are no Lessor Liens attributable to WTC in
respect of all or any part of the Trust Estate or the Trust Indenture Estate.
6.4.8 LITIGATION
There are no pending or, to the Actual Knowledge of WTC, threatened
actions or proceedings against WTC, in its individual capacity or as Mortgagee,
a Pass Through Trustee or Subordination Agent, before any court, administrative
agency or tribunal which, if determined adversely to WTC, in its individual
capacity or as Mortgagee, a Pass Through Trustee or Subordination Agent, as the
case may be, would materially adversely affect the ability of WTC, in its
individual capacity or as Mortgagee, a Pass Through Trustee or Subordination
Agent, as the case may be, to perform its obligations under any of the Mortgagee
Agreements, the Pass Through Trustee Agreements or the Subordination Agent
Agreements.
35
-30-
6.4.9 SECURITIES LAWS
Neither WTC nor any person authorized to act on its behalf has directly
or indirectly offered any beneficial interest or Security relating to the
ownership of the Aircraft or any interest in the Trust Indenture Estate or any
of the Equipment Notes or any other interest in or security under the Trust
Indenture for sale to, or solicited any offer to acquire any such interest or
security from, or has sold any such interest or security to, any Person other
than the Participants, except for the offering and sale of the Pass Through
Certificates.
6.4.10 INVESTMENT
The Equipment Notes to be acquired by the Subordination Agent are being
acquired by it for the account of the Pass Through Trustees, for investment and
not with a view to any resale or distribution thereof, except that, subject to
the restrictions on transfer set forth in Section 10.1.3, the disposition by it
of its Equipment Notes shall at all times be within its control.
6.4.11 TAXES
There are no Taxes payable by any Pass Through Trustee or WTC, as the
case may be, imposed by the State of Delaware or any political subdivision or
taxing authority thereof in connection with the execution, delivery and
performance by such Pass Through Trustee or WTC, as the case may be, of this
Agreement or any of the Pass Through Trustee Agreements (other than franchise or
other taxes based on or measured by any fees or compensation received by any
such Pass Through Trustee or WTC, as the case may be, for services rendered in
connection with the transactions contemplated by any of the Pass Through Trust
Agreements), and there are no Taxes payable by any Pass Through Trustee or WTC,
as the case may be, imposed by the State of Delaware or any political
subdivision thereof in connection with the acquisition, possession or ownership
by any such Pass Through Trustee of any of the Equipment Notes (other than
franchise or other taxes based on or measured by any fees or compensation
received by any such Pass Through Trustee or WTC, as the case may be, for
services rendered in connection with the transactions contemplated by any of the
Pass Through Trust Agreements), and, assuming that the trusts created by the
Pass Through Trust Agreements will not be taxable as corporations, but, rather,
will be classified as grantor trusts under subpart E, Part I of Subchapter J of
the Code or as a partnership under Subchapter K of the Code, and assuming that
the assets
36
-31-
of the trusts will be treated as held for investment purposes as provided in
each Pass Through Trust Agreement, such trusts will not be subject to any taxes
(including, without limitation, net or gross income, tangible or intangible
property, net worth, capital, franchise or doing business tax) fee or other
governmental charge under the laws of the State of Delaware or any political
subdivision thereof;
6.4.12 CONTROL
WTC is not an Affiliate of the Owner Participant or the Owner Trustee.
6.4.13 BROKER'S FEES
No Person acting on behalf of WTC, in its individual capacity or as
Mortgagee, any Pass Through Trustee or Subordination Agent, is or will be
entitled to any broker's fee, commission or finder's fee in connection with the
Transactions.
SECTION 7. COVENANTS, UNDERTAKINGS AND AGREEMENTS
7.1 COVENANTS OF LESSEE
Lessee covenants and agrees, at its own cost and expense, with Owner
Participant, Loan Participants, Owner Trustee and Mortgagee as follows:
7.1.1 CORPORATE EXISTENCE; U.S. AIR CARRIER
Lessee shall at all times maintain its corporate existence, except as
permitted by Section 13.2 of the Lease, and shall at all times remain a U.S. Air
Carrier.
7.1.2 NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE
Lessee will give Owner Participant, Owner Trustee and Mortgagee timely
written notice (but in any event within 30 days prior to the expiration of the
period of time specified under applicable Law to prevent lapse of perfection) of
any relocation of its chief executive office (as such term is defined in Article
9 of the UCC) from its then present location and will promptly take any action
required by Section 7.1.3(c) as a result of such relocation.
37
-32-
7.1.3 CERTAIN ASSURANCES
(a) Lessee shall duly execute, acknowledge and deliver, or shall cause
to be executed, acknowledged and delivered, all such further agreements,
instruments, certificates or documents, and shall do and cause to be done such
further commercially reasonable acts and things, in any case, as Owner
Participant, Owner Trustee or Mortgagee shall reasonably request for
accomplishing the purposes of this Agreement and the other Operative Agreements;
provided that any instrument or other document so executed by Lessee will not
expand any obligations or limit any rights of Lessee in respect of the
transactions contemplated by any Operative Agreement.
(b) Lessee shall promptly take such action with respect to the
recording, filing, re-recording and refiling of the Lease, the Trust Agreement
and the Trust Indenture and the respective supplements thereto, including,
without limitation, Lease Supplement No. 1 and the initial Trust Indenture
Supplement, as shall be necessary to establish, perfect and protect the
interests and rights of Owner Trustee in and to the Aircraft and under the Lease
and the perfection and priority of the Lien created by the Trust Indenture.
Lessee shall furnish to Owner Participant or Owner Trustee such information
(other than with respect to the citizenship of Owner Participant and Owner
Trustee) in Lessee's possession or otherwise reasonably available to Lessee as
may be required to enable Owner Participant or Owner Trustee to make application
for registration of the Aircraft under the Act (subject to Lessee's rights under
Section 7.1.2 of the Lease) and shall pay or cause to be paid all out-of-pocket
costs and expenses thereof (including, without limitation, reasonable attorneys'
fees and disbursements).
(c) Lessee, at its sole cost and expense, will cause the FAA Filed
Documents, the Financing Statements and all continuation statements (and any
amendments necessitated by any combination, consolidation or merger pursuant to
Section 13.2 of the Lease, or any relocation of its chief executive office) in
respect of the Financing Statements to be prepared and, subject only to the
execution and delivery thereof by Owner Trustee and Mortgagee, as applicable,
duly and timely filed and recorded, or filed for recordation, to the extent
permitted under the Act (with respect to the FAA Filed Documents) or the UCC or
similar law of any other applicable jurisdiction (with respect to such other
documents).
38
-33-
(d) If the Aircraft has been registered in a country other than the
United States pursuant to Section 7.1.2 of the Lease, Lessee will furnish to
Owner Trustee, Mortgagee and each Participant annually after such registration,
commencing with the calendar year after such registration is effected, an
opinion of special counsel reasonably satisfactory to Owner Participant and
Mortgagee stating that, in the opinion of such counsel, either that (i) such
action has been taken with respect to the recording, filing, rerecording and
refiling of the Operative Agreements and any supplements and amendments thereto
as is necessary to establish, perfect and protect Owner Trustee's and
Mortgagee's respective right, title and interest in and to the Aircraft and the
Operative Agreements, reciting the details of such actions, or (ii) no such
action is necessary to maintain the perfection of such right, title and
interest.
7.1.4 SECURITIES LAWS
Neither Lessee nor any person authorized to act on its behalf will
directly or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or the Lease or any interest in the Trust Estate and
Trust Agreement or any of the Equipment Notes or any other interest in or
security under the Trust Indenture, for sale to, or solicit any offer to acquire
any such interest or security from, or sell any such interest or security to,
any person in violation of the Securities Act or applicable state or foreign
securities Laws.
7.2 COVENANTS OF OWNER PARTICIPANT
Owner Participant covenants and agrees with Lessee, and, except with
respect to Section 7.2.4, Loan Participants, Owner Trustee and Mortgagee as
follows:
7.2.1 LIENS
Owner Participant (a) will not directly or indirectly create, incur,
assume or suffer to exist any Lessor Lien attributable to it on or with respect
to all or any part of the Trust Estate, the Trust Indenture Estate or the
Aircraft, (b) will, at its own cost and expense, promptly take such action as
may be necessary to discharge any Lessor Lien attributable to
39
-34-
Owner Participant on all or any part of the Trust Estate, the Trust Indenture
Estate or the Aircraft and (c) will hold harmless and indemnify Lessee, Owner
Trustee, each Note Holder, Mortgagee, each of their respective Affiliates,
successors and permitted assigns, the Trust Estate and the Trust Indenture
Estate from and against (i) any and all Expenses, (ii) any reduction in the
amount payable out of the Trust Estate or the Trust Indenture Estate and (iii)
any interference with the possession, operation or other use of all or any part
of the Aircraft imposed on, incurred by or asserted against any of the foregoing
as a consequence of any such Lessor Lien.
7.2.2 REVOCATION OF TRUST AGREEMENT
(a) Owner Participant will comply with the provisions of the Trust
Agreement applicable to it, and will not terminate or revoke the Trust
Agreement or the trusts created thereunder without the prior written
consent of Lessee and Mortgagee and will not amend, modify or supplement
the Trust Agreement, or waive any of the provisions thereof, if such
amendment, modification, supplement or waiver would have a material adverse
effect on Lessee, without the consent of Lessee, or on Mortgagee or any
Note Holder, without the consent of Mortgagee.
(b) Notwithstanding Section 7.2.2(a), Owner Participant may at any
time remove Owner Trustee pursuant to Section 9.1 of the Trust Agreement or
terminate the Trust Agreement pursuant to Section 11.2 of the Trust
Agreement.
7.2.3 CHANGE OF SITUS OF OWNER TRUST
If, at any time, any Tax Indemnitee or the Trust Estate becomes subject
to any Taxes for which it is indemnified pursuant to Section 9.3 of this
Agreement and if, as a consequence thereof, Lessee should request that the situs
of the Trust be moved to another state in the United States from the state in
which it is then located, the situs of the Trust may be moved with the written
consent of Owner Participant (which consent shall not be unreasonably withheld)
and Owner Participant will take whatever action may be reasonably necessary to
accomplish such relocation; provided, that, in any event, (a) Lessee shall
provide such additional tax indemnification as Owner Participant and the Note
Holders or the Pass Through Trustees may reasonably request to cover any
additional unindemnified Taxes or loss of Tax benefits described in the
assumptions in the Tax Indemnity Agreement resulting from such change in the
situs of the Trust, (b) the rights and obligations
40
-35-
under the Operative Agreements of Owner Participant, the Note Holders, Pass
Through Trustees and Mortgagee shall not be adversely affected as a result of
the taking of such action, (c) the Lien of the Trust Indenture on the Trust
Indenture Estate shall not be adversely affected by such action, and Lessee and
Owner Trustee shall execute and deliver such documents as may reasonably be
requested by Mortgagee to protect and maintain the perfection and priority of
such Lien, (d) Owner Participant, Pass Through Trustees and Mortgagee shall have
received an opinion or opinions of counsel (which counsel is reasonably
satisfactory to Owner Participant, Pass Through Trustees and Mortgagee) in
scope, form and substance reasonably satisfactory to Owner Participant, Pass
Through Trustees and Mortgagee to the effect that (i) the Trust, as thus
relocated, shall remain a validly established trust, (ii) any amendments to the
Trust Agreement necessitated by such relocation shall have been duly authorized,
executed and delivered by the parties thereto and shall constitute the valid and
binding obligations of such parties, enforceable in accordance with their terms,
(iii) covering such other matters as Owner Participant, Pass Through Trustees or
Mortgagee may reasonably request, (e) if such relocation involves the
replacement of Owner Trustee, then Owner Participant, Pass Through Trustees and
Mortgagee shall have received an opinion of counsel to such successor Owner
Trustee in form and substance reasonably satisfactory to Owner Participant, Pass
Through Trustees and Mortgagee covering the matters described in the opinion
delivered pursuant to Section 5.1.2(xxiii)(D) and (f) Lessee shall indemnify and
hold harmless Owner Participant, Note Holders, Pass Through Trustees and First
Security, in its individual capacity and as Owner Trustee, on a net after-tax
basis against any and all reasonable out-of-pocket costs and expenses including
attorneys' fees and disbursements, fees and expenses of any new owner trustee,
registration, recording or filing fees and taxes incurred by Owner Participant,
Note Holders, Pass Through Trustees or Owner Trustee in connection with such
change of situs. Owner Participant agrees with Lessee that it will not consent
to or direct a change in the situs of the Trust Estate without the prior written
consent of Lessee.
7.2.4 COMPLIANCE WITH LEASE PROVISIONS
Owner Participant will, solely for the benefit of Lessee, comply with
the provisions expressly applicable to it contained in the Lease.
41
-36-
7.2.5 SECURITIES ACT
Owner Participant will not directly or indirectly offer any beneficial
interest or security relating to the ownership of the Aircraft or any interest
in the Trust Estate or any of the Equipment Notes or any other interest in or
security under the Trust Indenture for sale to, or solicit any offer to acquire
any such interest or security from, or sell any such interest or security to,
any Person in violation of the Securities Act or applicable state or foreign
securities Laws, provided that the foregoing shall not be deemed to impose on
Owner Participant any responsibility with respect to any such offer, sale or
solicitation by any other party hereto.
7.2.6 REGARDING THE OWNER TRUSTEE
Owner Participant will cause Owner Trustee to perform its obligations
under each Owner Trustee Agreement.
7.3 COVENANTS OF FIRST SECURITY AND OWNER TRUSTEE
First Security, in its individual capacity and/or as Owner Trustee, as
provided below, covenants and agrees with Lessee, Owner Participant, each Note
Holder and Mortgagee as follows:
7.3.1 LIENS
First Security (a) will not directly or indirectly create, incur,
assume or suffer to exist any Lessor Lien attributable to it or Owner Trustee
with respect to all or any part of the Trust Estate, the Trust Indenture Estate
or the Aircraft, (b) will, at its own cost and expense, promptly take such
action as may be necessary to discharge any Lessor Lien attributable to First
Security or Owner Trustee on all or any part of the Trust Estate, the Trust
Indenture Estate or the Aircraft and (c) will personally hold harmless and
indemnify Lessee, Owner Participant, each Note Holder, Mortgagee, each of their
respective Affiliates, successors and permitted assigns, the Trust Estate and
the Trust Indenture Estate from and against (i) any and all Expenses, (ii) any
reduction in the amount payable out of the Trust Estate or the Trust Indenture
Estate and (iii) any interference with the possession, operation or other use of
all or any part of the Aircraft imposed on, incurred by or asserted against any
of the foregoing as a consequence of any such Lessor Lien.
42
-37-
7.3.2 OTHER BUSINESS
Owner Trustee will not enter into any business or other activity except
as contemplated by the Operative Agreements.
7.3.3 NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE
First Security, in its individual capacity and as Owner Trustee, will
give Lessee, each Participant and Mortgagee 30 days' prior written notice of any
relocation of its chief executive office (as such term is defined in Article 9
of the UCC) from its then present location and will promptly take any action
required by Section 7.3.8 as a result of such relocation.
7.3.4 SECURITIES ACT
First Security, in its individual capacity and as Owner Trustee, will
not directly or indirectly offer any beneficial interest or Security relating to
the ownership of the Aircraft or any interest in the Trust Estate or any of the
Equipment Notes or any other interest in or security under the Trust Indenture
for sale to, or solicit any offer to acquire any such interest or security from,
or sell any such interest or security to, any Person in violation of the
Securities Act or applicable state or foreign securities Laws, provided that the
foregoing shall not be deemed to impose on First Security in its individual
capacity or as Owner Trustee, any responsibility with respect to any such offer,
sale or solicitation by any other party hereto.
7.3.5 PERFORMANCE OF AGREEMENTS
Owner Trustee shall perform its obligations under the Owner Trustee
Agreements in accordance with the terms thereof.
7.3.6 RELEASE OF LIEN OF TRUST INDENTURE
Owner Trustee, in each instance referred to in the Lease in which a
transfer of any property is required to be made by Owner Trustee to Lessee or
any other Person (other than Mortgagee or Owner Participant), shall, at Lessee's
request and expense, use its reasonable efforts to procure from Mortgagee the
prompt release of the Lien of the Trust Indenture with respect to such property.
43
-38-
7.3.7 NOTICES; DOCUMENTS
In the event any claim with respect to any liabilities is filed against
the Owner Trustee in its capacity as such and Owner Trustee shall have Actual
Knowledge thereof, the Owner Trustee shall promptly notify Lessee in writing
thereof. Owner Trustee further agrees to provide to Lessee promptly any
documents (including the certificate of aircraft registration) that it receives
from the FAA with respect to the Aircraft.
7.3.8 FILINGS
After the Delivery Date, Owner Trustee shall duly execute and deliver
to Lessee all filings and recordings (including, without limitation, all filings
and UCC financing statements under the Act and the UCC and any amendments to UCC
financing statements necessitated by any relocation of its chief executive
office), prepared and delivered to it by Lessee required to perfect Owner
Trustee's title to the Aircraft and the liens of and security interests granted
by the Trust Indenture (or to maintain such perfection) and to make such title,
liens and security interests valid and enforceable.
7.3.9 TRUST AGREEMENT
Each of First Security and Owner Trustee hereby (i) agrees with Lessee,
Loan Participants and Mortgagee not to amend, supplement, terminate or otherwise
modify any provision of the Trust Agreement in such a manner as to adversely
affect the rights of any such party without the prior written consent of such
party and (ii) agrees with Lessee, Loan Participants and Mortgagee not to revoke
the trust created by the Trust Agreement so long as the Trust Indenture remains
undischarged or if such revocation would have an adverse effect on the Lessee.
Nothing contained in this Agreement shall impair any right under the Trust
Agreement of First Security to resign as Owner Trustee in accordance with the
provisions of the Trust Agreement.
7.4 COVENANTS OF WTC
WTC in its individual capacity or as Mortgagee, each Pass Through
Trustee or Subordination Agent, as the case may be, covenants and agrees with
Lessee, Owner Participant and Owner Trustee as follows:
44
-39-
7.4.1 LIENS
WTC (a) will not directly or indirectly create, incur, assume or suffer
to exist any Lessor Lien attributable to it on or with respect to all or any
part of the Trust Estate, the Trust Indenture Estate or the Aircraft, (b) will,
at its own cost and expense, promptly take such action as may be necessary to
discharge any Lessor Lien attributable to WTC on all or any part of the Trust
Estate, the Trust Indenture Estate or the Aircraft and (c) will personally hold
harmless and indemnify Lessee, Owner Participant, each Note Holder, Owner
Trustee, each of their respective Affiliates, successors and permitted assigns,
the Trust Estate and the Trust Indenture Estate from and against (i) any and all
Expenses, (ii) any reduction in the amount payable out of the Trust Estate or
the Trust Indenture Estate and (iii) any interference with the possession,
operation or other use of all or any part of the Aircraft, imposed on, incurred
by or asserted against any of the foregoing as a consequence of any such Lessor
Lien.
7.4.2 SECURITIES ACT
WTC in its individual capacity or as Mortgagee, a Pass Through Trustee
or Subordination Agent, will not offer any beneficial interest or Security
relating to the ownership of the Aircraft or any interest in the Trust Indenture
Estate, or any of the Equipment Notes or any other interest in or security under
the Trust Indenture for sale to, or solicit any offer to acquire any such
interest or security from, or sell any such interest or security to, any Person
in violation of the Securities Act or applicable state or foreign securities
Laws, provided that the foregoing shall not be deemed to impose on WTC any
responsibility with respect to any such offer, sale or solicitation by any other
party hereto.
7.4.3 PERFORMANCE OF AGREEMENTS
WTC, in its individual capacity and as Mortgagee, a Pass Through
Trustee or Subordination Agent, as the case may be, shall perform its
obligations under the Indenture Agreements, the Pass Through Trustee Agreements
and the Subordination Agent Agreements in accordance with the terms thereof.
7.4.4 WITHHOLDING TAXES
WTC shall indemnify (on an after-tax basis) and hold harmless Lessee,
Lessor and Owner Participant against any United States withholding taxes (and
related interest, penalties
45
-40-
and additions to tax) as a result of the failure by WTC to withhold on payments
to any Note Holder if such Note Holder failed to provide to Mortgagee necessary
certificates or forms to substantiate the right to exemption from such
withholding tax.
7.5 COVENANTS OF NOTE HOLDERS
Each Note Holder (including Subordination Agent) as to itself only
covenants and agrees with Lessee, Owner Participant, Owner Trustee and Mortgagee
as follows:
7.5.1 WITHHOLDING TAXES
Such Note Holder (if it is a Non-U.S. Person) agrees to indemnify (on
an after-tax basis) and hold harmless Lessee, Lessor, Owner Participant and
Mortgagee against any United States withholding taxes (and related interest,
penalties and additions to tax) as a result of the inaccuracy or invalidity of
any certificate or form provided by such Note Holder to Mortgagee in connection
with such withholding taxes. Any amount payable hereunder shall be paid within
30 days after receipt by a Note Holder of a written demand therefor.
7.5.2 TRANSFER; COMPLIANCE
(a) Such Note Holder will (i) not transfer any Equipment Note or
interest therein in violation of the Securities Act or applicable state or
foreign securities Law; provided, that the foregoing provisions of this
section shall not be deemed to impose on such Note Holder any
responsibility with respect to any such offer, sale or solicitation by any
other party hereto, and (ii) perform and comply with the obligations
specified to be imposed on it (as a Note Holder) under each of the Trust
Indenture and the form of Equipment Note set forth in the Trust Indenture.
(b) Except as otherwise required by the terms of Section 2.13 of the
Trust Indenture or Section 11 hereof, each Note Holder will not sell,
assign, convey, exchange or otherwise transfer any Equipment Note or any
interest in, or represented by, any Equipment Note (it being understood
that this provision is not applicable to the Pass Through Certificates)
unless the proposed transferee thereof first provides Lessee and Owner
Participant with both of the following:
46
-41-
(i) a written representation and covenant that either (a) no portion of
the funds it uses to purchase, acquire and hold such Equipment Note or
interest directly or indirectly constitutes, or may be deemed under the
Code or ERISA or any rulings, regulations or court decisions thereunder to
constitute, the assets of any Plan or (b) the transfer, and subsequent
holding, of such Equipment Note or interest shall not involve or give rise
to a transaction that constitutes a prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975(c)(1) of the Code involving
Lessee, Owner Participant, a Pass Through Trustee, the Subordination Agent
or the proposed transferee (other than a transaction that is exempted from
the prohibitions of such sections by applicable provisions of ERISA or the
Code or administrative exemptions or regulations issued thereunder); and
(ii) a written covenant that it will not transfer any Equipment Note or
any interest in, or represented by, any Equipment Note unless the
subsequent transferee also makes the representation described in clause (i)
above and agrees to comply with this clause (ii).
7.6 AGREEMENTS
7.6.1 OWNER TRUSTEE IS OWNER AND LESSOR FOR ALL PURPOSES
Lessee, the Owner Participant and Owner Trustee agree that for all
purposes, after the Closing, Owner Trustee will be the owner and lessor of the
Aircraft (except that Owner Participant will be the owner and lessor for income
tax purposes) and Lessee will be the lessee thereof. No transfer, by operation
of Law or otherwise, of the beneficial interest of Owner Participant in and to
the Trust Estate shall operate to transfer legal title to any part of the Trust
Estate to any transferee thereof.
7.6.2 COMMENCEMENT OF BANKRUPTCY PROCEEDINGS
Lessee, each Participant, each Note Holder, First Security, Owner
Trustee, WTC and Mortgagee agree for the benefit of each of the others that it
will not commence or join in any proceeding under the Bankruptcy Code to
commence a case under Section 303 of the Bankruptcy Code against the Trust
Estate. Nothing contained herein shall be deemed to preclude any Participant,
any Note Holder, First Security, Owner Trustee, WTC
47
-42-
or Mortgagee from filing any claim against the Trust Estate in any case
commenced against the Trust Estate.
7.6.3 CERTAIN BANKRUPTCY MATTERS
If (a) all or any part of the Trust Estate becomes the property of, or
Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (b) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code,
First Security or Owner Participant is required, by reason of First Security or
Owner Participant being held to have recourse liability to any Note Holder or
Mortgagee directly or indirectly (other than the recourse liability of First
Security or Owner Participant under this Agreement, the Trust Indenture or by
separate agreement), to make payment on account of any amount payable as
principal, Make-Whole Amount, if any, interest or other amounts on the Equipment
Notes, and (c) any Note Holder or Mortgagee actually receives any Excess Amount,
as defined below, which reflects any payment by First Security or Owner
Participant on account of (b) above, then such Note Holder or Mortgagee, as the
case may be, shall promptly refund to First Security or Owner Participant
(whichever shall have made such payment) such Excess Amount.
For purposes of this Section 7.6.3, "Excess Amount" means the amount by
which such payment exceeds the amount that would have been received by a Note
Holder or Mortgagee if First Security or Owner Participant had not become
subject to the recourse liability referred to in clause (b) above. Nothing
contained in this Section 7.6.3 shall prevent a Note Holder or Mortgagee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of First Security or Owner Participant under this Agreement (other than as
referred to in clause (b) above) or the Trust Indenture (and any exhibits or
annexes thereto) or from retaining any amount paid by Owner Participant under
Sections 2.13 or 4.03 of the Trust Indenture.
7.6.4 QUIET ENJOYMENT; SALE BY OWNER TRUSTEE BINDING
(a) Owner Participant, each Pass Through Trustee, Subordination Agent,
each Note Holder, Owner Trustee and Mortgagee each agrees as to itself with
Lessee that, so long as no Lease Event of Default shall have occurred and
be continuing, such Person shall not (and shall not permit any Affiliate or
other Person claiming by, through or under it to) interfere with Lessee's
or any Permitted Sublessee's rights in accordance with the Lease to the
quiet enjoyment, possession and use of the Aircraft during the Term.
48
-43-
(b) Any assignment, sale, transfer or other conveyance of the Aircraft
by Owner Trustee made pursuant to the terms of this Agreement or the Lease
shall bind Owner Participant and shall be effective to transfer or convey
all right, title and interest of Owner Trustee and Owner Participant in and
to the Aircraft. No purchaser or other grantee shall be required to inquire
as to the authorization, necessity, expediency or regularity of such
assignment, sale, transfer or conveyance, or as to the application of any
sale or other proceeds with respect thereto by Owner Trustee, as regards
Owner Participant.
7.6.5 RELEASE OF LIEN OF TRUST INDENTURE
Each of Lessee, Lessor and Mortgagee agrees that in each instance
referred to in the Lease in which a transfer of any property is required to be
made by Lessor to Lessee or any other Person (other than Mortgagee), Mortgagee
shall, upon request of Lessor and compliance with the applicable provisions of
the Lease and the Trust Indenture, including payment of all amounts then due and
payable to each Liquidity Provider as Supplemental Rent, promptly execute (at
Lessee's cost and expense) such instruments as Lessor or Lessee may reasonably
request to evidence the release of the Lien of the Trust Indenture with respect
to such property.
7.6.6 NON-RECOURSE
Each Loan Participant and Mortgagee agrees that (a) obligations of
Owner Trustee under the Trust Indenture or any other Operative Agreement and
with respect to the Equipment Notes shall be non-recourse to Owner Participant
and to First Security and (b) they will look solely to the income and proceeds
from the Trust Estate and the Trust Indenture Estate to the extent available for
distribution to Note Holder or Mortgagee as provided in the Trust Indenture and
that neither Owner Participant nor First Security will be personally liable to
Loan Participant or Mortgagee for any amounts payable by Owner Trustee under the
Trust Indenture or any other Operative Agreement; provided, however, that the
foregoing is not intended nor shall it be construed to limit any recourse
liability of Owner Participant or First Security to the extent that such
liability is expressly set forth in this Agreement or in any of the Operative
Agreements or arises by reason of the breach of any
49
-44-
representation or warranty or covenant given by such Person (in the case of
First Security, in its individual capacity).
7.6.7 OTHER DOCUMENTS; AMENDMENT
(a) So long as the Lease has not been terminated or expired, each
Participant, the Mortgagee and the Owner Trustee hereby agree for the
benefit of Lessee that without the consent of Lessee they will not amend,
supplement or otherwise modify (i) Article III, Article IX or Section 2.05
of the Trust Indenture, (ii) any provision of any Operative Agreement that
will affect the stated principal amount of or premium or interest on the
Equipment Notes or (iii) any other provision of the Trust Indenture or
Equipment Notes in a manner that would adversely affect Lessee. Mortgagee
and Owner Trustee agree to promptly furnish to Lessee copies of any
supplement, amendment, waiver or modification of any of the Operative
Agreements to which Lessee is not a party; provided that Mortgagee or Owner
Trustee, as the case may be, has in its possession a copy of such
supplement, amendment, waiver or modification. Each Loan Participant agrees
that it will not take any action in respect of the Trust Indenture Estate
except through the Mortgagee pursuant to the Trust Indenture or as
otherwise permitted by Trust Indenture or other Operative Agreement.
(b) Owner Trustee agrees to join with Lessee to the extent that action
on the part of Owner Trustee is necessary or appropriate (i) to cause the
following to be duly accomplished in accordance with applicable United
States federal Law by the time the Aircraft is delivered under this
Agreement and the Lease: (A) the application for registration of the
Aircraft in the name of Owner Trustee and (B) all related action necessary
in order for Lessee to have temporary or permanent authority to operate the
Aircraft as contemplated by the Lease and (ii) forthwith upon delivery of
the Aircraft under this Agreement and the Lease, to cause all necessary
documents to be duly filed for recording in accordance with applicable
United States federal Law.
7.6.8 CONSENTS
Each of Owner Participant, each Pass Through Trustee, Subordination
Agent, Owner Trustee and Mortgagee covenants and agrees, for the benefit of
Lessee, that it shall not unreasonably withhold its consent to any consent or
approval requested
50
-45-
of it or of Owner Trustee or Mortgagee under the terms of any of the Operative
Agreements which by its terms is not to be unreasonably withheld.
7.6.9 INSURANCE
Each of Owner Participant, the Pass Through Trustees, the Subordination
Agent and the Owner Trustee agrees not to obtain or maintain insurance for its
own account as permitted by Section 11.2 of the Lease if such insurance would
limit or otherwise adversely affect the coverage of any insurance required to be
obtained or maintained by Lessee pursuant to Section 11 and Annex D of the
Lease.
7.6.10 EXTENT OF INTEREST OF NOTE HOLDERS
A Note Holder shall not, as such, have any further interest in, or
other right with respect to, the Trust Estate or the Trust Indenture Estate when
and if the principal and Make-Whole Amount, if any, of and interest on the
Equipment Note held by such Note Holder, and all other sums, then due and
payable to such Note Holder hereunder and under any other Operative Agreement,
shall have been paid in full.
7.6.11 FOREIGN REGISTRATION
Each Participant, Owner Trustee and Mortgagee hereby agree, for the
benefit of Lessee but subject to the provisions of Section 7.1.2 of the Lease:
(a) that Lessee shall be entitled to register the Aircraft or cause
the Aircraft to be registered in a country other than the United States
subject to compliance with the following:
(i) each of the following requirements is satisfied:
(A) such registration shall be made only after the close of the
Tax Attribute Period, unless Lessee prepays to the Owner Participant
on a lump sum basis any indemnity due under the Tax Indemnity
Agreement as a result of such registration based upon the assumption
that such registration would continue for the remainder of the term of
the Permitted Sublease described in clause (C) below;
51
-46-
(B) no Lease Event of Default shall have occurred and be
continuing at the time of such registration;
(C) such proposed change of registration is made in connection
with a Permitted Sublease to a Permitted Air Carrier;
(D) such country is a Permitted Country with which the United
States then maintains normal diplomatic relations or, if Taiwan, the
United States then maintains diplomatic relations at least as good as
those in effect on the Delivery Date;
(ii) the Owner Trustee and Mortgagee shall have received an opinion of
counsel (subject to customary exceptions) reasonably satisfactory to the
Owner Participant addressed to each such party as to the effect that:
(A) such country would recognize the Owner Trustee's ownership
interest in the Aircraft;
(B) the obligations of Lessee, and the rights and remedies of
Owner Trustee, under the Lease are valid, binding and enforceable
under the laws of such jurisdiction (or the laws of the jurisdiction
to which the laws of such jurisdiction would refer as the applicable
governing law);
(C) after giving effect to such change in registration, the Lien
of the Trust Indenture on the Owner Trustee's right, title and
interest in and to the Aircraft and the Lease shall continue as a
valid and duly perfected first priority security interest and all
filing, recording or other action necessary to protect the same shall
have been accomplished (or, if such opinion cannot be given at the
time of such proposed change in registration because such change in
registration is not yet effective, (1) the opinion shall detail what
filing, recording or other action is necessary and (2) the Owner
Trustee and the Mortgagee shall have received a certificate from
Lessee that all possible preparations to accomplish such filing,
recording and other action shall have been done, and such filing,
recording and other action shall be accomplished and a supplemental
opinion to that effect shall be delivered to the Owner Trustee
52
-47-
and the Mortgagee on or prior to the effective date of such change in
registration);
(D) it is not necessary, solely as a consequence of such change
in registration and without giving effect to any other activity of the
Owner Trustee, the Owner Participant or the Mortgagee (or any
Affiliate thereof), as the case may be, for the Owner Trustee, the
Owner Participant or the Mortgagee to qualify to do business in such
jurisdiction as a result of such reregistration in order to exercise
any rights or remedies with respect to the Aircraft pursuant to the
Lease;
(E) there is no tort liability of the owner or lessor of an
aircraft not in possession thereof under the laws of such jurisdiction
(it being agreed that, in the event such opinion cannot be given in a
form satisfactory to the Owner Participant, such opinion shall be
waived if insurance reasonably satisfactory to the Owner Participant
is provided to cover such risk); and
(F) unless Lessee shall have agreed to provide insurance covering
the risk of requisition of use of the Aircraft by the government of
such country (so long as the Aircraft is registered under the laws of
such country), the laws of such country require fair compensation by
the government of such country payable in currency freely convertible
into Dollars and freely removable from such country (without license
or permit, unless Lessee prior to such proposed reregistration has
obtained such license or permit) for the taking or requisition by such
government of such use;
(b) In addition, as a condition precedent to any change in
registration Lessee shall have given to Lessor and Mortgagee assurances
reasonably satisfactory to each of them:
(i) to the effect that the provisions of Section 11 of the Lease will
have been complied with after giving effect to such change of registration;
(ii) of the payment by Lessee of all reasonable out-of-pocket expenses
of Lessor, each Participant and Mortgagee in connection with such change of
registry, including,
53
-48-
without limitation (1) the reasonable fees and disbursements of counsel to
Lessee, Lessor and Mortgagee, (2) any filing or recording fees, Taxes or
similar payments incurred in connection with the change of registration of
the Aircraft and the creation and perfection of the security interest
therein in favor of Mortgagee for the benefit of Note Holders, and (3) all
costs and expenses incurred in connection with any filings necessary to
continue in the United States the perfection of the security interest in
the Aircraft and the Lease in favor of Mortgagee for the benefit of Note
Holders; and
(iii) to the effect that the tax and other indemnities in favor of
each person named as an indemnitee under any other Operative Agreement
afford each such person substantially the same protection as provided prior
to such change of registration (or Lessee shall have agreed upon additional
indemnities that, together with such original indemnities, in the
reasonable judgment of Lessor and Mortgagee, afford such protection).
7.6.12 OTHER COMMERCIAL RELATIONS UNAFFECTED
Notwithstanding anything to the contrary set forth in any Operative
Agreement:
(a) Except as set forth in the Purchase Agreement Assignment, nothing
contained in the Operative Agreements shall constitute or be deemed to be a
waiver by Lessee of any rights, remedies or claims it may have against
Airframe Manufacturer or Engine Manufacturer or any subcontractor or
supplier of either; and the Operative Agreements do not and shall not be
construed or deemed to create any rights, waivers, immunities or
indemnities in favor of Airframe Manufacturer, Engine Manufacturer or any
subcontractor or supplier of either with respect to any such rights,
remedies or claims of Lessee; and
(b) None of Airframe Manufacturer, by its execution and delivery of
the Consent and Agreement, and Engine Manufacturer, by its execution and
delivery of the Engine Consent and Agreement, shall be deemed to have
waived any rights, remedies or claims which Airframe Manufacturer or Engine
Manufacturer (or any subcontractor or supplier of either), as the case may
be, may have against Lessee; and the Operative Agreements do not and shall
not be construed or deemed to create any rights, waivers, immunities or
indemnities in favor of Lessee with respect to any such
54
-49-
rights, remedies or claims of Airframe Manufacturer or Engine Manufacturer
(or any subcontractor or supplier of either).
7.6.13 INTEREST IN CERTAIN ENGINES
Each Participant, Owner Trustee, and Mortgagee agree, for the benefit
of each of the lessor, conditional seller, mortgagee or secured party of any
airframe or engine leased to, or purchased by, Lessee or any Permitted Sublessee
subject to a lease, conditional sale, trust indenture or other security
agreement that it will not acquire or claim, as against such lessor, conditional
seller, mortgagee or secured party, any right, title or interest in any engine
as the result of such engine being installed on the Airframe at any time while
such engine is subject to such lease, conditional sale, trust indenture or other
security agreement and owned by such lessor or conditional seller or subject to
a trust indenture or security interest in favor of such mortgagee or secured
party.
SECTION 8. CONFIDENTIALITY
Lessee, Owner Participant, Note Holders, Owner Trustee and Mortgagee
shall keep Annexes B, C and D and Schedules 1, 2A, 2B, 3 and 4 to the Lease, the
Participation Agreement, the Purchase Agreement Assignment and the Tax Indemnity
Agreement confidential and shall not disclose, or cause to be disclosed, the
same to any Person, except (A) to prospective and permitted transferees of
Lessee's, Owner Participant's, a Note Holder's, a Liquidity Provider's, Owner
Trustee's, Mortgagee's or other Indenture Indemnitee's interest or their
respective counsel or special counsel, independent insurance brokers, auditors,
or other agents who agree to hold such information confidential, (B) to
Lessee's, Owner Participant's, a Note Holder's, a Liquidity Provider's, a Pass
Through Trustee's, Owner Trustee's, Mortgagee's or other Indenture Indemnitee's
counsel or special counsel, independent insurance brokers, auditors, or other
agents, Affiliates or investors who agree to hold such information confidential,
(C) as may be required by any statute, court or administrative order or decree,
legal process or governmental ruling or regulation, including those of any
applicable insurance regulatory bodies (including, without limitation, the
National Association of Insurance Commissioners ("NAIC")), federal or state
banking examiners, Internal Revenue Service auditors or any stock exchange, (D)
with respect to Lessee and Owner Participant, by mutual agreement of such
parties, (E) with respect to a Note Holder or any Pass
55
-50-
Through Trustee, to a nationally recognized rating agency for the purpose of
obtaining a rating on the Equipment Notes or the Pass Through Trust Certificates
or to support an NAIC rating for the Equipment Notes or (F) such other Persons
as are reasonably deemed necessary by the disclosing party in order to protect
the interests of such party or for the purposes of enforcing such documents by
such party; provided, that any and all disclosures permitted by clauses (C),
(D), (E) or (F) above shall be made only to the extent necessary to meet the
specific requirements or needs of the Persons making such disclosures.
SECTION 9. INDEMNIFICATION AND EXPENSES
9.1 GENERAL INDEMNITY
9.1.1 INDEMNITY
Whether or not any of the transactions contemplated hereby are
consummated, Lessee shall indemnify, protect, defend and hold harmless each
Indemnitee from, against and in respect of, and shall pay on a net after-tax
basis, any and all Expenses of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against any Indemnitee, relating to, resulting from,
or arising out of or in connection with, any one or more of the following:
(a) The Operative Agreements, the Pass Through Agreements, or the
enforcement of any of the terms of any of the Operative Agreements or the
Pass Through Agreements;
(b) The Aircraft, the Airframe, any Engine or any Part, including,
without limitation, with respect thereto, (i) the manufacture, design,
purchase, acceptance, nonacceptance or rejection, ownership, registration,
reregistration, deregistration, delivery, nondelivery, lease, sublease,
assignment, possession, use or non-use, operation, maintenance, testing,
repair, overhaul, condition, alteration, modification, addition,
improvement, storage, airworthiness, replacement, repair, sale,
substitution, return, abandonment, redelivery or other disposition of the
Aircraft, any Engine or any Part, (ii) any claim or penalty arising out of
violations of applicable Laws by Lessee (or any Permitted Sublessee), (iii)
tort liability, whether or not arising out of the negligence of any
Indemnitee (whether active, passive or imputed), (iv) death or property
damage of passengers, shippers or others, (v) environmental
56
-51-
control, noise or pollution and (vi) any Liens in respect of the Aircraft,
any Engine or any Part;
(c) The offer, sale, or delivery of any Equipment Notes, Pass Through
Certificates or any interest therein or represented thereby; and
(d) Any breach of or failure to perform or observe, or any other
noncompliance with, any covenant or agreement or other obligation to be
performed by Lessee under any Lessee Operative Agreement or any Pass
Through Agreement or the falsity of any representation or warranty of
Lessee in any Lessee Operative Agreement or any Pass Through Agreement
other than in the Tax Indemnity Agreement.
9.1.2 EXCEPTIONS
Notwithstanding anything contained in Section 9.1.1, Lessee shall not
be required to indemnify, protect, defend and hold harmless any Indemnitee
pursuant to Section 9.1.1 in respect of any Expense of such Indemnitee:
(a) For any Taxes or a loss of Tax benefit, whether or not Lessee is
required to indemnify therefor pursuant to Section 9.3 or the Tax Indemnity
Agreement;
(b) Except to the extent attributable to acts or events occurring
prior thereto, acts or events (other than acts or events related to the
performance by Lessee of its obligations pursuant to the terms of the
Lessee Operative Agreements) that occur after the earliest of: (i) with
respect to the Airframe, any Engine or any Part, the return of possession
(it being understood that the date of the placement of the Aircraft in
storage as provided in Section 5 of the Lease constitutes the date of
return of the Aircraft under the Lease) of such Airframe, Engine or Part
pursuant to the terms of and in compliance with the Lease (other than
pursuant to Section 15 thereof, in which case Lessee's liability under this
Section 9.1 shall survive for so long as Lessor shall be entitled to
exercise remedies under such Section 15) or (ii) the termination of the
Term in accordance with the Lease;
(c) To the extent attributable to any Transfer (voluntary or
involuntary) by or on behalf of such Indemnitee of any Equipment Note or
interest therein, except (i) for out-of-pocket costs and expenses incurred
as a result of any such Transfer pursuant to the exercise of remedies under
57
-52-
any Operative Agreement resulting from a Lease Event of Default and (ii) as
otherwise required by the terms of Section 2.13 of the Trust Indenture or
Section 11 hereof;
(d) To the extent attributable to any Transfer (voluntary or
involuntary) by or on behalf of Owner Participant of any interest in the
Aircraft, or the Trust Estate except for out-of-pocket costs and expenses
incurred as a result of such Transfer, if, at the time of such Transfer, a
Lease Event of Default shall have occurred and be continuing;
(e) To the extent attributable to the gross negligence or willful
misconduct of such Indemnitee or any related Indemnitee (as defined below)
(other than gross negligence or willful misconduct imputed to such person
by reason of its interest in the Aircraft or any Operative Agreement);
(f) In the case of First Security, to the extent attributable to
matters enumerated in the proviso to Section 14;
(g) To the extent attributable to the incorrectness or breach of any
representation or warranty of such Indemnitee or any related Indemnitee
contained in or made pursuant to any Operative Agreement or any Pass
Through Agreement;
(h) To the extent attributable to the failure by such Indemnitee or
any related Indemnitee to perform or observe any agreement, covenant or
condition on its part to be performed or observed in any Operative
Agreement or any Pass Through Agreement;
(i) To the extent attributable to the offer or sale by such Indemnitee
or any related Indemnitee of any interest in the Aircraft, the Equipment
Notes, the Pass Through Trust Certificates, the Trust Estate or the Trust
Agreement or any similar interest, in violation of the Securities Act or
other applicable federal, state or foreign securities Laws (other than any
thereof caused by the acts or omissions of Lessee);
(j) (i) With respect to any Indemnitee (other than Mortgagee), to the
extent attributable to the failure of the Mortgagee to distribute funds
received and distributable by it in accordance with the Trust Indenture,
58
-53-
(ii) with respect to any Indemnitee (other than the Owner Trustee), to the
extent attributable to the failure of the Owner Trustee to distribute funds
received and distributable by it in accordance with the Trust Agreement,
(iii) with respect to any Indemnitee (other than the Subordination Agent),
to the extent attributable to the failure of the Subordination Agent to
distribute funds received and distributable by it in accordance with the
Intercreditor Agreement, (iv) with respect to any Indemnitee (other than
the Pass Through Trustees), to the extent attributable to the failure of a
Pass Through Trustee to distribute funds received and distributable by it
in accordance with the Pass Through Trust Agreements, (v) with respect to
any Indemnitee (other than the Escrow Agent), to the extent attributable to
the failure of the Escrow Agent to pay funds received and payable by it in
accordance with any Escrow Agreement, (vi) with respect to any Indemnitee
(other than the Paying Agent), to the extent attributable to the failure of
the Paying Agent to distribute funds received and distributable by it in
accordance with any Escrow Agreement, (vii) to the extent attributable to
the failure of the Depositary to pay funds payable by it in accordance with
any Deposit Agreement, (viii) with respect to Mortgagee, to the extent
attributable to the negligence or willful misconduct of Mortgagee in the
distribution of funds received and distributable by it in accordance with
the Trust Indenture, (ix) with respect to Owner Trustee, to the extent
attributable to the negligence or willful misconduct of Owner Trustee in
the distribution of funds received and distributable by it in accordance
with the Trust Agreement, (x) with respect to the Subordination Agent, to
the extent attributable to the negligence or willful misconduct of the
Subordination Agent in the distribution of funds received and distributable
by it in accordance with the Intercreditor Agreement, (xi) with respect to
the Pass Through Trustees, to the extent attributable to the negligence or
willful misconduct of a Pass Through Trustee in the distribution of funds
received and distributable by it in accordance with the Pass Through Trust
Agreements, (xii) with respect to the Escrow Agent, to the extent
attributable to the negligence or willful misconduct of the Escrow Agent in
the payment of funds received and payable by it in accordance with any
Escrow Agreement, and (xiii) with respect to the Paying Agent, to the
extent attributable to the negligence or willful misconduct of the Paying
Agent in the distribution of funds received and distributable by it in
accordance with any Escrow Agreement;
59
-54-
(k) Other than during the continuation of a Lease Event of Default, to
the extent attributable to the authorization or giving or withholding of
any future amendments, supplements, waivers or consents with respect to any
Operative Agreement or Pass Through Agreement other than such as have been
requested by Lessee or as are required by or made pursuant to the terms of
the Operative Agreements or Pass Through Agreements (unless such
requirement results from the actions of an Indemnitee not required by or
made pursuant to the Operative Agreements or the Pass Through Agreements);
(l) To the extent attributable to any amount which such Indemnitee
expressly agrees to pay or such Indemnitee expressly agrees shall not be
paid by or be reimbursed by Lessee;
(m) To the extent that such Expense is a loss of future profits of, a
cost or expense unreasonably incurred by, or an ordinary and usual
operating or overhead expense of, such Indemnitee;
(n) With respect to the Owner Participant or the Owner Trustee, or any
related Indemnitee, to the extent attributable to the deregistration of the
Aircraft under the Act as a result of Owner Participant's or Owner
Trustee's (or any related Indemnitee of either) not being a Citizen of the
United States as a result of any act (other than reregistration of the
Aircraft pursuant to Section 7.1.2 of the Lease) of Owner Participant or
Owner Trustee, or any related Indemnitee of either of the foregoing (not
taken at the request of the Lessee);
(o) With respect to the Owner Trustee or any related Indemnitee, to
the extent attributable to the deregistration of the Aircraft under the Act
as a result of Owner Trustee or any related Indemnitee not being a Citizen
of the United States as a result of any act (other than re-registration of
the Aircraft pursuant to Section 7.1.2 of the Lease) of the Owner Trustee
or any related Indemnitee (not taken at the request of the Lessee);
(p) For any Lessor Lien attributable to such Indemnitee or any related
Indemnitee;
(q) If another provision of an Operative Agreement or a Pass Through
Agreement specifies the extent of Lessee's responsibility or obligation
with respect to such
60
-55-
Expense, to the extent Lessee has complied with such specified
responsibility or obligation;
(r) To the extent constituting principal, Make-Whole Amount or
interest on the Equipment Notes attributable solely to an Event of Default
not constituting a Lease Event of Default;
(s) To the extent incurred by or asserted against an Indemnitee as a
result of any "prohibited transaction", within the meaning of Section 406
of ERISA or Section 4975(c)(1) of the Code; or
(t) For any loss attributable to, arising from or in connection with
any inspections or inspection rights arising from or in connection with any
of the Operative Documents or the Transactions.
For purposes of this Section 9.1, a Person shall be considered a
"related" Indemnitee with respect to an Indemnitee if such Person is an
Affiliate or employer of such Indemnitee, a director, officer, employee,
agent, or servant of such Indemnitee or any such Affiliate or a successor
or permitted assignee of any of the foregoing.
9.1.3 SEPARATE AGREEMENT
This Agreement constitutes a separate agreement with respect to each
Indemnitee and is enforceable directly by each such Indemnitee.
9.1.4 NOTICE
If a claim for any Expense that an Indemnitee shall be indemnified
against under this Section 9.1 is made, such Indemnitee shall give prompt
written notice thereof to Lessee. Notwithstanding the foregoing, the failure of
any Indemnitee to notify Lessee as provided in this Section 9.1.4, or in Section
9.1.5, shall not release Lessee from any of its obligations to indemnify such
Indemnitee hereunder, except to the extent that such failure results in an
additional Expense to Lessee (in which event Lessee shall not be responsible for
such additional expense) or materially impairs Lessee's ability to contest such
claim.
61
-56-
9.1.5 NOTICE OF PROCEEDINGS; DEFENSE OF CLAIMS; LIMITATIONS
(a) In case any action, suit or proceeding shall be brought against
any Indemnitee for which Lessee is responsible under this Section 9.1, such
Indemnitee shall notify Lessee of the commencement thereof and Lessee may,
at its expense, participate in and to the extent that it shall wish
(subject to the provisions of the following paragraph), assume and control
the defense thereof and, subject to Section 9.1.5(c), settle or compromise
the same.
(b) Lessee or its insurer(s) shall have the right, at its or their
expense, to investigate or, if Lessee or its insurer(s) shall agree not to
dispute liability to the Indemnitee giving notice of such action, suit or
proceeding under this Section 9.1.5 for indemnification hereunder or under
any insurance policies pursuant to which coverage is sought, control the
defense of, any action, suit or proceeding, relating to any Expense for
which indemnification is sought pursuant to this Section 9.1, and each
Indemnitee shall cooperate with Lessee or its insurer(s) with respect
thereto; provided, that Lessee shall not be entitled to control the defense
of any such action, suit, proceeding or compromise any such Expense during
the continuance of any Lease Event of Default arising under Section 14.1 of
the Lease. In connection with any such action, suit or proceeding being
controlled by Lessee, such Indemnitee shall have the right to participate
therein, at its sole cost and expense, with counsel reasonably satisfactory
to Lessee; provided, that such Indemnitee's participation does not, in the
reasonable opinion of the independent counsel appointed by the Lessee or
its insurers to conduct such proceedings, interfere with the defense of
such case.
(c) In no event shall any Indemnitee enter into a settlement or other
compromise with respect to any Expense without the prior written consent of
Lessee, which consent shall not be unreasonably withheld or delayed. Any
settlement or compromise without such consent of Lessee shall be deemed a
waiver by such Indemnitee of its right to be indemnified with respect to
such Expense under this Section 9.1.
(d) In the case of any Expense indemnified by the Lessee hereunder
which is covered by a policy of insurance maintained by Lessee pursuant to
Section 11 of the Lease,
62
-57-
at Lessee's expense, each Indemnitee agrees to cooperate with the insurers
in the exercise of their rights to investigate, defend or compromise such
Expense as may be required to retain the benefits of such insurance with
respect to such Expense.
(e) If an Indemnitee is not a party to this Agreement, Lessee may
require such Indemnitee to agree in writing to the terms of this Section 9
and Section 15.8 prior to making any payment to such Indemnitee under this
Section 9.
(f) Nothing herein shall be deemed to be an assumption by Lessee of
obligations of Owner Trustee with respect to, or a guarantee by Lessee of,
any amounts payable by Owner Trustee upon Equipment Notes or a guarantee of
any residual value of the Aircraft.
(g) Nothing contained in this Section 9.1.5 shall be deemed to require
an Indemnitee to contest any Expense or to assume responsibility for or
control of any judicial proceeding with respect thereto.
9.1.6 INFORMATION
Lessee will provide the relevant Indemnitee with such information not
within the control of such Indemnitee, as is in Lessee's control or is
reasonably available to Lessee, which such Indemnitee may reasonably request and
will otherwise cooperate with such Indemnitee so as to enable such Indemnitee to
fulfill its obligations under Section 9.1.5. The Indemnitee shall supply Lessee
with such information not within the control of Lessee, as is in such
Indemnitee's control or is reasonably available to such Indemnitee, which Lessee
may reasonably request to control or participate in any proceeding to the extent
permitted by Section 9.1.5.
9.1.7 EFFECT OF OTHER INDEMNITIES; SUBROGATION; FURTHER ASSURANCES
Upon the payment in full by Lessee of any indemnity provided for under
this Agreement, Lessee, without any further action and to the full extent
permitted by Law, will be subrogated to all rights and remedies of the person
indemnified (other than with respect to any of such Indemnitee's insurance
policies or in connection with any indemnity claim such Indemnitee may have
under Section 5.03 or Article VII of the Trust Indenture or Section 5.3 or 7 of
the Trust Agreement) in respect
63
-58-
of the matter as to which such indemnity was paid. Each Indemnitee will give
such further assurances or agreements and cooperate with Lessee to permit Lessee
to pursue such claims, if any, to the extent reasonably requested by Lessee and
at Lessee's expense.
9.1.8 REFUNDS
If an Indemnitee receives any refund, in whole or in part, with respect
to any Expense paid by Lessee hereunder, it will promptly pay the amount
refunded (but not an amount in excess of the amount Lessee or any of its
insurers has paid in respect of such Expense) over to Lessee unless a Lease
Event of Default shall have occurred and be continuing, in which case such
amounts shall be paid over to Owner Trustee (or, so long as the Trust Indenture
shall not have been discharged, to Mortgagee) to hold as security for Lessee's
obligations under the Lessee Operative Agreements or, if requested by Lessee,
applied to satisfy such obligations.
9.2 EXPENSES
9.2.1 INVOICES AND PAYMENT
Each of the Owner Trustee, Mortgagee, the Owner Participant, Lessee,
the Pass Through Trustees, and the Subordination Agent shall promptly submit to
Lessee for its prompt approval (which shall not be unreasonably withheld) copies
of invoices in reasonable detail of the Transaction Expenses for which it is
responsible for providing information as they are received (but in no event
later than the 90th day after the Delivery Date). If so submitted and approved,
the Owner Participant agrees promptly, but in any event no later than the 105th
day after the Delivery Date, to pay (but not in excess of [ ]% of Lessor's Cost)
Transaction Expenses. Notwithstanding the foregoing, Lessee at its sole option
shall have the right to pay directly any and all Transaction Expenses. Lessee
shall be obligated to pay directly any and all Transaction Expenses which are in
excess of [ ]% of Lessor's Cost. If Owner Participant shall fail to pay any
Transaction Expense that it is obligated to pay hereunder, Lessee shall pay such
Transaction Expense. Any such payment by Lessee shall not affect Owner
Participant's obligations or Lessee's rights against Owner Participant for its
failure to make any such payment.
64
-59-
9.2.2 PAYMENT OF OTHER EXPENSES
Lessee shall pay (i) the ongoing fees and expenses of Owner Trustee and
Mortgagee, and (ii) all reasonable out-of-pocket costs and expenses (including
the reasonable fees and disbursements of counsel) incurred by any Participant
attributable to (A) any transfer of title to the Aircraft or any Engine
contemplated by Section 4.5 of the Lease or (B) any waiver, amendment or
modification of any Operative Agreement to the extent requested by Lessee.
9.2.3 PAYMENTS IF TRANSACTIONS DO NOT CLOSE
In the event that the transaction contemplated by this Agreement fails
to close as a result of the Owner Participant's failure to comply with its
obligations under this Agreement or any breach of a representation or warranty
of Owner Participant made in or pursuant to any Operative Agreement,
notwithstanding any other rights and remedies that the parties hereto shall have
against Owner Participant, the Owner Participant will be responsible for all of
its fees and expenses, including but not limited to the fees, expenses and
disbursements of its special counsel and the fees of the Appraiser referred to
in Section 5.1.2(xv).
9.3 GENERAL TAX INDEMNITY
9.3.1 GENERAL
Except as provided in Section 9.3.2, Lessee agrees that each payment of
Rent paid by Lessee pursuant to the Lease, and any other payment or indemnity
paid by Lessee to a Tax Indemnitee under any Operative Agreement, shall be free
of all withholdings or deductions with respect to Taxes of any nature (other
than U.S. federal, state or local withholding taxes on, based on or measured by
gross or net income), and in the event that Lessee shall be required by
applicable law to make any such withholding or deduction for any such payment
(x) Lessee shall make all such withholdings or deductions, (y) the amount
payable by Lessee shall be increased so that after making all required
withholdings or deductions such Tax Indemnitee receives the same amount that it
would have received had no such withholdings or deductions been made, and (z)
Lessee shall pay the full amount withheld or deducted to the relevant Taxing
Authority in accordance with applicable law. Lessee further agrees that, in the
event it is required to withhold from any payment of Basic Rent, Stipulated Loss
Value (and amounts determined by reference thereto), and amounts payable upon
exercise
65
-60-
of Lessee's purchase option pursuant to Section 17.3 of the Lease, any Tax
imposed upon Owner Participant or Owner Trustee (including any withholding Tax
based on income or receipts of Owner Participant or Owner Trustee) and such Tax
is excluded from indemnification pursuant to Section 9.3.2, Lessee shall pay
such additional amount, if any, required so that the total amount paid by Lessee
(after making all required withholdings) is equal to (assuming timely payment of
the Equipment Notes prior to the relevant Payment Date) the aggregate principal
amount of scheduled installments due on the Equipment Notes outstanding on the
relevant Payment Date, together with accrued and unpaid interest, due on the
Equipment Notes; Owner Participant or Owner Trustee, as the case may be, shall
reimburse Lessee for any such additional amounts within two Business Days after
demand therefor. Except as provided in Section 9.3.2 and whether or not any of
the transactions contemplated hereby are consummated, Lessee shall pay,
indemnify, protect, defend and hold each Tax Indemnitee harmless from all Taxes
imposed by any Taxing Authority that may from time to time be imposed on or
asserted against any Tax Indemnitee or the Aircraft, the Airframe, any Engine or
any Part or any interest in any of the foregoing (whether or not indemnified
against by any other Person), upon or with respect to the Operative Agreements
or the transactions or payments contemplated thereby, including but not limited
to any Tax imposed upon or with respect to (x) the Aircraft, the Airframe, any
Engine, any Part, any Operative Agreement (including without limitation any
Equipment Notes) or any data or any other thing delivered or to be delivered
under an Operative Agreement, (y) the purchase, manufacture, acceptance,
rejection, sale, transfer of title, return, ownership, mortgaging, delivery,
transport, charter, rental, lease, re-lease, sublease, assignment, possession,
repossession, presence, use, condition, storage, preparation, maintenance,
modification, alteration, improvement, operation, registration, transfer or
change of registration, reregistration, repair, replacement, overhaul, location,
control, the imposition of any Lien (other than a Lessor Lien), financing,
refinancing requested by the Lessee, abandonment or other disposition of the
Aircraft, the Airframe, any Engine, any Part, any data or any other thing
delivered or to be delivered under an Operative Agreement or (z) rent, interest,
fees or any other income, proceeds, receipts or earnings, whether actual or
deemed, arising upon, in connection with, or in respect of, any of the Operative
Agreements (including the property or income or other proceeds with respect to
property held as part of the Trust Estate) or the transactions contemplated
thereby.
66
-61-
9.3.2 CERTAIN EXCEPTIONS
The provisions of Section 9.3.1 shall not apply to, and Lessee shall
have no liability hereunder for, Taxes:
(a) imposed on a Tax Indemnitee by the federal government of the
United States or any Taxing Authority or governmental subdivision of the
United States or therein (including any state or local Taxing Authority)
(i) on, based on, or measured by, gross or net income or gross or net
receipts, including capital gains taxes, excess profits taxes, minimum
taxes from tax preferences, alternative minimum taxes, branch profits
taxes, accumulated earnings taxes, personal holding company taxes,
succession taxes and estate taxes, and any withholding taxes on, based on
or measured by gross or net income or receipts or (ii) on, or with respect
to, or measured by, capital or net worth or in the nature of a franchise
tax or a tax for the privilege of doing business (other than, in the case
of clause (i) or (ii), sales, use, license or property Taxes);
(b) imposed on a Tax Indemnitee by any Taxing Authority or
governmental subdivision thereof or therein outside of the United States
(including any Taxing Authority in or of a territory, possession or
commonwealth of the United States) (i) on, based on, or measured by, gross
or net income or gross or net receipts, including capital gains taxes,
excess profits taxes, minimum taxes from tax preferences, alternative
minimum taxes, branch profits taxes, accumulated earnings taxes, personal
holding company taxes, succession taxes and estate taxes, and any
withholding taxes on, based on or measured by gross or net income or
receipts or (ii) on, or with respect to, or measured by, capital or net
worth or in the nature of a franchise tax or a tax for the privilege of
doing business (other than, in the case of clause (i) or (ii), (A) sales,
use, license or property Taxes, or (B) any Taxes imposed by any Taxing
Authority (other than a Taxing Authority within whose jurisdiction such Tax
Indemnitee is incorporated or organized or maintains its principal place of
business) if such Tax Indemnitee would not have been subject to Taxes of
such type by such jurisdiction but for (I) the location, use or operation
of the Aircraft, the Airframe, any Engine or any Part thereof by a Lessee
Person within the jurisdiction of the Taxing Authority imposing such Tax,
or (II) the activities of any Lessee Person (except for activities of a
Lessee Person that is not an
67
-62-
Affiliate, successor or assign of the Lessee, which activities are
unrelated to the transactions contemplated by the Operative Agreements) in
such jurisdiction, including, but not limited to, use of any other aircraft
by Lessee in such jurisdiction, (III) the status of any Lessee Person as a
foreign entity or as an entity owned in whole or in part by foreign
persons, (IV) Lessee having made (or having been deemed to have made)
payments to such Tax Indemnitee from the relevant jurisdiction or (V) in
the case of the Pass Through Trustees, any Participant or any related Tax
Indemnitee, the Lessee being incorporated, organized, maintaining a place
of business or conducting activities in such jurisdiction);
(c) on, or with respect to, or measured by, any trustee fees,
commissions or compensation received by Owner Trustee, Pass Through
Trustee, Subordination Agent or Mortgagee;
(d) on the Trust or the Trust Estate that result from treatment of the
Trust or the Trust Estate as an entity, such as a corporation, separate and
apart from the Owner Participant;
(e) that are being contested as provided in Section 9.3.4 hereof;
(f) imposed on any Tax Indemnitee to the extent that such Taxes result
from the gross negligence or willful misconduct of such Tax Indemnitee or
any Affiliate thereof;
(g) imposed on or with respect to a Tax Indemnitee (including the
transferee in those cases in which the Tax on transfer is imposed on, or is
collected from, the transferee) as a result of a transfer or other
disposition (including a deemed transfer or disposition) by such Tax
Indemnitee or a related Tax Indemnitee (or, in the case of the Owner
Participant, by Owner Trustee, or, in the case of Taxes imposed on a
transferee, by the transferor) of any interest in the Aircraft, the
Airframe, any Engine or any Part, the Rent (other than the assignment of
Rent to the Loan Trustee pursuant to the Trust Indenture), the Trust, the
Trust Estate, the Trust Indenture Estate, the Lease or any interest arising
under the Operative Agreements or any Equipment Note or a transfer or
disposition (including a deemed transfer or disposition) of any interest in
a Tax Indemnitee (other than (A) a substitution or
68
-63-
replacement of the Aircraft, the Airframe, any Engine or any Part by a
Lessee Person that is treated for Tax purposes as a transfer or
disposition, (B) a transfer pursuant to an exercise of remedies upon a
Lease Event of Default that shall have occurred and have been continuing,
or (C) a transfer to Lessee pursuant to Section 17.3 of the Lease);
(h) Taxes in excess of those that would have been imposed had there
not been a transfer or other disposition by or to such Tax Indemnitee or a
related Tax Indemnitee described in paragraph (g) above;
(i) imposed on the Owner Participant and indemnified by Lessee
pursuant to the Tax Indemnity Agreement;
(j) imposed with respect to any period after the expiration or earlier
termination of the Term and, if required pursuant to the terms of the
Lease, the return of possession of the Aircraft to Lessor or placement in
storage at the request of Lessor in accordance with the Lease (provided
that this exclusion (j) shall not apply to Taxes imposed after such period
arising as a result of payments by Lessee under the Operative Agreements
after such period);
(k) consisting of any interest, penalties or additions to tax imposed
on a Tax Indemnitee as a result of (in whole or in part) failure of such
Tax Indemnitee or a related Tax Indemnitee to file any return properly and
timely, unless such failure shall be caused by the failure of Lessee to
fulfill its obligations, if any, under Section 9.3.6 with respect to such
return;
(l) resulting from, or that would not have been imposed but for, any
Lessor Liens arising as a result of claims against, or acts or omissions
of, or otherwise attributable to such Tax Indemnitee or a related Tax
Indemnitee;
(m) imposed on any Tax Indemnitee as a result of the breach by such
Tax Indemnitee or a related Tax Indemnitee of any covenant of such Tax
Indemnitee or any Affiliate thereof contained in any Operative Agreement or
the inaccuracy of any representation or warranty by such Tax Indemnitee or
any Affiliate thereof in any Operative Agreement;
69
-64-
(n) in the nature of an intangible or similar Tax (i) upon or with
respect to the value or principal amount of the interest of Loan
Participant or any Note Holder in any Equipment Note or the loan evidenced
thereby or (ii) upon or with respect to the value of the interest of the
Owner Participant in the Trust Estate or the Trust, in each case only if
such Taxes are in the nature of franchise Taxes or result from the Tax
Indemnitee doing business in the taxing jurisdiction and are imposed
because of the place of incorporation or the activities unrelated to the
transactions contemplated by the Operative Agreements in the taxing
jurisdiction of such Tax Indemnitee;
(o) that is included in Lessor's Cost and paid to the appropriate
Taxing Authority;
(p) imposed on a Tax Indemnitee by a Taxing Authority of a
jurisdiction outside the United States to the extent that such Taxes would
not have been imposed but for a connection between the Tax Indemnitee or a
related Tax Indemnitee and such jurisdiction imposing such Tax unrelated to
the transactions contemplated by the Operative Agreements; or
(q) Taxes relating to ERISA or Section 4975 of the Code.
For purposes hereof, a Tax Indemnitee and any other Tax Indemnitees
that are successors, assigns, agents, servants or Affiliates of such Tax
Indemnitee shall be related Tax Indemnitees.
9.3.3 PAYMENT
(a) Lessee's indemnity obligation to a Tax Indemnitee under this
Section 9.3 shall equal the amount which, after taking into account any Tax
imposed upon the receipt or accrual of the amounts payable under this
Section 9.3 and any tax benefits actually recognized by such Tax Indemnitee
as a result of the indemnifiable Tax (including, without limitation, any
benefits recognized as a result of an indemnifiable Tax being utilized by
such Tax Indemnitee as a credit against Taxes not indemnifiable under this
Section 9.3), shall equal the amount of the Tax indemnifiable under this
Section 9.3.
(b) At Lessee's request, the computation of the amount of any
indemnity payment owed by Lessee or any
70
-65-
amount owed by a Tax Indemnitee to Lessee pursuant to this Section 9.3
shall be verified and certified by an independent public accounting firm
selected by such Tax Indemnitee and reasonably satisfactory to Lessee. Such
verification shall be binding. The costs of such verification (including
the fee of such public accounting firm) shall be borne by Lessee unless
such verification shall result in an adjustment in Lessee's favor of 5% or
more of the net present value of the payment as computed by such Tax
Indemnitee, in which case the costs shall be paid by such Tax Indemnitee.
(c) Each Tax Indemnitee shall provide Lessee with such certifications,
information and documentation as shall be in such Tax Indemnitee's
possession and as shall be reasonably requested by Lessee to minimize any
indemnity payment pursuant to this Section 9.3; provided, that
notwithstanding anything to the contrary contained herein, no Tax
Indemnitee shall be required to provide Lessee with any Tax returns.
(d) Each Tax Indemnitee shall promptly forward to Lessee any written
notice, ▇▇▇▇ or advice received by it from any Taxing Authority concerning
any Tax for which it seeks indemnification under this Section 9.3. Lessee
shall pay any amount for which it is liable pursuant to this Section 9.3
directly to the appropriate Taxing Authority if legally permissible or upon
demand of a Tax Indemnitee, to such Tax Indemnitee within 30 days of such
demand (or, if a contest occurs in accordance with Section 9.3.4, within 30
days after a Final Determination (as defined below)), but in no event more
than one Business Day prior to the date the Tax to which such amount
payable hereunder relates is due. If requested by a Tax Indemnitee in
writing, Lessee shall furnish to the appropriate Tax Indemnitee the
original or a certified copy of a receipt for Lessee's payment of any Tax
paid by Lessee or such other evidence of payment of such Tax as is
acceptable to such Tax Indemnitee. Lessee shall also furnish promptly upon
written request such data as any Tax Indemnitee may reasonably require to
enable such Tax Indemnitee to comply with the requirements of any taxing
jurisdiction unless such data is not reasonably available to Lessee or,
unless such data is specifically requested by a Taxing Authority, is not
customarily furnished by domestic air carriers under similar circumstances.
For purposes of this Section 9.3, a "Final Determination" shall mean (i) a
decision, judgment, decree or other order by any court of
71
-66-
competent jurisdiction that occurs pursuant to the provisions of Section
9.3.4, which decision, judgment, decree or other order has become final and
unappealable, (ii) a closing agreement or settlement agreement entered into
in accordance with Section 9.3.4 that has become binding and is not subject
to further review or appeal (absent fraud, misrepresentation, etc.), or
(iii) the termination of administrative proceedings and the expiration of
the time for instituting a claim in a court proceeding.
(e) If any Tax Indemnitee shall actually realize a tax savings by
reason of any Tax paid or indemnified by Lessee pursuant to this Section
9.3 (whether such tax savings shall be by means of a foreign tax credit,
depreciation or cost recovery deduction or otherwise) and such savings is
not otherwise taken into account in computing such payment or indemnity
such Tax Indemnitee shall pay to Lessee an amount equal to the lesser of
(i) the amount of such tax savings, plus any additional tax savings
recognized as the result of any payment made pursuant to this sentence,
when, as, if, and to the extent, realized or (ii) the amount of all
payments pursuant to this Section 9.3 by Lessee to such Tax Indemnitee
(less any payments previously made by such Tax Indemnitee to Lessee
pursuant to this Section 9.3.3 (e)) (and the excess, if any, of the amount
described in clause (i) over the amount described in clause (ii) shall be
carried forward and applied to reduce pro tanto any subsequent obligations
of Lessee to make payments to such Tax Indemnitee pursuant to this Section
9.3); provided, that such Tax Indemnitee shall not be required to make any
payment pursuant to this sentence so long as a Lease Event of Default of a
monetary nature has occurred and is continuing. If a tax benefit is later
disallowed or denied, the disallowance or denial shall be treated as a Tax
indemnifiable under Section 9.3.1 without regard to the provisions of
Section 9.3.2 (other than Section 9.3.2 (f)). Each such Tax Indemnitee
shall in good faith use reasonable efforts in filing its tax returns and in
dealing with Taxing Authorities to seek and claim any such tax benefit.
9.3.4 CONTEST
(a) If a written claim is made against a Tax Indemnitee for Taxes with
respect to which Lessee could be liable for payment or indemnity hereunder,
or if a Tax Indemnitee makes a determination that a Tax is due for which
Lessee could have an indemnity obligation hereunder, such
72
-67-
Tax Indemnitee shall promptly give Lessee notice in writing of such claim
(provided, that failure to so notify Lessee shall not relieve Lessee of its
indemnity obligations hereunder unless such failure to notify effectively
forecloses Lessee's rights to require a contest of such claim) and shall
take no action with respect to such claim without the prior written consent
of Lessee for 30 days following the receipt of such notice by Lessee;
provided, that, in the case of a claim made against a Tax Indemnitee, if
such Tax Indemnitee shall be required by law to take action prior to the
end of such 30-day period, such Tax Indemnitee shall, in such notice to
Lessee, so inform Lessee, and such Tax Indemnitee shall take no action for
as long as it is legally able to do so (it being understood that a Tax
Indemnitee shall be entitled to pay the Tax claimed and ▇▇▇ for a refund
prior to the end of such 30-day period if (i)(A) the failure to so pay the
Tax would result in substantial penalties (unless immediately reimbursed by
Lessee) and the act of paying the Tax would not materially prejudice the
right to contest or (B) the failure to so pay would result in criminal
penalties and (ii) such Tax Indemnitee shall take any action so required in
connection with so paying the Tax in a manner that is the least prejudicial
to the pursuit of the contest). In addition, such Tax Indemnitee shall
(provided, that Lessee shall have agreed to keep such information
confidential other than to the extent necessary in order to contest the
claim) furnish Lessee with copies of any requests for information from any
Taxing Authority relating to such Taxes with respect to which Lessee may be
required to indemnify hereunder. If requested by Lessee in writing within
30 days after its receipt of such notice, such Tax Indemnitee shall, at the
expense of Lessee (including, without limitation, all reasonable costs,
expenses and reasonable attorneys' and accountants' fees and
disbursements), in good faith contest (or, if permitted by applicable law,
allow Lessee to contest) through appropriate administrative and judicial
proceedings the validity, applicability or amount of such Taxes by (I)
resisting payment thereof, (II) not paying the same except under protest if
protest is necessary and proper or (III) if the payment is made, using
reasonable efforts to obtain a refund thereof in an appropriate
administrative and/or judicial proceeding. If requested to do so by Lessee,
the Tax Indemnitee shall appeal any adverse administrative or judicial
decision, except that the Tax Indemnitee shall not be required to pursue
any appeals to the United States Supreme Court. If and to the extent the
Tax Indemnitee is able to separate
73
-68-
the contested issue or issues from other issues arising in the same
administrative or judicial proceeding that are unrelated to the
transactions contemplated by the Operative Agreements without, in the good
faith judgment of such Tax Indemnitee, adversely affecting such Tax
Indemnitee, such Tax Indemnitee shall permit Lessee to control the conduct
of any such proceeding and shall provide to Lessee (at Lessee's cost and
expense) with such information or data that is in such Tax Indemnitee's
control or possession that is reasonably necessary to conduct such contest.
In the case of a contest controlled by a Tax Indemnitee, such Tax
Indemnitee shall consult with Lessee in good faith regarding the manner of
contesting such claim and shall keep Lessee reasonably informed regarding
the progress of such contest. A Tax Indemnitee shall not fail to take any
action expressly required by this Section 9.3.4 (including, without
limitation, any action regarding any appeal of an adverse determination
with respect to any claim) or settle or compromise any claim without the
prior written consent of the Lessee (except as contemplated by Section
9.3.4(b) or (c)).
(b) Notwithstanding the foregoing, in no event shall a Tax Indemnitee
be required to pursue any contest (or to permit Lessee to pursue any
contest) unless (i) Lessee shall have agreed to pay such Tax Indemnitee on
demand all reasonable costs and expenses incurred by such Tax Indemnitee in
connection with contesting such Taxes, including, without limitation, all
reasonable out of pocket costs and expenses and reasonable attorneys' and
accountants' fees and disbursements, (ii) if such contest shall involve the
payment of the claim, Lessee shall advance the amount thereof (to the
extent indemnified hereunder) plus interest, penalties and additions to tax
with respect thereto that are required to be paid prior to the commencement
of such contest on an interest-free after-Tax basis to such Tax Indemnitee
(and such Tax Indemnitee shall promptly pay to the Lessee any net realized
tax benefits resulting from such advance including any tax benefits
resulting from making such payment), (iii) such Tax Indemnitee shall have
reasonably determined that the action to be taken will not result in any
material risk of forfeiture, sale or loss of the Aircraft (unless Lessee
shall have made provisions to protect the interests of any such Tax
Indemnitee in a manner reasonably satisfactory to such Tax Indemnitee)
(provided, that such Tax Indemnitee agrees to notify Lessee in writing
promptly after it becomes aware of any such risk), (iv) no Lease Event of
Default shall have occurred and be
74
-69-
continuing unless Lessee has provided security for its obligations
hereunder by advancing to such Tax Indemnitee before proceeding or
continuing with such contest, the amount of the Tax being contested, plus
any interest and penalties and an amount estimated in good faith by such
Tax Indemnitee for expenses, and (v) prior to commencing any judicial
action controlled by Lessee, Lessee shall have acknowledged its liability
for such claim hereunder, provided that Lessee shall not be bound by its
acknowledgment if the Final Determination articulates conclusions of law
and fact that demonstrate that Lessee has no liability for the contested
amounts hereunder. Notwithstanding the foregoing, if any Tax Indemnitee
shall release, waive, compromise or settle any claim which may be
indemnifiable by Lessee pursuant to this Section 9.3 without the written
permission of Lessee, Lessee's obligation to indemnify such Tax Indemnitee
with respect to such claim (and all directly related claims and claims
based on the outcome of such claim) shall terminate, subject to Section
9.3.4(c), and subject to Section 9.3.4(c), such Tax Indemnitee shall repay
to Lessee any amount previously paid or advanced to such Tax Indemnitee
with respect to such claim, plus interest at the rate that would have been
payable by the relevant Taxing Authority with respect to a refund of such
Tax.
(c) Notwithstanding anything contained in this Section 9.3, a Tax
Indemnitee will not be required to contest the imposition of any Tax and
shall be permitted to settle or compromise any claim without Lessee's
consent if such Tax Indemnitee (i) shall waive its right to indemnity under
this Section 9.3 with respect to such Tax (and any directly related claim
and any claim the outcome of which is determined based upon the outcome of
such claim), (ii) shall pay to Lessee any amount previously paid or
advanced by Lessee pursuant to this Section 9.3 with respect to such Tax,
plus interest at the rate that would have been payable by the relevant
Taxing Authority with respect to a refund of such Tax, and (iii) shall
agree to discuss with Lessee the views or positions of any relevant Taxing
Authority with respect to the imposition of such Tax.
9.3.5 REFUND
If any Tax Indemnitee shall receive a refund of, or be entitled to a
credit against other liability for, all or any part of any Taxes paid,
reimbursed or advanced by Lessee, such Tax Indemnitee shall pay to Lessee within
30 days of such receipt
75
-70-
an amount equal to the lesser of (a) the amount of such refund or credit plus
any net tax benefit (taking into account any Taxes incurred by such Tax
Indemnitee by reason of the receipt of such refund or realization of such
credit) actually realized by such Tax Indemnitee as a result of any payment by
such Tax Indemnitee made pursuant to this sentence (including this clause (a))
and (b) such tax payment, reimbursement or advance by Lessee to such Tax
Indemnitee theretofore made pursuant to this Section 9.3 (and the excess, if
any, of the amount described in clause (a) over the amount described in clause
(b) shall be carried forward and applied to reduce pro tanto any subsequent
obligation of Lessee to make payments to such Tax Indemnitee pursuant to this
Section 9.3). If, in addition to such refund or credit, such Tax Indemnitee
shall receive (or be credited with) an amount representing interest on the
amount of such refund or credit, such Tax Indemnitee shall pay to Lessee within
30 days of such receipt or realization of such credit that proportion of such
interest that shall be fairly attributable to Taxes paid, reimbursed or advanced
by Lessee prior to the receipt of such refund or realization of such credit.
9.3.6 TAX FILING
If any report, return or statement is required to be filed with respect
to any Tax which is subject to indemnification under this Section 9.3, Lessee
shall timely file the same (except for any such report, return or statement
which a Tax Indemnitee has timely notified the Lessee in writing that such Tax
Indemnitee intends to file, or for which such Tax Indemnitee is required by law
to file, in its own name); provided, that the relevant Tax Indemnitee shall
furnish Lessee with any information in such Tax Indemnitee's possession or
control that is reasonably necessary to file any such return, report or
statement and is reasonably requested in writing by Lessee (it being understood
that the Tax Indemnitee shall not be required to furnish copies of its actual
tax returns, although it may be required to furnish relevant information
contained therein). Lessee shall either file such report, return or statement
and send a copy of such report, return or statement to such Tax Indemnitee, and
Owner Trustee if the Tax Indemnitee is not Owner Trustee, or, where Lessee is
not permitted to file such report, return or statement, it shall notify such Tax
Indemnitee of such requirement and prepare and deliver such report, return or
statement to such Tax Indemnitee in a manner satisfactory to such Tax Indemnitee
within a reasonable time prior to the time such report, return or statement is
to be filed.
76
-71-
9.3.7 FORMS
Each Tax Indemnitee agrees to furnish from time to time to Lessee or
Loan Trustee or to such other person as Lessee or Loan Trustee may designate, at
Lessee's or Loan Trustee's request, such duly executed and properly completed
forms as may be necessary or appropriate in order to claim any reduction of or
exemption from any withholding or other Tax imposed by any Taxing Authority, if
(x) such reduction or exemption is available to such Tax Indemnitee and (y)
Lessee has provided such Tax Indemnitee with any information necessary to
complete such form not otherwise reasonably available to such Tax Indemnitee.
9.3.8 NON-PARTIES
If a Tax Indemnitee is not a party to this Agreement, Lessee may
require the Tax Indemnitee to agree in writing, in a form reasonably acceptable
to Lessee, to the terms of this Section 9.3 and Section 15.8 prior to making any
payment to such Tax Indemnitee under this Section 9.3.
9.3.9 SUBROGATION
Upon payment of any Tax or other amount computed by reference to the
amount of any Tax by Lessee pursuant to this Section 9.3 to or on behalf of a
Tax Indemnitee or any Affiliate thereof, Lessee, without any further action,
shall be subrogated to any claims that such Tax Indemnitee or Affiliate may have
relating thereto. Such Tax Indemnitee or Affiliate shall cooperate with Lessee
(to the extent such cooperation does not result in any unreimbursed cost,
expense or liability to such Tax Indemnitee or Affiliate) to permit Lessee to
pursue such claims.
9.3.10 FOREIGN TAX ON LOAN PAYMENTS
If an Owner Participant is incorporated or organized, or maintains a
place of business or conducts activities in, a country other than the United
States or in a territory, possession or commonwealth of the United States
(within the meaning of the tax law of that foreign jurisdiction) and if as a
result thereof any foreign Taxes (including withholding Taxes) are imposed on
the Pass Through Trustees, Pass Through Trusts, or Note Holders, then Owner
Participant shall reimburse Lessee for any payments Lessee is required to make
to or on behalf of any Pass Through Trustee, Pass Through Trust, or Note Holder
under this Section 9.3 as a result of the imposition of such Taxes.
77
-72-
The amount payable by Owner Participant to Lessee shall be an amount which,
after taking into account any such Taxes, any Tax imposed upon the receipt or
accrual by Lessee of such payment by Owner Participant and any tax benefits or
tax savings realized by Lessee with respect to the payment of such withholding
Tax or the payment hereunder, shall equal the amount of Lessee's payment to or
on behalf of such Pass Through Trustee, or Note Holder.
9.4 PAYMENTS
Any payments made pursuant to Section 9.1 or 9.3 shall be due on the
60th day after demand therefor and shall be made directly to the relevant
Indemnitee or Tax Indemnitee or to Lessee, in immediately available funds at
such bank or to such account as specified by such Indemnitee or Tax Indemnitee
or Lessee, as the case may be, in written directives to the payor, or, if no
such direction shall have been given, by check of the payor payable to the order
of, and mailed to, such Indemnitee or Tax Indemnitee or Lessee, as the case may
be, by certified mail, postage prepaid, at its address as set forth in this
Agreement.
9.5 INTEREST
If any amount, payable by Lessee, any Indemnitee or any Tax Indemnitee
under Section 9.1 or 9.3 is not paid when due, the person obligated to make such
payment shall pay on demand, to the extent permitted by Law, to the person
entitled thereto, interest on any such amount for the period from and including
the due date for such amount to but excluding the date the same is paid, at the
Payment Due Rate. Such interest shall be paid in the same manner as the unpaid
amount in respect of which such interest is due.
9.6 BENEFIT OF INDEMNITIES
The obligations of Lessee in respect of all indemnities, obligations,
adjustments and payments in Section 9.1 or 9.3 are expressly made for the
benefit of, and shall be enforceable by, the Indemnitee or Tax Indemnitee
entitled thereto, without declaring the Lease to be in default or taking other
action thereunder, and notwithstanding any provision of the Trust Indenture.
78
-73-
SECTION 10. ASSIGNMENT OR TRANSFER OF INTERESTS
10.1 PARTICIPANTS, OWNER TRUSTEE AND NOTE HOLDERS
10.1.1 OWNER PARTICIPANT
(a) During the Term, Owner Participant shall not Transfer any or all
of its right, title or interest in the Trust Estate or the Trust Agreement
and to this Agreement unless such transfer is a Transfer of the entire
interest held by Owner Participant, and:
(i) The Transferee shall have full power, authority and legal right to
execute and deliver and to perform the obligations of Owner Participant
under this Agreement and the other Owner Participant Agreements and shall
provide reasonably satisfactory evidence of such power and authority to
Lessee, Owner Trustee and Mortgagee;
(ii) The Transferee shall enter into an agreement substantially in the
form of Exhibit H hereto (or otherwise in form and substance reasonably
satisfactory to Lessee and Mortgagee);
(iii) Lessee shall not be obligated to pay any greater amount or incur
any greater obligation than that which it would have been obliged to pay or
incur under the Lease or other Lessee Operative Agreement if no transfer or
assignment had taken place, and the terms and conditions of this Lease and
the other Lessee Operative Agreements insofar as they relate to the rights
and obligations of Lessee or the Loan Participant shall not be altered;
(iv) Owner Participant shall deliver to Lessee, Owner Trustee and
Mortgagee an opinion of counsel substantially in the form of Exhibit I
hereto (or otherwise in form and substance reasonably satisfactory to
Lessee and Mortgagee) to the effect that such agreement or agreements
referred to in Section 10.1.1(a)(ii) and, if applicable, 10.1.1(a)(vi) are
legal, binding and enforceable in accordance with its or their terms and
that such transfer will not violate the Act, the registration provisions of
the Securities Act, or any other applicable Federal law;
(v) The Transferee is a Citizen of the United States (it being
understood that the existence of any such requirement is to be determined
without giving consideration to Section 47.9 of the FAA Regulations or any
other provision
79
-74-
that may restrict Lessee's use or operation of the Aircraft), or shall use
a voting powers trust or similar arrangement in order to hold an interest
in the Trust Estate such that the Aircraft can be registered in the United
States (without giving consideration to Section 47.9 of the FAA
Regulations); and
(vi) The Transferee shall be a single person and shall be either (A) a
Permitted Institution or (B) any other person (other than, without Lessee's
consent, a commercial air carrier, a commercial aircraft operator, a
freight forwarder or an Affiliate of any of the foregoing) the obligations
of which under the Owner Participant Agreements are guaranteed by a
Permitted Institution in any case, pursuant to a written guaranty, in form
and substance reasonably satisfactory to Lessee, Owner Trustee and
Mortgagee.
(b) Owner Participant shall give written notice to Lessee, Mortgagee
and Owner Trustee at least 10 days prior to any such Transfer, specifying
the name and address of the proposed Transferee, and providing financial
statements of the proposed Transferee evidencing satisfaction of the
requirements described in Section 10.1.1(a)(vi)(A) or (B) above.
(c) Any fees, charges and expenses, including the reasonable legal
fees, charges and expenses incurred by Lessee, Owner Participant,
Mortgagee, any Note Holder or Owner Trustee in connection with any Transfer
by Owner Participant permitted by this Section 10.1.1, or by the Transferee
in any such case, will be paid for by Owner Participant.
10.1.2 OWNER TRUSTEE
Owner Trustee may transfer its interests in the Trust Agreement
pursuant to Section 9 thereof.
10.1.3 NOTE HOLDERS
Subject to Section 7.5.2 hereof and Section 2.07 of the Trust
Indenture, any Note Holder may, at any time and from time to time, Transfer or
grant participations in all or any portion of the Equipment Notes and/or all or
any portion of its beneficial interest in its Equipment Notes and the Trust
Indenture Estate to any person (it being understood that the sale or issuance of
Pass Through Certificates by a Pass Through Trustee
80
-75-
shall not be considered a Transfer or participation); provided, that any
participant in any such participations shall not have any direct rights under
the Operative Agreements or any Lien on all or any part of the Aircraft or Trust
Indenture Estate and Lessee shall not have any increased liability or
obligations as a result of any such participation. In the case of any such
Transfer, the Transferee, by acceptance of Equipment Notes in connection with
such Transfer, shall be deemed to be bound by all of the covenants of Note
Holders contained in the Operative Agreements.
10.1.4 LESSEE'S ASSUMPTION OF THE CERTIFICATES
(a) Subject to compliance by the Lessee with all of its obligations
under the Operative Agreements, each of the Owner Participant, the Owner
Trustee, the Mortgagee, the Pass Through Trustee and the Lessee covenants
and agrees that if the Lessee elects to purchase the Aircraft pursuant to
Section 17.3 of the Lease, then, upon compliance with the applicable
provisions of the Lease and the other Operative Agreements, each of the
parties will execute and deliver appropriate documentation transferring to
Lessee all right, title and interest in and to the Aircraft (including,
without limitation, such bills of sale and other instruments and documents
as Lessee shall reasonably request to evidence (on the public record or
otherwise) such transfer and the vesting in Lessee of all right, title and
interest in and to the Aircraft), such transfer to be without recourse or
warranty (except as to the absence of Lessor's Liens attributable to the
Owner Trustee) but subject to the Lien of the Indenture, and if the Lessee,
in connection with such purchase, elects to assume the obligations of the
Owner Trustee to the Mortgagee and the Note Holders under the Indenture,
the Equipment Notes, and hereunder, then the Lessee shall so notify the
Mortgagee, and each of the parties shall execute and deliver appropriate
documentation permitting the Lessee to assume such obligations on the basis
of full recourse to the Lessee, maintaining for the benefit of the Note
Holders and the other Indenture Indemnitees the security interest in the
Aircraft created by the Indenture, and upon compliance with the provisions
of this Section 10.1.4 releasing the Owner Participant and the Owner
Trustee from all obligations in respect of the Equipment Notes, the
Indenture, this Agreement, and the other Operative Agreements, except any
obligations relating to the period prior to such assumption and take all
such other actions, at the
81
-76-
Lessee's expense, as are reasonably necessary to permit such assumption of
the Lessee.
(b) In connection with such assumption:
(i) the Lessee shall execute and deliver an instrument (A) pursuant to
which the Lessee irrevocably and unconditionally assumes and undertakes,
with full recourse to the Lessee, to pay, satisfy, and discharge when and
as due (at the stated maturity thereof, by acceleration or otherwise) the
principal of, Make-Whole Amount, if any, interest, and all other sums owing
on all outstanding Equipment Notes (or on the Lessee's substituted
obligations) or otherwise payable under the Indenture in accordance with
their terms, and punctually to perform and observe all of the covenants and
obligations hereunder and under the Indenture and the Equipment Notes (as
the same may be amended in connection with such assumption) to be performed
or observed by the Owner Trustee, and (B) which contains amendments to the
Trust Indenture, in form and substance as reasonably satisfactory to the
Mortgagee, that incorporate therein such provisions from the Lease and this
Agreement as may be appropriate, including, without limitation, events of
default substantially identical in scope and effect to those set forth in
the Lease and covenants substantially identical to the covenants of the
Lessee hereunder and under the Lease;
(ii) the instrument referred to in paragraph (i) of this Section
10.1.4(b), any Uniform Commercial Code financing statements relating
thereto, and any other documents which shall be necessary (or reasonably
requested by the Mortgagee) to establish the Lessee's title to and interest
in the Aircraft or to reflect the substitution of the Lessee for the Owner
Trustee under the Operative Agreements or to continue the perfection of the
security interests in the Aircraft and the other rights, property, and
interests included in the Trust Indenture Estate for the benefit of the
Note Holders and the other Indenture Indemnitees (or the Lessee's
substituted obligations) shall be filed in such form, manner, and places as
are necessary or, in the reasonable opinion of the Indenture Trustee,
advisable for such purpose;
(iii) the Mortgagee shall have received an insurance report dated the
effective date of such assumption of an independent insurance broker and
certificates of insurance, each in form and substance satisfactory to the
Mortgagee,
82
-77-
as to the due compliance as of the effective date of such assumption with
the terms of Section 11 of the Lease (as it relates to the Mortgagee)
relating to the insurance with respect to the Aircraft;
(iv) the Mortgagee shall have received evidence that as of the
effectiveness of the assignment on the date of such assumption the Aircraft
is free and clear of all Liens other than the Lien of the Indenture and
other Permitted Liens;
(v) the Mortgagee shall have received a certificate from the Lessee
that no Event of Default exists as of the effective date of such
assumption; and
(vi) the Mortgagee shall have received (A) from counsel for the Lessee
(who may be an attorney in Lessee's legal department) a legal opinion, in
form and substance as reasonably satisfactory to the Mortgagee: (w) with
respect to the compliance of the assumption contemplated hereby with the
terms hereof, (x) with respect to the due authorization, execution,
delivery, validity, and enforceability of the instrument referred to in
paragraph (i) of this Section 10.1.4(b), (y) with respect to the continued
perfection of the first and prior Lien and security interest in the
Aircraft for the benefit of the Holders of the Equipment Notes and the
other Indenture Indemnitees (or the Lessee's substituted obligations)
referred to in paragraph (ii) of this Section 10.1.4(b), and (z) with
respect to the continued availability of the benefits of Section 1110 of
the Bankruptcy Code to the Mortgagee for the benefit of the Holders with
respect to the Aircraft after giving effect to such assumption, provided,
that the opinion required by subclause (z) need only be given if
immediately prior to such assumption the Owner Trustee should have been
entitled to the benefits of Section 1110 of the Bankruptcy Code, (B) from
counsel to the Mortgagee and special counsel in Oklahoma City, a legal
opinion comparable to the respective opinions delivered on the Issuance
Date or the Delivery Date, as the case may be, with such changes therein as
may be appropriate in light of such assumption, and (C) in the case of each
opinion described in clause (A) or (B) above, covering such additional
matters as the Mortgagee shall reasonably request.
(c) The Lessee shall pay all reasonable expenses (including reasonable
fees and expenses of counsel) of the Mortgagee, the Owner Trustee, the Pass
Through Trustee,
83
-78-
the Subordination Agent, each Liquidity Provider and the Owner Participant
in connection with such assumption.
(d) Such assumption may occur only if, the Lessee has (i) indemnified
the then existing beneficial owners of certificates against any incremental
U.S. federal income taxes that may be imposed on them as a direct
consequence of such assumption (including any taxes that may be imposed as
a result of the payment of such indemnification) and (ii) if such an
opinion can be given, provided an opinion of counsel to the effect that
holders of such Equipment Notes will not recognize income, gain or loss for
U.S. federal income tax purposes as a result of such assumption and will be
subject to U.S. federal income tax on the same amount and in the same
manner and at the same time as would have been the case if such assumption
had not occurred.
10.2 EFFECT OF TRANSFER
Upon any Transfer in accordance with Section 10.1.1, 10.1.2 or 10.1.3
(other than any Transfer by any Note Holder, to the extent it only grants
participations in Equipment Notes or in its beneficial interest therein),
Transferee shall be deemed an "Owner Participant," "Owner Trustee" or a "Note
Holder," respectively, for all purposes of this Agreement and the other
Operative Agreements and, in the case of a Transferee of any Participant or Note
Holder, shall be deemed to have paid its ratable portion of Lessor's Cost
previously made by Owner Participant or Loan Participant, respectively, making
such conveyance and represented by the interest being conveyed, and each
reference herein to Owner Participant, Owner Trustee or Note Holder,
respectively, shall thereafter be deemed a reference to such Transferee for all
purposes, and the transferring Owner Participant, Owner Trustee, Loan
Participant or Note Holder shall be released (except, in the case of Owner
Participant, to the extent of any guaranty provided by it under Section
10.1.1(a)(vi)) from all of its liabilities and obligations under this Agreement
and any other Operative Agreements to the extent such liabilities and
obligations arise after such Transfer and, in each case, to the extent such
liabilities and obligations are assumed by the Transferee; provided, that such
transferring Owner Participant, Owner Trustee or Note Holder (and its respective
Affiliates, successors, assigns, agents, servants, representatives, directors
and officers) will continue to have the benefit of any rights or indemnities
under any Operative Agreement vested or relating to circumstances, conditions,
acts or events prior to such Transfer.
84
-79-
SECTION 11. REFUNDING AND CERTAIN OTHER MATTERS
11.1 REFUNDING GENERALLY
Subject to Sections 11.2 and 11.4, in the event that at any time Lessee
shall have given written notice to Owner Participant, Owner Trustee, and
Mortgagee that Lessee is requesting a voluntary redemption of all, but not less
than all, of the outstanding Equipment Notes (in compliance with the provisions
of Sections 2.11 and 2.12 of the Trust Indenture) by Owner Trustee as part of a
refunding transaction, Owner Participant agrees to negotiate in good faith and
to promptly conclude an agreement with Lessee as to the terms of such refunding
transaction in form and substance reasonably satisfactory to Owner Participant
(including the terms of any debt to be issued in connection with such refunding
transaction and the documentation to be executed in connection therewith), and
after Lessee and Owner Participant shall have concluded such an agreement:
11.1.1 REFUNDING CERTIFICATE
Within 10 Business Days after reaching such agreement, Owner
Participant will deliver to Lessee a Refunding Certificate. Within 10 Business
Days of its receipt of the Refunding Certificate, Lessee may demand a
verification pursuant to Section 3.2.1(d) of the Lease of the information set
forth in the Refunding Certificate. Upon the acceptance by Lessee of the
accuracy of the information set forth in the Refunding Certificate or the
determination pursuant to such verification procedures of the Refunding
Information, the appropriate parties will take the actions specified in Sections
11.1.2 through 11.1.7 below.
11.1.2 FINANCING AGREEMENTS
The appropriate parties will enter into appropriate documentation
(which may include an underwriting agreement or similar private placement
agreement) with the institution or institutions to be named therein providing
for (a) the issuance and sale by Owner Trustee to such institution or
institutions on the Refunding Date of the New Debt and (b) the application of
the proceeds of the sale of the New Debt to the redemption of all such Equipment
Notes on the Refunding Date. Lessee, acting on behalf of Owner Trustee, shall
give Mortgagee at least 20 days revocable prior written notice of the proposed
date of the optional redemption.
85
-80-
11.1.3 LEASE AMENDMENTS
As a condition to the closing of the refunding transaction, Lessee and
Owner Trustee will amend the Lease, as contemplated by Section 3.2.1(b) of the
Lease, to provide that (a) Basic Rent in respect of the period from and after
the Refunding Date shall be as provided in the Refunding Information and (b)
amounts payable in respect of Stipulated Loss Value and Termination Value and,
if applicable, the EBO Price and the EBO Date, from and after the Refunding Date
shall be as provided in the Refunding Information.
11.1.4 SECURITY AGREEMENTS
Owner Trustee will enter into an agreement to provide for the securing
thereunder of the New Debt in like manner as the Equipment Notes and will enter
into such amendments and supplements to the Trust Indenture (or such new
indenture or other security agreement) and the other Operative Agreements as may
be necessary to effect such refunding.
11.1.5 EXPENSES
Whether or not such refunding transaction is consummated, Lessee shall
pay or reimburse all of the reasonable out-of-pocket expenses of all parties to
such refunding transaction, including, without limitation, any underwriting or
placement fees and the reasonable fees and expenses of such parties' counsel and
any related loan or commitment fees.
11.1.6 MAKE WHOLE AMOUNT
At the closing of such refunding, Owner Trustee shall pay, upon receipt
of the same from Lessee (which Lessee shall pay as Supplemental Rent as a
condition to the closing to the refunding transaction), to the Mortgagee for the
account of each Note Holder, the Make-Whole Amount, if any, payable to such Note
Holder under Section 2.11 of the Trust Indenture.
11.1.7 RETURN OF EQUIPMENT NOTES
Subject to compliance by Owner Trustee and Lessee with all applicable
terms and conditions for voluntary prepayment under the Trust Indenture and this
Agreement, each Note Holder will transfer to Owner Trustee the Equipment Notes
held by it for cancellation (and Owner Trustee shall cancel the same), against
receipt by such Note Holder of the then-
86
-81-
outstanding principal amount of such Equipment Notes, accrued and unpaid
interest and Make-Whole Amount, if any, thereon, together with payment in full
of all other amounts then payable to such Note Holder and Mortgagee hereunder or
under the Trust Indenture.
11.2 LIMITATIONS ON OBLIGATION TO REFUND
Notwithstanding the foregoing, Owner Participant shall have no
obligation to proceed with any refunding transaction as contemplated by this
Section 11:
(a) If such transaction would have, or creates a material risk of, an
adverse tax consequence to Owner Participant unless Lessee agrees to
indemnify Owner Participant against such adverse tax consequence;
(b) Unless Lessee indemnifies Owner Participant for any liability,
obligation (other than the obligation to pay principal and interest and
related payments in respect of the New Debt), cost or expense (including,
without limitation, reasonable attorneys' fees) related to or arising out
of any such refunding transaction;
(c) If a Lease Event of Default shall have occurred and be continuing;
or
(d) If there shall have previously been consummated three refunding
transactions at Lessee's request pursuant to this Section 11.
11.3 EXECUTION OF CERTAIN DOCUMENTS
Lessee, Owner Participant, Owner Trustee and Mortgagee each agree to
execute any document necessary or advisable to implement this Section 11
(including, without limitation, the execution, delivery and/or provision of any
appropriate additional or modified amendment, representation, warranty,
certificate, opinion or other document that may reasonably be requested by
Lessee or any other person).
11.4 ERISA
Owner Participant shall not be obligated to conclude the proposed
refunding transaction unless the agreements utilized to effect such refunding
contain an agreement by the initial holders of the New Debt substantially the
same as Section 7.5.2(b) of this Agreement, except in the case of any refunding
87
-82-
transaction where the New Debt is sold in a public offering under the Securities
Act or a private placement intended for resale pursuant to Rule 144A under the
Securities Act, in which case the holders of the New Debt shall be subject to
the restrictions relating to ERISA substantially the same as those applicable to
the purchasers of the Pass Through Certificates, as described in the Offering
Memorandum relating to the initial issuance and sale of the Pass Through
Certificates.
11.5 CONSENT TO OPTIONAL REDEMPTIONS
Each of Owner Participant, Owner Trustee and Mortgagee agrees with
Lessee not to cause an optional redemption of the Equipment Notes without
Lessee's consent except as set forth in Section 2.12 of the Trust Indenture.
SECTION 12. SECTION 1110
It is the intention of each of Lessee, Owner Participant, Loan
Participant, the Note Holders (such intention being evidenced by each of their
acceptance of an Equipment Note), Owner Trustee and Mortgagee that Owner
Trustee, as lessor under the Lease (and Mortgagee as assignee of Owner Trustee
under the Trust Indenture), shall be entitled to the benefits of Section 1110 in
the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a
debtor.
SECTION 13. CHANGE OF CITIZENSHIP
13.1 GENERALLY
Without prejudice to the representations, warranties or covenants
regarding the status of any party hereto as a Citizen of the United States:
(a) Each of Lessee, First Security, WTC and Mortgagee agrees that it
will, immediately upon obtaining knowledge of any facts that would cast
doubt upon its continuing status as a Citizen of the United States and
promptly upon public disclosure of negotiations in respect of any
transaction which would or might adversely affect such status, notify in
writing all parties hereto of all relevant matters in connection therewith;
and
(b) Owner Participant agrees that, in the event its status is to
change or has changed as a Citizen of the
88
-83-
United States, or it makes public disclosure of circumstances as a result
of which it believes that such status is likely to change, it will notify
all the other parties to this Participation Agreement of (i) such change in
status promptly after obtaining Actual Knowledge thereof or (ii) such
belief as soon as practicable after such public disclosure but in any event
within ten Business Days after such public disclosure.
13.2 OWNER PARTICIPANT
Owner Participant agrees, solely for the benefit of Lessee and the Note
Holders that if, during such time as the Aircraft is registered in the United
States, (a) it shall not be a Citizen of the United States and (b) the Aircraft
shall be, or would therefore become, ineligible for registration in the name of
Owner Trustee under the Act and regulations then applicable thereunder (without
giving consideration to Section 47.9 of the FAA Regulations or any other
provision that may restrict Lessee's use or operation of the Aircraft), then
Owner Participant shall as soon as is reasonably practicable, but in any event
within 30 days after obtaining Actual Knowledge of such ineligibility and of
such loss of citizenship, (y) effect voting trust or other similar arrangements
(in which case any provisions contained in the Operative Agreements restricting
Owner Participant's or Owner Trustee's ability to amend the Trust Agreement
shall not apply to the extent necessary to permit the use of such a voting trust
or other similar arrangement) or take any other action as may be necessary to
prevent any deregistration or maintain the United States registration of the
Aircraft or (z) transfer in accordance with the terms of this Agreement all its
right, title and interest in and to this Agreement, the Trust Estate and the
Trust Agreement in accordance with Section 10.1.
13.3 OWNER TRUSTEE
Upon First Security giving any notice in accordance with Section
13.1(a), Owner Trustee shall, subject to Section 9.1.1 of the Trust Agreement,
resign as Owner Trustee. Upon its receipt of such notice, Owner Participant
shall as promptly as practicable appoint a Citizen of the United States as
successor Owner Trustee pursuant to Section 9.1 of the Trust Agreement.
89
-84-
13.4 MORTGAGEE
Upon WTC giving any notice in accordance with Section 13.1(a),
Mortgagee shall (if and so long as such citizenship is necessary under the Act
as in effect at such time or, if it is not necessary, if and so long as
Mortgagee's citizenship could have any adverse effect on Lessee, any Participant
or any Note Holder), subject to Section 8.02 of the Trust Indenture, resign as
Mortgagee promptly upon its ceasing to be such a citizen.
SECTION 14. CONCERNING OWNER TRUSTEE
It is understood and agreed that, except as otherwise expressly
provided herein or in the Trust Agreement or the Trust Indenture, Owner Trustee
is entering into this Agreement solely in its capacity as trustee as provided in
the Trust Agreement and not in its individual capacity and in no case whatsoever
will it be liable or accountable in its individual capacity for any of the
statements, representations, warranties, agreements or obligations of Owner
Trustee hereunder, or for any loss in respect thereof, as to all of which the
parties agree to look solely to the Trust Estate; provided, that nothing in this
Section 14 shall be deemed to limit in scope or substance the personal liability
of First Security (a) to Owner Participant as expressly set forth in the Trust
Agreement, (b) in respect of the representations, warranties and agreements of
First Security expressly made as such herein or in any other Operative Agreement
to which it is a party, and (c) for the consequences of its own gross
negligence, willful misconduct, and, in receiving, handling or remitting of
funds only, its willful misconduct or simple negligence as a trustee.
SECTION 15. MISCELLANEOUS
15.1 AMENDMENTS
No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to amend, supplement, waive, modify, discharge,
terminate or otherwise vary and is signed by the party against which the
enforcement of the amendment, supplement, waiver, modification, discharge,
termination
90
-85-
or variance is sought. Each such amendment, supplement, waiver, modification,
discharge, termination or variance shall be effective only in the specific
instance and for the specific purpose for which it is given. No provision of
this Agreement shall be varied or contradicted by oral communication, course of
dealing or performance or other manner not set forth in an agreement, document
or instrument in writing and signed by the party against which enforcement of
the same is sought.
15.2 SEVERABILITY
If any provision hereof shall be held invalid, illegal or unenforceable
in any respect in any jurisdiction, then, to the extent permitted by Law, (a)
all other provisions hereof shall remain in full force and effect in such
jurisdiction and (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction. If, however, any Law pursuant to which such provisions are held
invalid, illegal or unenforceable may be waived, such Law is hereby waived by
the parties hereto to the full extent permitted, to the end that this Agreement
shall be deemed to be a valid and binding agreement in all respects, enforceable
in accordance with its terms.
15.3 SURVIVAL
The representations, warranties, covenants and indemnities set forth
herein shall survive the delivery or return of the Aircraft, the Transfer of any
interest of Owner Participant in this Agreement, the Trust Estate and the Trust
Agreement, the Transfer of any interest by any Note Holder of its Equipment Note
and the expiration or other termination of this Agreement or any other Operative
Agreement.
15.4 REPRODUCTION OF DOCUMENTS
This Agreement, all annexes, schedules and exhibits hereto and all
agreements, instruments and documents relating hereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed and (b) financial statements, certificates and other information
previously or hereafter furnished to any party hereto, may be reproduced by such
party by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process, and such party may destroy any original
documents so reproduced. Any such reproduction shall be as admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such party in
91
-86-
the regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction likewise is admissible in evidence.
15.5 COUNTERPARTS
This Agreement and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts (or upon separate signature
pages bound together into one or more counterparts), each of which when so
executed shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.
15.6 NO WAIVER
No failure on the part of any party hereto to exercise, and no delay by
any party hereto in exercising, any of its respective rights, powers, remedies
or privileges under this Agreement or provided at Law, in equity or otherwise
shall impair, prejudice or constitute a waiver of any such right, power, remedy
or privilege or be construed as a waiver of any breach hereof or default
hereunder or as an acquiescence therein nor shall any single or partial exercise
of any such right, power, remedy or privilege preclude any other or further
exercise thereof by it or the exercise of any other right, power, remedy or
privilege by it. No notice to or demand on any party hereto in any case shall,
unless otherwise required under this Agreement, entitle such party to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any party hereto to any other or further action in any
circumstances without notice or demand.
15.7 NOTICES
Unless otherwise expressly permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers and other
communications required or permitted to be made, given, furnished or filed
hereunder shall be in writing (it being understood that the specification of a
writing in certain instances and not in others does not imply an intention that
a writing is not required as to the latter), shall refer specifically to this
Agreement or other applicable Operative Agreement, and shall be personally
delivered, sent by facsimile (followed by overnight courier service for next
Business Day receipt) or telecommunication transmission (which in either case
provides written confirmation to the sender of its delivery), sent by registered
mail or certified mail, return
92
-87-
receipt requested, postage prepaid, or sent by overnight courier service, in
each case to the respective address, or facsimile number set forth for such
party in Schedule 1, or to such other address, facsimile or other number as each
party hereto may hereafter specify by notice to the other parties hereto. Each
such notice, request, demand, authorization, direction, consent, waiver or other
communication shall be effective when received or, if made, given, furnished or
filed (a) by facsimile or telecommunication transmission, when confirmed;
provided there is receipt of such notice the next Business Day from an overnight
courier service or (b) by registered or certified mail, three Business Days
after being deposited, properly addressed, with the U.S. Postal Service.
15.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE
(a) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(b) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS
ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW
YORK IN THE CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE
SOUTHERN DISTRICT OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR
PROCEEDING WITH RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT.
(c) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES THAT THE
SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE
MADE BY MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE
PREPAID, AT THE ADDRESS SET FORTH PURSUANT TO SECTION 15.7. EACH PARTY
HERETO HEREBY AGREES THAT SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH
CASE IN ACCORDANCE WITH THIS SECTION 15.8(C), SHALL CONSTITUTE VALID AND
EFFECTIVE PERSONAL SERVICE UPON SUCH PARTY, AND EACH PARTY HERETO HEREBY
AGREES THAT THE FAILURE OF ANY OF ITS AGENTS TO GIVE ANY
93
-88-
NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT IN ANY
WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED IN
ANY ACTION OR PROCEEDING BASED THEREON.
(d) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS
A DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT
HEREUNDER IN ANY OF THE ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING
IS BROUGHT IN AN INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR
PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT OR ANY OTHER OPERATIVE
AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS.
(e) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION
BASED UPON OR ARISING OUT OF OR RELATING TO THIS AGREEMENT.
15.9 THIRD-PARTY BENEFICIARY
This Agreement is not intended to, and shall not, provide any person
not a party hereto (other than the Liquidity Provider, the Depositary, the
Escrow Agent and the Paying Agent, each of which is an intended third party
beneficiary with respect to the provisions of Section 9.1) with any rights of
any nature whatsoever against any of the parties hereto and no person not a
party hereto (other than the Liquidity Provider, the Depositary, the Escrow
Agent and the Paying Agent, with respect to the provisions of Section 9.1) shall
have any right, power or privilege in respect of any party hereto, or have any
benefit or interest, arising out of this Agreement.
15.10 ENTIRE AGREEMENT
This Agreement, together with the other Operative Agreements, on and as
of the date hereof, constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof, and all prior or contemporaneous
understandings or agreements, whether written or oral, among any of the parties
hereto with respect to such subject matter are hereby superseded in their
entireties.
94
-89-
15.11 FURTHER ASSURANCES
Each party hereto shall execute, acknowledge and deliver or shall cause
to be executed, acknowledged and delivered, all such further agreements,
instruments, certificates or documents, and shall do and cause to be done such
further commercially reasonable acts and things, in any case, as any other party
hereto shall reasonably request in connection with the administration of, or to
carry out more effectively the purposes of, or to better assure and confirm into
such other party the rights and benefits to be provided under this Agreement and
the other Operative Agreements.
[This space intentionally left blank]
95
IN WITNESS WHEREOF, each of the parties has caused this Participation
Agreement to be duly executed and delivered as of the day and year first above
written.
ATLAS AIR, INC.,
Lessee
By:
----------------------------------------
Name:
Title:
------------------------------------------,
Owner Participant
By:
----------------------------------------
Name:
Title:
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity, except as
expressly provided herein, but solely as
Owner Trustee
By:
----------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
expressly provided herein, but solely as
Mortgagee
By:
-----------------------------------------
Name:
Title:
96
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as Pass
Through Trustee under the Pass
Through Trust Agreement for the
Atlas Air, Inc. Pass Through
Trust, 2000-__
By:
-----------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as Pass
Through Trustee under the Pass
Through Trust Agreement for the
Atlas Air, Inc. Pass Through
Trust, 2000-__
By:
-----------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as Pass
Through Trustee under the Pass
Through Trust Agreement for the
Atlas Air, Inc. Pass Through
Trust, 2000-__
By:
-----------------------------------------
Name:
Title:
97
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
expressly provided herein, but solely as
Subordination Agent
By:
-----------------------------------------
Name:
Title: