EXHIBIT 4.18
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AMENDED AND RESTATED PARTICIPATION AGREEMENT
Dated as of May 24, 2001
among
AMERICAN AIRLINES, INC.,
as Lessee
▇▇▇▇▇▇ LEASING COMPANY-1,
as Owner Participant
▇▇▇▇▇ FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
not in its individual capacity except as expressly
provided herein but solely
as Owner Trustee
WILMINGTON TRUST COMPANY,
not in its individual capacity except as expressly
provided herein but solely
as Indenture Trustee
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
not in its individual capacity except as expressly
provided herein but solely
as Loan Trustee, Pass Through Trustee and Subordination Agent
and
BOEING NEVADA, INC.,
as Original Loan Participant
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One Aircraft of the make and model and bearing
U.S. Registration Number and Manufacturer's
Serial Number listed on Schedule I hereto
Leased to American Airlines, Inc.
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AA-Boeing EETC-Leased Aircraft Participation Agreement
INDEX TO PARTICIPATION AGREEMENT
Page
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SECTION 1. Purchase of Equipment Notes; Refunding...................................................... 4
SECTION 2. Equipment Notes............................................................................. 5
SECTION 3. Owner Participant's Instructions to the Owner Trustee; Confirmation of Authorizations ...... 6
SECTION 4. Conditions Precedent........................................................................ 6
SECTION 5. Conditions Precedent to the Obligations of the Lessee; Conditions Precedent with
Respect to the Pass Through Trustee......................................................... 13
SECTION 6. Successor Trustee; Execution and Delivery of the Amended and Restated Indenture............. 13
SECTION 7. Execution and Delivery of the Amended and Restated Lease.................................... 14
SECTION 8. Execution and Delivery of the Amended and Restated Trust Agreement.......................... 14
SECTION 9. Extent of Interest of Noteholders........................................................... 14
SECTION 10. Lessee's Representations, Warranties and Indemnities........................................ 14
SECTION 11. Representations and Warranties.............................................................. 34
SECTION 12. Certain Covenants........................................................................... 42
SECTION 13. Other Documents............................................................................. 51
SECTION 14. [Intentionally left blank].................................................................. 51
SECTION 15. Liabilities of the Owner Participant and the Original Loan Participants..................... 51
SECTION 16. Certain Covenants of the Lessee............................................................. 52
SECTION 17. [Intentionally left blank].................................................................. 55
SECTION 18. Notices..................................................................................... 55
SECTION 19. Certain Covenants of the Owner Participant.................................................. 55
SECTION 20. Right to Restructure........................................................................ 57
SECTION 21. [Intentionally left blank].................................................................. 59
SECTION 22. Concerning the Owner Trustee................................................................ 59
SECTION 23. [Intentionally left blank].................................................................. 59
SECTION 24. Successor Loan Trustee; Amendment of Pass Through Trust Documents........................... 59
SECTION 25. Miscellaneous............................................................................... 60
SCHEDULE I Certain Terms and Addresses for Notices and Account Details
EXHIBIT I Form of Trust Agreement
EXHIBIT II Form of Indenture
EXHIBIT III Form of Lease
EXHIBIT IV Form of Opinion of General Counsel of the Lessee
EXHIBIT V Form of Opinion of Special Counsel for the Owner Trustee
EXHIBIT VI Form of Opinion of Special Counsel for the Loan Trustee
EXHIBIT VII Forms of Opinion of Special Counsel for the Owner Participant
and General Counsel of the Owner Participant
EXHIBIT VIII Form of Opinion of Special Oklahoma City Counsel
EXHIBIT IX Form of Opinion of Special Counsel for the Pass Through Trustee
EXHIBIT X Form of Opinion of Special Counsel for the Liquidity Provider
EXHIBIT XI Form of Owner Participant Guaranty
EXHIBIT XII Form of Purchase Agreement Assignment
EXHIBIT XIII Form of Assignment and Assumption Agreement
EXHIBIT XIV Form of Manufacturer Consent
ANNEX A Definitions
ANNEX B Return Conditions
AMENDED AND RESTATED
PARTICIPATION AGREEMENT
This AMENDED AND RESTATED
PARTICIPATION AGREEMENT, dated as of May 24,
2001, among (i) AMERICAN AIRLINES, INC., a Delaware corporation (herein,
together with its successors and permitted assigns, called "American" or the
"Lessee"), (ii) ▇▇▇▇▇▇ LEASING COMPANY-1, a Delaware corporation (herein,
together with its successors and permitted assigns, called the "Owner
Participant"), (iii) ▇▇▇▇▇ FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, (formerly
named First Security Bank, National Association) a national banking association,
not in its individual capacity except as expressly stated herein but solely as
trustee under the Trust Agreement (as hereinafter defined) (herein in such
capacity, together with its successors and assigns, called the "Owner Trustee"),
(iv) WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in its
individual capacity except as expressly stated herein, but solely as trustee
under the Original Indenture (as hereinafter defined) (in such capacity, the
"Indenture Trustee"), (v) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, a national banking association, not in its individual
capacity except as expressly stated herein, but solely as successor trustee to
the Indenture Trustee pursuant to the Instrument of Resignation (as hereinafter
defined) (herein in such capacity, together with its successors and assigns in
such capacity, called the "Loan Trustee"), (vi) BOEING NEVADA, INC., a Delaware
corporation (herein called the "Original Loan Participant"), (vii) STATE STREET
BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity except as otherwise provided herein,
but solely as trustee (in such capacity, the "Pass Through Trustee") for each of
the Pass Through Trusts created under the Pass Through Trust Agreement, each
dated as of the date hereof, between the Lessee and the Pass Through Trustee
(including the relevant Pass Through Trust Supplements, the "Pass Through Trust
Agreements"), and (viii) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, a national banking association, not in its individual
capacity except as otherwise provided herein, but solely as subordination agent
and trustee (in such capacity, the "Subordination Agent").
WITNESSETH:
WHEREAS, the Owner Participant is the grantor of an owner trust having
▇▇▇▇▇ Fargo Bank Northwest, National Association, as owner trustee pursuant to a
trust agreement, dated as of April 9, 2001, between the Owner Participant and
the Owner Trustee, in its individual capacity (the "Original Trust Agreement"),
pursuant to which the Owner Trustee agreed, among other things, to hold the
Trust Estate defined in Annex A to the Original Lease referred to below (the
"Trust Estate") for the benefit of the
AA-Boeing EETC-Leased Aircraft
Participation Agreement
Owner Participant on the terms specified in the Original Trust Agreement,
subject, however, to the lien created under the Original Indenture;
WHEREAS, the Owner Trustee is the owner of an aircraft of the make and
model and bearing U.S. Registration Number and Manufacturer's Serial Number
specified in Schedule I hereto (the "Aircraft", as such term is defined in Annex
A hereto, and, unless the context otherwise requires, capitalized terms used
herein without definition shall have the meanings set forth in Annex A hereto
for all purposes of this
Participation Agreement);
WHEREAS, the Lessee, the Owner Participant, the Owner Trustee, the
Indenture Trustee and the Original Loan Participant entered into an Amended and
Restated
Participation Agreement, dated as of April 9, 2001 (the "Original
Participation Agreement"), providing for the lease of the Aircraft;
WHEREAS, concurrently with the execution and delivery of the Original
Participation Agreement:
(i) the Owner Participant and the Owner Trustee,
entered into the Original Trust Agreement;
(ii) the Owner Trustee and the Indenture Trustee
entered into the Original Indenture, pursuant to which the
Owner Trustee issued to the Original Loan Participant a note
substantially in the form set forth in Article 2.01 of the
Original Indenture (the "Original Note") as evidence of the
participation of the Original Loan Participant in the
refunding of the Aircraft;
(iii) the Owner Trustee and the Lessee entered into
an Amended and Restated Lease Agreement, dated as of April 9,
2001, relating to the Aircraft (the "Original Lease"),
pursuant to which, subject to the terms and conditions set
forth therein, the Owner Trustee agreed to lease to the
Lessee, and the Lessee agreed to lease from the Owner Trustee,
the Aircraft; and
(iv) the Owner Participant and the Lessee entered
into an Amended and Restated Tax Indemnity Agreement, dated as
of April 9, 2001, relating to the Aircraft (the "Original Tax
Indemnity Agreement").
WHEREAS, pursuant to the Instrument of Resignation, Appointment and
Acceptance, to be dated as of the Closing Date (the "Instrument of
Resignation"), among the Lessee, the Owner Trustee, the Indenture Trustee, the
Loan Trustee and the Original Loan Participant, the Indenture Trustee will
resign under the Original Indenture, and the Pass Through Trustee, the Lessee
and the Owner Trustee will accept such resignation and
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AA-Boeing EETC-Leased Aircraft Participation Agreement
the appointment of the Loan Trustee as successor to the Indenture Trustee under
the Original Indenture;
WHEREAS, in connection with the consummation of the transactions
contemplated by this Agreement:
(i) the Owner Trustee and the Owner Participant will
amend and restate the Original Trust Agreement (the Original
Trust Agreement, as so amended, the "Trust Agreement"),
substantially in the form of Exhibit I hereto;
(ii) the Owner Participant and the Lessee will amend
and restate the Original Tax Indemnity Agreement (the Original
Tax Indemnity Agreement, as so amended, the "Tax Indemnity
Agreement"), in the form of agreed to by such parties;
(iii) subject to the terms hereof, the Owner Trustee
and the Loan Trustee will amend and restate the Original
Indenture (the Original Indenture, as so amended, the
"Indenture"), substantially in the form of Exhibit II hereto,
for the benefit of the holder or holders of the Equipment
Notes (as defined below), under which Indenture the Owner
Trustee shall issue to the Subordination Agent as agent and
trustee for each Pass Through Trustee equipment notes
substantially in the form of Exhibit A to the Indenture (as
further defined in the Indenture, being herein collectively
called the "Equipment Notes" and, individually, an "Equipment
Note");
WHEREAS, Section 20A of the Original Participation Agreement
contemplates redemption of the Original Notes pursuant to Section 2.12 of the
Original Indenture as part of a refinancing transaction;
WHEREAS, pursuant to the Pass Through Trust Agreement, on the Closing
Date, several pass through trusts (herein being collectively called the "Pass
Through Trusts" and, individually, a "Pass Through Trust") will be created to
facilitate the transactions contemplated hereby, including, without limitation,
the issuance and sale of the Pass Through Certificates;
WHEREAS, the proceeds from the sale of the Equipment Notes will be
applied to redeem the Original Notes with any excess payments being retained for
the benefit of the Owner Participant; and
WHEREAS, in connection with the consummation of the transactions
contemplated by this Agreement, the Owner Trustee and the Lessee will amend and
restate the Original Lease (the Original Lease, as so amended and restated, the
"Lease"),
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AA-Boeing EETC-Leased Aircraft Participation Agreement
substantially in the form of Exhibit III hereto, containing amendments,
modifications and additions necessary to give effect to the transactions
described herein;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, receipt of which is
acknowledged, the parties hereto agree as follows:
SECTION 1. Purchase of Equipment Notes; Refunding.
(a) Subject to the satisfaction or waiver of the conditions set forth
herein, at 9:00 a.m. New York City time on May 24, 2001 or at such other date
and time, not later than June 29, 2001, as shall be specified by the Lessee (the
"Closing Date"), (i) immediately prior to the Closing (as hereinafter defined),
if the Closing Date is other than a Lease Period Date, the Lessee shall pay to
the Owner Trustee Basic Rent for the period from the immediately preceding Lease
Period Date, prorated to reflect the actual number of days in such period (such
payment to be made directly to the Loan Trustee in accordance with Section 3(d)
of the Lease), (ii) each Pass Through Trustee for each Pass Through Trust shall
pay to the Loan Trustee on behalf of the Owner Trustee an amount equal to the
aggregate amount of Equipment Notes being purchased by such Pass Through Trust
and the Loan Trustee shall (w) hold on behalf of the Owner Trustee an amount
equal to the aggregate outstanding amount of the Original Note being redeemed as
set forth in clause (v) of this Section 1(a), and (x) pay to the Owner Trustee
on behalf of the Owner Participant, the balance of the proceeds of the issuance
of the Equipment Notes over such amount of the Original Note, (iii) subject to
the deposit with the Loan Trustee of the amounts referred to in clauses (i) and
(ii) above, the Owner Trustee shall direct the Loan Trustee to disburse to the
Original Loan Participant an amount equal to the then outstanding principal
amount of the Original Note outstanding on the Closing Date together with
accrued and unpaid interest on such Original Note to the Closing Date, as a
prepayment of such Original Note in accordance with Section 2.12 of the Original
Indenture, (iv) the Original Loan Participant shall, against receipt of payment
for its Original Note as aforesaid, deliver to the Loan Trustee the Original
Note for cancellation, and (v) simultaneously with the prepayment of the
Original Note described in clause (iii) above, (A) the Original Loan Participant
shall authorize, and the Owner Trustee and the Loan Trustee shall enter into,
the Indenture as provided in Section 6, (B) the Owner Participant and the Owner
Trustee shall enter into the Trust Agreement as provided in Section 8, (C) the
Owner Trustee and the Lessee shall enter into the Lease as provided in Section
7, and (D) the Owner Trustee shall issue, pursuant to Article II of the
Indenture and Section 2 hereof, to the Subordination Agent as agent and trustee
for the Pass Through Trustee for each Pass Through Trust, the Equipment Notes,
to be purchased by the Pass Through Trusts hereunder.
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AA-Boeing EETC-Leased Aircraft Participation Agreement
(b) The Owner Participant, by its execution and delivery hereof,
requests and directs the Owner Trustee to execute and deliver this Agreement
and, subject to the terms hereof, to take the actions contemplated herein.
(c) Each of the Original Loan Participant and each Pass Through
Trustee, by its execution and delivery hereof, authorizes the Loan Trustee to
act for its benefit as contemplated in this Agreement and requests and directs
the Loan Trustee to execute and deliver this Agreement and the Indenture and,
subject to the terms hereof and thereof, to take the actions contemplated herein
and therein.
(d) In case each Pass Through Trustee shall for any reason fail to
purchase the Equipment Notes to be purchased by it pursuant to Section 1(a)
above, neither the Owner Trustee nor the Lessee shall have any obligation to pay
to the Original Loan Participant any amount in respect of the prepayment of the
Original Notes, the Original Notes shall remain outstanding and in full force
and effect, and the actions contemplated by Sections 6, 7 and 8 hereof shall not
take place.
(e) The closing (the "Closing") of the transactions described in this
Agreement shall take place at the offices of Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ the Closing Date, or at such other place as the
parties hereto may agree.
(f) All payments pursuant to this Section 1 shall be made in
immediately available funds to such accounts and at such banks as the parties
hereto shall designate in writing not less than one Business Day prior to the
Closing Date.
(g) Subject to the terms and conditions hereof, in order to facilitate
the refinancing by the Owner Trustee of the Original Notes contemplated hereby,
the Lessee intends to enter into a placement agreement, to be dated on or prior
to the Closing Date, among the Lessee and one or more placement agents (the
"Placement Agents") named therein (the "Placement Agreement"); and the Lessee
will enter into the Pass Through Trust Agreements and Pass Through Trust
Supplements as the "issuer," as defined in and solely for purposes of the
Securities Act of 1933, as amended (the "Securities Act"), of the Pass Through
Certificates being issued thereunder, and as the "obligor," as defined in and
solely for purposes of the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), with respect to such Pass Through Certificates and will
undertake to perform certain administrative and ministerial duties under such
Pass Through Trust Supplements.
SECTION 2. Equipment Notes.
(a) The aggregate principal amount of the Equipment Notes shall be the
amount set out in Schedule I.
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AA-Boeing EETC-Leased Aircraft Participation Agreement
(b) Subject to adjustment as provided in the Registration Rights
Agreement, the Equipment Notes of each Series will bear interest at the rate,
mature on the date, and be payable as to principal in the amounts, to be
specified in the Indenture.
(c) The Equipment Notes shall be payable as to principal in accordance
with the terms of the Indenture, and the Equipment Notes of each Series shall
provide for a fixed rate of interest per annum and shall contain the terms and
provisions provided for the Equipment Notes of such Series in the Indenture. The
Owner Trustee shall execute, and the Loan Trustee shall authenticate and deliver
to the Subordination Agent as agent and trustee for the Pass Through Trustee for
each Pass Through Trust, the Equipment Notes in accordance with the provisions
of this Participation Agreement. Subject to the terms hereof and of the other
Operative Documents, all such Equipment Notes shall be dated and authenticated
as of the Closing Date and shall bear interest therefrom, shall be registered in
the name of the Subordination Agent or in such names as shall be specified by
the Subordination Agent, and shall be paid in the manner and at such places as
are set forth in the Indenture.
SECTION 3. Owner Participant's Instructions to the Owner Trustee;
Confirmation of Authorizations.
(a) Owner Participant's Instructions to the Owner Trustee. The Owner
Participant, by its execution and delivery hereof, hereby authorizes and directs
the Owner Trustee, subject to the conditions set forth in Section 4 having been
fulfilled to the satisfaction of the Owner Participant or waived by the Owner
Participant, to take the actions specified in Section 3.1 of the Trust
Agreement.
(b) Confirmation of Authorizations. The Owner Participant agrees, in
the case of any Replacement Engine substituted pursuant to Section 9(g) or 10(b)
of the Lease, that it will authorize and direct the Owner Trustee to take the
actions specified in such Sections of the Lease with respect to such Replacement
Engine upon due compliance with the terms and conditions set forth in such
Sections of the Lease with respect to such Replacement Engine.
SECTION 4. Conditions Precedent. The obligation of each Pass Through
Trustee to make the payment described in Section 1(a)(ii), and the obligations
of the Owner Trustee and the Owner Participant to participate in the
transactions contemplated by this Agreement on the Closing Date are subject to
the fulfillment to the satisfaction or waiver in writing by the Pass Through
Trustee, the Owner Participant and the Owner Trustee, as the case may be, prior
to or on the Closing Date, of the following conditions precedent (except that
paragraphs (f) and (l) shall not be conditions precedent to the obligations of
the Owner Trustee hereunder; and paragraphs (g) and (n) shall not be conditions
precedent to the obligations of the Owner Participant hereunder):
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AA-Boeing EETC-Leased Aircraft Participation Agreement
(a) The Owner Trustee shall have tendered to the Loan Trustee for
authentication the Equipment Notes issued to effect the refunding contemplated
by Section 1 hereof, and the Loan Trustee shall have authenticated such
Equipment Notes and shall have tendered the Equipment Notes to the Subordination
Agent as agent and trustee for each Pass Through Trustee in accordance with
Section 2.
(b) Each Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received executed counterparts or conformed copies
of the following documents:
(i) the Lease;
(ii) the Trust Agreement;
(iii) the Indenture;
(iv) the Purchase Agreement Assignment;
(v) this Participation Agreement;
(vi) the Pass Through Trust Agreements; and
(vii) the Tax Indemnity Agreement (for the Owner
Participant only);
(viii) the Intercreditor Agreement;
(ix) the Liquidity Facilities;
(x) the Instrument of Resignation; and
(xi) the Owner Participant Guaranty; and
(xii) the Manufacturer Consent.
(c) Each Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received the following:
(i) an incumbency certificate of the Lessee as to the
person or persons authorized to execute and deliver this
Agreement, the Lease and any other documents to be executed on
behalf of the Lessee in connection with the transactions
contemplated hereby and the signatures of such person or
persons;
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AA-Boeing EETC-Leased Aircraft Participation Agreement
(ii) a copy of the resolutions of the board of
directors of the Lessee or the executive committee thereof,
certified by the Secretary or an Assistant Secretary of the
Lessee, duly authorizing the transactions contemplated hereby
and the execution and delivery of each of the documents
required to be executed and delivered on behalf of the Lessee
in connection with the transactions contemplated hereby; and
(iii) a copy of the certificate of incorporation of
the Lessee certified by the Secretary of State of the State of
Delaware, a copy of the By-Laws of the Lessee, certified by
the Secretary or an Assistant Secretary of the Lessee, and
evidence from the Secretary of the State of the State of
Delaware as to the good standing of the Lessee.
(iv) a copy of the resolutions of the board of
directors of Boeing Capital Corporation or the executive
committee thereof, certified by the Secretary or an Assistant
Secretary of Boeing Capital Corporation, duly authorizing the
execution, delivery and performance by Boeing Capital
Corporation of the Owner Participant Guaranty;
(v) a copy of the resolutions of the board of
directors of the Owner Participant, certified by the Secretary
or an Assistant Secretary of the Owner Participant, duly
authorizing the transactions contemplated hereby and the
execution and delivery of each of the documents required to be
executed and delivered on behalf of the Owner Participant in
connection with the transactions contemplated hereby;
(vi) a copy of the resolutions of the board of
directors of the Owner Trustee in its individual capacity
certified by the Secretary or an Assistant Secretary of the
Owner Trustee, duly authorizing the execution, delivery and
performance by the Owner Trustee, in its individual capacity,
of each of the Operative Documents to which the Owner Trustee
is or will be a party in either such capacity and any other
documents to be executed by or on behalf of the Owner Trustee,
in its individual capacity or as trustee, as appropriate, in
connection with the transactions contemplated hereby;
(vii) a copy of the articles of association and
by-laws of the Loan Trustee, certified by the Secretary or an
Assistant Secretary of the Loan Trustee, which by-laws contain
a provision duly authorizing the execution, delivery and
performance by the Loan Trustee of each of the Operative
Documents to which the Loan Trustee is or will be a party and
any other documents to be executed by or on behalf of the Loan
Trustee in connection with the transactions contemplated
hereby; and
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AA-Boeing EETC-Leased Aircraft Participation Agreement
(viii) such other documents and evidence with respect
to the Lessee, the Owner Trustee, the Owner Participant, or
the Pass Through Trustee as the Pass Through Trustee, the
Owner Trustee and the Owner Participant, as appropriate, may
reasonably request in order to establish the consummation of
the transactions contemplated by this Participation Agreement,
the taking of all corporate and other proceedings in
connection therewith and compliance with the conditions herein
or therein set forth.
(d) Each Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received a certificate signed by an authorized
officer of the Lessee, dated the Closing Date, certifying that:
(i) the Aircraft has been duly certified by the
Federal Aviation Administration as to type and airworthiness
in accordance with the terms of the Original Lease and has a
current, valid United States standard certificate of
airworthiness issued by the FAA;
(ii) the FAA ▇▇▇▇ of Sale, the Original Lease and the
Original Indenture have been duly recorded, and the Original
Trust Agreement has been duly filed, with the FAA pursuant to
the Transportation Code;
(iii) the Instrument of Resignation, the Lease and
the Indenture shall have been duly filed for recordation (or
shall be in the process of being duly filed for recordation)
with the FAA and the Trust Agreement shall have been filed (or
shall be in the process of being filed) with the FAA;
(iv) the Aircraft has been registered with the
Federal Aviation Administration in the name of the Owner
Trustee and the Lessee has the regulatory authority to operate
the Aircraft on the Lessee's routes;
(v) the representations and warranties contained
herein of the Lessee are correct as though made on and as of
the Closing Date, except to the extent that such
representations and warranties relate solely to an earlier
date (in which case such representations and warranties were
correct on and as of such earlier date); and
(vi) no event has occurred and is continuing which
constitutes an Event of Default or an Event of Loss or would
constitute an Event of Default or an Event of Loss but for the
requirement that notice be given or time elapse or both.
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AA-Boeing EETC-Leased Aircraft Participation Agreement
(e) Each Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received a certificate signed by an authorized
officer of the Loan Trustee, dated the Closing Date, certifying that the
representations and warranties contained herein of the Loan Trustee are correct
as though made on and as of the Closing Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which case
such representations and warranties were correct on and as of such earlier
date).
(f) Each Pass Through Trustee and the Owner Participant each shall have
received a certificate signed by an authorized officer of the Owner Trustee,
dated the Closing Date, certifying that the representations and warranties
contained herein of the Owner Trustee are correct as though made on and as of
the Closing Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such representations and
warranties were correct on and as of such earlier date).
(g) Each Pass Through Trustee and the Owner Trustee each shall have
received a certificate signed by an authorized officer of the Owner Participant,
dated the Closing Date, certifying that the representations and warranties
contained herein of the Owner Participant are correct as though made on and as
of the Closing Date, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such representations
and warranties were correct on and as of such earlier date).
(h) Each Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an independent insurance broker's report,
together with certificates of insurance from such broker, as to the due
compliance with the terms of Section 11 of the Lease relating to insurance with
respect to the Aircraft.
(i) Each Pass Through Trustee shall have received copies of all Uniform
Commercial Code financing statements covering the security interests created by
or pursuant to the Granting Clause of the Original Indenture and all Uniform
Commercial Code financing statements describing the Lease as a lease and any
continuation statements relating thereto.
(j) (A) A termination of the UCC-1 financing statement on file in the
State of Utah shall have been executed and delivered by Wilmington Trust Company
as secured party under the existing filings, and such termination statement,
upon Closing, shall be filed promptly with the Secretary of State of Utah, (B) a
UCC-1 financing statement covering the security interests created by the
Indenture naming the Owner Trustee, as debtor, and the Loan Trustee, as secured
party, shall have been duly filed with the Secretary of State of the State of
Utah, (C) a UCC-1 financing statement covering the security interests created by
the Indenture naming the Owner Trustee, as debtor, and the Loan Trustee, as
secured party, shall have been executed and delivered by the Owner
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AA-Boeing EETC-Leased Aircraft Participation Agreement
Trustee, and such financing statement, upon Closing, shall be filed promptly
with the Recorder of Deeds of the District of Columbia, (D) a termination of the
UCC-1 financing statement on file in the State of Texas shall have been executed
and delivered by the Owner Trustee as secured party under the existing filings,
and such termination statement, upon Closing, shall be filed promptly with the
Secretary of State of Texas, (E) a UCC-1 financing statement describing the
Lease as a lease naming the Owner Trustee as secured party and Lessee as debtor,
shall have been executed and delivered by the Loan Trustee, the Owner Trustee
and the Lessee, and such financing statement, upon Closing, shall be filed
promptly with the Secretary of State of Texas, and (F) a UCC-1 financing
statement describing the Lease as a lease shall have been executed and delivered
by the Lessee, the Owner Trustee and the Loan Trustee, and such financing
statement, upon Closing, shall be filed promptly with the Secretary of State of
Delaware.
(k) Each Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from ▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, Esq., Senior Vice President - Administration (or such other internal
counsel to the Lessee as shall be reasonably satisfactory to each Pass Through
Trustee, the Owner Trustee and the Owner Participant) substantially in the form
of Exhibit IV hereto.
(l) Each Pass Through Trustee and the Owner Participant each shall have
received an opinion addressed to it from Ray, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special counsel
for the Owner Trustee, substantially in the form of Exhibit V hereto.
(m) Each Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from ▇▇▇▇▇▇▇
▇▇▇▇ L.L.P., special counsel for the Loan Trustee, Subordination Agent and Pass
Through Trustee, substantially in the form of Exhibit VI hereto.
(n) Each Pass Through Trustee and the Owner Trustee each shall have
received an opinion addressed to it from Fulbright & ▇▇▇▇▇▇▇▇ L.L.P., special
counsel for the Owner Participant, Boeing Capital Corporation, as Owner
Participant Guarantor, and the Original Loan Participant, substantially in the
form of Exhibit VII hereto, and an opinion addressed to it from ▇▇▇▇ ▇. ▇▇▇▇▇▇,
counsel of the Owner Participant, Boeing Capital Corporation, and the Original
Loan Participant, substantially in the form of Exhibit VII hereto.
(o) Each Pass Through Trustee, the Owner Trustee and the Owner
Participant each shall have received an opinion addressed to it from ▇▇▇▇▇ &
▇▇▇▇▇▇▇, P.C., special counsel in Oklahoma City, Oklahoma, substantially in the
form of Exhibit VIII hereto.
(p) Each Pass Through Trustee shall have received an opinion addressed
to it from Fulbright & ▇▇▇▇▇▇▇▇ L.L.P., special counsel for the Liquidity
Provider, and an
11
AA-Boeing EETC-Leased Aircraft Participation Agreement
opinion addressed to it from ▇▇▇▇ ▇. ▇▇▇▇▇▇, Counsel of the Liquidity Provider,
substantially in the form of Exhibit X hereto.
(q) The Lessee shall have entered into the Placement Agreement and the
Pass Through Trust Agreements, the Pass Through Certificates shall have been
issued and sold pursuant to the Placement Agreement and the Pass Through Trust
Agreements, and the Placement Agents shall have transferred to each Pass Through
Trustee in immediately available funds an amount equal to the aggregate purchase
price of the Equipment Notes to be purchased from the Owner Trustee by such Pass
Through Trustee.
(r) No change shall have occurred after the date of this Agreement in
applicable law or regulations thereunder or interpretations thereof by
appropriate regulatory authorities or any court that would make it illegal for
any Pass Through Trustee to make the payments described in Section 1(a) or for
the Owner Trustee or Owner Participant to participate in the transactions
contemplated by this Agreement on the Closing Date.
(s) All approvals and consents of any trustee or holder of any
indebtedness or obligations of the Lessee which are required in connection with
each Pass Through Trustee's making of the payments described in Section 1(a) or
the Owner Trustee's or Owner Participant's participation in the transactions
contemplated by this Agreement on the Closing Date shall have been duly
obtained.
(t) The Owner Participant shall have received the Boeing Letter
Agreement duly executed by American, in form and substance satisfactory to the
Owner Participant.
(u) No action or proceeding shall have been instituted nor shall
governmental action be threatened before any court or governmental agency, nor
shall any order, judgment or decree have been issued or proposed to be issued by
any court or governmental agency at the time of the Closing to set aside,
restrain, enjoin or prevent the completion and consummation of this
Participation Agreement and the other Operative Documents or the transactions
contemplated hereby and thereby.
(v) The Owner Trustee shall have made such filings as are required by
Section 131.3 of the New York Banking Law.
Promptly following the recording of the Instrument of Resignation, the
Lease and the Indenture pursuant to the Transportation Code and the filing of
the Trust Agreement pursuant to such Transportation Code, the Lessee will cause
▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., special counsel in Oklahoma City, Oklahoma, to deliver to
each Pass Through Trustee, the Lessee, the Loan Trustee, the Owner Participant
and the Owner Trustee an opinion as to the due recording of the Instrument of
Resignation, the Lease and the Indenture.
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AA-Boeing EETC-Leased Aircraft Participation Agreement
SECTION 5. Conditions Precedent to the Obligations of the Lessee;
Conditions Precedent with Respect to the Pass Through Trustee.
(a) The Lessee's obligation to participate in the transactions
contemplated by this Agreement and to execute and deliver the Lease are subject
to (i) the interest rates, principal amounts and amortization schedules of the
Equipment Notes being satisfactory to the Lessee, (ii) the fulfillment, prior to
or on the Closing Date, of the conditions precedent listed in subsections (a)
and (b), clauses (i) through (iii) of subsection (d), and subsections (e), (f),
(g), (j), (q) and (r) of Section 4 with respect to the other parties hereto and
(iii) the receipt by the Lessee of (a) each certificate referred to in
subsections (e), (f) and (g) of Section 4, (b) each opinion referred to in
subsections (l) through (o) of Section 4, addressed to the Lessee or accompanied
by a letter from counsel rendering such opinion authorizing the Lessee to rely
on such opinion as if it were addressed to the Lessee, (c) the Boeing Letter
Agreement, duly executed by Boeing Capital Corporation, in form and substance
satisfactory to the Lessee, and (d) such other documents and evidence with
respect to the Liquidity Provider each Pass Through Trustee and each party
hereto as the Lessee may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement, the taking of
all necessary corporate action in connection therewith and compliance with the
conditions herein set forth.
(b) The respective obligations of each of the Lessee, the Owner
Participant, the Owner Trustee and the Loan Trustee to participate in the
transactions contemplated hereby are subject to the receipt by each of them of
(i) a certificate signed by an authorized officer of each Pass Through Trustee,
dated the Closing Date, certifying that the representations and warranties
contained herein of such Pass Through Trustee are correct as though made on and
as of the Closing Date, except to the extent that such representations and
warranties relate solely to an earlier date (in which case such representations
and warranties are correct on and as of such earlier date), (ii) an opinion
addressed to each of them of ▇▇▇▇▇▇▇ ▇▇▇▇ L.L.P., special counsel for each Pass
Through Trustee, substantially in the form of Exhibit IX hereto, and (iii) such
other documents and evidence with respect to each Pass Through Trustee as it may
reasonably request in order to establish the due consummation of the
transactions contemplated by this Agreement, the taking of all necessary
corporate action in connection therewith and compliance with the conditions
herein set forth.
SECTION 6. Successor Trustee; Execution and Delivery of the Amended and
Restated Indenture. The Original Loan Participant, the Owner Trustee and the
Lessee hereby waive notice of the resignation of the Indenture Trustee pursuant
to the Instrument of Resignation. Each of the Original Loan Participant, Lessee,
Pass Through Trustee and Owner Trustee agrees that, notwithstanding the
provisions of Section 8.02 of the Original Indenture, the Loan Trustee is an
acceptable successor to the Indenture Trustee and the provisions of Section
8.02(b) of the Original Indenture are hereby waived by the Original Loan
Participant, the Owner Trustee, the Indenture Trustee and the Loan Trustee. The
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AA-Boeing EETC-Leased Aircraft Participation Agreement
Original Loan Participant and the Owner Participant, by execution and delivery
hereof, request and direct the Owner Trustee and the Loan Trustee to execute and
deliver the Indenture, and the Owner Trustee and the Loan Trustee agree to
execute and deliver the Indenture (the Indenture to be executed and delivered
shall set forth the interest rates, principal amounts and amortization schedules
of the Equipment Notes determined as contemplated by Section 2 hereof). The
Lessee, by execution and delivery hereof, consents to such execution and
delivery of the Indenture. The Indenture shall be effective as of the Closing.
SECTION 7. Execution and Delivery of the Amended and Restated Lease.
The Loan Trustee and the Owner Participant, by execution and delivery hereof,
request and instruct the Owner Trustee to execute and deliver the Lease; and the
Owner Trustee and the Lessee agree to execute and deliver the Lease. The Lease
shall be effective as of the Closing.
SECTION 8. Execution and Delivery of the Amended and Restated Trust
Agreement. The Owner Trustee, in its individual capacity, and the Owner
Participant, by execution and delivery hereof, agree (subject to the terms of
this Agreement) to execute and deliver the Trust Agreement. The Trust Agreement
shall be effective as of the Closing Date.
SECTION 9. Extent of Interest of Noteholders. A Noteholder shall have
no further interest in, or other right with respect to, the Indenture Estate
when and if the principal of, Make-Whole Amount, if any, and interest on all
Equipment Notes held by such Noteholder and all other sums payable to such
Noteholder hereunder and under the Indenture shall have been paid in full. By
acceptance of an Equipment Note, each Noteholder agrees that it will look solely
to the income and proceeds from the Indenture Estate to the extent available for
distribution to such Noteholder as provided in Section 2.11 of the Indenture and
that neither the Owner Participant nor the Owner Trustee shall be personally
liable to such Noteholder for any amounts payable under the Equipment Notes or
the Indenture, except as expressly provided in the Operative Documents.
SECTION 10. Lessee's Representations, Warranties and Indemnities.
(a) In General. The Lessee represents and warrants that:
(i) the Lessee is a corporation duly organized and
validly existing in good standing under the laws of the State
of Delaware, is a Certificated Air Carrier and a Citizen of
the United States and has the corporate power and authority to
own or hold under lease its properties and to enter into and
perform its obligations under the Operative Documents to which
it is a party, and is duly qualified to do business as a
foreign corporation in good standing in each state in which it
has intrastate
14
AA-Boeing EETC-Leased Aircraft Participation Agreement
routes or has a principal office or a major overhaul facility
(other than states where the failure to so qualify would not
have a material adverse effect on the consolidated financial
condition of the Lessee and its subsidiaries, considered as a
whole), and its chief executive office (as such term is used
in Article 9 of the Uniform Commercial Code as in effect in
the State of Texas) is located in Fort Worth, Texas;
(ii) the execution, delivery and performance of the
Operative Documents to which the Lessee is a party have been
duly authorized by all necessary corporate action on the part
of the Lessee, do not require any stockholder approval, or
approval or consent of any trustee or holder of any
indebtedness or obligations of the Lessee, and do not
contravene any law, governmental rule, regulation or order
binding on the Lessee or the Certificate of Incorporation or
By-Laws of the Lessee or contravene the provisions of, or
constitute a default under, or result in the creation of any
Lien (other than Permitted Liens as permitted under the Lease)
upon the property of the Lessee or on the Aircraft under, any
indenture, mortgage, contract or other agreement to which the
Lessee is a party or by which it or any of its properties may
be bound or affected;
(iii) neither the execution and delivery by the
Lessee of the Operative Documents to which it is a party, nor
the consummation of any of the transactions by the Lessee
contemplated hereby or thereby, requires the consent or
approval of, the giving of notice to, or the registration
with, or the taking of any other action in respect of, the
Department of Transportation, the FAA, or any other Federal,
state, local or foreign governmental authority or agency,
other than (i) the registration of the issuance and sale of
the Pass Through Certificates, to be issued pursuant to the
provisions of the Pass Through Trust Documents, under the
Securities Act, as may be required under the Registration
Rights Agreement and under the securities laws of any state in
which the Pass Through Certificates may be offered for sale if
the laws of such state require such action, (ii) the
qualification of the Pass Through Trust Documents under the
Indenture, pursuant to an order of the Securities and Exchange
Commission, as may be required under the Registration Rights
Agreement and (iii) the registration and filings referred to
in Section 10(a)(viii);
(iv) this Agreement has been duly executed and
delivered and constitutes, and each other Operative Document
to which the Lessee is a party has been duly executed and
delivered and constitutes, a legal, valid and binding
obligation of the Lessee enforceable against the Lessee in
accordance with its terms except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws
15
AA-Boeing EETC-Leased Aircraft Participation Agreement
affecting the rights of creditors generally and by general
principles of equity and except, in the case of the Lease, as
limited by applicable laws which may affect the remedies
provided in the Lease, which laws, however, do not make the
remedies provided in the Lease inadequate for the practical
realization of the rights and benefits provided thereby;
(v) there are no pending or threatened actions or
proceedings before any court, governmental authority or
administrative agency or arbitrator which would materially
adversely affect the consolidated financial condition of the
Lessee and its consolidated subsidiaries, taken as a whole, or
the ability of the Lessee to perform its obligations under the
Operative Documents to which it is a party;
(vi) the Lessee and its subsidiaries have filed or
caused to be filed all Federal, state, local and foreign tax
returns which are required to be filed and have paid or caused
to be paid all taxes shown to be due and payable on such
returns or (except to the extent being contested in good faith
and for the payment of which adequate reserves have been
provided) on any assessment received by the Lessee or any of
its subsidiaries, to the extent that such taxes have become
due and payable, except to the extent that the failure to file
any such tax returns or to pay any such Taxes could not
reasonably be expected to have a material adverse effect on
the financial condition of the Lessee and its subsidiaries,
taken as a whole; the Federal income tax liability, if any, of
the Lessee has been determined by the Internal Revenue Service
(or the statute of limitations has expired with respect to a
redetermination of such liability) and (except to the extent
being contested in good faith and for the payment of which
adequate reserves have been provided) paid for all years prior
to and including the fiscal year ended December 31, 1992; the
Federal income tax returns of the Lessee for the fiscal years
ended December 31, 1993 to December 31, 2000, inclusive, are
subject to examination by the Internal Revenue Service;
(vii) the audited consolidated balance sheet of the
Lessee and its subsidiaries as of the end of each of its last
three fiscal years, and the related consolidated statements of
operations and cash flows for the three fiscal years then
ended, fairly present the consolidated financial position of
the Lessee and its consolidated subsidiaries as at the end of
each such fiscal year and the consolidated results of their
operations and cash flows for each such fiscal year in
accordance with generally accepted accounting principles
applied on a consistent basis (except as may be noted in such
financial statements); from December 31, 1997 to the date of
this Participation Agreement, there has been no material
adverse change in
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AA-Boeing EETC-Leased Aircraft Participation Agreement
such consolidated financial position of the Lessee and its
consolidated subsidiaries, taken as a whole;
(viii) except for (A) the filing for recording
pursuant to the Transportation Code of the Lease (with the
Indenture covering the Aircraft attached), the Trust
Agreement, the Indenture and the Instrument of Resignation,
(B) the filing of financing statements (and continuation
statements at periodic intervals) with respect to the security
interests created by such documents under the Uniform
Commercial Code of Texas, Utah, Delaware and The District of
Columbia, and (C) the taking of possession by the Loan Trustee
of the original chattel paper counterpart 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 Uniform Commercial Code of any
applicable jurisdiction) is necessary or advisable under the
laws of the United States of America or any State thereof in
order to perfect the Owner Trustee's interest in the Aircraft
as against Lessee and any third parties, or to perfect the
security interest in the Owner Trustee's interest in the
Indenture Estate created under the Indenture in favor of the
Loan Trustee (with respect to such portion of the Aircraft as
is covered by the recording system established by the Federal
Aviation Administration pursuant to the Transportation Code)
and in the Lease;
(ix) the Lessee is not an investment company or a
company controlled by an investment company within the meaning
of the Investment Company Act of 1940, as amended;
(x) the Lessee is not in default in the performance
of any term or condition of the Purchase Agreement which
materially adversely impairs the transactions contemplated
hereby;
(xi) none of the proceeds from the issuance of the
Pass Through Certificates or from the acquisition by the Owner
Participant of its beneficial interest in the Trust Estate
will be used directly or indirectly by the Lessee to purchase
or carry any "margin stock" as such term is defined in
Regulation G of the Board of Governors of the Federal Reserve
System;
(xii) the Lessee has not voluntarily subjected the
Aircraft to any lease or mortgage, the existence of which has
not been disclosed to the Lessor;
(xiii) neither the Lessee nor any Person authorized
to act on its behalf has (1) directly or indirectly offered
any interest in the Trust Estate
17
AA-Boeing EETC-Leased Aircraft Participation Agreement
or any similar interest for sale to, or solicited any offer to
acquire the same from, any Person other than the Owner
Participant and not more than 35 other institutional
investors, or (2) directly or indirectly offered the Pass
Through Certificates for sale to any Person other than in a
manner required by the Securities Act and by the rules and
regulations thereunder;
(xiv) no event has occurred and is continuing which
constitutes an Event of Default or an Event of Loss would
constitute an Event of Default or on Event of Loss but for the
requirement that notice be given or time elapse or both; and
(xv) the original counterpart of the Lease was
delivered to the Loan Trustee on the Closing Date.
NOTWITHSTANDING ANYTHING CONTAINED HEREIN, IN THE PURCHASE AGREEMENT ASSIGNMENT,
OR IN THE LEASE TO THE CONTRARY, THE LESSEE DOES NOT MAKE NOR SHALL THE LESSEE
BE DEEMED TO HAVE MADE, AND THE LESSEE HEREBY DISCLAIMS, ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE WORKMANSHIP, DESIGN, PATENT
INFRINGEMENT, MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT AS OF THE
CLOSING DATE. NOTHING CONTAINED IN THE PRECEDING SENTENCE SHALL BE INTERPRETED
TO BE IN DEROGATION OF OR CONSTRUED TO LIMIT THE LESSEE'S INDEMNITY OBLIGATIONS
HEREUNDER OR TO EXCUSE THE PERFORMANCE BY THE LESSEE OF ITS OBLIGATIONS UNDER
THIS AGREEMENT OR ANY OTHER OPERATIVE DOCUMENT
(b) General Indemnity.
(1) Claims Defined. For the purposes of this Section 10(b),
"Claims" shall mean any and all liabilities, obligations, losses, damages,
penalties, claims, actions or suits of whatsoever kind and nature (whether or
not on the basis of negligence, strict or absolute liability or liability in
tort) which may be imposed on, incurred by, suffered by, or asserted against an
Indemnitee, as defined herein, and, except as otherwise expressly provided in
this Section 10(b), shall include all costs, disbursements and expenses
(including reasonable legal fees and expenses) of an Indemnitee in connection
therewith or related thereto.
(2) Indemnitee Defined. For the purposes of this Section
10(b), "Indemnitee" means the Owner Trustee (in both its individual capacity and
as Owner Trustee), the Owner Participant, each Pass Through Trustee (in both its
individual capacity and as Pass Through Trustee) so long as such Pass Through
Trustee is the holder of any Equipment Note, the Original Loan Participant (with
respect to matters arising
18
AA-Boeing EETC-Leased Aircraft Participation Agreement
prior to (or relating to the period prior to) the Closing Date), the Indenture
Trustee (in both its individual capacity and as Indenture Trustee, with respect
to matters arising prior to the Closing Date), the Loan Trustee (in both its
individual capacity and as Loan Trustee), the Subordination Agent, so long as
such Subordination Agent holds any Equipment Note as agent and trustee of any
Pass Through Trustee, each Liquidity Provider and their respective successors
and permitted assigns, directors, officers, employees, agents and servants (the
respective successors and permitted assigns, directors, officers, employees,
agents and servants of (a) the Owner Trustee (in both its individual capacity
and as Owner Trustee), together with the Owner Trustee, (b) the Owner
Participant, together with the Owner Participant, (c) each Pass Through Trustee
(in both its individual capacity and as Pass Through Trustee) together with the
Pass Through Trustee, (d) any Original Loan Participant, together with such
Original Loan Participant, (e) the Loan Trustee (in both its individual capacity
and as Loan Trustee), together with the Loan Trustee, (f) the Subordination
Agent, together with the Subordination Agent, (g) the Liquidity Provider,
together with the Liquidity Provider, being in each case referred to herein
collectively as the "Related Indemnitee Group" for each such party). No holder
of a Pass Through Certificate in its capacity as such holder shall be an
Indemnitee for purposes hereof.
(3) Claims Indemnified. Subject to the exclusions stated in
subsection (4) below, whether or not any of the transactions contemplated hereby
shall be consummated, the Lessee agrees to indemnify, protect, defend and hold
harmless on an After-Tax Basis each Indemnitee against Claims in any way
resulting from or arising out of (i) the Operative Documents, the Pass Through
Trust Documents or any sublease under the Lease or the enforcement of any of the
terms thereof, or any amendment, modification or waiver in respect thereof or
any of the transactions contemplated hereby or thereby, (ii) the purchase,
acceptance or rejection of the Aircraft including, without limitation, the
Airframe, any Engine, engine or Part (or any portion thereof) hereunder, (iii)
the manufacture, design, purchase, resale, acceptance, non-acceptance or
rejection of the Aircraft hereunder or under the Lease, (iv) the Aircraft,
whether or not arising out of the ownership, delivery, non-delivery, lease,
sublease, possession, use, non-use, substitution, airworthiness, state of
airworthiness, control, maintenance, repair, replacement, operation,
registration, re-registration, condition, sale, storage, modification,
alteration, return, transfer or other disposition of the Aircraft, the Airframe,
any Engine, any engine installed on the Airframe, any Part or any Passenger
Convenience Equipment (or portion thereof) (including, without limitation, any
death or injury to passengers or others, any damage to any property, the
environment, latent or other defects, whether or not discoverable, strict tort
liability, and any Claim for patent, trademark or copyright infringement), (v)
any breach of or failure to perform or observe, or any other non-compliance
with, any covenant, condition or agreement or other obligations to be performed
by the Lessee under any Operative Document, or the falsity of any representation
or warranty of the Lessee in any of the Operative Documents to which the Lessee
is a party or any sublease under the Lease or the enforcement of any of the
terms thereof,
19
AA-Boeing EETC-Leased Aircraft Participation Agreement
or any amendment, modification or waiver in respect thereof or any of the
transactions contemplated hereby or thereby, other than covenants, conditions,
agreements, obligations, representations and warranties in the Tax Indemnity
Agreement, or (vi) the offer, sale or delivery of any Equipment Notes or Pass
Through Certificates or any interest in the Trust Estate. Without limitation of
the foregoing, the Lessee agrees to pay the reasonable ongoing fees, and the
reasonable ongoing out-of-pocket costs and expenses (including, without
limitation, reasonable attorney's fees and disbursements and, to the extent
payable as provided in the Indenture, reasonable compensation and expenses of
the Loan Trustee's agents), of the Owner Trustee, the Loan Trustee and the
Liquidity Provider in connection with the transactions contemplated by the
Operative Documents.
(4) Claims Excluded. The following are excluded from the
Lessee's agreement to indemnify any Indemnitee under this Section 10(b):
(i) Any Claim to the extent caused by acts or events
occurring after the earlier of (x) the return of the Aircraft
pursuant to the Return Conditions (it being understood that
the date of the placement of the Aircraft in storage as
provided in Section G of the Return Conditions constitutes the
date of return of the Aircraft under the Lease), and (y) the
expiration or earlier termination of the Lease under
circumstances not requiring the return of the Aircraft, unless
and to the extent such Claim is attributable to the failure of
the Lessee to perform its obligations under the Lease in full
compliance therewith or acts occurring in connection with the
exercise of remedies pursuant to Section 15 of the Lease
following the occurrence and continuance of an Event of
Default thereunder;
(ii) Any Claim to the extent attributable to a Tax,
or any Claim of the Owner Participant to the extent
attributable to a Loss, whether or not Lessee is required to
indemnify therefor under Section 10(c) of this Participation
Agreement or the Tax Indemnity Agreement, provided that this
Section 10(b)(4)(ii) shall not exclude the reasonable
out-of-pocket costs, disbursements and expenses incurred with
respect to Taxes for which the Lessee is required to indemnify
under Section 10(c) of this Participation Agreement;
(iii) Any Claim to the extent caused by the gross
negligence or willful misconduct of such Indemnitee or any of
its Related Indemnitee Group (other than any gross negligence
or willful misconduct imputed as a matter of law to such
Indemnitee solely by reason of its interest in the Aircraft or
its status as a party to any of the Operative Documents);
20
AA-Boeing EETC-Leased Aircraft Participation Agreement
(iv) Any Claim to the extent caused by the
noncompliance by such Indemnitee or any of its Related
Indemnitee Group with any of the terms of, or any
misrepresentation by such Indemnitee or any of its Related
Indemnitee Group contained in, this Participation Agreement,
any other Operative Document or any Pass Through Trust
Document to which such Indemnitee or any of its Related
Indemnitee Group is a party or any agreement relating hereto
or thereto (except if such non-compliance was based on an
inaccurate representation or warranty of the Lessee);
(v) Any Claim that constitutes a Permitted Lien
attributable to such Indemnitee;
(vi) Any Claim to the extent caused by the offer,
sale, assignment, transfer, participation or other disposition
(voluntary or involuntary) by or on behalf of such Indemnitee
of any Equipment Notes or Pass Through Certificates or any
interest in the Trust Estate or the Trust Agreement, or any
similar security, other than a transfer by such Indemnitee of
its interests in the Aircraft pursuant to Section 9, 10, 15 or
20 of the Lease and any related provision of the Indenture
including, without limitation, Article 8 thereof except for
the cancellation of any Equipment Notes in connection with a
refinancing under Section 20 of this Participation Agreement
or a redemption under Section 2.08 of the Indenture;
(vii) Any Claim to the extent caused by a failure on
the part of the Owner Trustee to distribute in accordance with
the Trust Agreement any amounts received and distributable by
it thereunder to the extent such failure was not caused by or
attributable to the Lessee;
(viii) Any Claim to the extent such Claim is
attributable to (A) a failure on the part of the Loan Trustee
to distribute in accordance with this Agreement or the
Indenture any amounts received and distributable by it
hereunder or thereunder to the extent such failure was not
caused by or attributable to the Lessee, (B) a failure on the
part of the Subordination Agent to distribute in accordance
with the Intercreditor Agreement any amounts received and
distributable by it thereunder to the extent such failure was
not caused by or attributable to the Lessee or (C) a failure
on the part of any Pass Through Trustee to distribute in
accordance with the Pass Through Trust Agreement to which it
is a party any amounts received and distributable by it
thereunder to the extent such failure was not caused by or
attributable to the Lessee;
21
AA-Boeing EETC-Leased Aircraft Participation Agreement
(ix) Any Claim to the extent caused by the
authorization or giving or withholding by such Indemnitee of
any future amendments, supplements, waivers or consents with
respect to any of this Participation Agreement and the other
Operative Documents or the Pass Through Trust Documents, other
than such as have been requested by or consented to by the
Lessee, or such that occur as a result of an Event of Default
that shall have occurred and is continuing, or such as are
required or contemplated by (and, if contemplated by, in
compliance with) the provisions of the Operative Documents or
the Pass Through Trust Documents in order to give effect
thereto;
(x) Any Claim to the extent caused by an Indenture
Default that does not also constitute an Event of Default
under the Lease or an event which would constitute such an
Event of Default but for the requirement that notice be given
or time elapse or both;
(xi) Any Claim that would not have arisen but for the
appointment of a successor or an additional Owner Trustee
without the consent of the Lessee unless such successor or an
additional Owner Trustee or Indenture Trustee has been
appointed in connection with the exercise or remedies pursuant
to Section 15 of the Lease following the occurrence and
continuance of an Event of Default or if such appointment is
expressly required by any Operative Document or by applicable
law;
(xii) Any Claim to the extent caused by the failure
of a Person other than the Lessee to pay a cost, fee or
expense expressly payable by such Person in accordance with
Section 12(a), 12(b), 12(c), 12(f), 12(h), 12(j), 19(b),
19(c), or 20(a) and 20(b) hereof, or Section G of the Return
Conditions, or Sections 9, or 11 of the Lease;
(xiii) Any Claim that is an ordinary and usual
operating or overhead expense other than to the extent caused
by (a) the occurrence of an Event of Default or an Event of
Loss or (b) circumstances beyond the scope of routine
portfolio administration (such routine portfolio
administration to be deemed to include tax preparation and
other normally occurring administrative tasks but shall not
include any administrative obligations of the Lessee under the
Operative Documents or the Pass Through Trust Documents
performed by any Indemnitee);
(xiv) Any Claim to the extent that such Claim relates
to amounts payable by the Owner Trustee to the Loan Trustee in
respect of the Equipment Notes or otherwise under the
Indenture with respect to Make-Whole Amount, if any, payable
as a result of (x) a redemption or purchase
22
AA-Boeing EETC-Leased Aircraft Participation Agreement
of any Equipment Notes pursuant to Section 2.08 of the
Indenture or (y) an Indenture Default that does not constitute
a Lease Event of Default;
(xv) [Intentionally left blank];
(xvi) Any Claim to the extent such Claim is expressly
payable or borne by a Person other than the Lessee pursuant to
any provision of any Operative Document or any Pass Through
Trust Document;
(xvii) [Intentionally left blank];
(xviii) [Intentionally left blank];
(xix) [Intentionally left blank];
(xx) Any Claim that is directly attributable to a
"prohibited transaction" within the meaning of Section 406 of
ERISA or Section 4975(c)(i) of the Code that arises solely as
a result of (x) such Indemnitee's use of plan assets of any
"employee benefit plan" as defined in Section 3(3) of ERISA or
a "plan" as defined in Section 4975 of the Code, including any
entity whose assets are deemed to constitute plan assets under
Department of Labor Reg.ss.2510.3-101, to acquire or hold its
interest(s) in the Trust Estate or in any Equipment Note, as
applicable or (y) in the case of an Indemnitee which is the
Owner Participant or any of its Affiliates, the reliance by
any plan maintained or sponsored by the Owner Participant or
any of its Affiliates on the administrative exemption issued
to any of the Placement Agents;
(xxi) Any Claim to the extent such Claim is
attributable to one or more of the other aircraft financed
through the offering of Pass Through Certificates (in the
event of doubt, any Claim shall be allocated between the
Aircraft and such other aircraft in the same proportion that
the then outstanding Equipment Notes bear to the then
outstanding notes issued with respect to the other aircraft
and held by the Pass Through Trustees; and
(xxii) Any Claim attributable to the deregistration
of the Aircraft as a result of the failure of the Owner
Participant to be a Citizen of the United States.
A limitation on the Claims of one Indemnitee under this Section 10(b)(4) shall
not provide a basis for limiting any Claim of any other Indemnitee.
23
AA-Boeing EETC-Leased Aircraft Participation Agreement
(5) Insured Claims. In the case of any Claim indemnified by
the Lessee hereunder which is covered by a policy of insurance maintained by the
Lessee pursuant to Section 11 of the Lease, each Indemnitee agrees to cooperate,
at the Lessee's expense, with the insurers in the exercise of their rights to
investigate, defend or compromise such Claim as may be required to retain the
benefits of such insurance with respect to such Claim.
(6) Claims Procedure. An Indemnitee shall promptly notify the
Lessee of any Claim as to which indemnification is sought, provided that the
failure to provide such prompt notice shall not release the Lessee from any of
its obligations to indemnify hereunder. Any amount payable to any Indemnitee
pursuant to this Section 10(b) shall be paid on an After-Tax Basis within thirty
days after receipt of a written demand therefor from such Indemnitee accompanied
by a written statement describing in reasonable detail the Claims which are the
subject of and basis for such indemnity and the computation of the amount so
payable. Subject to the rights of insurers under policies of insurance
maintained pursuant to Section 11 of the Lease, so long as no Event of Default
shall have occurred and be continuing, the Lessee (at its sole cost and expense)
shall have the right to investigate, and the right in its sole discretion to
defend or compromise, any Claim for which indemnification is sought under this
Section 10(b); provided that in no event shall the right of any Indemnitee under
this Section 10(b) be adversely affected thereby and provided further that no
such Claim shall involve a material risk of the sale, forfeiture or loss
(including loss of use) of the Airframe or any Engine or any interest therein or
any meaningful risk of criminal liability or any material risk of civil penalty
against Lessor, any Pass Through Trustee or Owner Participant, and the
Indemnitee shall cooperate with all reasonable requests of the Lessee in
connection therewith; provided, however, that so long as an Event of Default has
occurred and is continuing, such Indemnitee shall have the right, along with the
concomitant right of the Lessee, to investigate, defend or compromise any such
Claim; provided that the Lessee shall reimburse such Indemnitee for all
reasonable costs and expenses incurred by it in connection therewith. The Lessee
will provide the Indemnitee with such information not within the control of such
Indemnitee, as is in the Lessee's control or as reasonably available to the
Lessee, which such Indemnitee may reasonably request and shall otherwise
cooperate with such Indemnitee so as to enable such Indemnitee to fulfill its
obligations under this Section 10(b)(6). Where the Lessee or the insurers under
a policy of insurance maintained by the Lessee undertake the defense of an
Indemnitee with respect to a Claim, and so long as the Lessee is entitled to
control such defense, no additional legal fees or expenses of such Indemnitee in
connection with the defense of such Claim shall be indemnified hereunder unless
such fees or expenses were incurred at the request of the Lessee or such
insurers; provided, however, that if (i) in the written opinion of counsel to
such Indemnitee an actual or potential material conflict of interest exists
where it is advisable for such Indemnitee to be represented by separate counsel
or (ii) such Indemnitee has been indicted or otherwise charged in a criminal
complaint and such Indemnitee informs the Lessee that such Indemnitee desires to
be represented by separate counsel, the reasonable
24
AA-Boeing EETC-Leased Aircraft Participation Agreement
fees and expenses of any such separate counsel shall be borne by the Lessee.
Subject to the requirements of any policy of insurance, an Indemnitee may
participate at its own expense in any judicial proceeding controlled by the
Lessee pursuant to the preceding provisions; provided that such party's
participation does not, in the reasonable opinion of the independent counsel
appointed by the Lessee or its insurers to conduct such proceedings,
significantly interfere with such control; and such participation shall not
constitute a waiver of the indemnification provided in this Section 10(b).
Notwithstanding anything to the contrary contained herein, (x) the Lessee shall
not under any circumstances be liable for the fees and expenses of more than one
counsel for each of (i) the Owner Participant and the Owner Trustee (and their
respective successors and permitted assigns, agents and servants and other
members of their respective Related Indemnitee Groups) and (ii) the
Subordination Agent, any Pass Through Trustee and the Loan Trustee (and their
respective successors and permitted assigns, agents and servants) except in the
case specified in the proviso to the fourth sentence of this paragraph (6) and
(y) the Lessee shall not defend or compromise any Claim if such proceedings will
involve a material risk of the sale, forfeiture or loss of, or the creation of
any Lien (other than a Permitted Lien) on the Airframe, any Engine or any part
of any thereof, or the Indenture Estate or the Trust Estate or any part of any
thereof, unless the Lessee shall have provided security for Lessee's obligations
under this Section 10(b) with respect to such Claim reasonably satisfactory to
the relevant Indemnitees in respect to such risk.
(7) Subrogation. To the extent that a Claim indemnified by the
Lessee under this Section 10(b) is in fact paid in full by the Lessee and/or an
insurer under a policy of insurance maintained by the Lessee pursuant to Section
11 of the Lease, the Lessee and/or such insurer, as the case may be, shall be
subrogated to the rights and remedies of the Indemnitee on whose behalf such
Claim was paid (other than rights of such Indemnitee under insurance policies
maintained at its own expense) with respect to the transaction or event giving
rise to such Claim, except that the Lessee shall not be subrogated to any rights
or remedies that the Owner Trustee may have against the Owner Participant under
Section 7.1 of the Trust Agreement or that the Loan Trustee may have against the
Owner Trustee under Section 11.01 of the Indenture. So long as no Event of
Default (or event that with the lapse of time would constitute an Event of
Default under Section 14(a), 14(g), 14(h) or 14(i) of the Lease) shall have
occurred and be continuing, should an Indemnitee receive any refund, in whole or
in part, with respect to any Claim paid by the Lessee hereunder, it shall
promptly pay the amount refunded (but not an amount in excess of the amount the
Lessee or any of its insurers has paid in respect of such Claim) over to the
Lessee. Moreover, if, by reason of any Claim that the Lessee has paid or
indemnified against pursuant to this Section 10(b), an Indemnitee realizes an
actual reduction in any Taxes that was not previously taken into account in
computing a payment by the Lessee pursuant to this Section 10(b), then such
Indemnitee shall promptly pay to the Lessee an amount equal to the actual net
reduction in Taxes realized by such Indemnitee attributable thereto plus the
actual reduction in Taxes realized by such Indemnitee as a result of any payment
to the Lessee pursuant to this sentence. Each
25
AA-Boeing EETC-Leased Aircraft Participation Agreement
Indemnitee shall in good faith use reasonable diligence in filing its tax
returns and in dealing with taxing authorities to seek and claim any tax
benefits that would result in such net reductions in Taxes.
(8) No Guaranty. Nothing set forth in this Section 10(b) shall
constitute a guarantee by the Lessee that the Aircraft shall have any particular
useful life or residual value or a guarantee to the Loan Trustee, the
Subordination Agent or any Pass Through Trustee that the Equipment Notes will be
paid.
(c) General Tax Indemnity.
(1) General. Subject to Section 10(c)(2) hereof, the Lessee
agrees to indemnify, protect, defend and hold harmless on an After-Tax Basis
each Tax Indemnitee against any and all Taxes imposed with respect to any period
after the Closing Date on any Tax Indemnitee, the Lessee, the Aircraft, the
Airframe, any Engine or any Part, upon or with respect to (A) the Aircraft, the
Airframe, any Engine or any Part or any interest in any thereof or the
applicability of the Lease to the Aircraft, the Airframe, any Engine or any Part
or any interest in any thereof, (B) the lease, sublease, hiring, acceptance,
delivery, transport, location, ownership, control, insurance, possession, use,
non-use, substitution, airworthiness, state of airworthiness, control,
maintenance, repair, replacement, operation, registration, re-registration,
condition, sale, storage, modification, alteration, return, transfer or other
disposition of the Aircraft, the Airframe, any Engine or any Part, (C) any Basic
Rent or Supplemental Rent payable by the Lessee, (D) the exercise of remedies
pursuant to Section 15 of the Lease in connection with an Event of Default that
shall have occurred and be continuing or (E) otherwise in connection with the
transactions contemplated by the Operative Documents.
(2) Taxes Excluded from Indemnity. The Lessee shall have no
obligation under the Lease with respect to Taxes described in any one or more of
the following clauses; provided that clauses (ii) and (vi) below shall not apply
in determining the additional amount necessary to make any payment under this
Section 10 on an After-Tax Basis:
(i) [Intentionally left blank];
(ii) Taxes imposed by any government or taxing
authority on, based on, measured by or with respect to
capital, net worth, doing business, retained earnings, tax
preferences, gross or net income or gross or net receipts or
that are franchise Taxes; provided that there shall not be
excluded by this clause (ii)(x) any such Taxes imposed by any
government or taxing authority located outside the United
States to the extent such Taxes would have been imposed had
the sole connection between the Tax Indemnitee and such
government or taxing authority been (I) the
26
AA-Boeing EETC-Leased Aircraft Participation Agreement
registration, location, use, operation or presence of the
Aircraft, the Airframe, any Engine or any Part in such
jurisdiction, (II) the presence, activity or other connection
of the Lessee or an Affiliate of the Lessee in or with such
jurisdiction, or (III) the Lessee's making a payment from or
through such jurisdiction or (y) any sales, use, transfer,
license, value added, property, excise or rental Taxes (or
Taxes in the nature thereof) imposed by any government or
taxing authority;
(iii) Taxes imposed on any Tax Indemnitee to the
extent such Taxes result from, or would not have been imposed
but for, (w) a Lessor's Lien, a Subordination Agent's Lien or
a Trustee's Lien, (x) the willful misconduct or gross
negligence of such Tax Indemnitee, (y) the breach or
inaccuracy of any representation, warranty or covenant of such
Tax Indemnitee in the Operative Documents or the Pass Through
Trust Documents (which is not attributable to a breach of any
representation, warranty or covenant of the Lessee), or (z)
the failure of such Tax Indemnitee to comply with any
certification, information, documentation, reporting or other
similar requirement, if such compliance is necessary or
appropriate to claim any relief from such Taxes for which such
Tax Indemnitee was eligible, unless such failure to comply is
due to the failure of the Lessee to provide timely written
notice to such Tax Indemnitee of such requirement or otherwise
to comply with its obligations under Section 10(c)(6) hereof;
(iv) Taxes imposed on any Tax Indemnitee in excess of
the Taxes that would have been imposed and indemnified against
had there not been a transfer (whether voluntary or
involuntary) (x) by a Tax Indemnitee of any interest in the
Aircraft, the Airframe, any Engine, any Part, the Trust
Estate, or any interest arising under any Operative Document
(other than such a transfer pursuant to Section 9, 10, or 20
of the Lease or the exercise of remedies pursuant to Section
15 of the Lease) or (y) of any interest (direct or indirect)
in a Tax Indemnitee; provided that in the case of any such
transfer by the initial Owner Participant within two years of
the Commencement Time, this clause (iv) shall apply to the
transferee of the initial Owner Participant only (I) if such
transfer is to a transferee Owner Participant that is not a
United States person for U.S. federal income tax purposes or
has its principal office, or participates in this transaction
through an office, located outside the United States or (II)
with respect to Taxes imposed on such transferee in the
relevant jurisdiction of a type that would not have been
incurred by a typical bank, leasing company, financial
institution or other company (which may include insurance
companies and utilities) regularly engaged in leasing
transactions;
27
AA-Boeing EETC-Leased Aircraft Participation Agreement
(v) Taxes imposed on any Tax Indemnitee on or with
respect to a transfer (whether voluntary or involuntary) (x)
by a Tax Indemnitee of any interest in the Aircraft, the
Airframe, any Engine, any Part, the Trust Estate, or any
interest arising under any Operative Document (other than such
a transfer pursuant to Section 9, 10, or 20 of the Lease or
the exercise of remedies pursuant to Section 15 of the Lease)
or (y) of any interest (direct or indirect) in a Tax
Indemnitee;
(vi) Taxes to the extent imposed with respect to any
period commencing after (x) the return of the Aircraft to the
Lessor pursuant to the Return Conditions or, if the Aircraft
is stored pursuant to Section G of the Return Conditions of
this Participation Agreement following termination thereof,
the date of the placement of the Aircraft in storage or (y)
the expiration or earlier termination of the Lease under
circumstances not requiring the return of the Aircraft;
provided that there shall not be excluded by this clause (vi)
any Taxes to the extent (I) attributable to events occurring
or matters arising prior to or simultaneously with the earlier
of such times, any failure of the Lessee to perform its
obligations under the Lease in full compliance therewith, or
the exercise of remedies pursuant to Section 15 of the Lease
in connection with an Event of Default that shall have
occurred and be continuing or (II) imposed with respect to any
payment by the Lessee under the Operative Documents after such
date;
(vii) Taxes imposed on any Tax Indemnitee by any
government or taxing authority to the extent such Taxes would
not have been imposed but for a present or former connection
between such Tax Indemnitee and such government or taxing
authority unrelated to the transactions contemplated by the
Operative Documents or the Pass Through Trust Documents;
(viii) Taxes to the extent such Taxes would not have
been imposed but for an amendment to any Operative Document or
any Pass Through Trust Document without the prior written
consent of the Lessee, unless such amendment is requested by
the Lessee, is expressly required by any Operative Document or
any Pass Through Trust Document or is made as a result of an
Event of Default that shall have occurred and be continuing;
(ix) Taxes for so long as such Taxes are being
contested in accordance with the provisions of Section
10(c)(5) hereof, except to the extent a payment by the Lessee
is required pursuant to such Section 10(c)(5);
28
AA-Boeing EETC-Leased Aircraft Participation Agreement
(x) Taxes imposed on any Tax Indemnitee in excess of
the Taxes that would have been imposed if such Tax Indemnitee
at all times had been a United States person for U.S. federal
income tax purposes;
(xi) value added Taxes imposed in lieu of income Tax
by the United States or any state or local government or
taxing authority thereof or therein;
(xii) Taxes that are directly attributable to a
"prohibited transaction" within the meaning of Section 406 of
ERISA or Section 4975(c)(i) of the Code that arise solely as a
result of (x) such Indemnitee's use of plan assets of any
"employee benefit plan" as defined in Section 3(3) of ERISA or
a "plan" as defined in Section 4975 of the Code, including any
entity whose assets are deemed to constitute plan assets under
Department of Labor Reg.ss.2510.3-101, to acquire or hold its
interest(s) in the Trust Estate or in any Equipment Note, as
applicable or (y) in the case of a Tax Indemnitee which is the
Owner Participant or any of its Affiliates, the reliance by
any plan maintained or sponsored by the Owner Participant or
any of its Affiliates on the administrative exemption issued
to any of the Placement Agents;
(xiii) Taxes to the extent imposed by reason of the
trust created under the Trust Agreement not being treated as a
"grantor trust" or otherwise being disregarded for U.S.
federal income tax purposes, except to the extent such Taxes
would have otherwise been imposed on another Tax Indemnitee
and been subject to indemnification by the Lessee under this
Section 10(c);
(xiv) Taxes on, based on, measured by or with respect
to any consideration payable for services rendered by any Pass
Through Trustee, the Subordination Agent, the Owner Trustee or
the Loan Trustee; and
(xv) [Intentionally left blank];
(3) Tax Savings. If, by reason of any Claims or Taxes paid or
indemnified against by the Lessee pursuant to Section 10(b) or this Section
10(c), any Indemnitee or Tax Indemnitee (or any related Person) at any time
realizes a net reduction in any Taxes not indemnified against by the Lessee and
not taken into account previously in computing the amount of any indemnity
payable by the Lessee under Section 10(b) or this Section 10(c), such Indemnitee
or Tax Indemnitee shall, subject to Section 10(c)(9) hereof if an Event of
Default or Specified Default has occurred and is continuing, promptly pay to the
Lessee an amount that, after subtraction of any further reduction in Taxes such
Tax Indemnitee or Indemnitee realizes as a result of the payment thereof,
29
AA-Boeing EETC-Leased Aircraft Participation Agreement
which reduction was not previously taken into account in computing an amount
payable by the Lessee hereunder, is equal to the amount of such net Tax
reduction; provided that any subsequent loss of a Tax benefit for which a
payment has been made to the Lessee under this Section 10(c)(3) (or which was
taken into account in computing an amount payable by the Lessee under this
Section 10(c)) shall be treated as an indemnifiable Tax hereunder without regard
to the exclusions set forth in Section 10(c)(2) hereof. Each Tax Indemnitee
shall in good faith use diligence in filing its tax returns and in dealing with
taxing authorities to seek and claim any Tax benefit that would result in such a
reduction in Taxes or would minimize the Taxes indemnifiable by the Lessee
hereunder.
(4) Payment. The Lessee shall pay any Tax for which it is
liable pursuant to this Section 10(c) directly to the appropriate taxing
authority, if allowable, or if not so allowable, directly to the relevant Tax
Indemnitee. Any amount payable directly to any Tax Indemnitee pursuant to this
Section 10(c) shall be paid to such Tax Indemnitee on or prior to the later of
(A) 30 days after receipt by the Lessee of a written demand therefor from such
Tax Indemnitee accompanied by a written statement describing in reasonable
detail the Taxes that are the subject of such indemnity and the computation of
the amount so payable, (B) three Business Days prior to the due date for the
payment of such Taxes (including all extensions) or (C) in the case of amounts
which are being contested in accordance with Section 10(c)(5) hereof, the time
such contest (including all appeals, if any) is finally resolved; provided that
the Lessee shall pay any amounts due pursuant to Section 10(c)(5) hereof at the
time or times required by such clause. If requested by a Tax Indemnitee in
writing, the Lessee shall furnish to such Tax Indemnitee the original or a
certified copy of a receipt (if any is reasonably available to the Lessee) for
the Lessee's payment of any Tax directly to a taxing authority pursuant to this
Section 10(c) or such other evidence of such payment by the Lessee as is
reasonably acceptable to such Tax Indemnitee and reasonably available to the
Lessee.
(5) Contests; Refunds. If a written claim is made against any
Tax Indemnitee for any Tax for which the Lessee may be obligated pursuant to
this Section 10(c), or if any Tax Indemnitee shall determine that any Tax for
which the Lessee may be obligated pursuant to this Section 10(c) may be payable,
such Tax Indemnitee shall notify the Lessee promptly in writing. If timely
requested by the Lessee in writing, such Tax Indemnitee shall in good faith
diligently contest through appropriate administrative and judicial proceedings
(including pursuing all judicial appeals, but not to the United States Supreme
Court) in the name of such Tax Indemnitee (or, if requested by the Lessee and
permitted by applicable law, and subject to the conditions set forth in the next
sentence, permit the Lessee to contest in the name of the Lessee or such Tax
Indemnitee), the validity, applicability and amount of such Tax by (x) resisting
payment thereof, (y) not paying the same except under protest, if protest be
necessary or proper, or (z) if payment be made, seeking a refund thereof in
appropriate administrative and judicial proceedings; provided that (A) prior to
taking such administrative or judicial action the Lessee shall have agreed to
pay (and shall pay) such Tax Indemnitee on
30
AA-Boeing EETC-Leased Aircraft Participation Agreement
demand all reasonable out-of-pocket costs and expenses which such Tax Indemnitee
may incur in connection with contesting such claim, including, without
limitation, all reasonable legal, accountants' and investigatory fees and
disbursements, (B) if such contest shall be conducted in a manner requiring the
payment of the Tax, the Lessee shall advance to such Tax Indemnitee (on an
interest-free basis) the amount of such payment and shall agree to indemnify
such Tax Indemnitee against any adverse tax consequences to such Tax Indemnitee
resulting from such interest-free loan, (C) the action to be taken will not
result in any material danger of forfeiture, sale or loss of the Aircraft, the
Airframe or any Engine (unless the Lessee shall have provided to the Lessor a
bond or other sufficient protection against such risk acceptable to the Lessor
and such Tax Indemnitee), (D) if an Event of Default or Specified Default shall
have occurred and be continuing, the Lessee shall have provided security for its
related tax indemnity obligation reasonably acceptable to such Tax Indemnitee,
(E) prior to commencing any contest involving income Taxes or any judicial
action (but not administrative action) involving non-income Taxes, if reasonably
requested by the Tax Indemnitee, the Lessee shall have provided to such Tax
Indemnitee an opinion of tax counsel (who may be an employee of American in the
case of a judicial action involving non-income Taxes) selected by the Lessee and
reasonably acceptable to such Tax Indemnitee to the effect that there is a
reasonable basis (consistent with ABA Opinion 85-352) for contesting such claim,
and (F) the amount of the potential indemnity (together with the amount of all
similar or logically related claims that have been or could be raised in any
audit involving such Tax Indemnitee for which the Lessee may be liable to pay an
indemnity under this Section 10(c)) exceeds $10,000 in connection with the
Lease. The Lessee shall be permitted to conduct such a contest (i) in its name
if contesting in its name is allowable under applicable law or (ii) in the name
of the relevant Tax Indemnitee, if consented to by the relevant Tax Indemnitee
(it being understood that the relevant Tax Indemnitee shall consider in good
faith the Lessee's request to conduct a contest in the name of the relevant Tax
Indemnitee). Otherwise, the relevant Tax Indemnitee shall conduct such contest.
In any contest under this Section 10(c)(5) conducted by the Lessee, the Lessee
shall determine the forum and manner in which such contest shall be conducted
and, upon the written request of the relevant Tax Indemnitee, will advise such
Tax Indemnitee of that status of such contest. In any contest under this Section
10(c)(5) conducted by a Tax Indemnitee, such Tax Indemnitee shall determine the
forum for such contest and the manner in which it shall be conducted; provided
that such Tax Indemnitee shall consult in good faith with the Lessee and its
counsel, and provide to the Lessee and its counsel any communications to or from
the relevant taxing authority or administrative or judicial body, with respect
to the issues for which the Lessee may be obligated under this Section 10(c).
If any Tax Indemnitee shall obtain a refund of all or part of any Tax
paid by the Lessee or for which the Lessee shall have reimbursed such Tax
Indemnitee, such Tax Indemnitee shall pay the Lessee an amount equal to the
amount of such refund, including any interest received on such refund
attributable to such Tax that is properly attributable
31
AA-Boeing EETC-Leased Aircraft Participation Agreement
to the period subsequent to such payment or reimbursement by the Lessee, reduced
by any Taxes payable by such Tax Indemnitee as a result of the receipt or
accrual of such refund and interest, and increased by any reduction in Taxes
actually realized by such Tax Indemnitee as a result of any payment by such Tax
Indemnitee pursuant to this sentence, which reduction was not previously taken
into account in computing an amount payable by the Lessee hereunder. If it is
later determined that the Tax Indemnitee was not entitled to such refund, the
portion of such refund that is repaid, recaptured or disallowed will be treated
as Taxes for which the Lessee must indemnify the Tax Indemnitee pursuant to this
Section 10(c) but without regard to Section 10(c)(2) hereof.
If a Tax Indemnitee elects not to contest any Tax that it is otherwise
required to contest in accordance with this Section 10(c)(5), or elects to
settle, compromise or otherwise terminate any such contest without the consent
of the Lessee, such election shall constitute a waiver by such Tax Indemnitee of
any right to any amount that might otherwise be payable by the Lessee pursuant
to this Section 10(c) with respect to such Tax (other than any expenses of the
contest) and, if the Lessee has theretofore provided such Tax Indemnitee with an
interest-free loan to pay such amount, such Tax Indemnitee shall promptly repay
an amount which, after subtraction of any further reduction in Taxes actually
realized by such Tax Indemnitee as a result of such payment, which reduction was
not previously taken into account in computing an amount payable by the Lessee
hereunder, shall be equal to the amount of such interest-free loan, together
with interest on the amount of such loan from the date such loan was made to the
date of repayment pursuant to this sentence at the rate that would have been
paid by the relevant taxing authority had such contest resulted in a refund.
(6) Reports; Returns; Forms. If any report or return is
required to be filed with respect to any property Tax (or any Tax in the nature
of a property Tax) subject to indemnification by the Lessee under this Section
10(c), the Lessee shall, if permitted by applicable law to do so, timely file
such report or return (except for any such report or return as to which the
Lessor has notified the Lessee that the Lessor intends to file such report or
return) so as to show ownership of the Aircraft in the Lessor and, if requested
by the Lessor, send a copy of such report or return to the Lessor; provided that
the Lessor shall have furnished the Lessee, at the Lessee's request, with such
information, not within the control of the Lessee, as is in the control of the
Lessor or the Owner Participant, if any, and is reasonably available to such
Person and necessary to file such report or return (it being understood that
neither the Lessor nor the Owner Participant shall be required to furnish copies
of its actual Tax returns). If the Lessee is not permitted by applicable law to
file any such report or return with respect to such Tax, or has insufficient
information to do so, the Lessee will promptly notify the Lessor of such
requirement and prepare and deliver to the Lessor a proposed form of such report
or return, within a reasonable time prior to the time such report or return is
to be filed. If any report or return is required to be filed with respect to any
Tax (other than a property Tax or Tax in the nature thereof) for which the
Lessee is obligated under this Section 10(c), the Lessee will notify the
32
AA-Boeing EETC-Leased Aircraft Participation Agreement
relevant Tax Indemnitee thereof upon the Lessee's obtaining actual knowledge of
such requirement. In addition, the Lessee will furnish upon written request such
data in its possession or otherwise reasonably available to it as any Tax
Indemnitee may reasonably request to enable such Tax Indemnitee to comply with
the requirements of any taxing authority arising out of such Tax Indemnitee's
participation in the transactions contemplated by the Lease.
Each Tax Indemnitee agrees to furnish from time to time to or as
directed by the Lessee, upon the Lessee's written request and at the Lessee's
expense, such duly executed and properly completed forms, statements or
certificates as may be necessary or appropriate in order to claim any available
reduction of any Tax for which the Lessee may be obligated under this Section
10(c); provided that the Lessee shall have furnished such Tax Indemnitee with
any information necessary to complete such form, statement or certificate that
is not otherwise reasonably available to such Tax Indemnitee.
(7) Verification. At the request of the Lessee, any statement
prepared by a Tax Indemnitee pursuant to this Section 10(c), and any amount
payable by or to the Lessee pursuant to this Section 10(c), shall be verified
and certified by a nationally recognized firm of independent accountants (which
may be the firm that audits such Tax Indemnitee's financial statements) selected
by the Tax Indemnitee and reasonably acceptable to the Lessee. The costs of any
such verification and certification shall be borne by the Lessee unless such
firm determines that any amount payable (A) by the Lessee to a Tax Indemnitee is
less than 95% of the amount determined to be so payable by such Tax Indemnitee
or (B) by any Tax Indemnitee to the Lessee is greater than the amount determined
to be so payable by such Tax Indemnitee by at least 5%, in either of which cases
the cost of such verification and certification shall be paid by the Tax
Indemnitee. In the event such firm shall determine that such amount or statement
is incorrect, then such firm shall determine what it believes to be the correct
amount, and such determination shall be binding upon the parties. Any Tax return
of a Tax Indemnitee provided to such firm shall be confidential and shall be
used by it only for purposes of such verification and certification and shall
not be disclosed to the Lessee.
(8) Meaning of Certain Terms. For purposes of this Section
10(c), any reference to the Lessor, the Owner Trustee, the Owner Participant,
the Loan Trustee, Indenture Estate or a Tax Indemnitee shall, with respect to
any Tax imposed with respect to a combined, consolidated or affiliated group of
which such Person is a member, also include such group and any member thereof.
(9) Application of Payments During Event of Default. If, at
the time any amount would otherwise be payable to the Lessee under this Section
10(c), an Event of Default or Specified Default shall have occurred and be
continuing, such amount shall be held by the relevant Tax Indemnitee as security
for the obligations of the Lessee under the Operative Documents and invested in
accordance with Section 25 of the Lease and, if
33
AA-Boeing EETC-Leased Aircraft Participation Agreement
the Lessor declares the Lease to be in default pursuant to Section 14 thereof,
applied against the Lessee's obligations under the Operative Documents as and
when due. At such time as there shall not be continuing any such Event of
Default or Specified Default, such amount shall be paid to the Lessee to the
extent not previously applied under the preceding sentence.
(10) Non-Parties. If a Tax Indemnitee is not a party to this
Agreement, the Lessee may require such Tax Indemnitee to agree in writing, in a
form reasonably acceptable to the Lessee, to the terms of this Section 10(c)
prior to making any payments to such Tax Indemnitee under this Section 10(c).
(d) Survival. The Indemnities, representations and warranties and other
obligations of the Lessee (subject to Section 10(b)(4)(i) and 10(c)(2)(vi)) and
the obligations of each Indemnitee and Tax Indemnitee under this Section 10,
shall survive the expiration or other termination of the Operative Documents or
any of the Pass Through Trust Documents.
SECTION 11. Representations and Warranties.
(a) The Owner Participant represents and warrants that neither it nor
any person authorized by it to act on its behalf has directly or indirectly
offered any Equipment Note or Pass Through Certificate or any interest in and to
the Trust Estate, the Trust Agreement, or any similar security for sale, or
solicited any offer to acquire any of the same other than in a manner required
or permitted by the Securities Act of 1933, as amended, and by the rules and
regulations thereunder. The Owner Participant represents and warrants that its
interest in and to the Trust Estate and the Trust Agreement was acquired for its
own account and it was purchased for investment and not with a view to any
resale or distribution thereof; provided, however, that such representation
shall in no way limit the Owner Participant's right to transfer such interest
pursuant to, and in accordance with all the terms and conditions of, Section
19(c) hereof.
(b) Each of the Owner Participant and the Owner Trustee represents that
neither it nor any Person authorized to act on its behalf has (i) directly or
indirectly offered any interest in or to the Trust Estate or the Trust Agreement
to, or solicited any offer to acquire any of the same from, anyone other than
the Owner Participant and not more than 35 other institutional investors, (ii)
directly or indirectly offered the Equipment Notes or Pass Through Certificates
for sale to, or solicited any offer to acquire any of the same from, anyone
other than the Original Loan Participant and not more than 35 other
institutional investors or (iii) offered any interest in the Trust Estate or any
Equipment Notes or Pass Through Certificates in a manner that would violate the
Securities Act of 1933, as amended, the regulations thereunder or judicial or
administrative interpretations thereof having the force of law.
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AA-Boeing EETC-Leased Aircraft Participation Agreement
(c) The Owner Trustee represents and warrants, both in its individual
capacity and as trustee, that it has not directly or indirectly offered any
Equipment Notes or Pass Through Certificates or any interest in or to the Trust
Estate, the Trust Agreement, or any similar security, for sale to, or solicited
any offer to acquire any of the same from, anyone.
(d) State Street Bank and Trust Company of Connecticut, National
Association (in its individual capacity, together with its successors and
permitted assigns, "State Street"), generally, and each of the Loan Trustee, the
Subordination Agent and the Pass Through Trustee as it relates to it,
represents, warrants and covenants that:
(i) State Street is a national banking association
duly organized and validly existing in good standing under the
laws of the United States, is eligible to be the Loan Trustee
under Section 9.10 of the Indenture, will promptly comply with
Section 9.10 of the Indenture and has full power, authority
and legal right to enter into and perform its obligations
under each the Operative Documents and the Pass Through Trust
Documents to which State Street, the Loan Trustee, the
Subordination Agent or any Pass Through Trustee is a party
and, in its capacity as Loan Trustee and Pass Through Trustee,
respectively, to authenticate the Equipment Notes and the Pass
Through Certificates, respectively.
(ii) The execution, delivery and performance by State
Street, individually or in its capacity as Loan Trustee,
Subordination Agent or Pass Through Trustee, as the case may
be, of this Agreement, each of the other Operative Documents
and each of the Pass Through Trust Documents to which State
Street, the Loan Trustee, the Subordination Agent or any Pass
Through Trustee is a party, and the authentication of the
Equipment Notes and the Pass Through Certificates,
respectively, to be delivered on the Closing Date, have been
duly authorized by all necessary action on the part of State
Street, the Loan Trustee, the Subordination Agent and each
Pass Through Trustee, as the case may be, and do not violate
any law or regulation of the United States or of the state of
the United States in which State Street is located and which
governs the banking and trust powers of State Street or any
order, writ, judgment or decree of any court, arbitrator or
governmental authority applicable to State Street, the Loan
Trustee, the Subordination Agent or any Pass Through Trustee
or any of their assets, will not violate any provision of the
articles of association or by-laws of State Street and will
not violate any provision of, or constitute a default under,
any mortgage, indenture, contract, agreement, instrument or
undertaking to which any of State Street, the Loan Trustee,
the Subordination Agent or any Pass Through
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AA-Boeing EETC-Leased Aircraft Participation Agreement
Trustee is a party or by which any of them or their respective
properties may be bound or affected.
(iii) Neither the execution and delivery by State
Street, individually or in its capacity as Loan Trustee,
Subordination Agent or Pass Through Trustee, as the case may
be, of this Agreement, any other Operative Document or any
Pass Through Trust Document to which State Street, the Loan
Trustee, the Subordination Agent or any Pass Through Trustee
is a party, nor the consummation by State Street, the Loan
Trustee, the Subordination Agent or any Pass Through Trustee
of any of the transactions contemplated hereby or thereby,
requires the authorization consent or approval of, the giving
of notice to, the filing or registration with, or the taking
of any other action in respect of, any governmental authority
or agency of the United States or the state of the United
States where State Street is located and regulating the
banking and trust powers of State Street.
(iv) This Agreement, each other Operative Document
and each Pass Through Trust Document to which State Street,
the Loan Trustee, the Subordination Agent or any Pass Through
Trustee is a party have been duly executed and delivered by
State Street, individually and in its capacity as Loan
Trustee, Subordination Agent or Pass Through Trustee, as the
case may be, and constitute the legal, valid and binding
obligations of State Street, the Loan Trustee, the
Subordination Agent and such Pass Through Trustee, as it shall
be a party thereto, enforceable against it in accordance with
its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally and
by general principles of equity.
(v) It unconditionally agrees with and for the
benefit of the parties to this Agreement that it will not
directly or indirectly create, incur, assume or suffer to
exist any Loan Trustee Lien or Other Party Lien attributable
to it, and it agrees that it will, at its own cost and
expense, promptly take such action as may be necessary to
discharge and satisfy in full any such Lien; and it shall
indemnify, protect, defend and hold harmless each Indemnitee
and the Lessee against Claims in any way resulting from or
arising out of a breach by it of its obligations under this
Section 11(d)(v).
(vi) The Equipment Notes to be issued to the
Subordination Agent pursuant hereto are being acquired by it
to be held under the Intercreditor Agreement.
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AA-Boeing EETC-Leased Aircraft Participation Agreement
(vii) Each of State Street, the Loan Trustee, the
Subordination Agent and each Pass Through Trustee agrees that
it will not impose any lifting charge, cable charge,
remittance charge or any other charge or fee on any transfer
by the Lessee of funds to, through or by State Street, the
Loan Trustee, the Subordination Agent or such Pass Through
Trustee pursuant to this Agreement, any other Operative
Document or any Pass Through Trust Document, except as may be
otherwise agreed to in writing by the Lessee.
(viii) [Intentionally left blank];
(ix) There are no Taxes payable by State Street, the
Loan Trustee, the Subordination Agent or any Pass Through
Trustee imposed by the State of Connecticut or any political
subdivision or taxing authority thereof in connection with the
execution, delivery or performance by State Street, the Loan
Trustee, the Subordination Agent or any Pass Through Trustee
of any Operative Document or any Pass Through Trust Document
(other than franchise or other taxes based on or measured by
any fees or compensation received by any such Person for
services rendered in connection with the transactions
contemplated by the Operative Documents or the Pass Through
Trust Documents), and there are no Taxes payable by any Pass
Through Trustee imposed by the State of Connecticut or any
political subdivision thereof in connection with the
acquisition, possession or ownership by 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 such Pass Through Trustee for services rendered in
connection with the transactions contemplated by the Operative
Documents or the Pass Through Trust Documents) and, assuming
that the Pass Through Trusts will not be taxable for Federal
income tax purposes as corporations, but, rather, will be
characterized for such purposes as grantor trusts or
partnerships, the Pass Through Trusts will not be subject to
any Taxes imposed by the State of Connecticut or any political
subdivision thereof.
(x) Except with the consent of the Lessee, which
shall not be unreasonably withheld, State Street will act as
Pass Through Trustee solely through its offices within the
State of Connecticut, except for such services that may be
performed for it by various agents, but not directly by it, in
other states.
(xi) There are no pending or, to its knowledge,
threatened actions or proceedings against the State Street,
the Loan Trustee, the Subordination Agent or any Pass Through
Trustee before any court or
37
AA-Boeing EETC-Leased Aircraft Participation Agreement
administrative agency which individually or in the aggregate,
if determined adversely to it, would materially adversely
affect the ability of State Street, the Loan Trustee, the
Subordination Agent or any Pass Through Trustee to perform its
obligations under any Operative Document or any Pass Through
Trust Document.
(xii) The representation and warranties contained in
Section 7.15 of each Pass Through Trust Agreement are true,
complete and correct as of the Closing Date.
(e) The Owner Trustee, in its individual capacity (except with respect
to clauses (iii) and (v) below) and as Owner Trustee, represents and warrants
that:
(i) the Owner Trustee, in its individual capacity, is
a national banking association duly organized and validly
existing in good standing under the laws of the United States,
has full corporate power and authority to carry on its
business as now conducted and to enter into and perform its
obligations hereunder and under the Trust Agreement and
(assuming due authorization, execution and delivery of the
Trust Agreement by the Owner Participant) has full power and
authority, as Owner Trustee and/or, to the extent expressly
provided herein or therein, in its individual capacity, to
enter into and perform its obligations under each of the
Operative Documents to which it is a party;
(ii) the Owner Trustee in its trust capacity and, to
the extent expressly provided therein, in its individual
capacity, has duly authorized, executed and delivered the
Trust Agreement and (assuming the due authorization, execution
and delivery of the Trust Agreement by the Owner Participant)
each of the other Operative Documents to which it is a party
and the Equipment Notes; and the Trust Agreement constitutes a
legal, valid and binding obligation of the Owner Trustee, in
its individual capacity, enforceable against it in its
individual capacity or as Owner Trustee, as the case may be,
in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity;
(iii) assuming the due authorization, execution and
delivery of the Trust Agreement by the Owner Participant, each
of the Operative Documents (other than the Trust Agreement) to
which it is a party constitutes, or when entered into will
constitute, a legal, valid and binding obligation of the Owner
Trustee, in its individual
38
AA-Boeing EETC-Leased Aircraft Participation Agreement
capacity or as Owner Trustee, as the case may be, enforceable
against it in its individual capacity or as Owner Trustee, as
the case may be, in accordance with its terms, except as the
same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of
equity;
(iv) neither the execution and delivery by the Owner
Trustee, in its individual capacity or as Owner Trustee, as
the case may be, of the Operative Documents to which it is or
will be a party or the Equipment Notes, nor the consummation
by the Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, of any of the transactions
contemplated hereby or thereby, nor the compliance by the
Owner Trustee, in its individual capacity or as Owner Trustee,
as the case may be, with any of the terms and provisions
hereof and thereof, (A) requires or will require any approval
of its stockholders, or approval or consent of any trustees or
holders of any indebtedness or obligations of it, or (B)
violates or will violate its articles of association or
by-laws, or contravenes or will contravene any provision of,
or constitutes or will constitute a default under, or results
or will result in any breach of, or results or will result in
the creation of any Lien (other than as permitted under the
Lease) upon its property under, any indenture, mortgage,
chattel mortgage, deed of trust, conditional sale contract,
bank loan or credit agreement, license or other agreement or
instrument to which it is a party or by which it is bound, or
contravenes or will contravene any law, governmental rule or
regulation of the United States of America or the State of
Utah governing the banking or trust powers of the Owner
Trustee, or any judgment or order applicable to or binding on
it;
(v) there are no Taxes payable by the Owner Trustee,
either in its individual capacity or as Owner Trustee, imposed
by the State of Utah or any political subdivision thereof in
connection with the execution and delivery by the Owner
Trustee in its individual capacity of the Trust Agreement,
and, in its individual capacity or as Owner Trustee, as the
case may be, of this Agreement, the other Operative Documents
to which it is a party or the Equipment Notes;
(vi) there are no pending or threatened actions or
proceedings against the Owner Trustee, either in its
individual capacity or as Owner Trustee, before any court or
administrative agency which, if determined adversely to it,
would materially adversely affect the ability of the Owner
Trustee, in its individual capacity or as Owner Trustee, as
the case may be, to perform its obligations under the Trust
Agreement, the other Operative Documents to which it is a
party or the Equipment Notes;
39
AA-Boeing EETC-Leased Aircraft Participation Agreement
(vii) both its chief executive office, and the place
where its records concerning the Aircraft and all its interest
in, to and under all documents relating to the Trust Estate,
are located at Salt Lake City, Utah, and the Owner Trustee, in
its individual capacity, agrees to give the Owner Participant,
the Loan Trustee and the Lessee at least 30 days' prior
written notice of any relocation of said chief executive
office or said place from its present location;
(viii) no consent, approval, order or authorization
of, giving of notice to, or registration with, or taking of
any other action in respect of, any United States or local
governmental authority or agency or any United States federal
governmental authority or agency regulating the banking or
trust powers of the Owner Trustee, in its individual capacity,
is required for the execution and delivery of, or the carrying
out by, the Owner Trustee in its individual capacity or as
Owner Trustee, as the case may be, of any of the transactions
contemplated hereby or by the Trust Agreement or of any of the
transactions contemplated by any other of the Operative
Documents to which the Owner Trustee is or will be a party,
other than any such consent, approval, order, authorization,
registration, notice or action as has been duly obtained,
given or taken;
(ix) on the Closing Date, each of the Trust Estate
and the Indenture Estate shall be free of any Lessor's Liens
attributable to the Owner Trustee in its individual capacity;
(x) all funds received by the Owner Trustee from the
Owner Participant pursuant to the Trust Agreement will be
administered by it in accordance with the Trust Agreement; and
(xi) it is a Citizen of the United States without
making use of a voting trust agreement or a voting powers
agreement.
(f) The Owner Participant represents and warrants that:
(i) the Owner Participant is a corporation duly
organized and validly existing in good standing under the laws
of the State of Delaware and has the corporate power and
authority to carry on its present business and operations, to
own or lease its properties and to enter into and perform its
obligations under this Agreement, the Tax Indemnity Agreement
and the Trust Agreement, and this Agreement, the Tax Indemnity
Agreement and the Trust Agreement have been duly authorized,
executed and delivered by it and are legal, valid and binding
on it and are enforceable against it in accordance with their
respective terms, except as such
40
AA-Boeing EETC-Leased Aircraft Participation Agreement
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
rights of creditors generally and by general equity
principles;
(ii) the execution and delivery by the Owner
Participant of this Agreement, the Tax Indemnity Agreement and
the Trust Agreement and compliance by it with all of the
provisions thereof do not and on the Closing Date will not
contravene any law or any order of any court or governmental
authority or agency applicable to or binding on it (it being
understood that no representation or warranty is made with
respect to laws, rules, or regulations relating to aviation or
to the nature of the equipment owned by the Owner Trustee or
with respect to ERISA as Section 4975 of the Code (other than
as set forth in Section (vii) hereof) other than such laws,
rules, or regulations relating to the citizenship requirements
of the Owner Participant under applicable law) or contravene
the provisions of, or constitute a default under, its articles
of incorporation or by-laws or any indenture, mortgage,
contract or other material agreement or instrument to which it
is a party or by which it or any of its property may be bound
or affected;
(iii) no authorization or approval or other action
by, and no notice to or filing with, any governmental
authority or regulatory body (other than as required by the
Transportation Code or the regulations promulgated thereunder)
is required for the due execution, delivery or performance by
it of this Agreement, the Tax Indemnity Agreement and the
Trust Agreement;
(iv) the Trust Estate is free of Lessor's Liens and
Original Owner Participant's Liens attributable to it;
(v) it is a Citizen of the United States;
(vi) there are no pending or threatened actions or
proceedings before any court or administrative agency which
would materially adversely affect its financial condition or
its ability to perform its obligations under this Agreement,
the Tax Indemnity Agreement or the Trust Agreement; and
(vii) no part of the funds used by it to purchase and
hold its interest pursuant to Section 1 constitutes assets of
any "employee benefit plan" (as defined in Section 3(3) of
ERISA) or a plan (as defined in Section 4975 of the Code) or
an entity whose assets are deemed to constitute plan assets
under Department of Labor Reg. Section 2510.3-101.
41
AA-Boeing EETC-Leased Aircraft Participation Agreement
(g) The Original Loan Participant represents and warrants that:
(i) as of the Closing Date it is the owner of
Original Notes in the aggregate principal amount of the amount
specified in Schedule I, free and clear of Liens attributable
to it; and
(ii) this Agreement has been duly authorized,
executed and delivered by the Original Loan Participant and
constitutes the legal, valid and binding obligation of the
Original Loan Participant, enforceable against the Original
Loan Participant in accordance with its terms, except as such
enforceability may be limited by application of bankruptcy,
insolvency, moratorium or similar laws affecting the rights of
creditors generally, and by general principles of equity.
SECTION 12. Certain Covenants.
(a) The Lessee agrees promptly to pay all expenses, fees and other
costs incurred from time to time in connection with or arising out of the
negotiation, preparation, execution and delivery of this Agreement, the Pass
Through Trust Documents, the Placement Agreement, the other Operative Documents
and any other documents or instruments referred to herein or therein including,
without limitation: (x) the initial and ongoing fees of the Owner Trustee, the
Indenture Trustee, the Subordination Agent, each Pass Through Trustee, the Loan
Trustee and the Liquidity Provider in connection with the transactions
contemplated hereby and, (y) all the reasonable out-of-pocket costs and expenses
incurred by the Indenture Trustee, the Loan Trustee, the Owner Trustee, the
Owner Participant, the Original Loan Participant, the Subordination Agent, each
Pass Through Trustee and the Liquidity Provider in connection with the
negotiation, preparation, execution and delivery of this Agreement, the other
Operative Documents, the Pass Through Trust Documents, the Placement Agreement,
and any other documents or instruments referred to herein or therein, including,
without limitation,
(i) the reasonable fees, expenses and disbursements
of (A) Shearman & Sterling, special counsel for the Placement
Agents, (B) Morris, James, Hitchens & ▇▇▇▇▇▇▇▇ LLP, special
counsel for the Indenture Trustee, (C) Ray, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
special counsel for the Owner Trustee, (D) ▇▇▇▇▇ & ▇▇▇▇▇▇▇,
P.C., special counsel in Oklahoma City, Oklahoma and (E)
▇▇▇▇▇▇▇ ▇▇▇▇ L.L.P., special counsel for the Loan Trustee,
each Pass Through Trustee and the Subordination Agent; and
(ii) all other reasonable expenses incurred in
connection with such actions and transactions, including,
without limitation, printing and
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AA-Boeing EETC-Leased Aircraft Participation Agreement
document production or reproduction expenses, the fees,
expenses and/or commissions payable to each of the Placement
Agents in connection with the offering and sale of the Pass
Through Certificates, printing and document production or
reproduction expenses payable in connection with the offering
and sale of the Pass Through Certificates and all fees, taxes
and other charges payable in connection with the recording or
filing of the instruments and financing statements described
in this Agreement.
Notwithstanding the foregoing, the Lessee shall not pay the fees,
expenses and disbursements of Fulbright & ▇▇▇▇▇▇▇▇ L.L.P, special counsel for
the Owner Participant, the Owner Participant Guarantor, the Original Loan
Participant and the Liquidity Provider.
Each of the Owner Trustee, the Owner Participant, the Original Loan
Participant, the Lessee, each Pass Through Trustee, the Liquidity Provider, the
Placement Agents, the Subordination Agent, the Indenture Trustee and the Loan
Trustee shall promptly submit to the Lessee copies of the invoices in respect of
the foregoing transaction costs as they are received.
The Owner Participant shall pay any break costs, exit fees and other
amounts owing to, and costs and liabilities incurred by, the holders of the
Original Note in connection with any repayment of the Original Note in
connection with the refinancing contemplated hereunder.
(b) The Owner Participant covenants that if (i) it ceases to be a
Citizen of the United States and (ii) either (A) the Aircraft shall or would
thereupon become ineligible for registration in the name of the Owner Trustee
under the Transportation Code as in effect at such time, or under the law of the
current jurisdiction of registry of the Aircraft, as the case may be, and the
regulations then applicable thereunder, or (B) the Aircraft is registered in a
jurisdiction other than the United States in circumstances in which clause (A)
does not apply and the Lessee at any time upon notice to the Owner Participant
proposes to register the Aircraft within four months in any jurisdiction to
which clause (A) would apply upon such reregistration, then the Owner
Participant at its own expense shall promptly (and, in any event, within a
period of 30 days) either transfer, pursuant to Section 19(c) hereof, such of
its right, title and interest in and to the Trust Agreement, the Trust Estate,
and this Agreement, or take such other action, as may be necessary to prevent
any deregistration of the Aircraft or to make possible its registration in the
United States. Each party hereto agrees to take such steps, at the Owner
Participant's expense, as the Owner Participant shall reasonably request in
order to assist the Owner Participant in complying with its obligations under
this Section 12(b). The Owner Participant hereby agrees to indemnify the Lessee,
the Indenture Trustee, the Liquidity Provider, the Owner Trustee, the Loan
Trustee, the Subordination Agent and each Pass Through Trustee and against any
and all losses, liabilities and expenses incurred by the Lessee, the Indenture
43
AA-Boeing EETC-Leased Aircraft Participation Agreement
Trustee, the Loan Trustee, the Subordination Agent and each Pass Through Trustee
to the extent that any such losses, liabilities or expenses are caused by the
Owner Participant's breach of the first sentence in this Section 12(b).
(c) The Owner Trustee in its individual capacity covenants that if at
any time it shall cease to be a Citizen of the United States, it will resign
immediately as Owner Trustee (if and so long as such citizenship is necessary
under the Transportation Code, or the law of the current jurisdiction of the
registry of the Aircraft, as the case may be, as in effect at such time or, if
it is not necessary, if and so long as the Owner Trustee's citizenship (in its
individual capacity) would have any adverse effect on the Lessee or any
Participant). The Owner Trustee in its individual capacity hereby
unconditionally agrees with and for the benefit of the parties to this Agreement
that the Owner Trustee in its individual capacity will not directly or
indirectly create, incur, assume or suffer to exist any Lessor's Liens on or
against any part of the Trust Estate, the Indenture Estate or the Aircraft
arising out of any act or omission of or claim against or affecting the Owner
Trustee in its individual capacity, and the Owner Trustee in its individual
capacity agrees that it will at its own cost and expense promptly take such
action as may be necessary to duly discharge and satisfy in full (i) all
Lessor's Liens attributable to the Owner Trustee in its individual capacity and
(ii) any other Liens attributable to the Owner Trustee in its individual
capacity on any part of the Trust Estate or the Indenture Estate which result
from claims against the Owner Trustee in its individual capacity not related to
the ownership of the Aircraft, the administration of the Trust Estate or the
Indenture Estate or the transactions contemplated by the Operative Documents or
the Pass Through Trust Documents. The Owner Trustee, in its individual capacity,
hereby agrees to indemnify and hold harmless the Lessee, the Indenture Trustee,
the Liquidity Provider, the Loan Trustee, the Subordination Agent and each Pass
Through Trustee from and against any loss, cost or expense (including reasonable
legal fees and expenses) which may be suffered or incurred by any of them as a
result of the failure of the Owner Trustee to discharge and satisfy any such
Lessor's Lien or other lien or encumbrance.
(d) Each of the Owner Participant and the Owner Trustee (in its
individual capacity and as Owner Trustee) agrees with the Lessee, the Indenture
Trustee, the Loan Trustee, the Subordination Agent and each Pass Through Trustee
that it will comply with all of the terms of the Trust Agreement (as the same
may hereafter be amended or supplemented from time to time in accordance with
the terms thereof) applicable to it in its respective capacity, the
noncompliance with which would adversely affect any such party and shall not
take any action, or cause any action to be taken, which would amend, modify or
supplement any provision of the Trust Agreement in a manner adversely affecting
any such party without the prior written consent of such party, which consent
shall not be unreasonably withheld. The Owner Trustee confirms for the benefit
of the Lessee, the Loan Trustee and each Noteholder that it will comply with the
provisions of Article IV of the Trust Agreement. The Owner Participant agrees
not to terminate or revoke the trust created by the Trust Agreement without the
prior written consent of the
44
AA-Boeing EETC-Leased Aircraft Participation Agreement
Lessee and (so long as the Indenture shall not have been discharged) the Loan
Trustee and the Subordination Agent, which consent in the case of the Lessee
shall not be unreasonably withheld. The Owner Participant further agrees not to
remove the institution acting as Owner Trustee, and not to replace the
institution acting as Owner Trustee in the event that such institution resigns
as Owner Trustee, unless the Owner Participant shall have consulted in good
faith with the Lessee and the Loan Trustee prior to such removal or replacement
as to the identity, location and fee schedules of the proposed successor
trustee, provided that (i) the Owner Participant shall retain the right,
notwithstanding any such consultation, to act in its sole discretion (provided
that the Owner Participant shall not choose a replacement Owner Trustee which,
in the good faith opinion of the Lessee, may result in additional liability to
the Lessee pursuant to Section 10(c) hereof, except in the case of a mandatory
or voluntary resignation of the Owner Trustee where the Lessee has not proposed
an alternative Owner Trustee which is reasonably satisfactory to the Owner
Participant) and (ii) no such consultation with the Lessee shall be required if
an Event of Default shall have occurred and be continuing. The Owner Trustee and
the Owner Participant agree that no co-trustee or separate trustee shall be
appointed pursuant to Section 9.2 of the Trust Agreement without the Lessee's
(so long as no Event of Default shall have occurred and be continuing) prior
written consent, such consent not to be unreasonably withheld. The Owner
Participant agrees that if, at any time, so long as no Event of Default has
occurred and is continuing, the Lessee certifies that the Lessee has, or in the
good faith opinion of the Lessee will, become obligated to pay an amount
pursuant to Section 10(c) hereof and the amount that has or will become payable
would be reduced or eliminated if the situs of the Trust Estate were changed and
if, as a consequence thereof, the Lessee requests 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 Owner Participant shall direct such change in situs of the Trust
Estate as may be specified in writing by the Lessee and the Owner Participant
will, at the Lessee's sole cost and expense, take whatever action as may be
reasonably necessary to accomplish such change; provided that the Lessee shall
provide such additional indemnification for Taxes imposed by the jurisdiction to
which the Trust Estate is to be moved as the Owner Participant may reasonably
request. The Loan Trustee shall, at the Lessee's sole cost and expense, execute
such documents and take such action as may be necessary to effect such change in
the situs of the Trust Estate; provided that the Lien created by the Indenture
shall continue to be perfected and shall not be otherwise adversely affected by
such change.
(e) [Intentionally left blank];
(f) The Subordination Agent and each Pass Through Trustee hereby
unconditionally agrees to perform its respective obligations under the Indenture
(including, without limitation, those contained in Section 9.12 of the
Indenture) as though such obligations were fully set forth herein.
45
AA-Boeing EETC-Leased Aircraft Participation Agreement
(g) The Owner Trustee, in its capacity as Owner Trustee, will not incur
any indebtedness for money borrowed, or enter into any business or other
activity, except as contemplated hereby and by the other Operative Documents.
(h) The Loan Trustee in its individual capacity hereby unconditionally
agrees with and for the benefit of the parties to this Agreement that the Loan
Trustee in its individual capacity or as Loan Trustee will not directly or
indirectly create, incur, assume or suffer to exist any Liens on or against any
part of the Trust Estate, the Indenture Estate or the Aircraft arising out of
any act or omission of or claim against the Loan Trustee in its individual
capacity, and the Loan Trustee in its individual capacity agrees that it will at
its own cost and expense promptly take such action as may be necessary duly to
discharge and satisfy in full (i) all such Liens attributable to the Loan
Trustee in its individual capacity and (ii) any other liens or encumbrances
attributable to the Loan Trustee in its individual capacity on any part of the
Trust Estate or the Indenture Estate which result from claims against the Loan
Trustee in its individual capacity not related to the administration of the
Indenture Estate. The Loan Trustee hereby agrees to indemnify and hold harmless
the Lessee, the Owner Trustee, the Owner Participant, each Pass Through Trustee,
the Liquidity Provider and the Subordination Agent from and against any loss,
cost or expense (including reasonable legal fees and expenses) which may be
suffered or incurred by any of them as a result of the failure of the Loan
Trustee to discharge and satisfy any such Lien or such other lien or
encumbrance.
(i) The Owner Trustee agrees that any profit, income, interest,
dividend or gain realized upon the maturity, sale or other disposition of any
Permitted Investment made by the Loan Trustee pursuant to Section 9.07 of the
Indenture, and paid to the Lessee on behalf of the Owner Trustee by the Loan
Trustee in accordance with the terms of such Section 9.07, shall be entirely for
the account of, and the sole property of, the Lessee who, for such purposes,
shall not be deemed to be acting as agent of the Owner Trustee, and the Lessee
shall have no obligation to pay over such income, interest, dividend or gain to
the Owner Trustee.
(j) The Loan Trustee, and by its acceptance of an Equipment Note, each
holder thereof (or each Pass Through Trustee, so long as the relevant Pass
Through Trust Supplement is in effect) hereby waives to the fullest extent
permitted by law the benefit of the provisions of Section 1111(b) of Title 11 of
the United States Code to the extent such provisions give recourse against the
Owner Trustee (in its individual capacity) and the Owner Participant on account
of any amount payable as principal of, Make-Whole Amount, if any, and interest
on the Equipment Notes. If (i) all or any part of the Trust Estate becomes the
property of, or the Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Reform Act of 1978 or any successor
provision, (ii) pursuant to such reorganization provisions the Owner Trustee (in
its individual capacity) or the Owner Participant is required, by reason of the
Owner Trustee (in its individual capacity) or the Owner Participant being held
to have recourse liability
46
AA-Boeing EETC-Leased Aircraft Participation Agreement
to a holder of an Equipment Note, a Pass Through Trustee or the Loan Trustee,
directly or indirectly, to make payment on account of any amount payable as
principal, Make-Whole Amount, if any, or interest on the Equipment Notes and
(iii) such holder, such Pass Through Trustee or the Loan Trustee actually
receives any Excess Payment (as hereinafter defined) which reflects any payment
by the Owner Trustee (in its individual capacity) or the Owner Participant on
account of (ii) above, then such holder, such Pass Through Trustee or the Loan
Trustee shall promptly refund to the Owner Trustee or the Owner Participant
(whichever shall have made such payment) such Excess Payment. For purposes of
this Section 12(j), "Excess Payment" means the amount by which such payment
exceeds the amount which would have been received by such holder, such Pass
Through Trustee or the Loan Trustee if the Owner Trustee (in its individual
capacity) or the Owner Participant had not become subject to the recourse
liability referred to in clause (ii) above. Nothing contained in this Section
12(j) shall prevent any holder of an Equipment Note, any Pass Through Trustee or
the Loan Trustee from enforcing any personal recourse obligation (and retaining
the proceeds thereof) of the Owner Trustee (in its individual capacity) or the
Owner Participant under this Participation Agreement or the Indenture (and any
exhibits or annexes thereto).
(k) [Intentionally left blank];
(l) In connection with a foreign sublease, the Lessee at any time, upon
notice to the Loan Trustee, Owner Trustee and the Owner Participant, may cause
the Aircraft to be registered under the applicable statutes of any other country
in which a Permitted Sublessee could be based in the name of the Owner Trustee
or, if required by applicable law, in the name of any other Person, and the
Owner Trustee and the Owner Participant will cooperate with the Lessee's
reasonable requests in effecting such foreign registration. Such foreign
registration is subject to the satisfaction of the conditions below or waiver
thereof by the Owner Trustee:
(i) no Specified Default or Event of Default shall
have occurred and be continuing at the date of such request or
at the effective date of the change in registration; provided
that it shall not be necessary to comply with this condition
(i) if the change in registration involves the re-registration
of the Aircraft under the laws of the U.S.;
(ii) all necessary governmental approvals required
for the subleased Airframe or any Engine to be imported into
the applicable country shall have been obtained prior to
commencement of any such sublease and any foreign exchange
permits necessary to allow all rent and other payments
provided for under any sublease shall be in full force and
effect;
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AA-Boeing EETC-Leased Aircraft Participation Agreement
(iii) each of the Owner Trustee, the Owner
Participant and the Loan Trustee, shall have received a legal
opinion addressed to it from counsel to the Lessee reasonably
satisfactory to such Persons (x) to the effect that (A) after
giving effect to such change in registration, all filing,
recording or other action necessary to perfect and protect the
Owner Trustee's rights and interests in and to the Aircraft
and the Lease has been accomplished and solely in the case of
the Loan Trustee, after giving effect to such change in
registration, the Lien on the Aircraft and the other property
included in the Indenture Estate shall continue as a valid and
duly perfected Lien and that all filing, recording or other
action necessary to perfect and protect the Lien of the
Indenture has been accomplished (or if such opinion cannot be
given at the time by which the Owner Trustee, the Owner
Participant and the Loan Trustee have been requested to
consent to a change in registration, (1) the opinion shall
detail what filing, recording or other action is necessary and
(2) the Owner Trustee, the Owner Participant and the Loan
Trustee, shall have received a certificate from the 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, the Owner Participant and the Loan Trustee on
or prior to the effective date of such change in
registration), (B) the terms of the Lease are legal, valid and
binding and enforceable in such jurisdiction (subject to
customary exceptions), and (C) it is not necessary for the
Owner Trustee or the Owner Participant to qualify to do
business in such jurisdiction or otherwise satisfy any other
applicable law, rule or regulation existing at the date of
such request (or if such opinion cannot be given, the opinion
shall detail what other existing law, rule or regulation must
be satisfied by the Owner Trustee or the Owner Participant, as
the case may be) solely as a result of the proposed
re-registration, and (D) the laws of such foreign jurisdiction
require fair compensation by the government of such
jurisdiction payable in a currency freely convertible into
United States dollars for the loss of use or of title to the
subleased equipment in the event of the requisition by such
foreign government of such use or title or the Lessee has
agreed to provide insurance covering the risk of requisition
of use or of title of the Aircraft by the government of such
country for so long as the Aircraft is registered under the
laws of such country, and (y) in addition, if such country is
not, at the time of re-registration, the U.S. or a Permitted
Country to the effect that there exist no possessory rights in
favor of the Lessee under the laws of such country that would,
assuming at such time the Lessee is not insolvent or bankrupt,
prevent the return of the Aircraft in accordance with and when
permitted by the terms of the Lease upon the exercise by the
Owner Trustee of its remedies under the Lease;
48
AA-Boeing EETC-Leased Aircraft Participation Agreement
(iv) the Owner Trustee the Owner Participant and the
Loan Trustee, shall have received assurances reasonably
satisfactory to the Owner Trustee, the Owner Participant and
the Loan Trustee, that the insurance provisions of the Lease
shall have been complied with after giving effect to such
change in registration;
(v) such re-registration will not result in the
imposition by such country of any taxes on the Owner Trustee,
the Owner Participant and the Loan Trustee, for which the
Lessee is not required to indemnify the Owner Trustee, the
Owner Participant and the Loan Trustee, unless the Lessee
agrees to indemnify the Owner Trustee, the Owner Participant
and the Loan Trustee, for any taxes imposed by such country in
connection with or relating to the transactions contemplated
by the Operative Documents that would not have been imposed
but for such re-registration; provided that it shall not be
necessary to comply with the conditions contained in this
clause (v) if such change in registration results in the
re-registration of the Aircraft under the laws of the U.S.,
except to the extent that the provisions of the tax
indemnification provisions relating to the Owner Participant
were amended in effecting a previous foreign registration;
(vi) such re-registration will not divest the Owner
Trustee of title to the Aircraft or adversely affect the Lien
of the Indenture; and
(vii) the Lessee shall have paid or made provision
for the payment of all reasonable out-of-pocket expenses
(including reasonable attorneys' fees) of the Owner Trustee,
the Owner Participant and the Loan Trustee, in connection with
such change in registration; provided further that the Lessee
shall not cause the Aircraft to be registered under the laws
of any foreign jurisdiction without the prior written consent
of the Owner Participant, if (A) the civil aviation laws of
such foreign jurisdiction impose unusual requirements or
liabilities on lessors of civil aircraft, and (B) the Owner
Participant would be required to comply with such requirements
or suffer such liabilities upon the registration of the
Aircraft in such foreign jurisdiction, and compliance
therewith or acceptance of such liabilities by the Owner
Participant would result in a material burden on the business
activities of the Owner Participant.
(m) Each of the Loan Trustee and the Pass Through Trustee hereby
agrees, subject to the terms of Section 12(l) hereof, for the benefit of the
Lessee, to cooperate with the Lessee in effecting any foreign registration of
the Aircraft pursuant to Section 7(a)(i) of the Lease.
(n) [Intentionally left blank];
49
AA-Boeing EETC-Leased Aircraft Participation Agreement
(o) The Owner Participant agrees that in each instance in which the
Lease provides that title to the Aircraft, Airframe, any Engine, engine, Part or
Obsolete Part shall be transferred to or vest in the Lessee, title to such
Aircraft, Airframe, Engine, engine, Part or Obsolete Part shall vest in the
Lessee, free and clear of all right, title and interest of the Owner Participant
and of Lessor's Liens, and the Owner Participant shall do all acts necessary to
discharge all of such Liens and other rights held by it in such Aircraft,
Airframe, Engine, engine, Part or Obsolete Part.
(p) Each of the Loan Trustee and the Pass Through Trustee severally
agrees for the benefit of the Lessee that (i) it shall comply with Section 5.01
of the Indenture and (ii) in each instance in which the Lease provides that
title to any Part or Obsolete Part shall be transferred to or vest in the
Lessee, title to such Part or Obsolete Part shall vest in the Lessee, free and
clear of all Liens attributable to it and other rights held by it, and the Loan
Trustee and the Pass Through Trustee, as applicable, shall do all acts necessary
to discharge all of its Liens and other rights held by it in such, Part or
Obsolete Part.
(q) The Owner Trustee, in its individual capacity, hereby agrees that
it will perform all of its administrative duties under this Agreement and the
other Operative Documents (whether in its individual capacity or as Owner
Trustee) solely in the State of Utah, except to the extent necessary to exercise
any of its rights or remedies to the extent permitted by applicable laws in
connection with an Event of Default or an event that with notice or lapse of
time or both would become an Event of Default.
(r) With respect to any transfer of Equipment Notes, the Loan Trustee
and the Owner Trustee agree for the benefit of the Lessee, to comply with the
provisions of Section 2.04 of the Indenture.
(s) [Intentionally left blank].
(t) Each of State Street, the Loan Trustee, the Owner Participant, the
Original Loan Participant, the Subordination Agent, each Pass Through Trustee
and any other holder of an Equipment Note, covenants that, except as expressly
permitted under Section 15 of the Lease following an Event of Default that has
occurred and is continuing, neither it, nor any Person claiming through or under
it, will take or cause to be taken any action inconsistent with the Lessee's
rights under the Lease and its right to quiet enjoyment of, or otherwise
interrupt or interfere in any way with continuing possession, use or operation
of, the Aircraft, the Airframe or any Engine by the Lessee or any sublessee,
assignee or transferee under any sublease, assignment or transfer then in effect
and permitted by the terms of the Lease; provided that the existence of any
event or condition that constitutes or was caused by or resulting from, any TWA
Matter, shall not constitute a breach of this covenant by any such party.
50
AA-Boeing EETC-Leased Aircraft Participation Agreement
(u) The Loan Trustee, the Pass Through Trustee and the Subordination
Agent hereby acknowledge and agree with the Owner Trustee that for purposes of
Section 8.01(j) of the Indenture no Owner Participant Guaranty shall be
considered to "cease[] to be a valid and enforceable obligation of the Owner
Participant Guarantor" to the extent such Owner Participant Guarantor is
released from its obligations thereunder pursuant to the last sentence of
Section 19(c).
(v) In the event the Debt Rate is increased pursuant to Section 2(d) of
the Registration Rights Agreement and such increase remains in effect for more
than one Lease Period, the Lessee, the Owner Trustee and the Owner Participant
agree to make corresponding adjustments to the Termination Values and Stipulated
Loss Values for the Aircraft set forth in Schedule B to the Lease, to take into
account such increase of the Debt Rate, in a manner consistent with the
preparation of such Schedule to the Lease as was in effect as of the Closing
Date, provided that such adjustment shall only be effective for so long as such
increased Debt Rate remains in effect.
SECTION 13. Other Documents. The Owner Participant agrees to comply
with all of the terms of the Trust Agreement (as the same may hereafter be
amended from time to time in accordance with the terms thereof) applicable to it
and with Sections 7, 9, 11, 12 and 15 of the Lease. The Lessee hereby consents
in all respects to the execution and delivery of the Indenture and to all of the
terms thereof, and the Lessee acknowledges receipt of an executed counterpart of
the Indenture. Notwithstanding the foregoing, the Loan Trustee and the Owner
Trustee hereby agree for the benefit of the Lessee that the Indenture and the
Pass Through Trust Documents shall not be amended, modified or supplemented
without the prior written consent of the Lessee if such amendment, modification
or supplement would adversely affect the Lessee. The Loan Trustee and the Owner
Trustee agree to furnish promptly to the Lessee copies of any amendment,
modification or supplement to any Operative Document to which the Lessee is not
a party to the extent the Indenture Trustee or the Owner Trustee, as the case
may be, shall have in its possession a copy of such amendment, modification or
supplement.
SECTION 14. [Intentionally left blank]
SECTION 15. Liabilities of the Owner Participant and the Original Loan
Participants. Neither the Owner Participant nor any Original Loan Participant
shall have any obligation or duty to the Lessee with respect to the transactions
contemplated hereby except those obligations or duties expressly set forth in
this Agreement or, in the case of the Owner Participant, the Tax Indemnity
Agreement. Without limiting the generality of the foregoing, under no
circumstances whatsoever shall the Owner Participant, as such, or any Original
Loan Participant, as such, be liable to the Lessee for any action or inaction on
the part of the Owner Trustee or the Loan Trustee in connection with the
Indenture, the Trust Agreement, the Lease, the Aircraft, the administration of
the Trust Estate or the Indenture Estate or otherwise, whether or not such
action or inaction is
51
AA-Boeing EETC-Leased Aircraft Participation Agreement
caused by the willful misconduct or gross negligence of the Owner Trustee or the
Loan Trustee unless such action or inaction is at the direction of the Owner
Participant (in the case of action or inaction on the part of the Owner Trustee)
or such Original Loan Participant (in the case of action or inaction on the part
of the Loan Trustee).
SECTION 16. Certain Covenants of the Lessee. The Lessee covenants and
agrees with the Owner Participant, each Pass Through Trustee, the Loan Trustee
and the Owner Trustee as follows:
(a) From and after the Closing Date, the Lessee will cause to be done,
executed, acknowledged and delivered all and every such further acts,
conveyances and assurances as the Owner Trustee, the Owner Participant, each
Pass Through Trustee or the Loan Trustee shall require for accomplishing the
purposes of this Agreement and the other Operative Documents and the Pass
Through Trust Documents, which further acts, conveyances and assurances shall
otherwise be consistent with this Agreement, the other Operative Documents and
the Pass Through Trust Documents. The Lessee shall cause the Aircraft to be duly
registered, and at all times to remain duly registered, in the name of the Owner
Trustee, except as otherwise required or permitted hereunder or under the Lease,
under the Transportation Code, or shall furnish to the Owner Trustee such
information as may be required to enable the Owner Trustee to make application
for such registration, and shall promptly furnish to the Owner Trustee such
information as may be required to enable the Owner Trustee to timely file any
reports required to be filed by it as the Lessor under the Lease or as the owner
of the Aircraft with any governmental authority because of the Owner Trustee's
ownership of the Aircraft.
(b) The Lessee will cause the Lease covering the Aircraft, the Trust
Agreement and the Indenture covering the Aircraft to be promptly filed and
recorded, or filed for recording, to the extent permitted under the
Transportation Code, and the rules and regulations of the FAA thereunder, or
required under any other applicable law.
(c) The Lessee will furnish to the Owner Trustee and the Loan Trustee
annually after the execution hereof (but not later than March 15th of each
year), commencing with the year 2002, an opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., or
other counsel reasonably acceptable to the Owner Trustee and the Loan Trustee,
stating either:
(i) that in the opinion of such counsel such action
has been taken with respect to the recording, filing,
re-recording and refiling of the Lease, the Indenture, the
Trust Agreement and any supplements thereto, including any
financing or continuation statements, and such other filings
and recordings as is necessary to maintain, for the 15-month
period succeeding the date of such opinion, the rights and
interests of the Owner Trustee in and to the Aircraft, and,
with respect to the Indenture, the
52
AA-Boeing EETC-Leased Aircraft Participation Agreement
perfection of the security interests created thereby and
reciting the details of such action; or
(ii) that in the opinion of such counsel no such
action is necessary to maintain, for the 15-month period
succeeding the date of such opinion, the perfection of such
rights and interests.
(d) The Lessee shall at all times maintain its corporate existence
except as permitted by Section 16(e) hereof. The Lessee will do or cause to be
done all things necessary to preserve and keep in full force and effect its
rights (charter and statutory) and franchises; provided, however, that the
Lessee shall not be required to preserve any right or franchise if its Board of
Directors shall determine that the preservation thereof is no longer desirable
in the conduct of the business of the Lessee. Notwithstanding the proviso to the
immediately preceding sentence, the Lessee shall, for so long as and to the
extent required under Section 1110 of the Bankruptcy Code in order that the
Owner Trustee and the Loan Trustee be entitled to the benefits of Section 1110
of the Bankruptcy Code with respect to the right to repossess the Airframe,
Engines and Parts as provided in the Lease, remain a Certificated Air Carrier.
(e) The Lessee shall not consolidate with or merge into any other
corporation or convey, transfer or lease all or substantially all of its assets
as an entirety to any Person, unless:
(i) the person formed by such consolidation or into
which the Lessee is merged or the Person that acquires by
conveyance, transfer or lease all or substantially all of the
assets of the Lessee as an entirety (the "Successor"): shall,
if and to the extent required under Section 1110 of the
Bankruptcy Code in order that the Owner Trustee, the Owner
Participant and the Loan Trustee continue to be entitled to
any benefits of Section 1110 with respect to the Aircraft, be
a Certificated Air Carrier; and shall execute and deliver to
the Owner Trustee, the Owner Participant, and the Loan Trustee
an agreement in form reasonably satisfactory to such Persons
containing an assumption by such Successor of the due and
punctual performance and observance of each covenant and
condition of each of the Operative Documents to which the
Lessee is a party and each other Operative Document to which
the Lessee is a party, to be performed or observed by the
Lessee;
(ii) immediately after giving effect to such
transaction, no Specified Default or Event of Default shall
have occurred and be continuing; and
53
AA-Boeing EETC-Leased Aircraft Participation Agreement
(iii) the Lessee shall have delivered to the Owner
Trustee, the Owner Participant and the Loan Trustee an
officer's certificate and an opinion of counsel (which may be
American's general counsel), each stating that such
consolidation, merger, conveyance, transfer or lease and the
assumption agreement described in clause (i) above comply with
this Section 16(e) and that all conditions precedent herein
provided for relating to such transaction have been complied
with (except that such opinion need not cover the matters
referred to in clause (ii) above and may rely, as to factual
matters, on an officer's certificate of the Lessee) and, in
the case of such opinion, that such assumption agreement has
been duly authorized, executed and delivered by the Successor,
constitutes its legal, valid and binding obligation and is
enforceable against such Successor in accordance with its
terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the rights of creditors generally and by
general principles of equity.
Upon any consolidation or merger, or any conveyance, transfer or lease of all or
substantially all of the assets of the Lessee as an entirety in accordance with
this Section 16(e), the Successor shall succeed to, be substituted for, and may
exercise every right and power of and shall assume every obligation and
liability of, the Lessee under this Agreement and the other Operative Documents
and Pass Through Trust Documents with the same effect as if the Successor had
been named as the Lessee herein provided that in no event will any such
conveyance release the transferor Lessee from any liability to the extent caused
by any breach existing at the time of such conveyance by the Lessee of any of
its representations, warranties, covenants or obligations contained herein or in
the Lease. No such conveyance, transfer or lease of all or substantially all of
the assets of the Lessee shall have the effect of releasing the Lessee or any
successor which shall theretofore have become such in the manner prescribed in
this Section 16(e) from its liability hereunder or under any other Operative
Document to which it is a party. The Lessee shall not assign its rights and
obligations under this Agreement and the other Operative Documents without the
prior written consent of the Owner Trustee and the Loan Trustee; provided,
however, that so long as the Equipment Notes have been repaid in full, no such
consent shall be required for any assignment by the Lessee to any Affiliate
thereof that is a Certificated Air Carrier and the obligations of which under
the Operative Documents have been guaranteed by American in form reasonably
satisfactory to the Owner Participant. Nothing contained herein shall permit any
lease, sublease or other arrangement for the use, operation or possession of the
Aircraft except in compliance with the Lease.
(f) The provisions of Sections 17 and 22 of the Lease are hereby
incorporated by reference herein for the express benefit of each Pass Through
Trustee. The Lessee shall notify the Loan Trustee and the Owner Trustee thirty
days prior to any change in the
54
AA-Boeing EETC-Leased Aircraft Participation Agreement
location of the chief executive office of the Lessee. In the event the Aircraft
is requisitioned for use by the Government pursuant to the Civil Reserve Air
Fleet Program referred to in Section 7(b)(iv) of the Lease, the Lessee shall
provide the Owner Trustee and the Loan Trustee with the name and address of the
Contracting Office Representative for the Air Mobility Command of the United
States Air Force for notification as required under Section 15 of the Lease.
SECTION 17. [Intentionally left blank]
SECTION 18. Notices. Unless otherwise specifically provided herein, all
notices required under the terms and provisions of this Agreement shall be in
English and in writing, and any such notice may be given by United States
registered or certified mail, postage prepaid, courier service, telegram, telex,
telecopy, cable or facsimile (confirmed by telephone or in writing in the case
of notice by telegram, telex, telecopy, cable or facsimile) or any other
customary means of communication, and any such notice shall be effective when
delivered if to the Lessee, the Owner Participant, the Original Loan
Participant, the Owner Trustee, the Indenture Trustee, the Loan Trustee, the
Subordination Agent, each Pass Through Trustee or the Liquidity Provider, at
their respective addresses or telex or facsimile numbers set forth in Schedule I
to this Agreement, or to such other address or telex or facsimile number as such
party may hereafter specify for such purpose by notice to the other parties
hereto.
SECTION 19. Certain Covenants of the Owner Participant.
(a) [Intentionally left blank];
(b) The Owner Participant agrees with and for the benefit of the other
parties to this Agreement that it will not directly or indirectly create, incur,
assume or suffer to exist any Lessor's Liens or Original Owner Participant's
Liens other than Lessor's Liens attributable to the Owner Trustee on or against
any part of the Trust Estate or the Aircraft arising out of any act or omission
of or claim against or affecting any part of the Trust Estate or the Aircraft
and agrees that it will, at its own cost and expense, take such action as may be
necessary to duly discharge and satisfy in full any such Lessor's Lien or
Original Owner Participant's Lien (by bonding or otherwise, so long as Lessee's
operation and use of the Aircraft is not impaired and the Lien of the Indenture
is not impaired), the Owner Participant hereby agrees to indemnify and hold
harmless the Lessee, the Liquidity Provider, the Loan Trustee, the Subordinated
Agent and each Pass Through Trustee against any loss, cost or expense (including
reasonable legal fees and expenses) which may be suffered or incurred by any of
them as the result of the failure of the Owner Participant to discharge and
satisfy any such Lessor's Lien or Original Owner Participant's Lien.
55
AA-Boeing EETC-Leased Aircraft Participation Agreement
(c) The Owner Participant shall not assign, convey or otherwise
transfer any of its right, title or interest in and to all or any part of any of
the Operative Documents or the Trust Estate, except that the Owner Participant
may assign or otherwise transfer all (but not less than all) thereof to any
transferee, provided that (i) such transferee (x) is (A) a Citizen of the United
States or qualifies through a discretionary trust arrangement or similar
arrangement that is sufficient to permit registration of the Aircraft with the
FAA (without regard to any provision of applicable law that permits registration
of an aircraft by limiting its location and usage) and (B) a "United States
Person" (as defined in Section 7701(a)(30) of the Code) for Federal income tax
purposes, (y) has (or has its obligations guaranteed, pursuant to a guaranty
agreement substantially in the form attached hereto Exhibit XI or otherwise
reasonably satisfactory to the Lessee and the Loan Trustee, by a Person that
has) a tangible net worth of at least $50,000,000, and (z) has the requisite
power, authority and legal right to enter into and carry out the transactions
contemplated hereby; (ii) such transferee is not an airline or other commercial
operator of aircraft or any Affiliate of any thereof; (iii) such transferee is
(A) a bank, trust company, insurance company, pension trust, finance or leasing
company or other corporation or financial institution and is not a limited
liability company, partnership or similar entity (any such transferee being
referred to as an "Acceptable Entity"), (B) a limited liability company,
partnership or similar entity, all of the membership, partnership or similar
ownership interests (in any such case, an "Interest") of which are directly or
indirectly owned by not more than nine Persons, each of which (x) is an
Acceptable Entity and (y) is and will continue to be a "United States Person"
(as defined in Section 7701(a)(30) of the Code) for Federal income tax purposes
provided that (1) no transfer of any Interest by any Person which holds the same
shall violate the applicable provisions of the Securities Act or any other law,
as the case may be, or require registration under the Securities Act, and (2)
the holders of ownership interests in any Acceptable Entity shall not be taken
into account in determining the number of Persons indirectly owning Interests in
such limited liability company, partnership or similar entity; or (C) any other
entity approved by the Lessee, such approval not to be unreasonably withheld
(any transferee described in clause (A), (B) or (C), an "Acceptable Person");
(iv) such transfer does not violate the applicable provisions of the Securities
Act or any other law, as the case may be, or require registration under the
Securities Act; (v) such transferee assumes all obligations of the Owner
Participant under the Operative Documents to which the Owner Participant is a
party or by which the Owner Participant is bound pursuant to an agreement
substantially in the form attached hereto as Exhibit XIII or otherwise
reasonably satisfactory to the Lessee and the Loan Trustee; (vi) after giving
effect to such transfer, there will be no more than one Owner Participant; (vii)
the Owner Participant shall deliver the Lessee and the Loan Trustee an opinion
of counsel reasonably satisfactory to the Lessee and the Loan Trustee (it being
agreed that in-house counsel shall be deemed acceptable), that each of the
agreement referred to in clause (v) above and any guaranty delivered pursuant to
clause (i)(y) above has been duly authorized executed and delivered by such
transferee, in the case of such agreement, and by the guarantor, in the case of
any such guaranty, constitutes its legal, valid and binding
56
AA-Boeing EETC-Leased Aircraft Participation Agreement
obligation and is enforceable against such transferee in accordance with its
terms, except as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally or by general principles of equity; (viii) the Owner Participant shall
deliver to the Lessee and the Loan Trustee one or more certificates of a duly
authorized officer of the transferor and, if necessary, transferee Owner
Participant containing, when taken together, representations and warranties
addressing all of the matters contained in clauses (i), (iii) and (vi) of this
paragraph (c) and an opinion delivered by counsel of the type referred to in
clause (vii) of this paragraph (c) to the effect that such transfer (A) complies
with the provisions of clause (i)(z) of this paragraph (c) and (B) does not
require registration under the Securities Act (it being understood that such
counsel may assume such facts as such counsel deems reasonably necessary in
order to deliver the opinion referred to in clause (B) of this clause (viii));
and (ix) the Owner Participant pays all reasonable expenses of the Owner
Trustee, the Loan Trustee, the Pass Through Trustee the Lessee and the other
parties hereto in connection with such transfer; and provided, further, that
unless such transferee is Boeing or an Affiliate thereof, the Owner Participant
may not transfer its interest until one month after the Closing Date. If the
Owner Participant intends to transfer its interests hereunder, it shall give
prior written notice thereof as soon as practicable, but in no event less than
10 Business Days prior thereto, to the Lessee and the Loan Trustee, specifying
the name and address of the proposed transferee. The Owner Participant may at
any time grant participations in its interest in the Operative Documents to any
person on customary terms so long as no such participant shall be an Owner
Participant of record, such grant complies with clauses (i)(x), (ii), (iv) and
(ix) above, and the transferring Owner Participant makes the representation and
warranty described in Section 4(j) of the form of assignment and assumption
agreement attached hereto as Exhibit XIII.
Any agreement or instrument pursuant to which the Owner Participant
sells such a participation shall provide that the Owner Participant shall retain
the sole right to exercise the rights of the "Owner Participant" pursuant to the
Operative Documents.
In connection with any transfer by the Owner Participant of its
interest in the Trust Estate in compliance with this Section 19(c), any Owner
Participant Guarantor which delivered an Owner Participant Guaranty in respect
of the obligations of the transferring Owner Participant shall be released from
its obligations under such Owner Participant Guaranty.
SECTION 20. Right to Restructure.
(a) Back-leveraging. So long as the Equipment Notes have been repaid in
full, the Owner Participant will be permitted to grant a security interest in
the Lease or "back-leverage" the transaction to a third party, provided that (i)
no such grant or "back-leveraging" will require any participation by the Lessee,
(ii) such third party agrees to
57
AA-Boeing EETC-Leased Aircraft Participation Agreement
preserve the Lessee's quiet enjoyment of the Aircraft, (iii) the Owner
Participant pays all reasonable expenses of the other parties to the Operative
Documents in connection with such grant or "back-leveraging", (iv) such grant or
"back-leveraging" does not violate the Securities Act or any other law, as the
case may be, or require registration under the Securities Act or, without the
Lessee's consent (such consent not to be unreasonably withheld), involve a Rule
144A/Reg S or other capital markets transaction, (v) none of the obligations,
liabilities and risks of the Lessee in the use and operation of the Aircraft or
under or in respect of the Lease shall be increased, and none of the Lessee's
rights and benefits in respect thereof shall be diminished, as a result of any
such grant or "back-leveraging", and the Owner Participant agrees to indemnify
the Lessee for any such adverse consequences resulting from such grant or
"back-leveraging", (vi) the Owner Participant pays any Make-Whole Amount
resulting from the redemption of the Equipment Notes and (vii) such transaction
is permitted under the Indenture.
(b) Special Structure. So long as the Equipment Notes shall have been
repaid in full, Boeing or an Affiliate thereof shall have the right to
restructure the transaction contemplated herein using (i) a "cross border"
lease, a tax lease or a head-lease/sublease structure and (ii) any other type of
transaction, which may involve special structural arrangements other than
securitizations of the rent or the debt pursuant to an EETC or similar structure
in which the Lessee would act as issuer (any such structure described in
subclauses (i) and (ii) above, a "Special Structure"), provided that such
Special Structure shall satisfy the requirements of subclauses (ii)-(vii) of
Section 20(a) hereof. Any Special Structure may result in additional persons
participating in such transactions. The Lessee agrees to cooperate in the
implementation of any such restructuring and to take such action as may
reasonably be requested by Boeing to accomplish such restructuring, including
taking such actions as may be agreed by the parties acting reasonably taking
into account Market-Based Transactions for the type of Special Structure
selected. In any such Special Structure Boeing shall be entitled to retain all
the benefits of any such transaction. All transactional and incremental ongoing
costs and expenses incurred in connection with such Special Structure (including
reasonable fees and expenses of the Lessee's counsel) shall be borne by Boeing
and there shall be no change in the Lessee's scheduled rental payments.
Notwithstanding the foregoing, the Lessee shall not be required to enter into
any Special Structure if such Special Structure would materially increase,
individually or in the aggregate, the obligations of the Lessee under the
Operative Documents, or would require the Lessee to pay, directly or indirectly,
increased amounts of money in connection with such Special Structure, other than
de minimis increased amounts. Boeing shall provide the Lessee with such other
indemnification as the Lessee shall reasonably request in connection with such
Special Structure on terms to be agreed by the parties acting reasonably taking
into account Market-Based Transactions.
(c) Except as described above in this Section 20(b), the Owner
Participant will have no other rights to restructure or refinance the
transaction, including without
58
AA-Boeing EETC-Leased Aircraft Participation Agreement
limitation to include a "head-lease" structure, without the Lessee's consent,
such consent not to be unreasonably withheld.
(d) No provision in the preceding paragraphs of this Section 20 shall
be construed to limit the issuance, or the Owner Participant's right to effect
the issuance, of Series E Equipment Notes provided, that the Owner Participant
shall not cause the Owner Trustee to issue Series E Equipment Notes pursuant to
the Indenture, unless it shall have received Ratings Confirmation (as defined in
the Intercreditor Agreement). If Series E Equipment Notes are initially issued
to other than the Pass Through Trustee for the Class E Certificates, the Owner
Participant will cause the Owner Trustee to cause such Series E Equipment Notes
to be subject to the provisions of the Intercreditor Agreement that allow the
"Controlling Party" (as defined in the Intercreditor Agreement), during the
continuance of an "Indenture Event of Default" (as defined in the Intercreditor
Agreement), to direct the Loan Trustee in taking action under the Indenture.
SECTION 21. [Intentionally left blank]
SECTION 22. Concerning the Owner Trustee. ▇▇▇▇▇ Fargo Bank Northwest,
National Association is entering into this Agreement solely in its capacity as
Owner Trustee under the Trust Agreement and not in its individual capacity
(except as expressly stated herein) and in no case shall ▇▇▇▇▇ Fargo Bank
Northwest, National Association (or any entity acting as successor Owner Trustee
under the Trust Agreement) be personally liable for or on account of any of the
statements, representations, warranties, covenants or obligations stated to be
those of the Owner Trustee hereunder, provided, however, that ▇▇▇▇▇ Fargo Bank
Northwest, National Association (or any such successor Owner Trustee) shall be
personally liable hereunder for its own gross negligence or willful misconduct
or for its breach of its covenants, representations and warranties contained
herein, to the extent covenanted or made in its individual capacity.
SECTION 23. [Intentionally left blank]
SECTION 24. Successor Loan Trustee; Amendment of Pass Through Trust
Documents.
(a) In the event that the Loan Trustee gives notice of its resignation
pursuant to Section 9.08(b) of the Indenture, the Lessee may direct the Owner
Trustee to appoint, and the Owner Trustee shall promptly appoint, a successor
Loan Trustee.
(b) In the event that either the Owner Trustee or the Lessee obtains
knowledge of the existence of any of the grounds for removal of the Loan Trustee
set forth in Section 9.08 of the Indenture, the Owner Trustee or the Lessee, as
the case may be, shall promptly give notice (the "Removal Notice") to the other
by telephone, confirmed in writing. Within five Business Days after the giving
of the Removal Notice, the Lessee
59
AA-Boeing EETC-Leased Aircraft Participation Agreement
may direct the Owner Trustee to remove, and the Owner Trustee shall remove, the
Loan Trustee and appoint a successor Loan Trustee, provided that, if within ten
Business Days after the giving of the Removal Notice the Loan Trustee shall not
have been removed, the Owner Trustee shall be deemed without further act to have
delegated to the Lessee the right, on behalf of the Owner Trustee, to remove the
Loan Trustee and appoint a successor, and, in the event of the removal of the
Loan Trustee in accordance with such delegation, the Lessee agrees to appoint
promptly a successor Loan Trustee.
(c) The Lessee shall not enter into any modification or amendment of
(i) Section 3.01(g) of the Pass Through Trust Supplements or (ii) any Pass
Through Trust Documents in any manner affecting the Pass Through Trusts created
pursuant to the Pass Through Trust Supplements, in each case without the consent
of the Owner Participant, such consent not to be unreasonably withheld.
SECTION 25. Miscellaneous.
(a) Any capitalized term not herein defined, when used herein in
capitalized form, shall have the meaning attributed thereto in the Lease.
(b) Nothing contained in this Agreement, or in the Lease, the
Indenture, the Trust Agreement or the Tax Indemnity Agreement shall be construed
as a guarantee by the Lessee of payments due pursuant to the Equipment Notes or
the Pass Through Certificates or of the residual value or useful life of the
Aircraft or any portion thereof.
(c) Any provision of this Agreement which is prohibited and
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. This Agreement may be executed by the parties hereto in
separate counterparts, each of, which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing signed by the party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought or to the
extent required by the Indenture, with the consent of each Pass Through Trustee.
The section and paragraph headings in this Agreement and the index preceding
this Agreement are for convenience of reference only and shall not modify,
define, expand or limit any of the terms or provisions hereof and all references
herein to numbered sections, unless otherwise indicated, are to sections of this
Agreement.
(d) The terms of this Agreement shall be binding upon, and shall inure
to the benefit of, the Lessee and, subject to the terms of Section 16(e) hereof,
its successors and
60
AA-Boeing EETC-Leased Aircraft Participation Agreement
permitted assigns, the Loan Trustee and its successors as Loan Trustee under the
Indenture, the Owner Trustee and its successors as Owner Trustee under the Trust
Agreement, the Owner Participant and, subject to the provisions of Section 19(c)
hereof, its successors and permitted assigns, and the Original Loan Participant
and, the Noteholders. Each Noteholder other than the Original Loan Participant,
by its acceptance of any Equipment Note, shall be deemed to have irrevocably and
unconditionally agreed to perform the obligations of a Noteholder hereunder and
under the Indenture. No purchaser or holder of any Equipment Note (including any
Noteholder) shall be deemed to be a successor or assign of any of the Original
Loan Participants.
(e) With respect to any opinion required to be delivered under any
Operative Document by counsel to any party hereto, each party hereto hereby
irrevocably instructs its applicable counsel to deliver such opinion to and for
the benefit of the parties that are the addressees of such opinion.
(f) The Lessee, the Owner Participant, the Owner Trustee, the Indenture
Trustee, the Loan Trustee, the Pass Through Trustee, the Subordination Agent and
the Original Loan Participant shall keep the terms of this Participation
Agreement, the Original Participation Agreement, Schedule B to the Lease,
Schedule B to the Original Lease, Schedule I to the Original Indenture, the
Purchase Agreement Assignment, the Tax Indemnity Agreement and the Original Tax
Indemnity Agreement (collectively, the "Confidential Information") confidential
and shall not disclose, or cause to be disclosed, the same to any Person, except
(i) to prospective and permitted transferees of the Lessee's, the Owner
Participant's, the Owner Trustee's, the Indenture Trustee's, the Loan Trustee's,
the Pass Through Trustee's, the Subordination Agent's or the Original Loan
Participant's interest or their respective counsel or special counsel,
independent insurance brokers, auditors or other agents if such Persons shall
have agreed to hold such Confidential Information confidential in accordance
with the provisions set forth herein, (ii) to the Lessee's, the Owner
Participant's, the Owner Trustee's, the Indenture Trustee's, the Loan Trustee's,
the Pass Through Trustee's, the Subordination Agent's or the Original Loan
Participant's counsel or special counsel, independent insurance brokers,
auditors, or other agents, Affiliates or investors who agree to hold such
information confidential, (iii) to any Person with whom the Lessee or the Owner
Participant (or any Affiliate thereof) is in good faith conducting negotiations
relating to any restructuring, refinancing, transfer, sale, assignment or other
disposition of rights and interest permitted under the terms of this
Participation Agreement, if such Persons shall have agreed to hold such
Confidential Information confidential in accordance with the provisions set
forth herein, (iv) as may be required by any order of any court or
administrative agency or by any statute, rule, regulation or order of any
governmental authority (the "Court Order"); provided that if any party (such
party, the "Disclosing Party") is required by such a Court Order to disclose any
Confidential Information, the Disclosing Party will promptly notify the other
party (such other party, the "Non-Disclosing Party") prior to such disclosure to
enable the Non-Disclosing Party to seek a
61
AA-Boeing EETC-Leased Aircraft Participation Agreement
protective order or to take other action that the Non-Disclosing Party in its
reasonable discretion deems appropriate, and the Disclosing Party will cooperate
with the Non-Disclosing Party in its efforts to obtain a protective order or
other reasonable assurance that confidential treatment will be accorded the
Confidential Information and (v) to 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 (iii), (iv) or (v) above shall
be made only to the extent necessary to meet the specific requirements or needs
of the Persons making such disclosures. Each party shall in each instance obtain
the prior written approval of each party concerning the exact text and timing of
news releases, articles and other informational releases to the public media
concerning the transaction governed by this Participation Agreement.
(g) Each of the Lessee, the Owner Participant, the Owner Trustee, the
Indenture Trustee, the Loan Trustee, the Pass Through Trustee and the
Subordination Agent covenant that until the Series A-1 Equipment Notes and
Series A-2 Equipment Notes have been paid in full, it shall not file an
involuntary bankruptcy petition or initiate any other form of insolvency
proceeding against the respective Pass Through Trust holding such Equipment
Notes.
THIS AGREEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK AND SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
62
AA-Boeing EETC-Leased Aircraft Participation Agreement
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
AMERICAN AIRLINES, INC.
as Lessee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director, Corporate
Finance and Banking
▇▇▇▇▇▇ LEASING COMPANY-1
as Owner Participant
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Senior Director
▇▇▇▇▇ FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
as Owner Trustee
By: /s/ C. ▇▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Name: C. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
WILMINGTON TRUST COMPANY
as Indenture Trustee
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
--------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Financial Services Officer
▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
as Pass Through Trustee under each of
the Pass Through Trust Agreements
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
as Subordination Agent
By: /s/ Alison Della Bella
----------------------------------
Name: Alison Della Bella
Title: Assistant Vice President
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
as Loan Trustee
By: /s/ Alison Della Bella
----------------------------------
Name: Alison Della Bella
Title: Assistant Vice President
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
in its individual capacity as set
forth herein
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
64
BOEING NEVADA, INC.
as Original Loan Participant
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇, ▇▇.
----------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇, ▇▇.
Title: Senior Director
65
SCHEDULE I TO
PARTICIPATION
AGREEMENT
Certain Terms
Aircraft
Model: DC-9-83 (MD-83)
U.S. Registration Number: N9630A
Manufacturer's Serial Number: 53561
Date of Purchase Agreement: 11/13/1997
Aggregate Principal Amount of the Equipment Notes: $18,800,927
Aggregate Principal Amount of the Original Notes: $12,332,150
Addresses for Notices and Account Details
LESSEE: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Chase Manhattan Bank
American Airlines, Inc. ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ABA #: 0210 0002 1
Attn: Treasurer Account No.: ▇▇▇-▇-▇▇▇▇▇▇
Telex: 4630158
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
OWNER TRUSTEE: ▇▇▇▇▇ Fargo Bank Northwest, N.A.. ▇▇▇▇▇ Fargo Bank Northwest ▇.▇.
▇▇▇▇▇ Fargo Bank Corporate Trust Services ABA # ▇▇▇▇▇▇▇▇▇
Northwest, N.A. MAC ▇▇▇▇▇-▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ Account No.: ▇▇▇-▇▇▇▇▇-▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇ Re: American N9630A
Phone: ▇▇▇-▇▇▇-▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
OWNER PARTICIPANT: ▇▇▇▇▇▇ Leasing Company-1 Chase Manhattan Bank
▇▇▇▇▇▇ Leasing Company-1 c/o Boeing Capital Corporation ABA #: 0210 0002 1
Seattle Operations Group Boeing Capital Corporation
Mail code 6Y-16 Account No.: 910 1 307412
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇ Reference: ▇▇▇▇▇▇ Leasing
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Company-1 and MSN53561
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
With a copy to:
SCHEDULE I TO
PARTICIPATION
AGREEMENT
Boeing Capital Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, M/C
D091-0070
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: BCC Treasury
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
INDENTURE TRUSTEE: Wilmington Trust Company Wilmington Trust Company
Wilmington Trust Company ▇▇▇▇▇▇ Square North ABA # 0311 00092
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Account No.: 42914-0
Attn: Corporate Trust
Administration
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
ORIGINAL LOAN PARTICIPANT: Boeing Nevada, Inc. The Chase Manhattan Bank
Boeing Nevada, Inc ▇▇▇▇-▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇ One Chase Manhattan Plaza
Las Vegas, NV 89119 ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Phone: ▇▇▇-▇▇▇-▇▇▇▇ ABA#: ▇▇▇▇-▇▇▇▇-▇
For the account of Boeing
Nevada, Inc.
with a copy to: Account No. ▇▇▇-▇-▇▇▇▇▇▇
Boeing Nevada, Inc. Reference:
c/o The Boeing Company Boeing Nevada, Inc./MSN53561
▇.▇. ▇▇▇ ▇▇▇▇
Attn: Operations and Legal
M/C 6Y-11
Facsimile: ▇▇▇▇-▇▇▇-▇▇▇▇
LOAN TRUSTEE: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ and Trust
State Street Bank and Trust Company of Connecticut, N.A Company of Connecticut, N.A
Company of Connecticut, N.A. ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ c/o State Street Bank and Trust
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Company
Attn: Alison Della Bella Boston, MA
Tel: ▇▇▇-▇▇▇-▇▇▇▇ ABA #011-00-0028
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ Corporate Trust
DDA #▇▇▇▇-▇▇▇-▇
FFC: American Airlines EETC 2001-1
Attn: May ▇▇▇▇
PASS THROUGH TRUSTEE: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ and Trust
State Street Bank and Trust Company of Connecticut, N.A Company of Connecticut, N.A
Company of Connecticut, N.A ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ c/o State Street Bank and Trust
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Company Boston, MA
Attn: Alison Della Bella ABA #011-00-0028
Tel: ▇▇▇-▇▇▇-▇▇▇▇ Corporate Trust
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ DDA #▇▇▇▇-▇▇▇-▇
FFC: American Airlines EETC 2001-1
Attn: May ▇▇▇▇
SUBORDINATION AGENT: ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ and Trust
State Street Bank and Trust Company of Connecticut, N.A Company of Connecticut, N.A
Company of Connecticut, N.A ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ c/o State Street Bank and Trust
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ Company Boston, MA
Attn: Alison Della Bella ABA #011-00-0028
Tel: ▇▇▇-▇▇▇-▇▇▇▇ Corporate Trust
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇ DDA #▇▇▇▇-▇▇▇-▇
FFC: American Airlines EETC 2001-1
Attn: May ▇▇▇▇
EXHIBIT I to
PARTICIPATION AGREEMENT
FORM OF TRUST AGREEMENT
EXHIBIT II to
PARTICIPATION AGREEMENT
FORM OF INDENTURE
EXHIBIT III to
PARTICIPATION AGREEMENT
FORM OF LEASE
EXHIBIT IV to
PARTICIPATION AGREEMENT
FORM OF OPINION OF GENERAL COUNSEL OF THE LESSEE
EXHIBIT V to
PARTICIPATION AGREEMENT
FORM OF OPINION OF SPECIAL COUNSEL FOR THE OWNER TRUSTEE
EXHIBIT VI to
PARTICIPATION AGREEMENT
FORM OF OPINION OF SPECIAL COUNSEL FOR THE
LOAN TRUSTEE
EXHIBIT VII to
PARTICIPATION AGREEMENT
FORMS OF OPINION OF SPECIAL COUNSEL FOR THE
OWNER PARTICIPANT AND GENERAL COUNSEL OF
THE OWNER PARTICIPANT
EXHIBIT VIII to
PARTICIPATION AGREEMENT
FORM OF OPINION OF SPECIAL OKLAHOMA CITY COUNSEL
EXHIBIT IX to
PARTICIPATION AGREEMENT
FORM OF OPINION OF SPECIAL COUNSEL FOR THE
PASS THROUGH TRUSTEE
EXHIBIT X to
PARTICIPATION AGREEMENT
FORM OF OPINION OF SPECIAL COUNSEL FOR THE
LIQUIDITY PROVIDER
EXHIBIT XI to
PARTICIPATION AGREEMENT
FORM OF OWNER PARTICIPANT GUARANTY
EXHIBIT XII to
PARTICIPATION AGREEMENT
FORM OF AMENDED AND RESTATED PURCHASE
AGREEMENT ASSIGNMENT
EXHIBIT XIII to
PARTICIPATION AGREEMENT
FORM OF OWNER PARTICIPATION TRANSFER AGREEMENT
EXHIBIT XIV to
PARTICIPATION AGREEMENT
FORM OF MANUFACTURER CONSENT
Annex A
Lease, PA & Indenture Definitions
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Document, unless otherwise expressly provided, a
reference to:
(i) each of "Lessee," "Lessor," "Owner Trustee," "Owner
Participant," "Loan Trustee," "Subordination Agent," "Pass Through
Trustee," "Original Loan Participant," "Liquidity Provider," or any
other person includes, without prejudice to the provisions of any
Operative Document, any successor in interest to it and any permitted
transferee, permitted purchaser or permitted assignee of it;
(ii) words importing the plural include the singular and words
importing the singular include the plural;
(iii) any agreement, instrument or document, or any annex,
schedule or exhibit thereto, or any other part thereof, includes,
without prejudice to the provisions of any Operative Document, that
agreement, instrument or document, or annex, schedule or exhibit, or
part, respectively, as amended, modified or supplemented from time to
time in accordance with its terms and in accordance with Operative
Documents, and any agreement, instrument or document entered into in
substitution or replacement therefor;
(iv) any provision of any law includes any such provision as
amended, modified, supplemented, substituted, reissued or reenacted
prior to the Commencement Time, and thereafter from time to time;
(v) the words "Agreement," "this Agreement," "hereby,"
"herein," "hereto," "hereof" and "hereunder" and words of similar
import when used in any Operative Document refer to such Operative
Document as a whole and not to any particular provision of such
Operative Document;
(vi) the words "including," "including, without limitation,"
"including, but not limited to," and terms or phrases of similar import
when used in any Operative Document, with respect to any matter or
thing, mean including, without limitation, such matter or thing; and
(vii) a "Section," a "subsection," an "Exhibit," an "Annex" or
a "Schedule" in any Operative Document, or in any annex thereto, is a
reference to a section or a subsection of, or an exhibit, an annex or a
schedule to, such Operative Document or such annex, respectively.
AA-Boeing EETC-Annex A
(b) Each exhibit, annex and schedule to each Operative Document is
incorporated in, and shall be deemed to be a part of, such Operative Document.
(c) Headings used in any Operative Document are for convenience only
and shall not in any way affect the construction of, or be taken into
consideration in interpreting, such Operative Document.
DEFINED TERMS
"Accrued Basic Rent" means, for any period of days within a Lease
Period, the amount determined by multiplying the Basic Rent installment for such
Lease Period designated in Schedule B to the Lease by a fraction, the numerator
of which shall be the actual number of days in such period and the denominator
of which shall be the actual number of days in such Lease Period.
"Affiliate" of any Person means any other Person directly or indirectly
controlling, controlled by or under common control with such Person. For
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise, and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"After-Tax Basis", in the context of determining the amount of a
payment to be made on such basis, means the payment of an amount which, after
subtraction of the net increase, if any, in U.S. Federal, state and local income
tax liability incurred by the Indemnitee or Tax Indemnitee to whom the payment
is made as a result of the receipt or accrual of such payment (taking into
account any Tax benefits realized or deemed to be realized by such Indemnitee or
Tax Indemnitee as a result of the event or circumstances giving rise to such
payment), shall equal the amount that would have been payable if no net increase
in such tax liability had been incurred.
"Aircraft" means the Airframe leased under the Lease, together with the
two Engines described in Schedule A to the Lease (or any Replacement Engine
substituted for any Engine under the Lease), whether or not any of such initial
or substituted Engines may from time to time be installed on such Airframe or
may be installed on any other airframe or on any other aircraft.
"Airframe" means (i) the Aircraft (except Engines or engines from time
to time installed thereon) bearing U.S. registration number and Manufacturer's
serial number specified on Schedule A to the Lease and Schedule I to the
Indenture, and leased under the Lease by Lessor to Lessee; and (ii) any and all
Parts so long as the same shall be incorporated or installed in or attached to
such aircraft, or so long as title thereto shall
2
AA-Boeing EETC-Annex-A
remain vested in Lessor in accordance with the terms of Section 8 of the Lease
after removal from such aircraft.
"American" means American Airlines, Inc., a Delaware corporation, and
its successors and permitted assigns.
"Average Certificate Rate" means the weighted average interest rate
applicable to the Equipment Notes at the time outstanding, computed on the basis
of a 360-day year of twelve 30-day months.
"Bankruptcy Code" means the U.S. Bankruptcy Code, 11 United States Code
Section 101 et seq., as amended, or any successor statutes thereto.
"Base Lease Expiry Date" has the meaning specified in Schedule B to the
Lease.
"Base Rate" means the rate of interest per annum announced by Citibank,
N.A. at its principal office in New York as its "base" or "prime" rate from time
to time; provided that if Citibank N.A. shall no longer announce such a "prime"
or "base" rate, the Prime Rate shall be the rate for 90-day directly placed
commercial paper (or the midpoint in the range of such rate if more than one
rate is published) as of the opening of business on the date in question (or the
arithmetic average of such rates at the opening of business on each day during
any period in question), as quoted in The Wall Street Journal.
"Basic Pass Through Trust Agreement" or "Basic Agreement" means that
certain Pass Through Trust Agreement, dated as of the Closing Date, between
American and State Street, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Basic Rent" for the Aircraft means the rent payable for the Aircraft
pursuant to Section 3(b) specified in Schedule B to the Lease, or, during any
Renewal Term, the rent payable for the Aircraft pursuant to Section 20(a) of the
Lease.
"Boeing" means The Boeing Company, a Delaware corporation.
"Boeing Capital Corporation" means Boeing Capital Corporation, a
Delaware corporation.
"Boeing Letter Agreement" means the letter agreement, entered into on
or prior to the Closing Date, between American and Boeing Capital Corporation, a
Delaware corporation.
"Business Day" means any day other than a Saturday, Sunday or a day on
which commercial banks are authorized or required by law, regulation or
executive order to be closed in New York, New York, the city and state in which
the principal corporate trust
3
AA-Boeing EETC-Annex-A
office of the Owner Trustee is located or the city and state in which the
principal corporate trust office of the Loan Trustee is located or the city and
state in which the Loan Trustee disburses funds.
"Casualty Loss Determination Date" for the Aircraft means each of the
dates specified in Schedule B to the Lease which is the same as or immediately
precedes a Loss Payment Date on which Stipulated Loss Value is payable with
respect to the Aircraft.
"Certificated Air Carrier" means a Person holding an air carrier
operating certificate issued by the Secretary of Transportation pursuant to
Chapter 447 of Title 49, United States Code, for aircraft capable of carrying
ten or more individuals or 6,000 pounds or more of cargo or that otherwise is
certified or registered to the extent required to fall within the purview of
Section 1110.
"Citizen of the United States" has the meaning specified for such term
in section 40102(a)(15) of Title 49 of the United States Code or any similar
legislation of the U.S. enacted in substitution or replacement therefor.
"Claims" means any and all liabilities, obligations, losses, damages,
penalties, claims, actions or suits of whatsoever kind and nature (whether or
not on the basis of negligence, strict or absolute liability or liability in
tort), including all costs, disbursements and expenses (including reasonable
legal fees and expenses).
"Closing" has the meaning specified in Section 1(e) of the
Participation Agreement.
"Closing Date" means the date set out on the cover page of the Lease.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commencement Time" has the meaning specified in Schedule A to the
Original Lease.
"Confidential Information" means (a) the existence and terms of any
sublease of the Airframe or Engines pursuant to Section 7(b) of the Lease and
the identity of the Permitted Sublessee thereunder (other than the sublease from
American to TWA Airlines LLC); (b) all information obtained in connection with
any inspection conducted pursuant to Section 12 of the Lease; (c) each
certification furnished pursuant to Section 11(a) and Section 11(b) of the
Lease; and (d) all information contained in each report furnished pursuant to
Section 11(e) of the Lease.
"Continuous Stay Period" has the meaning specified in Section 8.04 of
the Indenture.
4
AA-Boeing EETC-Annex-A
"Controlling Party" has the meaning specified in Section 2.06 of the
Intercreditor Agreement.
"Cost" for the Aircraft has the meaning set forth in the Schedule B to
the Lease.
"CRAF Program" has the meaning set forth in Section 7(b)(iv) of the
Lease.
"Debt" means any liability for borrowed money, or any liability for the
payment of money in connection with any letter of credit transaction, or other
liabilities evidenced or to be evidenced by bonds, debentures, notes or other
similar instruments.
"Debt Rate" means, with respect to any Series, the rate per annum
specified for such Series under the heading "Interest Rate" in Schedule II to
the Indenture, as such rate may be adjusted as necessary to provide for the
increased interest rate borne by the Equipment Notes in the circumstances
specified in Section 2(d) of the Registration Rights Agreement.
"Direction" has the meaning specified in Section 2.15 of the Indenture.
"Dollars" and "$" mean the lawful currency of the United States of
America.
"Enforcement Date" has the meaning specified in Section 8.03 of the
Indenture.
"Engine" means (i) each of the two ▇▇▇▇▇ & ▇▇▇▇▇▇▇ Model JT80-219
engines described on Schedule A to the Lease and Schedule I to the Indenture
whether or not from time to time installed on the Airframe or installed on any
other airframe or an any other aircraft and (ii) any Replacement Engine which
may from time to time be substituted pursuant to Section 9(g) or 10(b) of the
Lease for an Engine leased under the Lease; together in each case with any and
all Parts incorporated or installed in or attached thereto or any and all Parts
removed therefrom so long as title thereto shall remain vested in Lessor in
accordance with the terms of Section 8 of the Lease after removal from such
Engine. Except as otherwise set forth in the Lease, at such time as a
Replacement Engine shall be so substituted and the Engine for which substitution
is made shall be released from the lien of the Indenture, such replaced Engine
shall cease to be an Engine under the Lease. The term "Engines" means, as of any
date of determination, all Engines then leased under the Lease.
"Equipment Note Register" has the meaning specified in Section 2.04 of
the Indenture.
"Equipment Note Registrar" has the meaning specified in Section 2.04 of
the Indenture.
5
AA-Boeing EETC-Annex-A
"Equipment Notes" means the equipment notes issued pursuant to Section
2.02 of the Indenture and shall include any equipment notes issued in exchange
therefor or replacement thereof pursuant to the Indenture.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" has the meaning specified in Section 14 of the
Lease.
"Event of Loss" with respect to any property means any of the following
events with respect to such property:
(i) loss of such property or the use thereof due to theft,
disappearance, destruction, damage beyond repair or rendition of such property
permanently unfit for normal use for any reason whatsoever;
(ii) any damage to such property which results in an insurance
settlement with respect to such property on the basis of a total loss or a
compromised or constructive total loss;
(iii) the condemnation, confiscation or seizure of, or requisition of
title to or use of, such property (other than a requisition for use of the
Aircraft by the U.S. Government which shall not have resulted in a loss of
possession of such property for a period continuing beyond the end of the Term
or any Renewal Term then in effect);
(iv) as a result of any rule, regulation, order or other action by the
FAA, the Department of Transportation or other governmental body of the U.S. or
other country of registry of the Aircraft having jurisdiction, the use of such
property in the normal course of passenger air transportation shall have been
prohibited for a period of six consecutive months, unless such rule, regulation,
order or other action shall have prohibited such use with respect to all
aircraft of such make and model registered in the applicable jurisdiction,
unless Lessee (or any Permitted Sublessee), prior to or, if earlier, until the
end of the Term or any Renewal Term, the expiration of such six-month or shorter
period, as the case may be, shall have undertaken and shall be diligently
carrying forward all steps which in its judgment are necessary or desirable to
permit the normal use of such property by Lessee (or any Permitted Sublessee)
or, in any event, if such use shall have been prohibited for a period of twelve
consecutive months; or
(v) the operation or location of the Aircraft, while under requisition
for use by the U.S. Government, in any area excluded from coverage by any
insurance policy in effect with respect to the Aircraft required by the terms of
the Lease, if Lessee shall be unable to obtain indemnity or insurance in lieu
thereof from the U.S. Government;
6
provided that if such property is returned to Lessee having substantially the
same value and utility as such property had immediately prior to such event
prior to the date upon which Stipulated Loss Value is required to be paid, then
such event will, at the option of Lessee, not constitute an Event of Loss.
"Excepted Property" means (i) indemnity or other payments paid or
payable by American to or in respect of the Owner Participant or the Owner
Trustee in its individual capacity or any member or their respective Related
Indemnitee Groups pursuant to the Participation Agreement or any corresponding
payment of Supplemental Rent under the Lease, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the Aircraft
paid or payable as a result of insurance claims or amounts in respect of such
indemnities paid or payable to or for the benefit of, or losses suffered by, the
Owner Trustee or the Loan Trustee in their respective individual capacities or
the Owner Participant or by any affiliated or otherwise related additional
insureds or loss payees (collectively, the "Related Insured Parties"), (iii)
proceeds of insurance maintained in conformity with Section 11(f) of the Lease
by the Owner Participant or any Affiliate thereof (whether directly or through
the Owner Trustee), (iv) payments of Supplemental Rent or other payments by
American payable under the Tax Indemnity Agreement, (v) payments of Supplemental
Rent by the Lessee with respect to the foregoing, (vi) fees payable to the Owner
Trustee pursuant to Section 12(a) of the Participation Agreement, (vii) any
right to restitution from American, as lessee under the Lease, in respect of any
determination of the invalidity of any Excepted Property, (viii) the respective
rights of the Owner Trustee or the Loan Trustee in their respective individual
capacities or the Owner Participant (or of any member of their Related
Indemnitee Groups or any Related Insured Party) to the proceeds of the foregoing
and (ix) any right to demand, collect or otherwise receive and enforce the
payment of any amount described in clauses (i) through (viii) above (other than
the right to declare the Lease to be in Default or to exercise any remedies
thereunder; provided that the Owner Trustee or the Owner Participant, as the
case may be, may demand payment of any Excepted Property and may commence any
action in equity or at law against Lessee to require payment of the same) and
any and all interest payable in respect thereof. Excepted Property shall not
include amounts paid by the Lessee to the Loan Trustee pursuant to Sections
10(b) and 10(c) of the Participation Agreement and payable by the Loan Trustee
to the Subordination Agent or any Pass Through Trustee pursuant to Section
3.05(b) of the Indenture.
"Excess Payment" has the meaning set forth in Section 12(j) of the
Participation Agreement.
"FAA" means the Federal Aviation Administration of the United States of
America and any successor governmental authority.
7
AA-Boeing EETC-Annex-A
"FAA ▇▇▇▇ of Sale" means the ▇▇▇▇ of sale for the Aircraft on AC Form
8050-2 in favor of the Owner Trustee, recorded with the FAA.
"Federal Aviation Act" means the Transportation Code.
"Federal Funds Rate" means a fluctuating interest rate per annum in
effect from time to time, which rate per annum shall at all times be equal to
the weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or if such rate
is not so published for any day that is a Business Day, the average of the
quotations for such day for such transactions received by State Street from
three Federal funds brokers of recognized standing selected by it.
"Fee Letter" has the meaning set forth in Section 1.01 of the
Intercreditor Agreement.
"Government" means the government of any of the Permitted Countries and
any instrumentality or agency of any thereof.
"Indemnitee" has the meaning set forth in Section 10(b) (2) of the
Participation Agreement.
"Indenture" means the Amended and Restated Trust Indenture and Security
Agreement relating to the Aircraft, between Lessor (in its individual capacity
only as expressly provided therein and otherwise as Owner Trustee) and the Loan
Trustee named therein, dated as of the Closing Date, together with the Annexes,
Exhibits and Schedules as originally executed or as modified, supplemented or
amended from time to time pursuant to the applicable provisions thereof.
"Indenture Default" means any event that is, or after notice or passage
of time, or both, would be, an Indenture Event of Default.
"Indenture Documents" shall mean the Participation Agreement, the
Lease, the Purchase Agreement Assignment, and the Owner Participant Guaranty.
"Indenture Estate" has the meaning set forth in the Granting Clause of
the Indenture.
"Indenture Event of Default" has the meaning set forth in Article 8 of
the Indenture.
"Indenture Indemnitee" means (i) the Loan Trustee, (ii) State Street,
(iii) the Subordination Agent, so long as it holds any Equipment Notes as agent
and trustee of any
8
AA-Boeing EETC-Annex-A
Pass Through Trustee (iv) the Liquidity Provider, and (v) each Pass Through
Trustee, so long as it is the holder of any Equipment Notes, and each of their
respective directors, officers, employees, agents and servants. No holder of a
Pass Through Certificate in its capacity as such shall be an Indenture
Indemnitee.
"Indenture Supplement" means a supplement to the Indenture,
substantially in the form of Exhibit B to the Indenture, which shall
particularly describe any Replacement Engine included in the property subject to
the Lien of the Indenture.
"Indenture Trustee" means Wilmington Trust Company, a Delaware banking
corporation.
"Indentured Property" shall mean all property included in the Indenture
Estate.
"Independent Appraisal" means an appraisal mutually agreed to by two
nationally recognized independent aircraft appraisers, one of which appraisers
shall be chosen by Lessor and one by Lessee, or, if such appraisers cannot agree
on such appraisal, an appraisal arrived at by a third independent aircraft
appraiser chosen by the mutual consent of such two appraisers, provided that, if
either party shall fail to appoint an appraiser within 15 days after a written
request to do so by the other party, or if such two appraisers cannot agree on
such appraisal and fail to appoint a third appraiser within 20 days after the
date of the appointment of the second of such appraisers, then either party may
apply to the American Arbitration Association to make such appointment. In the
event such third independent appraiser shall be chosen to provide such
appraisal, unless the parties agree otherwise, such appraisal shall be required
to be made within 20 days of such appointment. An "Independent Appraisal" of the
fair market rental value or fair market sales value of the Aircraft shall mean
an appraisal which assumes that the sale or lease transaction would be an
arm's-length transaction between an informed and willing lessee or buyer, as the
case may be, under no compulsion to lease or buy, as the case may be, and an
informed and willing lessor or seller, as the case may be, under no compulsion
to lease or sell, as the case may be, and assumes that the Aircraft is
unencumbered by the Lease or any renewal or purchase option under the Lease and
is in the condition required thereunder; provided that an Independent Appraisal
undertaken pursuant to Section 15 of the Lease shall value the Aircraft on an
"as-is, where-is" basis. The fees and expenses of appraisers for an Independent
Appraisal, whenever undertaken pursuant to the Lease, shall be borne equally by
Lessor and Lessee and each shall separately bear any fees, costs and expenses of
its respective attorneys and experts (other than the appraisers referred to
above) incurred in connection with such Independent Appraisal, except that the
costs of an Independent Appraisal undertaken pursuant to Section 15 of the Lease
shall be for the account of Lessee.
"Instrument of Resignation" has the meaning set forth in the recitals
to the Participation Agreement.
9
AA-Boeing EETC-Annex-A
"Intercreditor Agreement" means that certain Intercreditor Agreement,
dated as of the Closing Date, among the Pass Through Trustees, the Liquidity
Provider, and the Subordination Agent, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with its terms.
"Lease" means the Amended and Restated Lease Agreement relating to the
Aircraft, between the Lessor and American dated as of the Closing Date, together
with the Annexes and Schedules as originally executed or as modified, amended or
supplemented pursuant to the applicable provisions of the Lease and in
accordance with the Indenture.
"Lease Default" means an event which with notice or lapse of time or
both would become a Lease Event of Default.
"Lease Event of Default" means an "Event of Default" as defined in
Section 14 of the Lease.
"Lease Period" means the period commencing immediately following the
Commencement Time and ending on and including the date immediately preceding the
first Lease Period Date listed on Schedule B to the Lease and each of the
remaining consecutive semiannual periods commencing on and including the Lease
Period Date to but excluding the Base Lease Expiry Date.
"Lease Period Date" means each date listed in the column "Lease Period
Dates" on Schedule B to the Lease.
"Lease Supplement" means a Lease Supplement, substantially in the form
of Exhibit A to the Lease, executed and delivered in connection with one or more
Replacement Engines.
"Lease Termination Date" has the meaning specified for the term
"Termination Date" in Section 9(a) of the Lease.
"Lessee" means American Airlines, Inc., a Delaware corporation, and its
successors and permitted assigns.
"Lessor" means Owner Trustee as lessor under the Lease.
"Lessor's Liens" means any Lien on or relating to or affecting the
Aircraft, the Engines or any part thereof arising as a result of (1) Claims
against or affecting Lessor or Owner Participant, as applicable, not related to
the ownership of the Aircraft or the transactions contemplated by the Lease or
the Participation Agreement; (2) acts or omissions of Lessor or Owner
Participant, as applicable, not related to the transactions contemplated by the
Lease or any other agreement entered into with the written consent
10
AA-Boeing EETC-Annex-A
of Lessee in connection therewith or not expressly provided for under the terms
of the Lease or any such agreement; (3) Taxes or Claims imposed against Lessor
or Owner Participant, as applicable, which are not indemnified against by Lessee
pursuant to the Participation Agreement; or (4) Claims against Lessor or Owner
Participant, as applicable, arising out of the voluntary transfer (other than
pursuant to certain voluntary transfers permitted by the Participation
Agreement) by Lessor of its interest in the Aircraft or the Lease including,
without limitation, by means of granting a security interest therein; provided,
that, for purposes of Section 12(c) of the Participation Agreement, any Lien
that is attributable solely to Owner Participant or Lessor and would otherwise
constitute a Lessor's Lien shall not constitute a Lessor's Lien, so long as (A)
the existence of such Lien poses no material risk of the sale, forfeiture or
loss (including loss of use) of the Aircraft, or any Engine or any interest
therein, (B) the existence of such Lien does not interfere with or interrupt the
possession, maintenance, repair, overhaul, use or operation of the Aircraft by
Lessee and (C) Lessor or Owner Participant, as the case may be, is diligently
contesting such Lien in good faith by appropriate proceedings so long as such
proceedings do not involve any material risk of sale, forfeiture or loss
(including loss of use) of the Aircraft or any Engine or any interest therein or
any meaningful risk of criminal liability or any material risk of civil penalty
against Lessee; and provided further, that Lessor and Owner Participant shall,
under no circumstances, have any obligation under the Operative Documents or the
Pass Through Trust Documents to discharge any Liens arising out of, resulting
from or relating to any TWA Matter.
"Lien" means any mortgage, pledge, lien, charge, encumbrance, lease,
exercise of rights, security interest or claim.
"Liquidity Facilities" means the revolving credit agreements, dated as
of the Closing Date, between the Subordination Agent, as borrower, and the
Liquidity Provider, and any replacements thereof, in each case as the same may
be amended or supplemented or otherwise modified from time to time in accordance
with its terms.
"Liquidity Provider" means Boeing Capital Corporation, a Delaware
corporation, solely in its capacity as liquidity provider and not in any other
capacity, together with any successor thereto as liquidity provider.
"Loan Trustee" means State Street Bank and Trust Company of
Connecticut, National Association, as successor trustee to the Indenture Trustee
pursuant to the Instrument of Resignation, and each other Person that may from
time to time be acting as loan trustee under the Indenture.
"Loan Trustee Liens" means any Lien attributable to State Street as the
Loan Trustee with respect to the Aircraft, any interest therein or any other
portion of the Indenture Estate arising as a result of (i) claims against State
Street or the Loan Trustee
11
AA-Boeing EETC-Annex-A
not related to its interest in the Aircraft of the administration of the
Indenture Estate pursuant to the Indenture, (ii) acts of State Street or the
Loan Trustee not permitted by, or the failure of State Street or the Loan
Trustee to take any action required by, the Operative Documents or the Pass
Through Trust Documents, (iii) claims against State Street or the Loan Trustee
relating to Taxes or Claims that are excluded from the indemnification pursuant
to Section 10 (c)(4) or 10(b)(2) of the Participation Agreement, or (iv) claims
against State Street or the Loan Trustee arising out of the transfer by any such
party of all or any portion of its interest in the Aircraft, the Indenture
Estate, the Operative Documents or the Pass Through Trust Documents, except
while an Event of Default is continuing and prior to the time that the Loan
Trustee has received all amounts due to it pursuant to the Indenture.
"Loss" has the meaning set forth in Section 5(a) of the Tax Indemnity
Agreement.
"Loss Payment Date" has the meaning set forth in Section 10(a) of the
Lease.
"Maintenance Program" means a written, continuous maintenance and
inspection program for aircraft of such make and model as the Aircraft.
"Majority in Interest of Noteholders" means, as of a particular date of
determination and subject to Section 2.15 of the Indenture, the holders of at
least a majority in aggregate unpaid principal amount of all Equipment Notes
outstanding as of such date (excluding any Equipment Notes held by American or
any Affiliate thereof, unless all Equipment Notes are held by American or any
Affiliate thereof).
"Make-Whole Amount" means, with respect to any Equipment Note, the
amount (as determined by an investment bank of national standing selected by
American (and following the occurrence and during the continuance of an Event of
Default, reasonably acceptable to the Loan Trustee)), if any, by which (i) the
present value of the remaining scheduled payments of principal and interest from
the redemption date to maturity of such Equipment Note computed by discounting
such payment on a semiannual basis from its respective payment date (assuming a
360-day year of twelve 30-day months) using a discount rate equal to the
Treasury Yield exceeds (ii) the outstanding principal amount of such Equipment
Note plus accrued but unpaid interest thereon. For purposes of determining the
Make-Whole Amount, "Treasury Yield" means, at the time of determination, the
interest rate (expressed as a semiannual equivalent and as a decimal and, in the
case of United States Treasury bills, converted to a bond equivalent yield)
determined to be the per annum rate equal to the semiannual yield to maturity
for United States Treasury securities maturing on the Average Life Date and
trading in the public securities market either as determined by interpolation
between the most recent weekly average yield to maturity for two series of
United States Treasury securities, trading in the public securities markets, (A)
one maturing as close as possible to, but earlier than, the Average Life Date
and (B) the other maturing as close as possible to, but later than,
12
AA-Boeing EETC-Annex-A
the Average Life Date, in each case as published in the most recent H.15(519)
or, if a weekly average yield to maturity for United States Treasury securities
maturing on the Average Life Date is reported on the most recent H.15(519), such
weekly average yield to maturity as published in such H.15(519). "H.15(519)"
means the weekly statistical release designated as such, or any successor
publication, published by the Board of Governors of the Federal Reserve System.
The date of determination of a Make-Whole Amount shall be the third Business Day
prior to the applicable redemption date and the "most recent H.15(519)" means
the H.15(519) published prior to the close of business on the third Business Day
prior to the applicable redemption date. "Average Life Date" means, for each
Equipment Note to be redeemed, the date which follows the redemption date by a
period equal to the Remaining Weighted Average Life at the redemption date of
such Equipment Note. "Remaining Weighted Average Life" of an Equipment Note, at
the redemption date of such Equipment Note, means the number of days equal to
the quotient obtained by dividing: (i) the sum of the products obtained by
multiplying (A) the amount of each then remaining installment of principal,
including the payment due on the maturity date of such Equipment Note, by (B)
the number of days from and including the redemption date to but excluding the
scheduled payment date of such principal installment by (ii) the then unpaid
principal amount of such Equipment Note.
"Manufacturer" means ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation.
"Manufacturer Consent" means the Manufacturer Consent and Agreement
dated as of the Closing Date, substantially in the form of Exhibit XIV to the
Participation Agreement.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
"Noteholder" means any Person in whose name an Equipment Note is
registered (including the Subordination Agent, for so long as it is the
registered holder of any Equipment Notes on behalf of any Pass Through Trustees
pursuant to the provisions of the Intercreditor Agreement).
"Notes" means the equipment notes issued pursuant to Section 2.02 of
the Indenture and shall include any equipment notes issued in exchange therefor
or replacement thereof pursuant to the Indenture.
"Obsolete Parts" has the meaning specified in Section 8(c) of the
Lease.
"Officers' Certificate" means a certificate signed, in the case of the
American, by (i) the Chairman of the Board of Directors, the President, any
Executive Vice President, or any Senior Vice President of the American, signing
alone, or (ii) any Vice President signing together with the Secretary, any
Assistant Secretary, the Treasurer or any
13
AA-Boeing EETC-Annex-A
Assistant Treasurer of the American or, in the case of the Owner Trustee, a
Responsible Officer of the Owner Trustee.
"Operative Documents" means the Lease, each Lease Supplement, the
Participation Agreement, the Indenture, each Indenture Supplement, the
Manufacturer Consent, the Equipment Notes, the Trust Agreement, the Purchase
Agreement Assignment and the Tax Indemnity Agreement.
"Original Indenture" means the original indenture identified in
Schedule I to the Indenture.
"Original Lease" has the meaning set forth in the recitals to the
Participation Agreement.
"Original Loan Participant" means Boeing Nevada, Inc., a Delaware
corporation.
"Original Note" has the meaning set forth in the recitals to the
Participation Agreement.
"Original Owner Participant's Lien" means any Lien attributable to the
Owner Participant on or against the Aircraft, any interest therein, or any
portion of the Indenture Estate arising or out of any act or omission of the
Owner Participant prior to the Closing Date, but specifically excluding any
Liens arising out of, resulting from or relating to any TWA Matter.
"Original Participation Agreement" has the meaning set forth in the
recitals to the Participation Agreement.
"Original Tax Indemnity Agreement" has the meaning set forth in the
recitals to the Participation Agreement.
"Original Trust Agreement" has the meaning set forth in the recitals to
the Participation Agreement.
"Other Party Liens" means any Lien attributable to the Pass Through
Trustee (other than in its capacity as Noteholder), the Subordination Agent
(other than in its capacity as Noteholder) or the Liquidity Provider on or
against the Aircraft, any interest therein, or any portion of the Indenture
Estate arising out of any Claim against such party that is not related to the
Operative Documents or Pass Through Trust Documents, or out of any act or
omission of such party that it not related to the transaction contemplated by,
or that constitutes a breach by such party of its obligations under, the
Operative Documents or the Pass Through Trust Documents.
14
AA-Boeing EETC-Annex-A
"Overdue Rate" means (i) with respect to the portion of any payment of
Rent that would be required to be distributed to the Subordination Agent or any
Pass Through Trustee pursuant to the terms of the Indenture, the Past Due Rate
applicable to the Equipment Notes held by such Subordination Agent or Pass
Through Trustee and (ii) with respect to the portion of any payment of Rent that
would be required to be distributed to Lessor pursuant to the terms of the
Indenture or would be payable pursuant to the terms of any of the Operative
Documents directly to Lessor, the Owner Participant, or the Owner Trustee in its
individual capacity, the lesser of 1% over the Base Rate and the maximum
interest rate from time to time permitted by law.
"Owner Participant" means ▇▇▇▇▇▇ Leasing Company-1, a Delaware
corporation, and any other Person or Persons to which the Owner Participant
transfers its right, title and interest in and to the Trust Agreement, the Trust
Estate and the Participation Agreement, in accordance with Article VIII of the
Trust Agreement and Section 19(c) of the Participation Agreement, and their
respective permitted successors and assigns.
"Owner Participant Guarantor" shall mean any provider of an Owner
Participant Guaranty.
"Owner Participant Guaranty" means a guaranty delivered pursuant to
Section 4(b)(xi) of the Participation Agreement, or any guaranty delivered by a
guarantor of a transferee of the Owner Participant, in either case substantially
in the form of Exhibit XI to the Participation Agreement.
"Owner Trustee" means ▇▇▇▇▇ Fargo Bank Northwest, National Association,
a national banking association, not in its individual capacity but solely as
trustee under the Trust Agreement, and each other Person which may from time to
time be acting as Owner Trustee in accordance with the provisions of the Trust
Agreement and this Agreement.
"Participant" means each of the Owner Participant and any Original Loan
Participant.
"Participation Agreement" means the Amended and Restated Participation
Agreement, dated on or prior to the Closing Date, among the Lessee, the Owner
Participant, the Lessor (in its individual capacity only as expressly provided
therein and otherwise as Owner Trustee), the Indenture Trustee, each Pass
Through Trustee, the Subordination Agent, the Loan Trustee and the Original Loan
Participant, as originally executed or as modified, amended or supplemented
pursuant to the applicable provisions thereof.
"Parts" means all appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment of whatever nature (other than (i)
complete Engines or engines, (ii) any items leased by Lessee from a third party
(other than items leased under
15
AA-Boeing EETC-Annex-A
the Lease by Lessee from Lessor, (iii) cargo containers and (iv) any Passenger
Convenience Equipment) that at any time of determination are incorporated or
installed in or attached to the Airframe or any Engine or the title to which
remains vested in Lessor in accordance with Section 8 of the Lease.
"Passenger Convenience Equipment" has the meaning set forth in Section
8(d) of the Lease.
"Pass Through Certificates" means the pass through certificates issued
by the Pass Through Trustees.
"Pass Through Trust" means each trust created pursuant to a Pass
Through Trust Supplement to facilitate certain of the transactions contemplated
by the Operative Documents.
"Pass Through Trust Agreement" means the Basic Pass Through Trust
Agreement together with each separate Pass Through Trust Supplement thereto, as
the same may be modified, supplemented or amended pursuant to the applicable
provisions thereof.
"Pass Through Trust Documents" means the Pass Through Trust Agreements,
the Intercreditor Agreement and the Liquidity Facilities.
"Pass Through Trustee" means State Street Bank and Trust Company of
Connecticut, National Association, in its capacity as trustee under each of the
Pass Through Trust Supplements, and each other person which may from time to
time be acting as successor trustee under any Pass Through Trust Supplement.
"Pass Through Trust Supplement" means each of the pass through trust
supplements referred to on Schedule III to the Indenture.
"Past Due Rate" means the Debt Rate plus 1% per annum.
"Payment Date" means, with respect to any Equipment Note, each May 23
and November 23, commencing November 23, 2001.
"Permitted Air Carrier" has the meaning set forth in Section 7(b)(i) of
the Lease.
"Permitted Country": Argentina, Australia, Austria, Belgium, Canada,
Denmark, Finland, France, Germany, Iceland, Ireland, Italy, Japan, ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ (including Canary Islands),
Sweden, Switzerland, and the United Kingdom.
"Permitted Investment" means each of (i) direct obligations of the
United States of America and agencies thereof; (ii) obligations fully guaranteed
by the United States of
16
AA-Boeing EETC-Annex-A
America; (iii) certificates of deposit issued by, or bankers' acceptances of, or
time deposits with, any bank, trust company or national banking association
incorporated or doing business under the laws of the United States of America or
one of the states thereof having combined capital and surplus and retained
earnings of at least $300,000,000 (including Lessor in its individual capacity
or the Loan Trustee in its individual capacity if such conditions are met); (iv)
commercial paper of any holding company of a bank, trust company or national
banking association described in clause (iii); (v) bearer note deposits with, or
certificates of deposit issued by, or promissory notes of, any subsidiary
incorporated under the laws of Canada (or any province thereof) of any bank,
trust company or national banking association described in clause (iii), (viii)
or (ix); (vi) commercial paper of companies having a rating assigned to such
commercial paper by S&P or Moody's (or, if neither such organization shall rate
such commercial paper at any time, by any nationally recognized rating
organization in the United States of America) equal to the highest rating
assigned by such organization; (vii) U.S. dollar- denominated certificates of
deposit issued by, or time deposits with, the European subsidiaries of (a) any
bank, trust company or national banking association described in clause (iii),
or (b) any other bank described in clause (viii) or (ix), having the highest
rating assigned by Moody's or S&P (or if neither such organization shall rate
such institution at any time, by any nationally recognized rating organization
in the United States of America); (viii) U.S.-issued Yankee certificates of
deposit issued by, or bankers' acceptances of, or commercial paper issued by,
any bank having combined capital and surplus and retained earnings of at least
$300,000,000 and headquartered in Canada, Japan, the United Kingdom, France, the
Federal Republic of Germany, Switzerland or The Netherlands, having the highest
rating assigned by Moody's or S&P (or if neither such organization shall rate
such institution at any time, by any nationally recognized rating organization
in the United States of America); (ix) U.S. dollar- denominated time deposits
with any Canadian bank having a combined capital and surplus and retained
earnings of at least $300,000,000, having the highest rating assigned by Moody's
or S&P (or if neither such organization shall rate such institution at any time,
by any nationally recognized rating organization in the United States of
America); (x) Canadian Treasury Bills fully hedged to U.S. dollars; (xi)
repurchase agreements with any financial institution having combined capital and
surplus and retained earnings of at least $150,000,000 (including Lessor in its
individual capacity or the Loan Trustee in its individual capacity if such
conditions are met) collateralized by transfer of possession of any of the
obligations described in clauses (i) through (x) above; (xii) bonds, notes or
other obligations of any state of the United States of America, or any political
subdivision of any such state, or any agencies or other instrumentalities of any
such state, including, but not limited to, industrial development bonds,
pollution control revenue bonds, public power bonds, housing bonds, other
revenue bonds or any general obligation bonds, provided further that, at the
time of their purchase, such obligations are rated in either of the two highest
rating categories by S&P or Moody's (or, if neither such organization shall rate
such obligations at any time, by any nationally recognized rating organization
in the United States of America); provided that, at the time of their purchase,
no such
AA-Boeing EETC-Annex-A
obligations shall have a term to maturity in excess of the earliest date when
such investments may be required for distribution; or (xiii) bonds or other debt
instruments of any company, if such bonds or other debt instruments, at the time
of their purchase, are rated in either of the two highest rating categories by
S&P or Moody's (or, if neither such organization shall rate such obligations at
such time, by any nationally recognized rating organization in the United States
of America); provided that, at the time of their purchase, no such obligations
or instruments shall have a term to maturity in excess of the earliest date when
such investments may be required for distribution.
"Permitted Liens" means Liens referred to in clauses (i) through (ix)
of Section 6 of the Lease.
"Permitted Sublessee" means, (1) any Certificated Air Carrier, (2) any
foreign air carrier that is principally based in and a domiciliary of any
Permitted Country, or (3) any foreign air carrier not described in clause (2)
above, if, at the time Lessee enters into a sublease with such foreign air
carrier, Lessor receives an opinion from Lessee's counsel (which counsel shall
be reasonably satisfactory to Lessor) to the effect that (x) there exist no
possessory rights in favor of such sublessee under the laws of such sublessee's
country which would, upon bankruptcy or insolvency of or other default by Lessee
and assuming that at the time of such bankruptcy, insolvency or other default by
Lessee, such sublessee is not insolvent or bankrupt, prevent the return of an
Engine or the Airframe and each Engine or engine subject to such sublease to
Lessor in accordance with and when permitted by the terms of the Lease upon
Lessor's exercise of its remedies and (y) the terms of the Lease are legal,
valid, binding and enforceable in the country in which such foreign air carrier
is principally based (subject to customary exceptions); provided that in the
case of any such foreign air carrier referred to in clause (2) or (3) above
(other than a foreign air carrier principally based in Taiwan), the U.S.
maintains full diplomatic relations with the country in which such foreign air
carrier is principally based at the time such sublease is entered into.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Placement Agents" means the initial purchasers listed as such in the
Placement Agreement.
"Placement Agreement" means the purchase agreement, dated May 18, 2001,
between American and the Placement Agents.
"Purchase Agreement" means the purchase agreement, dated as of the date
set forth in Schedule I to the Participation Agreement, entered into with the
Manufacturer in relation to the manufacture and sale of the Aircraft.
18
AA-Boeing EETC-Annex-A
"Purchase Agreement Assignment" means that certain Purchase Agreement
Assignment dated as of the Closing Date between American and the Owner Trustee,
in the form of Exhibit XII to the Participation Agreement.
"Rating Agencies" means S&P and Moody's.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated May 18, 2001, among American, each Pass Through Trustee and the
Placement Agents, as the same may be amended, supplemented or otherwise modified
from time to time in accordance with its terms.
"Related Indemnitee Group" has the meaning set forth in Section 10(b)
(2) of the Participation Agreement.
"Removal Notice" has the meaning set forth in Section 24(b) of the
Participation Agreement.
"Renewal Term" has the meaning set forth in Section 20(a) of the Lease.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Replacement Engine" means a ▇▇▇▇▇ & ▇▇▇▇▇▇▇ Model JT80-219 engine (or
an engine of the same or another manufacturer of a comparable or an improved
model and suitable for installation and use on the Airframe and compatible for
use on the Airframe with the other Engine leased under the Lease) which shall
have been substituted under the Lease pursuant to Section 5 or 10(b) of the
Lease, together with all Parts relating to such engine.
"Responsible Officer" means, (a) with respect to Lessee, its Chairman
of the Board, its President, any Senior Vice President, the Chief Financial
Officer, any Vice President, the Treasurer or any other management employee (i)
whose power to take the action in question has been authorized, directly or
indirectly, by the Board of Directors of Lessee, (ii) working under the direct
supervision of such Chairman of the Board, President, Senior Vice President,
Chief Financial Officer, Vice President or Treasurer and (iii) whose
responsibilities include the administration of the transactions and agreements,
including the Lease, contemplated by the Participation Agreement and the other
Operative Documents, and (b) with respect to the Owner Trustee, any officer in
its corporate trust department or any officer customarily performing functions
similar to those performed by the persons who at the time shall be such
respective officers or to whom any corporate trust matter is referred because of
his knowledge of and familiarity with a particular subject.
"Return Conditions" means, with respect to an Aircraft, Annex B to the
Participation Agreement.
19
AA-Boeing EETC-Annex-A
"Section 1110" means Section 1110 of the Bankruptcy Code, as in effect
on the Closing Date or any successor or analogous section of the federal
bankruptcy law in effect from time to time.
"Section 1110 Period" has the meaning specified in Section 8.04 of the
Indenture.
"Secured Obligations" has the meaning set forth in Section 2.17 of the
Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Series" means any series of Equipment Notes, including the Series A-1
Equipment Notes, the Series A-2 Equipment Notes, the Series B Equipment Notes,
the Series C Equipment Notes, the Series D Equipment Notes, or the Series E
Equipment Notes, if any.
"Series A-1 Equipment Notes" means Equipment Notes issued and
designated as "Series A-1 Equipment Notes" under the Indenture, in the original
principal amount and maturities and bearing interest as specified in Schedule II
to the Indenture.
"Series A-2 Equipment Notes" means Equipment Notes issued and
designated as "Series A-2 Equipment Notes" under the Indenture, in the original
principal amount and maturities and bearing interest as specified in Schedule II
to the Indenture.
"Series B Equipment Notes" means Equipment Notes issued and designated
as "Series B Equipment Notes" under the Indenture, in the original principal
amount and maturities and bearing interest as specified in Schedule II to the
Indenture.
"Series C Equipment Notes" means Equipment Notes issued and designated
as "Series C Equipment Notes" under the Indenture, in the original principal
amount and maturities and bearing interest as specified in Schedule II to the
Indenture.
"Series D Equipment Notes" means Equipment Notes issued and designated
as "Series D Equipment Notes" under the Indenture, in the original principal
amount and maturities and bearing interest as specified in Schedule II to the
Indenture.
"Series E Equipment Notes" means Equipment Notes, if any, issued and
designated as "Series E Equipment Notes" under the Indenture, in the original
principal amount and maturities and bearing interest as specified in Schedule II
to the Indenture (or, if the Series E Equipment Notes are issued after the
Closing Date, as specified in an amendment to the Indenture at the time of
issuance of Series E Equipment Notes).
"S&P" means Standard & Poor's Ratings Services, a Division of the
McGraw Hill Companies, Inc.
20
AA-Boeing EETC-Annex-A
"Special Structure" has the meaning set forth in Section 20(b) of the
Participation Agreement.
"Specified Default" means any event that, with the lapse of time or the
giving of notice, or both, would become an Event of Default under Section 14(a),
(f), (g), (h) or (i) of the Lease.
"Specified Person" has the meaning specified in Section 11(a) of the
Lease.
"State Street" has the meaning set forth in Section 11(d) of the
Participation Agreement.
"Stipulated Loss Value" payable with respect to an Event of Loss for
the Aircraft means the amount set forth in Schedule B to the Lease opposite the
Casualty Loss Determination Date next preceding the Loss Payment Date (or, if
the Loss Payment Date occurs on a Casualty Loss Determination Date, by the
amount set forth opposite such Casualty Loss Determination Date), provided that
during any Renewal Term, "Stipulated Loss Value" shall be determined as provided
in Section 20(a) of the Lease.
"Sublease" has the meaning specified in Section 7(a)(ii) of the Lease.
"Subordination Agent" has the meaning specified in the introductory
paragraph to the Intercreditor Agreement.
"Successor" has the meaning set out in Section 16(e)(i) of the
Participation Agreement.
"Supplemental Rent" means all amounts, liabilities and obligations
(other than Basic Rent) which Lessee assumes or is obligated or agrees to pay
under the Lease, the Participation Agreement, the Tax Indemnity Agreement, the
Lease Supplement or the Purchase Agreement Assignment (or under any other
agreement of Lessee expressly providing that amounts, liabilities and
obligations which Lessee assumes or is obligated or agrees to pay under the
Lease shall be Supplemental Rent) to Lessor or others, including, without
limitation, payments of Stipulated Loss Value, Termination Value, any additional
amounts payable by Lessor on the Equipment Notes as a result of an increase in
the Debt Rate pursuant to Section 2(d) of the Registration Rights Agreement and
amounts calculated with reference thereto and Make-Whole Amount, if any, payable
in accordance with Section 3(c) of the Lease and any amounts payable by Owner
Trustee pursuant to Section 2.14 of the Indenture.
"Tax" or "Taxes" means all governmental or quasi-governmental fees
(including, without limitation, license, filing and registration fees) and all
taxes (including, without limitation, franchise, excise, stamp, value added,
income, gross receipts, sales, use, property, personal and real, tangible and
intangible taxes), withholdings, assessments,
21
AA-Boeing EETC-Annex-A
levies, imposts, duties or charges, of any nature whatsoever, together with any
penalties, fines, additions to tax or interest thereon or other additions
thereto imposed, levied or assessed by any country, taxing authority or
governmental subdivision thereof or therein or by any international authority,
including any taxes imposed on any Person as a result of such Person being
required to collect and pay over withholding taxes.
"Tax Indemnitee" means the Lessor, ▇▇▇▇▇ Fargo Bank Northwest, National
Association, the Owner Participant, the Loan Trustee (in its individual capacity
and as the Loan Trustee), the Indenture Estate, the Subordination Agent as, and
so long as it is, the registered holder of any Equipment Notes, each Pass
Through Trustee as, and so long as it is, the owner of any Equipment Notes and
(with respect to matters arising prior to the Closing Date) the Original Loan
Participant and the Indenture Trustee (but shall not include any holder of a
Pass Through Certificate) and their respective servants, officers, directors,
agents and, to the extent provided for in Section 10(c)(8) of the Participation
Agreement, affiliates, and the respective successors and permitted assigns of
each of the foregoing Persons, but excluding any such Person in its capacity as
the manufacturer, supplier or subcontractor of the Aircraft, Airframe, Engines
or any Part thereof, and any officer, director, servant, agent, successor, or
permitted assign of such Person in such capacity.
"Tax Indemnity Agreement" means the Amended and Restated Tax Indemnity
Agreement, dated as of the Closing Date, between Lessee and the Owner
Participant, as the same may be modified, amended or supplemented from time to
time.
"Term" means the term for which the Aircraft is leased pursuant to
Section 3(a) of the Lease except that, during any Renewal Term, "Term" shall
also mean such Renewal Term, as specified in Section 20(a) of the Lease.
"Termination Date" has the meaning set forth in Section 9(a) of the
Lease.
"Termination Value" for the Aircraft as of any date of determination
means the amount set forth in Schedule B to the Lease opposite the Termination
Value Determination Date next preceding such date of determination (or, if such
date of determination is a Termination Value Determination Date, by the amount
set forth opposite such Termination Value Determination Date), provided that
during any Renewal Term, "Termination Value" shall be determined as provided in
Section 20(a) of the Lease. "Termination Value" for the Airframe or any Engine
as of any date of determination means a portion of the Termination Value for the
Aircraft, computed as of such date of determination, which bears the same ratio
to such Termination Value for the Aircraft as the original cost (as reasonably
determined by Lessor after consultation with Lessee and the Manufacturer) to
Lessor of the Airframe or such Engine bears to Cost for the Aircraft.
22
AA-Boeing EETC-Annex-A
"Termination Value Determination Date" means each of the dates
specified in Schedule B which is the same as or immediately precedes the date
with respect to which Termination Value is to be determined.
"Transportation Code" means that portion of Title 49 of the United
States Code comprising those provisions formerly referred to as the Federal
Aviation Act of 1958, as amended, or any subsequent legislation that amends,
supplements or supersedes such provisions.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
as of the Closing Date, relating to the Aircraft, between the Owner Participant
and Lessor (in its individual capacity only as expressly provided therein and
otherwise as Owner Trustee), as originally executed or as modified, amended or
supplemented pursuant to the applicable provisions thereof and in accordance
with the other Operative Documents, including, without limitation,
supplementation thereof by one or more Trust Agreement and Indenture Supplements
entered into pursuant to the applicable provisions of such Trust Agreement and
of the other Operative Documents.
"Trust Estate" means all estate, right, title and interest of the Owner
Trustee in and to the Aircraft, the Participation Agreement, the Lease, each
Lease Supplement, the Bills of Sale, the Purchase Agreement and the Purchase
Agreement Assignment, including, without limitation, all amounts of Basic Rent,
Supplemental Rent, insurance proceeds (other than any insurance proceeds payable
under liability policies to or for the benefit of the Owner Trustee, for its own
account or in its individual capacity, or to the Owner Participant or any
Affiliate thereof listed as an additional insured) and requisition, indemnity or
other payments of any kind for or with respect to the Aircraft including,
without limitation, any and all payments and proceeds received by the Owner
Trustee after the termination of the Lease with respect to the Aircraft
resulting from the sale, lease or other disposition thereof, subject, however,
to the provisions of and the lien created by the Indenture. Notwithstanding the
foregoing, "Trust Estate" shall include all of the property, rights and interest
of the Owner Trustee subject to the Granting Clause of the Indenture but shall
not include any Excepted Property.
"Trustee's Liens" has the meaning specified in Section 9.11 of the
Indenture.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
"TWA" means Trans World Airlines, Inc. (together with any predecessors
or affiliates).
"TWA Matter" means (i) any responsibility or liability for any act or
omission of TWA at any time or for any act, claim, event, circumstance or
condition existing, accruing, arising or occurring with respect to (y) the
Aircraft, or (z) any agreement with
23
AA-Boeing EETC-Annex-A
respect to the Aircraft to which TWA was a party or by which TWA was bound or by
which TWA's rights were affected (the "TWA Lease Documents"), in either case at
any time at or prior to Commencement Time (any of the foregoing, a "Prior
Claim"), (ii) any liability, obligation or indebtedness of TWA with respect to
the Aircraft, Airframe or Engines, or otherwise, whether primary or secondary,
direct or indirect, including without limitation any and all liabilities and
obligations of TWA resulting from, caused by or arising out of, directly or
indirectly, any act or omission of TWA, the conduct of its business or ownership
or lease of any of its properties or assets (including the Aircraft) or any
properties or assets used by TWA at any time, including without limitation such
of the foregoing as constitute, may constitute or are alleged to constitute a
tort, breach of contract or violation of requirements of any law, (iii) any
responsibility for any rental or other payments arising or accruing at any time,
or in respect of any period at or prior to Commencement Time, even if the
payment date therefor under the TWA Lease Documents would have occurred after
Commencement Time, and (iv) any liability for any Prior Claim that results or
arises from the execution or performance of the Original Participation
Agreement, the Original Lease, the Original Indenture, the Original Notes, the
Original Trust Agreement, the Original Tax Indemnity Agreement, or the TWA
Assignment, Assumption and Amendment Agreement relating to the Aircraft, dated
as of April 9, 2001, provided that "TWA Matter" shall exclude any and all
liability or responsibility relating to any death, personal injury or property
damage occurring after Commencement Time whether or not resulting from an act,
claim, event, circumstance accruing prior to such time.
"U.S." means the United States of America.
"U.S. Government" means the government of the U.S. and any
instrumentality or agency thereof.
24
AA-Boeing EETC-Annex-A
ANNEX B
RETURN CONDITIONS
The terms of this Annex B (this "Annex") shall apply with respect to
the return of the Aircraft to Lessor by or on behalf of Lessee under the Lease,
either at the expiration of the Lease Term or upon exercise of Lessor's remedies
following an Event of Default.
Capitalized terms used but not defined in this Annex shall have the
respective meanings ascribed in the Lease.
A. RETURN OF AIRCRAFT
Except as otherwise provided in this Annex or in the Lease, upon the
termination of the Lease at the end of the Lease Term (including any Renewal
Term) or upon exercise of Lessor's remedies following an Event of Default,
unless Lessee shall have exercised its option to purchase the Aircraft pursuant
to the terms of the Lease, Lessee will return the Aircraft to Lessor by
delivering the same, at its own expense, to a location in the 48 contiguous
United States which is on Lessee's or American's (if American is not Lessee)
route system, as selected by Lessor and reasonably acceptable to Lessee, or, if
Lessor has requested storage pursuant to Section G of this Annex, to the
location determined in accordance with such Section G. The Aircraft, at the time
of return to Lessor, shall be in a configuration suitable for commercial
passenger service and shall be fully equipped with two Engines (which may be
Replacement Engines owned by Lessee) duly installed thereon. At the time of the
return of the Aircraft to Lessor, Lessor and Lessee shall execute a Return
Acceptance Supplement in the form of Exhibit A attached hereto.
B. RETURN OF MANUALS AND DATA
At the time of the return of the Aircraft, Lessee shall deliver or
cause to be delivered to Lessor all logs, manuals, certificates and data, and
inspection, modification, overhaul and repair records required to be maintained
with respect to or in connection with operation of the Aircraft following the
Commencement Time under applicable rules and regulations of the FAA or, if the
Aircraft is then registered in another country, under applicable rules and
regulations of the central civil aviation authority of such country (the
"Records"), which shall be in such condition as to allow the Aircraft to be
operated under Part 121 of the U.S. Federal Aviation Regulations. The Records
shall be in English and shall be returned with the Aircraft in accordance with
Part 121.380 and Part 121.380(a) of the U.S. Federal Aviation Regulations. At
the time of delivery of the Records pursuant to this Annex, Lessor and Lessee
shall execute an Aircraft Documentation Return Receipt in the form of Exhibit B
attached hereto.
C. MODIFICATION KITS
Lessor may request and Lessee shall provide any modification kits or
other such items that are on order for the Aircraft, and Lessor shall reimburse
Lessee for the cost of
such kits to the extent such kits have been requested by Lessor. Lessee shall be
responsible for ordering all no charge kits and, if not incorporated, shall
return them to Lessor with the Aircraft at no charge to Lessor.
D. CONDITION OF AIRCRAFT AT RETURN
At the time of return of the Aircraft to Lessor hereunder:
(1) Registration; Certification. The Aircraft will be registered under
the laws of the United States with the FAA in the name of Lessor or its
designee, provided that Lessee shall be relieved of its obligation to register
the Aircraft with the FAA if such registration is prohibited by reason of the
failure of Lessor, an owner participant or Lessor's designee to comply with the
citizenship or other eligibility requirements for registration of aircraft under
the Transportation Code.
The Aircraft shall have a currently effective standard certificate of
airworthiness issued by the FAA and shall be in full compliance with the
provisions of Part 121 of the U.S. Federal Aviation Regulations and U.S.
regulations applicable to the Aircraft's operations for noise, emissions and
environment and be eligible for continued registration and operation in the
United States under the provisions of such Part 121 with no restrictions,
waivers or exemptions.
(2) Compliance with Maintenance Program. The Aircraft shall be in
compliance with the Maintenance Program (including the associated corrosion
prevention and control program).
(3) Repairs. All repairs that were performed on the Aircraft since
delivery of the Aircraft to the Lessee at the Commencement Time and that then
exist on the Aircraft shall be permanent and shall have FAA approval if
required. All such repairs shall be provided with data and documentation
necessary to verify and substantiate their certification (in accordance with
FAA-approved criteria) and methods of compliance. Lessee shall keep and maintain
a complete summary listing of all repairs performed on the Aircraft after the
Commencement Time.
(4) Modifications. All modifications to the Aircraft made after the
Commencement Time that have not been removed by Lessee at or prior to the return
of the Aircraft shall be in accordance with FAA-approved data. All such
modifications shall be provided with data and documentation necessary to
substantiate their FAA certification, approval and methods of compliance. Lessee
shall keep and maintain a complete summary listing of all modifications
performed on the Aircraft after the Commencement Time (it being understood and
agreed that nothing set forth in this Annex shall derogate from Lessee's rights
and obligations with respect to the alteration and modification of the Aircraft
as set forth in the Lease).
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(5) Airworthiness Directives and Mandatory Regulations. All FAA
airworthiness directives and U.S. Federal Aviation Regulations applicable to the
Aircraft (including its systems and components) requiring compliance or
terminating compliance on or prior to the expiration of the Lease Term (or, if
Lessee has commenced compliance with such directive with respect to any other
aircraft affected by such directive and in use by Lessee and, subsequent to any
such commencement, the Aircraft is subjected to a maintenance check of the type
at which Lessee makes the modification required by such directive in accordance
with the Maintenance Program, requiring compliance or terminating compliance
within 12 months after the expiration of the Lease Term) shall be accomplished
in compliance with the FAA's specific instructions without regard to any
alternate means of compliance, waiver or operator exemptions that delay
compliance with such FAA airworthiness directives or U.S. Federal Aviation
Regulations. Lessee shall provide a current and accurate status report and all
hard copy records evidencing, when accomplished, times and cycles and methods of
accomplishment with the appropriate signatures or stamps.
(6) RETURN STATUS.
(i) Operating Condition. At the expiration of the Lease Term,
the Aircraft shall be in as good an operating and physical condition as
when delivered to Lessee at the Commencement Time, ordinary wear and
tear excepted, and shall be in such condition, and all modifications
and maintenance of the Aircraft after the Commencement Time shall have
been performed in such a manner, as to allow the Aircraft to be
operated under Part 121 of the Federal Aviation Regulations.
(ii) "C-Check" Time Remaining. The Airframe shall have 100%
remaining time (i.e., a full C-Check interval) until its next due
"C-Check" under the Maintenance Program, as measured by hour, cycle or
calendar day, whichever is applicable and more limiting; provided that
Lessee may return the Aircraft with less than 100% remaining time,
subject to paying the C-Check Adjustment Amount. The "C-Check
Adjustment Amount" shall be calculated by multiplying (A) the
difference between (I) the number of hours, cycles or calendar days, as
applicable, in a full C-Check interval and (II) the number of hours,
cycles or calendar days, as applicable, remaining until the next due
C-Check by (B) a fraction (I) the numerator of which is the cost of
completing the C-Check in accordance with the Maintenance Program (at
Lessee's internal rates with no ▇▇▇▇ up) at the time of redelivery and
(II) the denominator of which is the total number of hours, cycles or
calendar days, as applicable, in the applicable C- Check interval.
(iii) Most Comprehensive Structural Refurbishment Time
Remaining. The Airframe shall have at least 25% remaining time until
its next scheduled most
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comprehensive structural refurbishment (referred to as a Heavy C-Check,
under the American Airlines maintenance program, or a C4 or C8 (or a
succeeding or subsequent check identified by the letter "C" and a
multiple of the number "4"), under the TWA maintenance program)
("MCSR"), as measured by hour, cycle or calendar day, whichever is
applicable and more limiting; provided that Lessee may return the
Aircraft with less than 25% remaining time, subject to paying the MCSR
Adjustment Amount. The "MCSR Adjustment Amount" shall be calculated by
multiplying (A) the difference between (I) the number of hours, cycles
or calendar days, as applicable, representing 25% remaining time until
the next MCSR and (II) the number of hours, cycles or calendar days, as
applicable, remaining until the next due MCSR by (B) a fraction (I) the
numerator of which is the cost of completing the MCSR in accordance
with the Maintenance Program (at rates determined by a mutually agreed
third party) at time of redelivery and (II) the denominator of which is
the total number of hours, cycles or calendar days, as applicable, in
the applicable MCSR interval.
(iv) Landing Gear Time Remaining. The installed nose and main
landing gears (the "Landing Gear") shall have at least 25% remaining
time until the next scheduled overhaul under the Maintenance Program as
measured by hour, cycle or calendar day, whichever is applicable and
more limiting; provided that Lessee may return the Aircraft with less
than 25% remaining time, subject to paying the Landing Gear Adjustment
Amount. The "Landing Gear Adjustment Amount" shall be calculated by
multiplying (A) the difference between (I) the number of hours, cycles
or calendar days, as applicable, representing 25% remaining time until
the next Landing Gear overhaul and (II) the number of hours, cycles or
calendar days, as applicable, remaining until the next due Landing Gear
overhaul by (B) a fraction (I) the numerator of which is the cost of
completing the Landing Gear overhaul in accordance with the Maintenance
Program (at rates determined by a mutually agreed third party) at time
of redelivery and (II) the denominator of which is the total number of
hours, cycles or calendar days, as applicable, in the applicable
Landing Gear overhaul interval.
(v) Engine Life-Limited Part Cycle Life Remaining. Each
life-limited part ("LLP") of the Engines returned with the Aircraft
shall have at least 25% remaining of its total cycle life until
required replacement under the Maintenance Program; provided that
Lessee may return the Aircraft with less than 25% remaining life on an
Engine LLP, subject to (i) such Engine LLP having a minimum of 1000
cycles remaining until the next scheduled replacement and (ii) paying
the Engine LLP Adjustment Amount. The "Engine LLP Adjustment Amount"
shall be calculated by multiplying (A) the difference between (I) the
number of cycles representing 25% remaining time until the next
required replacement for such Engine LLP and (II) the number of cycles
remaining until the next required replacement for such Engine LLP by
(B) a fraction (I) the
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numerator of which is the price of replacing the relevant part with a
new part pursuant to the Engine manufacturer's new part price listing
in effect at the time of return of the Aircraft and (II) the
denominator of which is the number of cycles in the new part's total
life.
(vi) Engines Time Remaining. Each Engine returned with the
Aircraft will have at least 25% remaining time under the Maintenance
Program until the next required performance restoring major
refurbishment (based on Lessee's mean time between such refurbishments
for engines of the same type operated by Lessee) as measured by hour,
cycle or calendar day, whichever is applicable and more limiting;
provided that Lessee may return the Aircraft with less than 25%
remaining time on an Engine, subject to (i) such Engine having a
minimum of twelve months or 1000 cycles, whichever is more limiting,
remaining until the next scheduled performance restoring major
refurbishment under the Maintenance Program and (ii) paying the Engine
Major Refurbishment Adjustment Amount. The "Engine Major Refurbishment
Adjustment Amount" shall be calculated by multiplying (A) the
difference between (I) the number of hours, cycles or calendar days, as
applicable, representing 25% remaining time until the next required
major refurbishment of such Engine and (II) the number of hours, cycles
or calendar days, as applicable, remaining until the next required
major refurbishment for such Engine by (B) a fraction (I) the numerator
of which is the cost of completing the major engine refurbishment in
accordance with the Maintenance Program (at rates determined by a
mutually agreed third party) and (II) the denominator of which is the
number of hours, cycles or calendar days, as applicable, in the
applicable major refurbishment interval.
(vii) Engine Borescope Inspection. A full cold and hot section
video borescope inspection in accordance with the Maintenance Program
and a full on-wing power assurance run in accordance with the
Maintenance Program shall have been performed by Lessee, at Lessee's
expense, for each Engine in the presence of a representative of Lessor
prior to return of the Aircraft, and Lessee shall have corrected, at
Lessee's expense, discrepancies found during such inspections that are
determined to be outside the limits permitted by the Maintenance
Program.
(viii) APU. The auxiliary power unit of the Aircraft ("APU")
shall be in good operating condition. An on-aircraft hot section
inspection (video borescope) and an operational check in accordance
with the Maintenance Program shall have been performed by Lessee on the
APU in the presence of a representative of Lessor prior to return of
the Aircraft, and Lessee shall have repaired or replaced, at Lessee's
expense, any watch items or unserviceable or reject conditions revealed
by such borescope inspection.
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(7) Deferred Maintenance. There shall be no deferred maintenance items,
scheduled or unscheduled, or watch items or items requiring repetitive
inspections against the Aircraft, including those identified in pre-delivery
inspections or test flights, that are outside of the limits established by the
Maintenance Program.
(8) General Appearance. The Aircraft shall be clean by U.S. commercial
airline standards and shall be in suitable condition to be placed into U.S.
scheduled revenue airline operations under Part 121 of the U.S. Federal Aviation
Regulations.
(9) Fuel. Lessee shall have no obligation with respect to the amount of
fuel or oil contained in the fuel or oil tanks of the Aircraft and all fuel or
oil remaining on board the Aircraft at the time of its return hereunder shall be
the property of Lessor without charge.
(10) Special Markings. All internal and external airline designation
markings appearing on the Aircraft shall have been removed or painted over in a
workmanlike manner.
E. PRE-RETURN INSPECTIONS
Immediately prior to the redelivery of the Aircraft, Lessee shall make
the Aircraft available to Lessor for an inspection that shall include ground
functional checks to verify compliance with the return conditions set forth in
this Annex and, at Lessor's request, a two-hour demonstration flight of the
Aircraft for the purpose of demonstrating the satisfactory operation of the
Aircraft, conducted by Lessee using Lessee's usual test flight procedures.
Lessor shall be permitted to have up to three representatives to be direct
observers of the demonstration flight. The cost of the demonstration flight
shall be paid by Lessee. In the event that the demonstration flight reveals any
operational discrepancies that are determined to be outside the limits permitted
by the Maintenance Program or other items or conditions that would prevent the
Aircraft from meeting the return conditions specified in this Annex, Lessee will
correct, at Lessee's expense, such discrepancies, items or conditions. Lessor
and such Lessor's representatives shall execute and deliver to Lessee prior to
such demonstration flight releases and waivers of liability in form and
substance reasonably satisfactory to Lessee. Any inspection or demonstration
flight shall be subject to the confidentiality provisions set forth in the Lease
with respect to inspections of the Aircraft.
F. NO LIENS
At the time of return of the Aircraft, it shall be free and clear of
all Liens other than Lessor's Liens and Permitted Liens referred to in clause
(i) (other than with respect to any rights of Lessee) or (viii) of the
definition thereof.
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G. STORAGE UPON RETURN
Upon written request of Lessor received at least 30 days prior to the
end of the Lease Term, Lessee will provide Lessor with storage facilities and
maintenance services for the Aircraft for a period not exceeding 90 days at such
location in the continental United States as selected by Lessee. Any storage
facilities provided by Lessee for the Aircraft pursuant to this Section G shall,
in all cases, be at the cost to Lessor of insurance and at Lessor's risk of
loss. In exchange for the maintenance and storage services described in this
Section G, Lessee will charge Lessor, and Lessor will pay to Lessee, Lessee's
rates customarily charged to third parties for similar maintenance and storage
services.
H. REPLACEMENT ENGINES
Lessee shall have the right to substitute an existing Engine with a
Replacement Engine at the time of return as long as such Replacement Engine is
of the same or better value, utility and modification level as the existing
Engine (taking into account the number of hours, cycles or calendar days, as
applicable, since the relevant engine's last major refurbishment). In the event
that a Replacement Engine meeting the value, utility and modification level
requirements of the immediately preceding sentence and not owned by Lessor shall
be delivered with the Airframe at the time of return, Lessee, at its own
expense, concurrently with such delivery, will furnish Lessor with a warranty
(as to title) ▇▇▇▇ of sale (which warranty shall except Lessor's Liens and
Permitted Liens of the type described in clause (viii) of the definition
thereof) with respect to such Replacement Engine, and Lessor will transfer to
Lessee, without recourse or warranty (except as to Lessor's Liens and Permitted
Liens of the type described in clause (viii) of the definition thereof), all
Lessor's right, title and interest in and to an Engine constituting part of the
Aircraft but not installed on the Airframe at the time of the return of the
Airframe.
I. PAYMENT MECHANICS
Any payments required to be made pursuant to this Annex shall be made
in U.S. dollars in immediately available funds to such bank account as is
designated by the payee.
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EXHIBITS TO ANNEX B
Exhibit A: Return Acceptance Supplement
Exhibit B: Aircraft Documentation Return Receipt
EXHIBIT A TO ANNEX B
RETURN ACCEPTANCE SUPPLEMENT
Dated ______________________
to Lease No. _______
Relating to Model ____ Aircraft
between
----------------------------------------
(LESSOR)
and
----------------------------------------
(LESSEE)
This Return Acceptance Supplement is executed by the parties hereto to
confirm that on the date of this Return Acceptance Supplement at ______________
[time] the following described Aircraft:
Manufacturer .........................
Model ................................
Manufacturer's Serial No. ............
Aircraft Hours and Cycles ............ (See Attachment 1)
including the following described Engines installed thereon:
Manufacturer's
Manufacturer Make and Model Serial No.
------------ -------------- --------------
was delivered by Lessee to Lessor.
This Return Acceptance Supplement is intended to be delivered by Lessor
to Lessee in ________________________________ .
IN WITNESS WHEREOF, the parties hereto have caused this Return
Acceptance Supplement to be executed by their duly authorized representatives as
of the day and year first above written.
-------------------------------- --------------------------------
(LESSEE) (LESSOR)
By By
------------------------------ ------------------------------
Its Its
----------------------------- -----------------------------
ATTACHMENT 1: "Aircraft Hours and Cycles"
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ATTACHMENT 1 TO
RETURN ACCEPTANCE SUPPLEMENT
AIRCRAFT HOURS AND CYCLES
AS OF _____________
MODEL ______ AIRCRAFT
REGISTRATION MARKINGS SERIAL NUMBER
---------------- ----------
A. AIRFRAME:
Aircraft Total Time (Hours) ...............
----------------
Aircraft Total Landings (Cycles) ..........
----------------
Aircraft (and Engine) "C" Check--
Hours/Cycles/Days since last check ....
----------------
Aircraft (and Engine) "MCSR"--
Hours/Cycles/Days since last MCSR .....
----------------
B. ENGINES--MODEL:
Hours/Cycles/Days Cycles
To Next Required To Next
Total Performance Replacement of
Serial Engine Total Restoring Major Lowest Life
Position Number Cycles Time Refurbishment Limited Part
-------- ------ ------ ----- ----------------- --------------
1
2
3
ATTACHMENT 1 TO
RETURN ACCEPTANCE SUPPLEMENT
C. APU - MODEL:
Total
Serial Number Hours/Cycles
------------- ------------
D. LANDING GEAR:
Hours/Cycles/Days
Serial Number Hours/Cycles To Next Overhaul
------------- ------------ -----------------
Nose Landing Gear
Left Main Gear
Right Main Gear
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EXHIBIT B TO ANNEX B
AIRCRAFT DOCUMENTATION RETURN RECEIPT
________________ ("Lessee"), a [Delaware] ________________, and
______________________ ("Lessor"), a ______________________________, hereby
confirm the return delivery by Lessee and receipt by Lessor of the Aircraft
Documentation listed on Attachment 1 hereto and made a Part hereof, on
____________, in ___________________, at _______________________ local time.
[Lessor is executing this return receipt pursuant to the instructions of
______________________, a ________________ ("Owner Participant"), such
instructions attached hereto as Attachment 2.]
-------------------------------- --------------------------------
(LESSEE) (LESSOR)
By By
------------------------------ ------------------------------
Its Its
----------------------------- -----------------------------
ATTACHMENTS (2)
Attachment 1
AIRCRAFT DOCUMENTATION
Identification
Title Number Quantity
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