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EXHIBIT 4.15
PARTICIPATION AGREEMENT 322
Dated as of June 25, 1997
Among
CONTINENTAL AIRLINES, INC.,
Owner,
and
WILMINGTON TRUST COMPANY,
Not in its individual capacity
except as expressly provided herein,
but solely as Mortgagee, Second Mortgagee, Subordination
Agent under the Intercreditor Agreement and Pass
Through Trustee under each of the Pass Through Agreements
----------------------------
One Boeing Model 737-3T0 Aircraft
Bearing Manufacturer's Serial No. 23373
and U.S. Registration No. N12322
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CONTENTS
SECTION 1. DEFINITIONS AND CONSTRUCTION............................................ 2
SECTION 2. SECURED LOANS........................................................... 2
2.1 Making of Loans and Issuance of Equipment Notes.............. 2
2.2 Payments..................................................... 3
SECTION 3. CLOSING; TERMINATIONS................................................... 3
3.1 Closing...................................................... 3
3.2 Termination.................................................. 3
SECTION 4. CONDITIONS PRECEDENT.................................................... 3
4.1 Conditions Precedent to the Obligations of the Pass Through
Trustees..................................................... 3
4.2 Conditions Precedent to Obligations of Mortgagee............. 8
4.3 Conditions Precedent to Obligations of Owner................. 8
4.4 Conditions Precedent to Obligations of Second Mortgagee...... 9
4.5 Post-Registration Opinion.................................... 10
SECTION 5. REPRESENTATIONS AND WARRANTIES.......................................... 10
5.1 Owner's Representations and Warranties....................... 10
5.2 WTC's Representations and Warranties......................... 13
SECTION 6. COVENANTS, UNDERTAKINGS AND AGREEMENTS.................................. 18
6.1 Covenants of Owner........................................... 18
6.2 Covenants of WTC............................................. 19
6.3 Covenants of Note Holders.................................... 21
6.4 Agreements................................................... 22
SECTION 7. CONFIDENTIALITY......................................................... 26
SECTION 8. INDEMNIFICATION AND EXPENSES............................................ 27
8.1 General Indemnity............................................ 27
8.2 Expenses..................................................... 33
8.3 General Tax Indemnity........................................ 34
8.4 Payments..................................................... 45
8.5 Interest..................................................... 45
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8.6 Benefit of Indemnities....................................... 46
SECTION 9. ASSIGNMENT OR TRANSFER OF INTEREST...................................... 46
9.1 Note Holders................................................. 46
9.2 Effect of Transfer........................................... 46
SECTION 10. SECTION 1110............................................................ 47
SECTION 11. CHANGE OF CITIZENSHIP................................................... 47
11.1 Generally.................................................... 47
11.2 Mortgagee.................................................... 47
SECTION 12. MISCELLANEOUS........................................................... 47
12.1 Amendments................................................... 47
12.2 Severability................................................. 48
12.3 Survival..................................................... 48
12.4 Reproduction of Documents.................................... 48
12.5 Counterparts................................................. 49
12.6 No Waiver.................................................... 49
12.7 Notices...................................................... 49
12.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE............. 50
12.9 Third-Party Beneficiary...................................... 51
12.10 Entire Agreement............................................. 51
12.11 Further Assurances........................................... 52
SCHEDULES AND EXHIBITS
SCHEDULE 1 - Accounts; Addresses
SCHEDULE 2 - Commitments
SCHEDULE 3 - Certain Terms
SCHEDULE 4 - Permitted Countries
EXHIBIT A - Opinion of special counsel to Owner
EXHIBIT B - Opinion of corporate counsel to Owner
EXHIBIT C - Opinion of special counsel to Mortgagee
EXHIBIT D - Opinion of special counsel to the initial purchasers of the
Pass Through Certificates
EXHIBIT E - Opinion of special counsel in Oklahoma City, Oklahoma
EXHIBIT F - Form of Trust Indenture
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PARTICIPATION AGREEMENT 322
PARTICIPATION AGREEMENT 322, dated as of June 25, 1997 (this
"Agreement"), among (a) CONTINENTAL AIRLINES, INC., a Delaware corporation
("Owner"), (b) WILMINGTON TRUST COMPANY, a Delaware banking corporation, not in
its individual capacity, except as expressly provided herein, but solely as
Mortgagee (in its capacity as Mortgagee, "Mortgagee" and in its individual
capacity, "WTC"), (c) Wilmington Trust Company, not in its individual capacity,
except as expressly provided herein, but solely as Second Mortgagee (the "Second
Mortgagee"), (d) WILMINGTON TRUST COMPANY, not in its individual capacity,
except as expressly provided herein, but solely as Pass Through Trustee under
each of the Pass Through Trust Agreements, (each, a "Pass Through Trustee") and
(e) WILMINGTON TRUST COMPANY, not in its individual capacity, except as
expressly provided herein, but solely as Subordination Agent under the
Intercreditor Agreement ("Subordination Agent").
RECITALS
A. Owner, Owner Participant and Owner Trustee have entered into the
Aircraft Purchase Agreement, pursuant to which, among other things, the Owner
Trustee has agreed to sell to Owner and Owner has agreed to purchase from the
Owner Trustee, certain aircraft, including the Aircraft.
B. Pursuant to each of the Pass Through Trust Agreements, on the
Issuance Date the Pass Through Trusts were created and the Pass Through
Certificates were issued and sold.
C. Each Pass Through Trustee has agreed to use a portion of the
proceeds from the issuance and sale of the Pass Through Certificates issued by
each Pass Through Trust to purchase from Owner, on behalf of the related Pass
Through Trust, the Equipment Note bearing the same interest rate as the Pass
Through Certificates issued by such Pass Through Trust.
D. Owner and Mortgagee, at the Closing contemplated by the Agreement,
will enter into the Trust Indenture for the benefit of the Note Holders,
pursuant to which, among other things, Owner agrees (1) to issue Equipment
Notes, in the amounts and otherwise as provided in the Trust Indenture, and (2)
to mortgage, pledge and assign to Mortgagee all of Owner's right, title and
interest
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in the Collateral to secure the Secured Obligations, including, without
limitation, Owner's obligations under the Equipment Notes.
E. The Owner shall apply the proceeds of the issuances of the Equipment
Notes to the payment of the purchase price of the Aircraft in the manner
provided herein and for no other purpose.
F. The parties hereto wish to set forth in this Agreement the terms and
conditions upon and subject to which the aforesaid transactions shall be
effected.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS AND CONSTRUCTION
Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference, and shall be construed and
interpreted in the manner described, in Annex A to the Trust Indenture.
SECTION 2. SECURED LOANS
2.1 MAKING OF LOANS AND ISSUANCE OF EQUIPMENT NOTES
Subject to the terms and conditions of this Agreement, at the Closing:
(a) Each Pass Through Trustee shall make a secured loan to the
Owner in the amount in Dollars opposite such Trustee's name on
Schedule 2; and
(b) The Owner shall issue, pursuant to and in accordance with the
provisions of Article II of the Trust Indenture, to the
Subordination Agent as the registered holder on behalf of each
Pass Through Trustee, one or more Equipment Notes, dated the
Closing Date, of the Series set forth opposite such Trustee's
name on Schedule 2, in an aggregate principal amount equal to
the secured loan made by each such Pass Through Trustee.
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2.2 PAYMENTS
The proceeds of each secured loan made by each Pass Through Trustee to
the Owner as provided in Section 2.1 shall be made available by such Pass
Through Trustee causing a wire transfer of such proceeds to the account of the
"Applicable Indenture Trustee" (as defined in the Aircraft Purchase Agreement)
with respect to the Aircraft in payment of a portion of the "Net Purchase Price"
(as defined in the Aircraft Purchase Agreement) for the Aircraft.
SECTION 3. CLOSING; TERMINATION
3.1 CLOSING
The Closing of the transactions contemplated hereby shall take place at
the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, or at such other place as the parties shall agree. Owner shall give
to Mortgagee and each Pass Through Trustee at least two Business Days' advance
notice (or, in the case of any adjourned Closing, one Business Days' advance
notice) of the Closing Date. If on a scheduled Closing Date the Closing shall
not occur for any reason, the Closing shall be deemed adjourned to the next
Business Day or to such other Business Day as Owner shall specify by written
notice to the Mortgagee and each Pass Through Trustee prior to 6 P.M. New York
time on the scheduled Closing Date, provided that in no event shall the Closing
Date be adjourned beyond August 31, 1997.
3.2 TERMINATION
This Agreement shall terminate if the Closing shall not have occurred
on or before August 31, 1997.
SECTION 4. CONDITIONS PRECEDENT
4.1 CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE PASS THROUGH
TRUSTEES
The obligation of each Pass Through Trustee to make the secured loan
described in Section 2.1(a) and to participate in the transactions contemplated
by this Agreement on the Closing Date is subject to the fulfillment, prior to or
on the Closing Date, of the following conditions precedent:
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4.1.1 EQUIPMENT NOTES
The Owner shall have tendered the Equipment Notes to the Mortgagee for
authentication and the Mortgagee shall have authenticated such Equipment Notes
and shall have tendered the Equipment Notes to the Subordination Agent on behalf
of such Pass Through Trustee, against confirmation that the loan proceeds have
been made available to Owner, all in accordance with Section 2.
4.1.2 DELIVERY OF DOCUMENTS
The Subordination Agent on behalf of each Pass Through Trustee shall
have received executed counterparts or conformed copies of the following
documents:
(i) this Agreement;
(ii) the Trust Indenture in substantially the form of Exhibit
F hereto;
(iii) the initial Trust Indenture Supplement;
(iv) the Second Mortgage;
(v) the Second Mortgage Supplement No. 1 and any subsequent
Second Mortgage Supplement executed by Owner and the Second Mortgagee
on or prior to the Closing Date;
(vi) the Owner Trustee ▇▇▇▇ of Sale and the FAA ▇▇▇▇ of Sale;
(vii) (A) a copy of the Certificate of Incorporation and
By-Laws of Owner and resolutions of the board of directors of Owner
and/or the executive committee thereof, in each case certified as of
the Closing Date, by the Secretary or an Assistant Secretary of Owner,
duly authorizing the execution, delivery and performance by Owner of
the Operative Agreements to which it is party required to be executed
and delivered by Owner on or prior to the Closing Date in accordance
with the provisions hereof and thereof; and (B) an incumbency
certificate of Owner as to the person or persons authorized to execute
and deliver the Operative Agreements on behalf of Owner;
(viii) an Officer's Certificate of Owner, dated as of the
Closing Date, stating that its representations and
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warranties set forth in this Agreement are true and correct as of the
Closing Date (or, to the extent that any such representation and
warranty expressly relates to an earlier date, true and correct as of
such earlier date);
(ix) the Financing Statements;
(x) the following opinions of counsel, in each case dated the
Closing Date:
(A) an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, special
counsel to Owner, substantially in the form of Exhibit A;
(B) an opinion of Owner's Legal Department,
substantially in the form of Exhibit B;
(C) an opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & Finger, special
counsel to Mortgagee and Second Mortgagee, substantially in
the form of Exhibit C;
(D) an opinion of Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇,
special counsel for the initial purchasers of the Pass Through
Certificates, substantially in the form set forth in Exhibit
D; and
(E) an opinion of ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇, special
counsel in Oklahoma City, Oklahoma, substantially in the form
of Exhibit E;
(xi) the broker's report and insurance certificates required
by Section 4.06 of the Trust Indenture;
(xii) the Aircraft Purchase Agreement;
(xiii) the Existing Indenture Release;
(xiv) the Termination of Lease; and
(xv) the acknowledgment of the "Applicable Indenture Trustee"
(as defined in the Aircraft Purchase Agreement) with respect to the
Aircraft of receipt of the proceeds of the secured loan pursuant to
Section 2 and the application thereof to the "Net Purchase Price" (as
defined in the Aircraft Purchase Agreement).
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4.1.3 PERFECTED SECURITY INTEREST
On the Closing Date, after giving effect to the filing of the FAA Filed
Documents and the Financing Statements, Mortgagee shall have received a duly
perfected first priority security interest in all of Owner's right, title and
interest in the Aircraft, subject only to Permitted Liens.
4.1.4 VIOLATION OF LAW
No change shall have occurred after the date of this Agreement in any
applicable Law that makes it a violation of Law for (a) Owner, any Pass Through
Trustee, Subordination Agent or Mortgagee to execute, deliver and perform the
Operative Agreements to which any of them is a party or (b) any Pass Through
Trustee to make the loan contemplated by Section 2.1, to acquire an Equipment
Note or to realize the benefits of the security afforded by the Trust Indenture.
4.1.5 REPRESENTATIONS, WARRANTIES AND COVENANTS
The representations and warranties of each other party to this
Agreement made, in each case, in this Agreement and in any other Operative
Agreement to which it is a party, shall be true and accurate in all material
respects as of the Closing Date (unless any such representation and warranty
shall have been made with reference to a specified date, in which case such
representation and warranty shall be true and accurate as of such specified
date) and each other party to this Agreement shall have performed and observed,
in all material respects, all of its covenants, obligations and agreements in
this Agreement and in any other Operative Agreement to which it is a party to be
observed or performed by it as of the Closing Date.
4.1.6 NO EVENT OF DEFAULT
On the Closing Date, no event shall have occurred and be continuing, or
would result from the mortgage of the Aircraft, which constitutes a Default or
an Event of Default.
4.1.7 NO EVENT OF LOSS
No Event of Loss with respect to the Aircraft shall have occurred.
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4.1.8 TITLE
Owner shall have good title (subject to filing and recordation of the
FAA ▇▇▇▇ of Sale with the FAA) to the Aircraft, free and clear of all Liens,
except Permitted Liens.
4.1.9 CERTIFICATION
The Aircraft shall have been duly certificated by the FAA as to type
and airworthiness.
4.1.10 SECTION 1110
Mortgagee shall be entitled to the benefits of Section 1110 (as
currently in effect) with respect to the right to take possession of the
Airframe and Engines as provided in the Trust Indenture in the event of a case
under Chapter 11 of the Bankruptcy Code in which Owner is a debtor.
4.1.11 FILING
On the Closing Date (a) the FAA Filed Documents shall have been duly
filed for recordation (or shall be in the process of being so duly filed for
recordation) with the FAA in accordance with the Act and (b) each Financing
Statement shall have been duly filed (or shall be in the process of being so
duly filed) in the appropriate jurisdiction.
4.1.12 NO PROCEEDINGS
No action or proceeding shall have been instituted, nor shall any
action be threatened in writing, before any Government Entity, nor shall any
order, judgment or decree have been issued or proposed to be issued by any
Government Entity, to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or any other Operative Agreement or the
transactions contemplated hereby or thereby.
4.1.13 GOVERNMENTAL ACTION
All appropriate action required to have been taken prior to the Closing
Date by the FAA, or any governmental or political agency, subdivision or
instrumentality of the United States, in connection with the transactions
contemplated by this Agreement shall have been taken, and all orders, permits,
waivers, authorizations, exemptions and approvals of such entities
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required to be in effect on the Closing Date in connection with the transactions
contemplated by this Agreement shall have been issued.
4.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF MORTGAGEE
The obligation of Mortgagee to authenticate the Equipment Notes on the
Closing Date is subject to the satisfaction or waiver by Mortgagee, on or prior
to the Closing Date, of the conditions precedent set forth below in this Section
4.2.
4.2.1 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 4.1.2 shall have been received by Mortgagee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Mortgagee.
4.2.2 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 4.1.4, 4.1.5, 4.1.6 and
4.1.10 shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Mortgagee.
4.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF OWNER
The obligation of Owner to participate in the transaction contemplated
hereby on the Closing Date is subject to the satisfaction or waiver by Owner, on
or prior to the Closing Date, of the conditions precedent set forth below in
this Section 4.3.
4.3.1 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 4.1.2 shall have been received by Owner, except
as specifically provided therein, and shall be satisfactory to Owner, unless the
failure to receive any such agreement, instrument, certificate or document is
the result of any action or inaction by Owner. In addition, the Owner shall have
received the following:
(i) (A) an incumbency certificate of WTC as to the person or
persons authorized to execute and deliver the
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Operative Agreements on behalf of WTC and (B) a copy of the Certificate
of Incorporation and By-Laws and general authorizing resolution of the
board of directors (or executive committee) or other satisfactory
evidence of authorization of WTC, certified as of the Closing Date by
the Secretary or Assistant or Attesting Secretary of WTC, which
authorize the execution, delivery and performance by WTC of the
Operative Agreements to which it is a party; and
(ii) an Officer's Certificate of WTC, dated as of the Closing
Date, stating that its representations and warranties in its individual
capacity or as Mortgagee, Second Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, set forth in this Agreement
are true and correct as of the Closing Date (or, to the extent that any
such representation and warranty expressly relates to an earlier date,
true and correct as of such earlier date);
4.3.2 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 4.1.4, 4.1.5, 4.1.6,
4.1.7, 4.1.8, 4.1.9, 4.1.10, 4.1.11, 4.1.12 and 4.1.13 shall have been satisfied
or waived by Owner, unless the failure of any such condition to be satisfied is
the result of any action or inaction by Owner.
4.4 CONDITIONS PRECEDENT TO OBLIGATIONS OF SECOND MORTGAGEE
The obligation of Second Mortgagee to execute and deliver the Second
Mortgage (if not previously done) and the Second Mortgage Supplement relating to
the Aircraft on the Closing Date is subject to the satisfaction or waiver by
Second Mortgagee, on or prior to the Closing Date, of the conditions precedent
set forth below in this Section 4.4.
4.4.1 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 4.1.2 shall have been received by Second
Mortgagee, except as specifically provided therein, unless the failure to
receive any such agreement, instrument, certificate or document is the result of
any action or inaction by Second Mortgagee.
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4.4.2 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 4.1.4, 4.1.5, 4.1.6 and
4.1.10 shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Second Mortgagee.
4.5 POST-REGISTRATION OPINION
Promptly upon the registration of the Aircraft and the recordation of
the FAA Filed Documents pursuant to the Act, Owner will cause ▇▇▇▇▇ ▇▇▇▇▇ &
▇▇▇▇▇▇, special counsel in Oklahoma City, Oklahoma, to deliver to Owner, each
Pass Through Trustee, Mortgagee and Second Mortgagee a favorable opinion or
opinions addressed to each of them with respect to such registration and
recordation.
SECTION 5. REPRESENTATIONS AND WARRANTIES
5.1 OWNER'S REPRESENTATIONS AND WARRANTIES
Owner represents and warrants to each Applicable Pass Through Trustee,
Subordination Agent, Mortgagee and Second Mortgagee that:
5.1.1 ORGANIZATION; QUALIFICATION
Owner is a corporation duly incorporated, validly existing and in good
standing under the Laws of the State of Delaware and has the corporate power and
authority to conduct the business in which it is currently engaged and to own or
hold under lease its properties and to enter into and perform its obligations
under the Operative Agreements to which it is party. Owner is duly qualified to
do business as a foreign corporation in good standing in each jurisdiction in
which the nature and extent of the business conducted by it, or the ownership of
its properties, requires such qualification, except where the failure to be so
qualified would not give rise to a Material Adverse Change to Owner.
5.1.2 CORPORATE AUTHORIZATION
Owner has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by its Certificate of Incorporation or By-Laws) to
authorize the
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execution and delivery of each of the Operative Agreements to which it is party,
and the performance of its obligations thereunder.
5.1.3 NO VIOLATION
The execution and delivery by Owner of the Operative Agreements to
which it is party, the performance by Owner of its obligations thereunder and
the consummation by Owner on the Closing Date of the transactions contemplated
thereby, do not and will not (a) violate any provision of the Certificate of
Incorporation or By-Laws of Owner, (b) violate any Law applicable to or binding
on Owner or (c) violate or constitute any default under (other than any
violation or default that would not result in a Material Adverse Change to
Owner), or result in the creation of any Lien (other than as permitted under the
Trust Indenture) upon the Aircraft under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, lease, loan or other
material agreement, instrument or document to which Owner is a party or by which
Owner or any of its properties is bound.
5.1.4 APPROVALS
The execution and delivery by Owner of the Operative Agreements to
which Owner is a party, the performance by Owner of its obligations thereunder
and the consummation by Owner on the Closing Date of the transactions
contemplated thereby do not and will not require the consent or approval of, or
the giving of notice to, or the registration with, or the recording or filing of
any documents with, or the taking of any other action in respect of, (a) any
trustee or other holder of any Debt of Owner and (b) any Government Entity,
other than the filing of (x) the FAA Filed Documents and the Financing
Statements (and continuation statements periodically) and (y) filings,
recordings, notices or other ministerial actions pursuant to any routine
recording, contractual or regulatory requirements applicable to it.
5.1.5 VALID AND BINDING AGREEMENTS
The Operative Agreements to which Owner is a party have been duly
authorized, executed and delivered by Owner and, assuming the due authorization,
execution and delivery thereof by the other party or parties thereto, constitute
the legal, valid and binding obligations of Owner and are enforceable against
Owner in
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accordance with the respective terms thereof, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, receivership, moratorium
and other similar Laws affecting the rights of creditors generally and general
principles of equity, whether considered in a proceeding at law or in equity.
5.1.6 REGISTRATION AND RECORDATION
Except for (a) the registration of the Aircraft with the FAA pursuant
to the Act in the name of Owner, (b) the filing for recordation (and
recordation) of the FAA Filed Documents, (c) the filing of the Financing
Statements (and continuation statements relating thereto at periodic intervals),
and (d) the affixation of the nameplates referred to in Section 4.02(f) of the
Trust Indenture, no further action, including any filing or recording of any
document (including any financing statement in respect thereof under Article 9
of the UCC) is necessary in order to establish and perfect Mortgagee's or Second
Mortgagee's security interest in the Aircraft as against Owner and any other
Person, in each case, in any applicable jurisdictions in the United States. Upon
consummation of the Closing, the Owner will purchase the Aircraft pursuant to
Section 2.01 of the Aircraft Purchase Agreement.
5.1.7 CHIEF EXECUTIVE OFFICE
The chief executive office (as such term is defined in Article 9 of the
UCC) of Owner is located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
5.1.8 NO EVENT OF LOSS
No Event of Loss has occurred with respect to the Aircraft.
5.1.9 COMPLIANCE WITH LAWS
(a) Owner is a Citizen of the United States and a U.S. Air Carrier.
(b) Owner holds all licenses, permits and franchises from the
appropriate Government Entities necessary to authorize Owner to lawfully engage
in air transportation and to carry on scheduled commercial passenger service as
currently conducted, except where the failure to so hold any such license,
permit or
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franchise would not give rise to a Material Adverse Change to Owner.
(c) Owner 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.
(d) The Owner Trustee ▇▇▇▇ of Sale and the FAA ▇▇▇▇ of Sale are
effective to convey title to the Aircraft to the Owner. Upon consummation of the
Closing, the Owner will have good title to the Aircraft, free and clear of all
Liens, except Permitted Liens.
5.1.10 SECURITIES LAWS
Neither Owner nor any person authorized to act on its behalf has
directly or indirectly offered any beneficial interest or Security relating to
the ownership of the Aircraft, or any of the Equipment Notes or any other
interest in or security under the Trust Indenture or the Second Mortgage, for
sale to, or solicited any offer to acquire any such interest or security from,
or has sold any such interest or security to, any person in violation of the
Securities Act.
5.1.11 BROKER'S FEES
No Person acting on behalf of Owner is or will be entitled to any
broker's fee, commission or finder's fee in connection with the Transactions,
other than the fees and expenses payable by Owner to the initial purchasers of
the Pass Through Certificates.
5.1.12 SECTION 1110
Mortgagee is entitled to the benefits of Section 1110 (as currently in
effect) with respect to the right to take possession of the Airframe and Engines
as provided in the Trust Indenture in the event of a case under Chapter 11 of
the Bankruptcy Code in which Owner is a debtor.
5.2 WTC'S REPRESENTATIONS AND WARRANTIES
WTC represents and warrants (with respect to Section 5.2.10, solely in
its capacity as Subordination Agent) to Owner that:
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5.2.1 ORGANIZATION, ETC.
WTC is a Delaware banking corporation duly organized, validly existing
and in good standing under the Laws of the State of Delaware, holding a valid
certificate to do business as a Delaware banking corporation with banking
authority to execute and deliver, and perform its obligations under, the Pass
Through Trustee Agreements and the Operative Agreements to which it is a party.
5.2.2 CORPORATE AUTHORIZATION
WTC has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by Law or by its Certificate of Incorporation or By-Laws)
to authorize the execution and delivery by WTC, in its individual capacity or as
Mortgagee, Second Mortgagee, a Pass Through Trustee or Subordination Agent, as
the case may be, of the Pass Through Trustee Agreements and the Operative
Agreements to which it is a party and the performance of its obligations
thereunder.
5.2.3 NO VIOLATION
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, Second Mortgagee, a Pass Through Trustee or Subordination Agent, as
the case may be, of the Pass Through Trustee Agreements and the Operative
Agreements to which it is a party, the performance by WTC, in its individual
capacity or as Mortgagee, Second Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, of its obligations thereunder and the
consummation on the Closing Date of the transactions contemplated thereby, do
not and will not (a) violate any provision of the Certificate of Incorporation
or By-Laws of WTC, (b) violate any Law applicable to or binding on WTC, in its
individual capacity or (except in the case of any Law relating to any Plan) as
Mortgagee, Second Mortgagee, a Pass
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Through Trustee or Subordination Agent, or (c) violate or constitute any default
under (other than any violation or default that would not result in a Material
Adverse Change to WTC, in its individual capacity or Mortgagee, Second
Mortgagee, a Pass Through Trustee or Subordination Agent), or result in the
creation of any Lien (other than the lien of the Trust Indenture and the Second
Mortgage) upon any property of WTC, in its individual capacity or as Mortgagee,
Second Mortgagee, a Pass Through Trustee or Subordination Agent, or any of WTC's
subsidiaries under, any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, lease, loan or other agreement, instrument or
document to which WTC, in its individual capacity or as Mortgagee, Second
Mortgagee, a Pass Through Trustee or Subordination Agent, is a party or by which
WTC, in its individual capacity or as Mortgagee, Second Mortgagee, a Pass
Through Trustee or Subordination Agent, or any of their respective properties is
bound.
5.2.4 APPROVALS
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, Second Mortgagee, a Pass Through Trustee or Subordination Agent, as
the case may be, of the Pass Through Trustee Agreements and the Operative
Agreements to which it is a party, the performance by WTC, in its individual
capacity or as Mortgagee, Second Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, of its obligations thereunder and the
consummation on the Closing Date by WTC, in its individual capacity or as
Mortgagee, Second Mortgagee, a Pass Through Trustee or Subordination Agent, as
the case may be, of the transactions contemplated thereby do not and will not
require the consent, approval or authorization of, or the giving of notice to,
or the registration with, or the recording or filing of any documents with, or
the taking of any other action in respect of, (a) any trustee or other holder of
any Debt of WTC or (b) any Government Entity, other than the filing of the FAA
Filed Documents and the Financing Statements.
5.2.5 VALID AND BINDING AGREEMENTS
The Pass Through Trustee Agreements and the Operative Agreements to
which it is a party have been duly authorized, executed and delivered by WTC
and, assuming the due authorization, execution and delivery by the other party
or parties thereto, constitute the legal, valid and binding obligations of WTC,
in its individual capacity or as Mortgagee, Second Mortgagee, a Pass Through
Trustee or Subordination Agent, as the case may be, and are enforceable against
WTC, in its individual capacity or as Mortgagee, Second Mortgagee, a Pass
Through Trustee or Subordination Agent, as the case may be, in accordance with
the respective terms thereof, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, receivership, moratorium or other
similar Laws
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affecting the rights of creditors generally and general principles of equity,
whether considered in a proceeding at law or in equity.
5.2.6 CITIZENSHIP
WTC is a Citizen of the United States.
5.2.7 NO LIENS
On the Closing Date, there are no Liens attributable to WTC in respect
of all or any part of the Collateral.
5.2.8 LITIGATION
There are no pending or, to the Actual Knowledge of WTC, threatened
actions or proceedings against WTC, in its individual capacity or as Mortgagee,
Second Mortgagee, a Pass Through Trustee or Subordination Agent, before any
court, administrative agency or tribunal which, if determined adversely to WTC,
in its individual capacity or as Mortgagee, Second Mortgagee, a Pass Through
Trustee or Subordination Agent, as the case may be, would materially adversely
affect the ability of WTC, in its individual capacity or as Mortgagee, Second
Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may be, to
perform its obligations under any of the Mortgagee Agreements, the Pass Through
Trustee Agreements or the Subordination Agent Agreements.
5.2.9 SECURITIES LAWS
Neither WTC nor any person authorized to act on its behalf has directly
or indirectly offered any beneficial interest or Security relating to the
ownership of the Aircraft or any interest in the Collateral or any of the
Equipment Notes or any other interest in or security under the Collateral for
sale to, or solicited any offer to acquire any such interest or security from,
or has sold any such interest or security to, any Person other than the
Subordination Agent and the Pass Through Trustees, except for the offering and
sale of the Pass Through Certificates.
5.2.10 INVESTMENT
The Equipment Notes to be acquired by the Subordination Agent are being
acquired by it for the account of the Applicable Pass Through Trustees, for
investment and not with a view to any
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resale or distribution thereof, except that, subject to the restrictions on
transfer set forth in Section 9, the disposition by it of its Equipment Notes
shall at all times be within its control.
5.2.11 TAXES
There are no Taxes payable by any Pass Through Trustee or WTC, as the
case may be, imposed by the State of Delaware or any political subdivision or
taxing authority thereof in connection with the execution, delivery and
performance by such Pass Through Trustee or WTC, as the case may be, of this
Agreement or any of the Pass Through Trustee Agreements (other than franchise or
other taxes based on or measured by any fees or compensation received by any
such Pass Through Trustee or WTC, as the case may be, for services rendered in
connection with the transactions contemplated by any of the Pass Through Trust
Agreements), and there are no Taxes payable by any Pass Through Trustee or WTC,
as the case may be, imposed by the State of Delaware or any political
subdivision thereof in connection with the acquisition, possession or ownership
by any such Pass Through Trustee of any of the Equipment Notes (other than
franchise or other taxes based on or measured by any fees or compensation
received by any such Pass Through Trustee or WTC, as the case may be, for
services rendered in connection with the transactions contemplated by any of the
Pass Through Trust Agreements), and, assuming that the trusts created by the
Pass Through Trust Agreements will not be taxable as corporations, but, rather,
each will be characterized as a grantor trust under subpart E, Part I of
Subchapter J of the Code or as a partnership under Subchapter K of the Code,
such trusts will not be subject to any Taxes imposed by the State of Delaware or
any political subdivision thereof;
5.2.12 BROKER'S FEES
No Person acting on behalf of WTC, in its individual capacity or as
Mortgagee, Second Mortgagee, any Pass Through Trustee or Subordination Agent, is
or will be entitled to any broker's fee, commission or finder's fee in
connection with the Transactions.
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SECTION 6. COVENANTS, UNDERTAKINGS AND AGREEMENTS
6.1 COVENANTS OF OWNER
Owner covenants and agrees, at its own cost and expense, with Note
Holder, Mortgagee and Second Mortgagee as follows:
6.1.1 CORPORATE EXISTENCE; U.S. AIR CARRIER
Owner shall at all times maintain its corporate existence, except as
permitted by Section 4.07 of the Trust Indenture, and shall at all times remain
a U.S. Air Carrier.
6.1.2 NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE
Owner will give Mortgagee and Second Mortgagee timely written notice
(but in any event within 30 days prior to the expiration of the period of time
specified under applicable Law to prevent lapse of perfection) of any relocation
of its chief executive office (as such term is defined in Article 9 of the UCC)
from its then present location and will promptly take any action required by
Section 6.1.3(c) as a result of such relocation.
6.1.3 CERTAIN ASSURANCES
(a) Owner shall duly execute, acknowledge and deliver, or shall cause
to be executed, acknowledged and delivered, all such further agreements,
instruments, certificates or documents, and shall do and cause to be done such
further acts and things, in any case, as Mortgagee or Second Mortgagee shall
reasonably request for accomplishing the purposes of this Agreement and the
other Operative Agreements, provided that any instrument or other document so
executed by Owner will not expand any obligations or limit any rights of Owner
in respect of the transactions contemplated by any Operative Agreement.
(b) Owner shall promptly take such action with respect to the
recording, filing, re-recording and refiling of the Trust Indenture, the Second
Mortgage and any supplements thereto, including, without limitation, the Trust
Indenture Supplement and Second Mortgage Supplement No. 1, as shall be necessary
to continue the perfection and priority of the Lien created by the Trust
Indenture and the Second Mortgage in the Collateral.
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(c) Owner, at its sole cost and expense, will cause the FAA Filed
Documents, the Financing Statements and all continuation statements (and any
amendments necessitated by any combination, consolidation or merger of the
Owner, or any relocation of its chief executive office) in respect of the
Financing Statements to be prepared and, subject only to the execution and
delivery thereof by Mortgagee and Second Mortgagee, duly and timely filed and
recorded, or filed for recordation, to the extent permitted under the Act (with
respect to the FAA Filed Documents) or the UCC or similar law of any other
applicable jurisdiction (with respect to such other documents).
(d) If the Aircraft has been registered in a country other than the
United States pursuant to Section 4.02(e) of the Trust Indenture, Owner will
furnish to Mortgagee and Second Mortgagee annually after such registration,
commencing with the calendar year after such registration is effected, an
opinion of special counsel reasonably satisfactory to Mortgagee and Second
Mortgagee stating that, in the opinion of such counsel, either that (i) such
action has been taken with respect to the recording, filing, rerecording and
refiling of the Operative Agreements and any supplements and amendments thereto
as is necessary to establish, perfect and protect the Lien created by the Trust
Indenture and the Second Mortgage in the Collateral, reciting the details of
such actions, or (ii) no such action is necessary to maintain the perfection of
such Lien.
6.1.4 SECURITIES LAWS
Neither Owner nor any person authorized to act on its behalf will
directly or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or any interest in any of the Equipment Notes or any
other interest in or security under the Trust Indenture or the Second Mortgage,
for sale to, or solicit any offer to acquire any such interest or security from,
or sell any such interest or security to, any person in violation of the
Securities Act or applicable state or foreign securities Laws.
6.2 COVENANTS OF WTC
WTC in its individual capacity or as Mortgagee, Second Mortgagee, each
Pass Through Trustee or Subordination Agent, as the case may be, covenants and
agrees with Owner as follows:
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6.2.1 LIENS
WTC (a) will not directly or indirectly create, incur, assume or suffer
to exist any Lien attributable to it on or with respect to all or any part of
the Collateral or the Aircraft, (b) will, at its own cost and expense, promptly
take such action as may be necessary to discharge any Lien attributable to WTC
on all or any part of the Collateral or the Aircraft and (c) will personally
hold harmless and indemnify Owner, each Note Holder, each of their respective
Affiliates, successors and permitted assigns, and the Collateral from and
against (i) any and all Expenses, and (ii) any interference with the possession,
operation or other use of all or any part of the Aircraft, imposed on, incurred
by or asserted against any of the foregoing as a consequence of any such Lien.
6.2.2 SECURITIES ACT
WTC in its individual capacity or as Mortgagee, Second Mortgagee, a
Pass Through Trustee or Subordination Agent, will not offer any beneficial
interest or Security relating to the ownership of the Aircraft or any interest
in the Collateral, or any of the Equipment Notes or any other interest in or
security under the Trust Indenture or the Second Mortgage for sale to, or
solicit any offer to acquire any such interest or security from, or sell any
such interest or security to, any Person in violation of the Securities Act or
applicable state or foreign securities Laws, provided that the foregoing shall
not be deemed to impose on WTC any responsibility with respect to any such
offer, sale or solicitation by any other party hereto.
6.2.3 PERFORMANCE OF AGREEMENTS
WTC, in its individual capacity and as Mortgagee, Second Mortgagee, a
Pass Through Trustee or Subordination Agent, as the case may be, shall perform
its obligations under the Pass Through Trustee Agreements and the Operative
Agreements in accordance with the terms thereof.
6.2.4 WITHHOLDING TAXES
WTC shall indemnify (on an after-tax basis) and hold harmless Owner
against any United States withholding taxes (and related interest, penalties and
additions to tax) as a result of the failure by WTC to withhold on payments to
any Note Holder if such Note Holder failed to provide to Mortgagee and Second
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Mortgagee necessary certificates or forms to substantiate the right to exemption
from such withholding tax.
6.3 COVENANTS OF NOTE HOLDERS
Each Note Holder (including Subordination Agent) as to itself only
covenants and agrees with Owner, Mortgagee and Second Mortgagee as follows:
6.3.1 WITHHOLDING TAXES
Such Note Holder (if it is a Non-U.S. Person) agrees to indemnify (on
an after-tax basis) and hold harmless Owner, Mortgagee and Second Mortgagee
against any United States withholding taxes (and related interest, penalties and
additions to tax) as a result of the inaccuracy or invalidity of any certificate
or form provided by such Note Holder to Mortgagee or Second Mortgagee in
connection with such withholding taxes. Any amount payable hereunder shall be
paid within 30 days after receipt by a Note Holder of a written demand therefor.
6.3.2 TRANSFER; COMPLIANCE
(a) Such Note Holder will (i) not transfer any Equipment Note or
interest therein in violation of the Securities Act or applicable state or
foreign securities Law; provided, that the foregoing provisions of this section
shall not be deemed to impose on such Note Holder any responsibility with
respect to any such offer, sale or solicitation by any other party hereto, and
(ii) perform and comply with the obligations specified to be imposed on it (as a
Note Holder) under each of the Trust Indenture, the form of Equipment Note set
forth in the Trust Indenture and the Second Mortgage.
(b) Each Note Holder will not sell, assign, convey, exchange or
otherwise transfer any Equipment Note or any interest in, or represented by, any
Equipment Note (it being understood that this provision is not applicable to the
Pass Through Certificates) unless the proposed transferee thereof first provides
Owner with both of the following:
(i) a written representation and covenant that either (a) no
portion of the funds it uses to purchase, acquire and hold such
Equipment Note or interest directly or indirectly constitutes, or may
be deemed under the Code or ERISA or any rulings, regulations or court
decisions thereunder to
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constitute, the assets of any Plan or (b) the transfer, and subsequent
holding, of such Equipment Note or interest shall not involve or give
rise to a transaction that constitutes a prohibited transaction within
the meaning of Section 406 of ERISA or Section 4975(c)(1) of the Code
involving Owner, a Pass Through Trustee, the Subordination Agent or the
proposed transferee (other than a transaction that is exempted from the
prohibitions of such sections by applicable provisions of ERISA or the
Code or administrative exemptions or regulations issued thereunder);
and
(ii) a written covenant that it will not transfer any
Equipment Note or any interest in, or represented by, any Equipment
Note unless the subsequent transferee also makes the representation
described in clause (i) above and agrees to comply with this clause
(ii) and the other covenants of the Note Holders contained in the
Operative Agreements.
6.4 AGREEMENTS
6.4.1 QUIET ENJOYMENT
Each Pass Through Trustee, Subordination Agent, each Note Holder,
Mortgagee and Second Mortgagee agrees as to itself with Owner that, so long as
no Event of Default shall have occurred and be continuing, such Person shall not
(and shall not permit any Affiliate or other Person claiming by, through or
under it to) interfere with Owner's rights in accordance with the Trust
Indenture and the Second Mortgage to the quiet enjoyment, possession and use of
the Aircraft.
6.4.2 CONSENTS
Each Pass Through Trustee, Subordination Agent, Mortgagee and Second
Mortgagee covenants and agrees, for the benefit of Owner, that it shall not
unreasonably withhold its consent to any consent or approval requested of it
under the terms of any of the Operative Agreements which by its terms is not to
be unreasonably withheld.
6.4.3 INSURANCE
Each Pass Through Trustee, Subordination Agent, Mortgagee, Second
Mortgagee and each Note Holder agrees not to obtain or maintain insurance for
its own account as permitted by Section 4.06 of the Trust Indenture (or the
provisions thereof to
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the extent required to be complied with under the Second Mortgage) if such
insurance would limit or otherwise adversely affect the coverage of any
insurance required to be obtained or maintained by Owner pursuant to Section
4.06 of the Trust Indenture (or the provisions thereof to the extent required to
be complied with under the Second Mortgage).
6.4.4 EXTENT OF INTEREST OF NOTE HOLDERS
A Note Holder shall not, as such, have any further interest in, or
other right with respect to, the Collateral when and if the principal and
Make-Whole Amount, if any, of and interest on the Equipment Note held by such
Holder, and all other sums, then due and payable to such Holder hereunder and
under any other Operative Agreement (other than the Second Mortgage or any
Second Mortgage Supplement), shall have been paid in full.
6.4.5 FOREIGN REGISTRATION
Each Note Holder, Mortgagee and Second Mortgagee hereby agree, for the
benefit of Owner but subject to the provisions of Section 4.02(b) of the Trust
Indenture:
(a) that Owner shall be entitled to register the Aircraft or cause the
Aircraft to be registered in a country other than the United States subject to
compliance with the following:
(i) each of the following requirements is satisfied:
(A) no Special Default or Event of Default shall have
occurred and be continuing at the time of such
registration;
(B) such proposed change of registration is made in
connection with a Permitted Lease to a Permitted Air
Carrier;
(C) such country is a country with which the United
States then maintains normal diplomatic relations or,
if Taiwan, the United States then maintains
diplomatic relations at least as good as those in
effect on the Closing Date;
(ii) the Mortgagee and Second Mortgagee shall have received an
opinion of counsel (subject to customary exceptions) reasonably
satisfactory to the Mortgagee and
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Second Mortgagee addressed to Mortgagee and Second Mortgagee as to the
effect that:
(A) such country would recognize the Owner's
ownership interest in the Aircraft;
(B) after giving effect to such change in
registration, the Lien of the Trust Indenture and the Second
Mortgagee on the Owner's right, title and interest in and to
the Aircraft shall continue, in the case of the Trust
Indenture, as a valid and duly perfected first priority
security interest and, in the case of the Second Mortgage, as
a valid and duly perfected second priority security interest,
and all filing, recording or other action necessary to protect
the same shall have been accomplished (or, if such opinion
cannot be given at the time of such proposed change in
registration because such change in registration is not yet
effective, (1) the opinion shall detail what filing, recording
or other action is necessary and (2) the Mortgagee and the
Second Mortgagee shall have received a certificate from Owner
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
Mortgagee and the Second Mortgagee on or prior to the
effective date of such change in registration);
(C) unless Owner or the Permitted Air Carrier shall
have agreed to provide insurance covering the risk of
requisition of use of the Aircraft by the government of such
country (so long as the Aircraft is registered under the laws
of such country), the laws of such country require fair
compensation by the government of such country payable in
currency freely convertible into Dollars and freely removable
from such country (without license or permit, unless Owner
prior to such proposed reregistration has obtained such
license or permit) for the taking or requisition by such
government of such use; and
(D) it is not necessary, solely as a consequence of
such change in registration and without giving
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effect to any other activity of the Mortgagee or the Second
Mortgagee (or any Affiliate of the Mortgagee or the Second
Mortgagee), for the Mortgagee or the Second Mortgagee to
qualify to do business in such jurisdiction as a result of
such reregistration in order to exercise any rights or
remedies with respect to the Aircraft.
(E) there shall not exist possessory rights in favor
of the government of such country or of the Permitted Air
Carrier (including, without limitation, a defense of sovereign
immunity) that would, upon the bankruptcy of the Permitted Air
Carrier or upon the occurrence of an Event of Default, prevent
the return of the Aircraft pursuant to the Trust Indenture.
(b) In addition, as a condition precedent to any change in registration
Owner shall have given to Mortgagee and the Second Mortgagee assurances
reasonably satisfactory to Mortgagee and the Second Mortgagee:
(i) to the effect that the provisions of Section 4.06 of
the Trust Indenture have been complied with after
giving effect to such change of registration;
(ii) of the payment by Owner of all reasonable
out-of-pocket expenses of each Note Holder, Mortgagee
and the Second Mortgagee in connection with such
change of registry, including, without limitation (1)
the reasonable fees and disbursements of counsel to
Mortgagee and the Second Mortgagee, (2) any filing or
recording fees, Taxes or similar payments incurred in
connection with the change of registration of the
Aircraft and the creation and perfection of the
security interest therein in favor of Mortgagee and
the Second Mortgagee for the benefit of Note Holders,
and (3) all costs and expenses incurred in connection
with any filings necessary to continue in the United
States the perfection of the security interest in the
Aircraft in favor of Mortgagee and the Second
Mortgagee for the benefit of Note Holders; and
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(iii) to the effect that the tax and other indemnities in
favor of each person named as an indemnitee under
any other Operative Agreement afford each such
person substantially the same protection as provided
prior to such change of registration (or Owner shall
have agreed upon additional indemnities that,
together with such original indemnities, in the
reasonable judgment of Mortgagee, afford such
protection).
6.4.6 INTEREST IN CERTAIN ENGINES
Each Note Holder, Mortgagee and Second Mortgagee agree, for the benefit
of each of the lessor, conditional seller, mortgagee or secured party of any
airframe or engine leased to, or purchased by, Owner or any Permitted Lessee
subject to a lease, conditional sale, trust indenture or other security
agreement that it will not acquire or claim, as against such lessor, conditional
seller, mortgagee or secured party, any right, title or interest in any engine
as the result of such engine being installed on the Airframe at any time while
such engine is subject to such lease, conditional sale, trust indenture or other
security agreement and owned by such lessor or conditional seller or subject to
a trust indenture or security interest in favor of such mortgagee or secured
party.
SECTION 7. CONFIDENTIALITY
Owner, Note Holders, Mortgagee and Second Mortgagee shall keep the
Participation Agreement and Annex B to the Trust Indenture confidential and
shall not disclose, or cause to be disclosed, the same to any Person, except (A)
to prospective and permitted transferees of Owner's, a Note Holder's, a
Liquidity Provider's, Mortgagee's, Second Mortgagee's or other Indenture
Indemnitee's interest or their respective counsel or special counsel,
independent insurance brokers, auditors, or other agents who agree to hold such
information confidential, (B) to Owner's, a Note Holder's, a Liquidity
Provider's, a Pass Through Trustee's, Mortgagee's, Second Mortgagee's or other
Indenture Indemnitee's counsel or special counsel, independent insurance
brokers, auditors, or other agents, Affiliates or investors who agree to hold
such information confidential, (C) as may be required by any statute, court or
administrative order or decree, legal process or governmental ruling or
regulation, including those of any applicable insurance regulatory bodies
(including,
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30
without limitation, the National Association of Insurance Commissioners),
federal or state banking examiners, Internal Revenue Service auditors or any
stock exchange, (D) with respect to a Note Holder or any Pass Through Trustee,
to a nationally recognized rating agency for the purpose of obtaining a rating
on the Equipment Notes or the Pass Through Certificates or to support an NAIC
rating for the Equipment Notes or (E) such other Persons as are reasonably
deemed necessary by the disclosing party in order to protect the interests of
such party or for the purposes of enforcing such documents by such party;
provided, that any and all disclosures permitted by clauses (C), (D), or (E)
above shall be made only to the extent necessary to meet the specific
requirements or needs of the Persons making such disclosures.
SECTION 8. INDEMNIFICATION AND EXPENSES
8.1 GENERAL INDEMNITY
8.1.1 INDEMNITY
Whether or not any of the transactions contemplated hereby are
consummated, Owner shall indemnify, protect, defend and hold harmless each
Indemnitee from, against and in respect of, and shall pay on a net after-tax
basis, any and all Expenses of any kind or nature whatsoever that may be imposed
on, incurred by or asserted against any Indemnitee, relating to, resulting from,
or arising out of or in connection with, any one or more of the following:
(a) The Operative Agreements, the Pass Through Agreements, or the
enforcement of any of the terms of any of the Operative Agreements or the Pass
Through Agreements;
(b) The Aircraft, the Airframe, any Engine or any Part, including,
without limitation, with respect thereto, (i) the manufacture, design, purchase,
acceptance, nonacceptance or rejection, ownership, registration, reregistration,
deregistration, delivery, nondelivery, lease, sublease, assignment, possession,
use or non-use, operation, maintenance, testing, repair, overhaul, condition,
alteration, modification, addition, improvement, storage, airworthiness,
replacement, repair, sale, substitution, return, abandonment, redelivery or
other disposition of the Aircraft, any Engine or any Part, (ii) any claim or
penalty arising out of violations of applicable Laws by Owner (or any Permitted
Lessee), (iii) tort liability, whether
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31
or not arising out of the negligence of any Indemnitee (whether active, passive
or imputed), (iv) death or property damage of passengers, shippers or others,
(v) environmental control, noise or pollution and (vi) any Liens in respect of
the Aircraft, any Engine or any Part;
(c) The offer, sale, or delivery of any Equipment Notes, Pass Through
Certificates or any interest therein or represented thereby; and
(d) Any breach of or failure to perform or observe, or any other
noncompliance with, any covenant or agreement or other obligation to be
performed by Owner under any Operative Agreement to which it is party or any
Pass Through Agreement or the falsity of any representation or warranty of Owner
in any Operative Agreement to which it is party or any Pass Through Agreement.
8.1.2 EXCEPTIONS
Notwithstanding anything contained in Section 8.1.1, Owner shall not be
required to indemnify, protect, defend and hold harmless any Indemnitee pursuant
to Section 8.1.1 in respect of any Expense of such Indemnitee:
(a) For any Taxes or a loss of Tax benefit, whether or not Owner is
required to indemnify therefor pursuant to Section 8.3;
(b) Except to the extent attributable to acts or events occurring prior
thereto, acts or events (other than acts or events related to the performance by
Owner of its obligations pursuant to the terms of the Operative Agreements) that
occur after the Trust Indenture is required to be terminated in accordance with
Section 11.01 of the Trust Indenture and the Collateral is required to be
released from the Lien of the Second Mortgage pursuant to Section 11.01 of the
Second Mortgage; provided, that nothing in this clause (b) shall be deemed to
exclude or limit any claim that any Indemnitee may have under applicable Law by
reason of an Event of Default or for damages from Owner for breach of Owner's
covenants contained in the Operative Agreements or to release Owner from any of
its obligations under the Operative Agreements that expressly provide for
performance after termination of the Trust Indenture;
(c) To the extent attributable to any Transfer (voluntary or
involuntary) by or on behalf of such Indemnitee of any Equipment Note or
interest therein, except for out-of-pocket
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costs and expenses incurred as a result of any such Transfer pursuant to the
exercise of remedies under any Operative Agreement;
(d) To the extent incurred by or asserted against an Indemnitee as a
result of any "prohibited transaction", within the meaning of Section 406 of
ERISA or Section 4975(c)(1) of the Code;
(e) To the extent attributable to the gross negligence or willful
misconduct of such Indemnitee or any related Indemnitee (as defined below)
(other than gross negligence or willful misconduct imputed to such person by
reason of its interest in the Aircraft or any Operative Agreement);
(f) If another provision of an Operative Agreement or a Pass Through
Agreement specifies the extent of Owner's responsibility or obligation with
respect to such Expense, to the extent arising from other than failure of Owner
to comply with such specified responsibility or obligation;
(g) To the extent attributable to the incorrectness or breach of any
representation or warranty of such Indemnitee or any related Indemnitee
contained in or made pursuant to any Operative Agreement or any Pass Through
Agreement;
(h) To the extent attributable to the failure by such Indemnitee or any
related Indemnitee to perform or observe any agreement, covenant or condition on
its part to be performed or observed in any Operative Agreement or any Pass
Through Agreement;
(i) To the extent attributable to the offer or sale by such Indemnitee
or any related Indemnitee of any interest in the Aircraft, the Equipment Notes,
the Pass Through Certificates, or any similar interest, in violation of the
Securities Act or other applicable federal, state or foreign securities Laws
(other than any thereof caused by acts or omissions of Owner);
(j) (i) With respect to any Indemnitee (other than Mortgagee), to the
extent attributable to the failure of the Mortgagee to distribute funds received
and distributable by it in accordance with the Trust Indenture, (ii) with
respect to any Indemnitee (other than the Second Mortgagee), to the extent
attributable to the failure of the Second Mortgagee to distribute funds received
and distributable by it in accordance with the
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Second Mortgage, (iii) with respect to any Indemnitee (other than the
Subordination Agent), to the extent attributable to the failure of the
Subordination Agent to distribute funds received and distributable by it in
accordance with the Intercreditor Agreement, (iv) with respect to any Indemnitee
(other than the Pass Through Trustees), to the extent attributable to the
failure of a Pass Through Trustee to distribute funds received and distributable
by it in accordance with the Pass Through Trust Agreements, (v) with respect to
Mortgagee, to the extent attributable to the negligence or willful misconduct of
Mortgagee in the distribution of funds received and distributable by it in
accordance with the Trust Indenture, (vi) with respect to the Second Mortgagee,
to the extent attributable to the negligence or willful misconduct of the Second
Mortgagee in the distribution of funds received and distributable by it in
accordance with the Second Mortgage, (vii) with respect to the Subordination
Agent, to the extent attributable to the negligence or willful misconduct of the
Subordination Agent in the distribution of funds received and distributable by
it in accordance with the Intercreditor Agreement, and (viii) with respect to
the Pass Through Trustees, to the extent attributable to the negligence or
willful misconduct of a Pass Through Trustee in the distribution of funds
received and distributable by it in accordance with the Pass Through Trust
Agreements;
(k) Other than during the continuation of an Event of Default, to the
extent attributable to the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any Operative
Agreement or Pass Through Agreement other than such as have been requested by
Owner or as are required by or made pursuant to the terms of the Operative
Agreements or Pass Through Agreements (unless such requirement results from the
actions of an Indemnitee not required by or made pursuant to the Operative
Agreements or the Pass Through Agreements);
(l) To the extent attributable to any amount which any Indemnitee
expressly agrees to pay or such Indemnitee expressly agrees shall not be paid by
or be reimbursed by Owner;
(m) To the extent that it is an ordinary and usual operating or
overhead expense; or
(n) For any Lien attributable to such Indemnitee or any related
Indemnitee.
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For purposes of this Section 8.1, a Person shall be considered a
"related" Indemnitee with respect to an Indemnitee if such Person is an
Affiliate or employer of such Indemnitee, a director, officer, employee, agent,
or servant of such Indemnitee or any such Affiliate or a successor or permitted
assignee of any of the foregoing.
8.1.3 SEPARATE AGREEMENT
This Agreement constitutes a separate agreement with respect to each
Indemnitee and is enforceable directly by each such Indemnitee.
8.1.4 NOTICE
If a claim for any Expense that an Indemnitee shall be indemnified
against under this Section 8.1 is made, such Indemnitee shall give prompt
written notice thereof to Owner. Notwithstanding the foregoing, the failure of
any Indemnitee to notify Owner as provided in this Section 8.1.4, or in Section
8.1.5, shall not release Owner from any of its obligations to indemnify such
Indemnitee hereunder, except to the extent that such failure results in an
additional Expense to Owner (in which event Owner shall not be responsible for
such additional expense) or materially impairs Owner's ability to contest such
claim.
8.1.5 NOTICE OF PROCEEDINGS; DEFENSE OF CLAIMS; LIMITATIONS
(a) In case any action, suit or proceeding shall be brought against any
Indemnitee for which Owner is responsible under this Section 8.1, such
Indemnitee shall notify Owner of the commencement thereof and Owner may, at its
expense, participate in and to the extent that it shall wish (subject to the
provisions of the following paragraph), assume and control the defense thereof
and, subject to Section 8.1.5(c), settle or compromise the same.
(b) Owner or its insurer(s) shall have the right, at its or their
expense, to investigate or, if Owner or its insurer(s) shall agree not to
dispute liability to the Indemnitee giving notice of such action, suit or
proceeding under this Section 8.1.5 for indemnification hereunder or under any
insurance policies pursuant to which coverage is sought, control the defense of,
any action, suit or proceeding, relating to any Expense for which
indemnification is sought pursuant to this
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Section 8.1, and each Indemnitee shall cooperate with Owner or its insurer(s)
with respect thereto; provided, that Owner shall not be entitled to control the
defense of any such action, suit, proceeding or compromise any such Expense
during the continuance of any Special Default or Event of Default. In connection
with any such action, suit or proceeding being controlled by Owner, such
Indemnitee shall have the right to participate therein, at its sole cost and
expense, with counsel reasonably satisfactory to Owner; provided, that such
Indemnitee's participation does not, in the reasonable opinion of the
independent counsel appointed by the Owner or its insurers to conduct such
proceedings, interfere with the defense of such case.
(c) In no event shall any Indemnitee enter into a settlement or other
compromise with respect to any Expense without the prior written consent of
Owner, which consent shall not be unreasonably withheld or delayed, unless such
Indemnitee waives its right to be indemnified with respect to such Expense under
this Section 8.1.
(d) In the case of any Expense indemnified by the Owner hereunder which
is covered by a policy of insurance maintained by Owner pursuant to Section 4.06
of the Indenture or Section 4.01 of the Second Mortgage, at Owner's expense,
each Indemnitee agrees to cooperate with the insurers in the exercise of their
rights to investigate, defend or compromise such Expense as may be required to
retain the benefits of such insurance with respect to such Expense.
(e) If an Indemnitee is not a party to this Agreement, Owner may
require such Indemnitee to agree in writing to the terms of this Section 8 and
Section 12.8 prior to making any payment to such Indemnitee under this Section
8.
(f) Nothing contained in this Section 8.1.5 shall be deemed to require
an Indemnitee to contest any Expense or to assume responsibility for or control
of any judicial proceeding with respect thereto.
8.1.6 INFORMATION
Owner will provide the relevant Indemnitee with such information not
within the control of such Indemnitee, as is in Owner's control or is reasonably
available to Owner, which such Indemnitee may reasonably request and will
otherwise cooperate with such Indemnitee so as to enable such Indemnitee to
fulfill
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its obligations under Section 8.1.5. The Indemnitee shall supply Owner with such
information not within the control of Owner, as is in such Indemnitee's control
or is reasonably available to such Indemnitee, which Owner may reasonably
request to control or participate in any proceeding to the extent permitted by
Section 8.1.5.
8.1.7 EFFECT OF OTHER INDEMNITIES; SUBROGATION; FURTHER
ASSURANCES
Upon the payment in full by Owner of any indemnity provided for under
this Agreement, Owner, without any further action and to the full extent
permitted by Law, will be subrogated to all rights and remedies of the person
indemnified (other than with respect to any of such Indemnitee's insurance
policies or in connection with any indemnity claim such Indemnitee may have
under Section 6.03 or 8.01 of the Trust Indenture or Section 6.03 or 8.01 of the
Second Mortgage) in respect of the matter as to which such indemnity was paid.
Each Indemnitee will give such further assurances or agreements and cooperate
with Owner to permit Owner to pursue such claims, if any, to the extent
reasonably requested by Owner and at Owner's expense.
8.1.8 REFUNDS
If an Indemnitee receives any refund, in whole or in part, with respect
to any Expense paid by Owner hereunder, it will promptly pay the amount refunded
(but not an amount in excess of the amount Owner or any of its insurers has paid
in respect of such Expense) over to Owner unless a Special Default or an Event
of Default shall have occurred and be continuing, in which case such amounts
shall be paid over to Mortgagee or, if the Lien of the Trust Indenture has been
discharged but the Collateral is not required to be released from the Lien of
the Second Mortgage, to the Second Mortgagee, to hold as security for Owner's
obligations under the Operative Agreements or, if requested by Owner, applied to
satisfy such obligations.
8.2 EXPENSES
8.2.1 INVOICES AND PAYMENT
The Mortgagee, the Second Mortgagee, the Pass Through Trustees and the
Subordination Agent shall promptly submit to Owner for its prompt approval
(which shall not be unreasonably withheld) copies of invoices in reasonable
detail of the
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Transaction Expenses for which it is responsible for providing information as
they are received (but in no event later than the 90th day after the Closing
Date). If so submitted and approved, the Owner agrees promptly, but in any event
no later than the 105th day after the Closing Date, to pay Transaction Expenses.
8.2.2 PAYMENT OF OTHER EXPENSES
Owner shall pay (i) the ongoing fees and expenses of Mortgagee and the
Second Mortgagee, and (ii) all reasonable out-of-pocket costs and expenses
(including the reasonable fees and disbursements of counsel) incurred by
Mortgagee, the Second Mortgagee or any Note Holder attributable to any waiver,
amendment or modification of any Operative Agreement to the extent requested by
Owner.
8.3 GENERAL TAX INDEMNITY
8.3.1 GENERAL
Except as provided in Section 8.3.2, Owner agrees that each payment
paid by Owner under the Equipment Notes, and any other payment or indemnity paid
by Owner to a Tax Indemnitee under any Operative Agreement, shall be free of all
withholdings or deductions with respect to Taxes of any nature (other than U.S.
federal, state or local withholding taxes on, based on or measured by gross or
net income), and in the event that Owner shall be required by applicable law to
make any such withholding or deduction for any such payment (x) Owner shall make
all such withholdings or deductions, (y) the amount payable by Owner shall be
increased so that after making all required withholdings or deductions such Tax
Indemnitee receives the same amount that it would have received had no such
withholdings or deductions been made, and (z) Owner shall pay the full amount
withheld or deducted to the relevant Taxing Authority in accordance with
applicable law. Except as provided in Section 8.3.2 and whether or not any of
the transactions contemplated hereby are consummated, Owner shall pay,
indemnify, protect, defend and hold each Tax Indemnitee harmless from all Taxes
imposed by any Taxing Authority that may from time to time be imposed on or
asserted against any Tax Indemnitee or the Aircraft, the Airframe, any Engine or
any Part or any interest in any of the foregoing (whether or not indemnified
against by any other Person), upon or with respect to the Operative Agreements
or the transactions or payments contemplated thereby, including but not limited
to any
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Tax imposed upon or with respect to (x) the Aircraft, the Airframe, any Engine,
any Part, any Operative Agreement (including without limitation any Equipment
Notes) or any data or any other thing delivered or to be delivered under an
Operative Agreement, (y) the purchase, manufacture, acceptance, rejection, sale,
transfer of title, return, ownership, mortgaging, delivery, transport, charter,
rental, lease, re-lease, sublease, assignment, possession, repossession,
presence, use, condition, storage, preparation, maintenance, modification,
alteration, improvement, operation, registration, transfer or change of
registration, reregistration, repair, replacement, overhaul, location, control,
the imposition of any Lien, financing, refinancing requested by the Owner,
abandonment or other disposition of the Aircraft, the Airframe, any Engine, any
Part, any data or any other thing delivered or to be delivered under an
Operative Agreement or (z) interest, fees or any other income, proceeds,
receipts or earnings, whether actual or deemed, arising upon, in connection
with, or in respect of, any of the Operative Agreements (including the property
or income or other proceeds with respect to property held as part of the
Collateral) or the transactions contemplated thereby.
8.3.2 CERTAIN EXCEPTIONS
The provisions of Section 8.3.1 shall not apply to, and Owner shall
have no liability hereunder for, Taxes:
(a) imposed on a Tax Indemnitee by the federal government of the United
States or any Taxing Authority or governmental subdivision of the United States
or therein (including any state or local Taxing Authority) (i) on, based on, or
measured by, gross or net income or gross or net receipts, including capital
gains taxes, excess profits taxes, minimum taxes from tax preferences,
alternative minimum taxes, branch profits taxes, accumulated earnings taxes,
personal holding company taxes, succession taxes and estate taxes, and any
withholding taxes on, based on or measured by gross or net income or receipts or
(ii) on, or with respect to, or measured by, capital or net worth or in the
nature of a franchise tax or a tax for the privilege of doing business (other
than, in the case of clause (i) or (ii), sales, use, license or property Taxes);
(b) imposed on a Tax Indemnitee by any Taxing Authority or governmental
subdivision thereof or therein outside of the United States (including any
Taxing Authority in or of a territory,
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39
possession or commonwealth of the United States) (i) on, based on, or measured
by, gross or net income or gross or net receipts, including capital gains taxes,
excess profits taxes, minimum taxes from tax preferences, alternative minimum
taxes, branch profits taxes, accumulated earnings taxes, personal holding
company taxes, succession taxes and estate taxes, and any withholding taxes on,
based on or measured by gross or net income or receipts or (ii) on, or with
respect to, or measured by, capital or net worth or in the nature of a franchise
tax or a tax for the privilege of doing business (other than, in the case of
clause (i) or (ii), (A) sales, use, license or property Taxes, or (B) any Taxes
imposed by any Taxing Authority (other than a Taxing Authority within whose
jurisdiction such Tax Indemnitee is incorporated or organized or maintains its
principal place of business) if such Tax Indemnitee would not have been subject
to Taxes of such type by such jurisdiction but for (I) the location, use or
operation of the Aircraft, the Airframe, any Engine or any Part thereof by an
Owner Person within the jurisdiction of the Taxing Authority imposing such Tax,
or (II) the activities of any Owner Person in such jurisdiction, including, but
not limited to, use of any other aircraft by Owner in such jurisdiction, (III)
the status of any Owner Person as a foreign entity or as an entity owned in
whole or in part by foreign persons, (IV) Owner having made (or having been
deemed to have made) payments to such Tax Indemnitee from the relevant
jurisdiction or (V) in the case of the Pass Through Trustees, the Note Holders
or any related Tax Indemnitee, the Owner being incorporated or organized or
maintaining a place of business or conducting activities in such jurisdiction);
(c) on, or with respect to, or measured by, any trustee fees,
commissions or compensation received by the Pass Through Trustee, Subordination
Agent, Mortgagee or Second Mortgagee;
(d) that are being contested as provided in Section 8.3.4 hereof;
(e) imposed on any Tax Indemnitee to the extent that such Taxes result
from the gross negligence or willful misconduct of such Tax Indemnitee or any
Affiliate thereof;
(f) imposed on or with respect to a Tax Indemnitee (including the
transferee in those cases in which the Tax on transfer is imposed on, or is
collected from, the transferee) as a result of a transfer or other disposition
(including a deemed
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transfer or disposition) by such Tax Indemnitee or a related Tax Indemnitee of
any interest in the Aircraft, the Airframe, any Engine or any Part, any interest
arising under the Operative Agreements or any Equipment Note or as a result of a
transfer or disposition (including a deemed transfer or disposition) of any
interest in a Tax Indemnitee (other than (A) a substitution or replacement of
the Aircraft, the Airframe, any Engine or any Part by an Owner Person that is
treated for Tax purposes as a transfer or disposition, or (B) a transfer
pursuant to an exercise of remedies upon an Event of Default that shall have
occurred and have been continuing);
(g) Taxes in excess of those that would have been imposed had there not
been a transfer or other disposition by or to such Tax Indemnitee or a related
Tax Indemnitee described in paragraph (f) above;
(h) consisting of any interest, penalties or additions to tax imposed
on a Tax Indemnitee as a result of (in whole or in part) failure of such Tax
Indemnitee or a related Tax Indemnitee to file any return properly and timely,
unless such failure shall be caused by the failure of Owner to fulfill its
obligations, if any, under Section 8.3.6 with respect to such return;
(i) resulting from, or that would not have been imposed but for, any
Liens arising as a result of claims against, or acts or omissions of, or
otherwise attributable to such Tax Indemnitee or a related Tax Indemnitee that
the Owner is not obligated to discharge under the Operative Agreements;
(j) imposed on any Tax Indemnitee as a result of the breach by such Tax
Indemnitee or a related Tax Indemnitee of any covenant of such Tax Indemnitee or
any Affiliate thereof contained in any Operative Agreement or the inaccuracy of
any representation or warranty by such Tax Indemnitee or any Affiliate thereof
in any Operative Agreement;
(k) in the nature of an intangible or similar Tax (i) upon or with
respect to the value or principal amount of the interest of any Note Holder in
any Equipment Note or the loan evidenced thereby but only if such Taxes are in
the nature of franchise Taxes or result from the Tax Indemnitee doing business
in the taxing jurisdiction and are imposed because of the place of incorporation
or the activities unrelated to the transactions
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41
contemplated by the Operative Agreements in the taxing jurisdiction of such Tax
Indemnitee;
(l) imposed on a Tax Indemnitee by a Taxing Authority of a jurisdiction
outside the United States to the extent that such Taxes would not have been
imposed but for a connection between the Tax Indemnitee or a related Tax
Indemnitee and such jurisdiction imposing such Tax unrelated to the transactions
contemplated by the Operative Agreements; or
(m) Taxes relating to ERISA or Section 4975 of the Code.
For purposes hereof, a Tax Indemnitee and any other Tax Indemnitees
that are successors, assigns, agents, servants or Affiliates of such Tax
Indemnitee shall be related Tax Indemnitees.
8.3.3 PAYMENT
(a) Owner's indemnity obligation to a Tax Indemnitee under this Section
8.3 shall equal the amount which, after taking into account any Tax imposed upon
the receipt or accrual of the amounts payable under this Section 8.3 and any tax
benefits actually recognized by such Tax Indemnitee as a result of the
indemnifiable Tax (including, without limitation, any benefits recognized as a
result of an indemnifiable Tax being utilized by such Tax Indemnitee as a credit
against Taxes not indemnifiable under this Section 8.3), shall equal the amount
of the Tax indemnifiable under this Section 8.3.
(b) At Owner's request, the computation of the amount of any indemnity
payment owed by Owner or any amount owed by a Tax Indemnitee to Owner pursuant
to this Section 8.3 shall be verified and certified by an independent public
accounting firm selected by such Tax Indemnitee and reasonably satisfactory to
Owner. Such verification shall be binding. The costs of such verification
(including the fee of such public accounting firm) shall be borne by Owner
unless such verification shall result in an adjustment in Owner's favor of 5% or
more of the net present value of the payment as computed by such Tax Indemnitee,
in which case the costs shall be paid by such Tax Indemnitee.
(c) Each Tax Indemnitee shall provide Owner with such certifications,
information and documentation as shall be in such Tax Indemnitee's possession
and as shall be reasonably requested by Owner to minimize any indemnity payment
pursuant to this
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Section 8.3; provided, that notwithstanding anything to the contrary contained
herein, no Tax Indemnitee shall be required to provide Owner with any Tax
returns.
(d) Each Tax Indemnitee shall promptly forward to Owner any written
notice, ▇▇▇▇ or advice received by it from any Taxing Authority concerning any
Tax for which it seeks indemnification under this Section 8.3. Owner shall pay
any amount for which it is liable pursuant to this Section 8.3 directly to the
appropriate Taxing Authority if legally permissible or upon demand of a Tax
Indemnitee, to such Tax Indemnitee within 30 days of such demand (or, if a
contest occurs in accordance with Section 8.3.4, within 30 days after a Final
Determination (as defined below)), but in no event more than one Business Day
prior to the date the Tax to which such amount payable hereunder relates is due.
If requested by a Tax Indemnitee in writing, Owner shall furnish to the
appropriate Tax Indemnitee the original or a certified copy of a receipt for
Owner's payment of any Tax paid by Owner or such other evidence of payment of
such Tax as is acceptable to such Tax Indemnitee. Owner shall also furnish
promptly upon written request such data as any Tax Indemnitee may reasonably
require to enable such Tax Indemnitee to comply with the requirements of any
taxing jurisdiction unless such data is not reasonably available to Owner or,
unless such data is specifically requested by a Taxing Authority, is not
customarily furnished by domestic air carriers under similar circumstances. For
purposes of this Section 8.3, a "Final Determination" shall mean (i) a decision,
judgment, decree or other order by any court of competent jurisdiction that
occurs pursuant to the provisions of Section 8.3.4, which decision, judgment,
decree or other order has become final and unappealable, (ii) a closing
agreement or settlement agreement entered into in accordance with Section 8.3.4
that has become binding and is not subject to further review or appeal (absent
fraud, misrepresentation, etc.), or (iii) the termination of administrative
proceedings and the expiration of the time for instituting a claim in a court
proceeding.
(e) If any Tax Indemnitee shall actually realize a tax savings by
reason of any Tax paid or indemnified by Owner pursuant to this Section 8.3
(whether such tax savings shall be by means of a foreign tax credit,
depreciation or cost recovery deduction or otherwise) and such savings is not
otherwise taken into account in computing such payment or indemnity such Tax
Indemnitee shall pay to Owner an amount equal to the lesser of
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43
(i) the amount of such tax savings, plus any additional tax savings recognized
as the result of any payment made pursuant to this sentence, when, as, if, and
to the extent, realized or (ii) the amount of all payments pursuant to this
Section 8.3 by Owner to such Tax Indemnitee (less any payments previously made
by such Tax Indemnitee to Owner pursuant to this Section 8.3.3 (e)) (and the
excess, if any, of the amount described in clause (i) over the amount described
in clause (ii) shall be carried forward and applied to reduce pro tanto any
subsequent obligations of Owner to make payments to such Tax Indemnitee pursuant
to this Section 8.3); provided, that such Tax Indemnitee shall not be required
to make any payment pursuant to this sentence so long as an Event of Default of
a monetary nature has occurred and is continuing. If a tax benefit is later
disallowed or denied, the disallowance or denial shall be treated as a Tax
indemnifiable under Section 8.3.1 without regard to the provisions of Section
8.3.2 (other than Section 8.3.2 (f)). Each such Tax Indemnitee shall in good
faith use reasonable efforts in filing its tax returns and in dealing with
Taxing Authorities to seek and claim any such tax benefit.
8.3.4 CONTEST
(a) If a written claim is made against a Tax Indemnitee for Taxes with
respect to which Owner could be liable for payment or indemnity hereunder, or if
a Tax Indemnitee makes a determination that a Tax is due for which Owner could
have an indemnity obligation hereunder, such Tax Indemnitee shall promptly give
Owner notice in writing of such claim (provided, that failure to so notify Owner
shall not relieve Owner of its indemnity obligations hereunder unless such
failure to notify effectively forecloses Owner's rights to require a contest of
such claim) and shall take no action with respect to such claim without the
prior written consent of Owner for 30 days following the receipt of such notice
by Owner; provided, that, in the case of a claim made against a Tax Indemnitee,
if such Tax Indemnitee shall be required by law to take action prior to the end
of such 30-day period, such Tax Indemnitee shall, in such notice to Owner, so
inform Owner, and such Tax Indemnitee shall take no action for as long as it is
legally able to do so (it being understood that a Tax Indemnitee shall be
entitled to pay the Tax claimed and ▇▇▇ for a refund prior to the end of such
30-day period if (i)(A) the failure to so pay the Tax would result in
substantial penalties (unless immediately reimbursed by Owner) and the act of
paying the Tax would not materially prejudice the right to contest or
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44
(B) the failure to so pay would result in criminal penalties and (ii) such Tax
Indemnitee shall take any action so required in connection with so paying the
Tax in a manner that is the least prejudicial to the pursuit of the contest). In
addition, such Tax Indemnitee shall (provided, that Owner shall have agreed to
keep such information confidential other than to the extent necessary in order
to contest the claim) furnish Owner with copies of any requests for information
from any Taxing Authority relating to such Taxes with respect to which Owner may
be required to indemnify hereunder. If requested by Owner in writing within 30
days after its receipt of such notice, such Tax Indemnitee shall, at the expense
of Owner (including, without limitation, all reasonable costs, expenses and
reasonable attorneys' and accountants' fees and disbursements), in good faith
contest (or, if permitted by applicable law, allow Owner to contest) through
appropriate administrative and judicial proceedings the validity, applicability
or amount of such Taxes by (I) resisting payment thereof, (II) not paying the
same except under protest if protest is necessary and proper or (III) if the
payment is made, using reasonable efforts to obtain a refund thereof in an
appropriate administrative and/or judicial proceeding. If requested to do so by
Owner, the Tax Indemnitee shall appeal any adverse administrative or judicial
decision, except that the Tax Indemnitee shall not be required to pursue any
appeals to the United States Supreme Court. If and to the extent the Tax
Indemnitee is able to separate the contested issue or issues from other issues
arising in the same administrative or judicial proceeding that are unrelated to
the transactions contemplated by the Operative Agreements without, in the good
faith judgment of such Tax Indemnitee, adversely affecting such Tax Indemnitee,
such Tax Indemnitee shall permit Owner to control the conduct of any such
proceeding and shall provide to Owner (at Owner's cost and expense) with such
information or data that is in such Tax Indemnitee's control or possession that
is reasonably necessary to conduct such contest. In the case of a contest
controlled by a Tax Indemnitee, such Tax Indemnitee shall consult with Owner in
good faith regarding the manner of contesting such claim and shall keep Owner
reasonably informed regarding the progress of such contest. A Tax Indemnitee
shall not fail to take any action expressly required by this Section 8.3.4
(including, without limitation, any action regarding any appeal of an adverse
determination with respect to any claim) or settle or compromise any claim
without the prior written consent of the Owner (except as contemplated by
Section 8.3.4(b) or (c)).
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45
(b) Notwithstanding the foregoing, in no event shall a Tax Indemnitee
be required to pursue any contest (or to permit Owner to pursue any contest)
unless (i) Owner shall have agreed to pay such Tax Indemnitee on demand all
reasonable costs and expenses incurred by such Tax Indemnitee in connection with
contesting such Taxes, including, without limitation, all reasonable out of
pocket costs and expenses and reasonable attorneys' and accountants' fees and
disbursements, (ii) if such contest shall involve the payment of the claim,
Owner shall advance the amount thereof (to the extent indemnified hereunder)
plus interest, penalties and additions to tax with respect thereto that are
required to be paid prior to the commencement of such contest on an
interest-free after-Tax basis to such Tax Indemnitee (and such Tax Indemnitee
shall promptly pay to the Owner any net realized tax benefits resulting from
such advance including any tax benefits resulting from making such payment),
(iii) such Tax Indemnitee shall have reasonably determined that the action to be
taken will not result in any material risk of forfeiture, sale or loss of the
Aircraft (unless Owner shall have made provisions to protect the interests of
any such Tax Indemnitee in a manner reasonably satisfactory to such Tax
Indemnitee) (provided, that such Tax Indemnitee agrees to notify Owner in
writing promptly after it becomes aware of any such risk), (iv) no Lease Event
of Default shall have occurred and be continuing unless Owner has provided
security for its obligations hereunder by advancing to such Tax Indemnitee
before proceeding or continuing with such contest, the amount of the Tax being
contested, plus any interest and penalties and an amount estimated in good faith
by such Tax Indemnitee for expenses, and (v) prior to commencing any judicial
action controlled by Owner, Owner shall have acknowledged its liability for such
claim hereunder, provided that Owner shall not be bound by its acknowledgment if
the Final Determination articulates conclusions of law and fact that demonstrate
that Owner has no liability for the contested amounts hereunder. Notwithstanding
the foregoing, if any Tax Indemnitee shall release, waive, compromise or settle
any claim which may be indemnifiable by Owner pursuant to this Section 8.3
without the written permission of Owner, Owner's obligation to indemnify such
Tax Indemnitee with respect to such claim (and all directly related claims and
claims based on the outcome of such claim) shall terminate, subject to Section
8.3.4(c), and subject to Section 8.3.4(c), such Tax Indemnitee shall repay to
Owner any amount previously paid or advanced to such Tax Indemnitee with respect
to such claim, plus interest at the rate that would have
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been payable by the relevant Taxing Authority with respect to a refund of such
Tax.
(c) Notwithstanding anything contained in this Section 8.3, a Tax
Indemnitee will not be required to contest the imposition of any Tax and shall
be permitted to settle or compromise any claim without Owner's consent if such
Tax Indemnitee (i) shall waive its right to indemnity under this Section 8.3
with respect to such Tax (and any directly related claim and any claim the
outcome of which is determined based upon the outcome of such claim), (ii) shall
pay to Owner any amount previously paid or advanced by Owner pursuant to this
Section 8.3 with respect to such Tax, plus interest at the rate that would have
been payable by the relevant Taxing Authority with respect to a refund of such
Tax, and (iii) shall agree to discuss with Owner the views or positions of any
relevant Taxing Authority with respect to the imposition of such Tax.
8.3.5 REFUND
(a) If any Tax Indemnitee shall receive a refund of, or be entitled to
a credit against other liability for, all or any part of any Taxes paid,
reimbursed or advanced by Owner, such Tax Indemnitee shall pay to Owner within
30 days of such receipt an amount equal to the lesser of (a) the amount of such
refund or credit plus any net tax benefit (taking into account any Taxes
incurred by such Tax Indemnitee by reason of the receipt of such refund or
realization of such credit) actually realized by such Tax Indemnitee as a result
of any payment by such Tax Indemnitee made pursuant to this sentence (including
this clause (a)) and (b) such tax payment, reimbursement or advance by Owner to
such Tax Indemnitee theretofore made pursuant to this Section 8.3 (and the
excess, if any, of the amount described in clause (a) over the amount described
in clause (b) shall be carried forward and applied to reduce pro tanto any
subsequent obligation of Owner to make payments to such Tax Indemnitee pursuant
to this Section 8.3). If, in addition to such refund or credit, such Tax
Indemnitee shall receive (or be credited with) an amount representing interest
on the amount of such refund or credit, such Tax Indemnitee shall pay to Owner
within 30 days of such receipt or realization of such credit that proportion of
such interest that shall be fairly attributable to Taxes paid, reimbursed or
advanced by Owner prior to the receipt of such refund or realization of such
credit.
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(b) Upon the receipt by the Subordination Agent of any payment by a
Liquidity Provider pursuant to the second paragraph of Section 3.03(a) of any
Liquidity Facility, the Subordination Agent shall pay such amount to the Owner.
8.3.6 TAX FILING
If any report, return or statement is required to be filed with respect
to any Tax which is subject to indemnification under this Section 8.3, Owner
shall timely file the same (except for any such report, return or statement
which a Tax Indemnitee has timely notified the Owner in writing that such Tax
Indemnitee intends to file, or for which such Tax Indemnitee is required by law
to file, in its own name); provided, that the relevant Tax Indemnitee shall
furnish Owner with any information in such Tax Indemnitee's possession or
control that is reasonably necessary to file any such return, report or
statement and is reasonably requested in writing by Owner (it being understood
that the Tax Indemnitee shall not be required to furnish copies of its actual
tax returns, although it may be required to furnish relevant information
contained therein). Owner shall either file such report, return or statement and
send a copy of such report, return or statement to such Tax Indemnitee, or,
where Owner is not permitted to file such report, return or statement, it shall
notify such Tax Indemnitee of such requirement and prepare and deliver such
report, return or statement to such Tax Indemnitee in a manner satisfactory to
such Tax Indemnitee within a reasonable time prior to the time such report,
return or statement is to be filed.
8.3.7 FORMS
Each Tax Indemnitee agrees to furnish from time to time to Owner,
Mortgagee or Second Mortgagee or to such other person as Owner, Mortgagee or
Second Mortgagee may designate, at Owner's, Mortgagee's or Second Mortgagee's
request, such duly executed and properly completed forms as may be necessary or
appropriate in order to claim any reduction of or exemption from any withholding
or other Tax imposed by any Taxing Authority, if (x) such reduction or exemption
is available to such Tax Indemnitee and (y) Owner has provided such Tax
Indemnitee with any information necessary to complete such form not otherwise
reasonably available to such Tax Indemnitee.
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8.3.8 NON-PARTIES
If a Tax Indemnitee is not a party to this Agreement, Owner may require
the Tax Indemnitee to agree in writing, in a form reasonably acceptable to
Owner, to the terms of this Section 8.3 and Section 15.8 prior to making any
payment to such Tax Indemnitee under this Section 8.3.
8.3.9 SUBROGATION
Upon payment of any Tax by Owner pursuant to this Section 8.3 to or on
behalf of a Tax Indemnitee, Owner, without any further action, shall be
subrogated to any claims that such Tax Indemnitee may have relating thereto.
Such Tax Indemnitee shall cooperate with Owner (to the extent such cooperation
does not result in any unreimbursed cost, expense or liability to such Tax
Indemnitee) to permit Owner to pursue such claims.
8.4 PAYMENTS
Any payments made pursuant to Section 8.1 or 8.3 shall be due on the
30th day after demand therefor and shall be made directly to the relevant
Indemnitee or Tax Indemnitee or to Owner, in immediately available funds at such
bank or to such account as specified by such Indemnitee or Tax Indemnitee or
Owner, as the case may be, in written directives to the payor, or, if no such
direction shall have been given, by check of the payor payable to the order of,
and mailed to, such Indemnitee or Tax Indemnitee or Owner, as the case may be,
by certified mail, postage prepaid, at its address as set forth in this
Agreement.
8.5 INTEREST
If any amount, payable by Owner, any Indemnitee or any Tax Indemnitee
under Section 8.1 or 8.3 is not paid when due, the person obligated to make such
payment shall pay on demand, to the extent permitted by Law, to the person
entitled thereto, interest on any such amount for the period from and including
the due date for such amount to but excluding the date the same is paid, at the
Payment Due Rate. Such interest shall be paid in the same manner as the unpaid
amount in respect of which such interest is due.
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8.6 BENEFIT OF INDEMNITIES
The obligations of Owner in respect of all indemnities, obligations,
adjustments and payments in Section 8.1 or 8.3 are expressly made for the
benefit of, and shall be enforceable by, the Indemnitee or Tax Indemnitee
entitled thereto, notwithstanding any provision of the Trust Indenture or the
Second Mortgage.
SECTION 9. ASSIGNMENT OR TRANSFER OF INTEREST
9.1 NOTE HOLDERS
Subject to Section 6.3.2 hereof and Section 2.07 of the Trust
Indenture, any Note Holder may, at any time and from time to time, Transfer or
grant participations in all or any portion of the Equipment Notes and/or all or
any portion of its beneficial interest in its Equipment Notes to any person (it
being understood that the sale or issuance of Pass Through Certificates by a
Pass Through Trustee shall not be considered a Transfer or participation);
provided, that any participant in any such participations shall not have any
direct rights under the Operative Agreements or any Lien on all or any part of
the Aircraft or the Collateral and Owner shall not have any increased liability
or obligations as a result of any such participation. In the case of any such
Transfer, the Transferee, by acceptance of Equipment Notes in connection with
such Transfer, shall be deemed to be bound by all of the covenants of Note
Holders contained in the Operative Agreements.
9.2 EFFECT OF TRANSFER
Upon any Transfer in accordance with Section 9.1 (other than any
Transfer by any Note Holder, to the extent it only grants participations in
Equipment Notes or in its beneficial interest therein), Transferee shall be
deemed a "Note Holder," for all purposes of this Agreement and the other
Operative Agreements, and the transferring Note Holder shall be released from
all of its liabilities and obligations under this Agreement and any other
Operative Agreements to the extent such liabilities and obligations arise after
such Transfer and, in each case, to the extent such liabilities and obligations
are assumed by the transferee; provided, that such transferring Note Holder (and
its respective Affiliates, successors, assigns, agents, servants,
representatives, directors and officers) will continue to have the benefit of
any rights or indemnities under any Operative
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50
Agreement vested or relating to circumstances, conditions, acts or events prior
to such Transfer.
SECTION 10. SECTION 1110
It is the intention of each of the Owner, the Note Holders (such
intention being evidenced by each of their acceptance of an Equipment Note), and
Mortgagee that Mortgagee shall be entitled to the benefits of Section 1110 in
the event of a case under Chapter 11 of the Bankruptcy Code in which Owner is a
debtor.
SECTION 11. CHANGE OF CITIZENSHIP
11.1 GENERALLY
Without prejudice to the representations, warranties or covenants
regarding the status of any party hereto as a Citizen of the United States, each
of Owner, WTC, Mortgagee and Second Mortgagee agrees that it will, immediately
upon obtaining knowledge of any facts that would cast doubt upon its continuing
status as a Citizen of the United States and promptly upon public disclosure of
negotiations in respect of any transaction which would or might adversely affect
such status, notify in writing all parties hereto of all relevant matters in
connection therewith.
11.2 MORTGAGEE
Upon WTC giving any notice in accordance with Section 11.1, Mortgagee
and Second Mortgagee shall (if and so long as such citizenship is necessary
under the Act as in effect at such time or, if it is not necessary, if and so
long as Mortgagee's or Second Mortgagee's citizenship could have any adverse
effect on Owner, or any Note Holder), subject to Section 9.02 of the Trust
Indenture and Section 9.02 of the Second Mortgage, resign as Mortgagee and
Second Mortgagee promptly upon its ceasing to be such a citizen.
SECTION 12. MISCELLANEOUS
12.1 AMENDMENTS
No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to
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51
amend, supplement, waive, modify, discharge, terminate or otherwise vary and is
signed by the party against which the enforcement of the amendment, supplement,
waiver, modification, discharge, termination or variance is sought. Each such
amendment, supplement, waiver, modification, discharge, termination or variance
shall be effective only in the specific instance and for the specific purpose
for which it is given. No provision of this Agreement shall be varied or
contradicted by oral communication, course of dealing or performance or other
manner not set forth in an agreement, document or instrument in writing and
signed by the party against which enforcement of the same is sought.
12.2 SEVERABILITY
If any provision hereof shall be held invalid, illegal or unenforceable
in any respect in any jurisdiction, then, to the extent permitted by Law, (a)
all other provisions hereof shall remain in full force and effect in such
jurisdiction and (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction. If, however, any Law pursuant to which such provisions are held
invalid, illegal or unenforceable may be waived, such Law is hereby waived by
the parties hereto to the full extent permitted, to the end that this Agreement
shall be deemed to be a valid and binding agreement in all respects, enforceable
in accordance with its terms.
12.3 SURVIVAL
The indemnities set forth herein shall survive the delivery or return
of the Aircraft, the Transfer of any interest by any Note Holder of its
Equipment Note and the expiration or other termination of this Agreement or any
other Operative Agreement.
12.4 REPRODUCTION OF DOCUMENTS
This Agreement, all schedules and exhibits hereto and all agreements,
instruments and documents relating hereto, including, without limitation, (a)
consents, waivers and modifications that may hereafter be executed and (b)
financial statements, certificates and other information previously or hereafter
furnished to any party hereto, may be reproduced by such party by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process, and such party may destroy any original documents so
reproduced. Any such reproduction
PAGE 48
52
shall be as admissible in evidence as the original itself in any judicial or
administrative proceeding (whether or not the original is in existence and
whether or not such reproduction was made by such party in the regular course of
business) and any enlargement, facsimile or further reproduction of such
reproduction likewise is admissible in evidence.
12.5 COUNTERPARTS
This Agreement and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts (or upon separate signature
pages bound together into one or more counterparts), each of which when so
executed shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.
12.6 NO WAIVER
No failure on the part of any party hereto to exercise, and no delay by
any party hereto in exercising, any of its respective rights, powers, remedies
or privileges under this Agreement or provided at Law, in equity or otherwise
shall impair, prejudice or constitute a waiver of any such right, power, remedy
or privilege or be construed as a waiver of any breach hereof or default
hereunder or as an acquiescence therein nor shall any single or partial exercise
of any such right, power, remedy or privilege preclude any other or further
exercise thereof by it or the exercise of any other right, power, remedy or
privilege by it. No notice to or demand on any party hereto in any case shall,
unless otherwise required under this Agreement, entitle such party to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any party hereto to any other or further action in any
circumstances without notice or demand.
12.7 NOTICES
Unless otherwise expressly permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers and other
communications required or permitted to be made, given, furnished or filed
hereunder shall be in writing (it being understood that the specification of a
writing in certain instances and not in others does not imply an intention that
a writing is not required as to the latter), shall refer specifically to this
Agreement or other applicable Operative Agreement, and shall be personally
delivered, sent by
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53
facsimile or telecommunication transmission (which in either case provides
written confirmation to the sender of its delivery), sent by registered mail or
certified mail, return receipt requested, postage prepaid, or sent by overnight
courier service, in each case to the respective address, or facsimile number set
forth for such party in Schedule 1, or to such other address, facsimile or other
number as each party hereto may hereafter specify by notice to the other parties
hereto. Each such notice, request, demand, authorization, direction, consent,
waiver or other communication shall be effective when received or, if made,
given, furnished or filed (a) by facsimile or telecommunication transmission,
when confirmed, or (b) by registered or certified mail, three Business Days
after being deposited, properly addressed, with the U.S. Postal Service.
12.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE
(a) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(b) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS
ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
IN THE CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING
WITH RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT.
(c) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES TO THE
SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE
ADDRESS SET FORTH PURSUANT TO SECTION 12.7. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 12.8(C), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH
PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS
TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT
IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED
IN ANY ACTION OR PROCEEDING BASED THEREON.
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54
(d) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A
DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN
ANY OF THE ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT
THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY
SUCH COURTS.
(e) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION BASED
UPON OR ARISING OUT OF OR RELATING TO THIS AGREEMENT.
12.9 THIRD-PARTY BENEFICIARY
This Agreement is not intended to, and shall not, provide any person
not a party hereto (other than the Indenture Indemnitees, each of which is an
intended third party beneficiary with respect to the provisions of Section 8.1,
the Tax Indemnitees, each of which is an intended third party beneficiary with
respect to the provisions of Section 8.3, and the persons referred to in Section
6.4.6, which are intended third party beneficiaries with respect to such
Section) with any rights of any nature whatsoever against any of the parties
hereto and no person not a party hereto (other than the Indenture Indemnitees,
with respect to the provisions of Section 8.1, the Tax Indemnitees with respect
to the provisions of Section 8.3, and the persons referred to in Section 6.4.6
with respect to the provisions of such Section) shall have any right, power or
privilege in respect of any party hereto, or have any benefit or interest,
arising out of this Agreement.
12.10 ENTIRE AGREEMENT
This Agreement, together with the other Operative Agreements, on and as
of the date hereof, constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof, and all prior or contemporaneous
understandings or agreements, whether written or oral, among any of the parties
hereto with respect to such subject matter are hereby superseded in their
entireties.
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12.11 FURTHER ASSURANCES
Each party hereto shall execute, acknowledge and deliver or shall cause
to be executed, acknowledged and delivered, all such further agreements,
instruments, certificates or documents, and shall do and cause to be done such
further acts and things, in any case, as any other party hereto shall reasonably
request in connection with the administration of, or to carry out more
effectually the purposes of, or to better assure and confirm into such other
party the rights and benefits to be provided under this Agreement and the other
Operative Agreements.
[This space intentionally left blank]
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IN WITNESS WHEREOF, each of the parties has caused this Participation
Agreement to be duly executed and delivered as of the day and year first above
written.
CONTINENTAL AIRLINES, INC.,
Owner
By______________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as Mortgagee
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Vice President
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as Second
Mortgagee
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Vice President
SIGNATURE PAGE
57
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
expressly provided herein, but solely as
Pass Through Trustee under the Pass
Through Trust Agreement for the
Continental Airlines Pass Through
Trust, 1997-2C
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Vice President
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as Pass
Through Trustee under the Pass
Through Trust Agreement for the
Continental Airlines Pass Through
Trust, 1997-2D
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Vice President
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as
Subordination Agent
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Vice President
SIGNATURE PAGE
58
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as Pass
Through Trustee under the Pass
Through Trust Agreement for the
Continental Airlines Pass Through
Trust, 1997-2A
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Vice President
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided
herein, but solely as Pass
Through Trustee under the Pass
Through Trust Agreement for the
Continental Airlines Pass Through
Trust, 1997-2B
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Vice President
SIGNATURE PAGE
59
SCHEDULE 1
TO
PARTICIPATION AGREEMENT
--------------------------------------------------------------------------------
ACCOUNTS; ADDRESSES
ACCOUNT FOR PAYMENTS ADDRESS FOR NOTICES
-------------------- -------------------
CONTINENTAL The Chase Manhattan Bank Continental Airlines, Inc.
AIRLINES, INC. (National Association) ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Suite 2010
Account No.: ▇▇▇-▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
ABA#: 021-000021 Attention: Executive Vice
Attention: ▇▇▇▇ ▇▇▇▇▇▇ President and Chief
Voice: ▇▇▇-▇▇▇-▇▇▇▇ Financial Officer
Facsimile: 212-552-0107 Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Reference: Continental 322
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS MORTGAGEE (National Association) ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Account No.: ▇▇▇-▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ABA#: 021-000021 Attention: Corporate Trust
Attention: Corporate Trust Administration
Administration Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Reference: Continental 322
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS SECOND MORTGAGEE (National Association) ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Account No.: ▇▇▇-▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ABA#: 021-000021 Attention: Corporate Trust
Attention: Corporate Trust Administration
Administration Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Reference: Continental 322
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS SUBORDINATION AGENT (National Association) ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Account No.: ▇▇▇-▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ABA#: 021-000021 Attention: Corporate Trust
Attention: Corporate Trust Administration
Administration Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Reference: Continental 322
PAGE 1
60
ACCOUNT FOR PAYMENTS ADDRESS FOR NOTICES
-------------------- -------------------
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS PASS THROUGH TRUSTEE (National Association) One ▇▇▇▇▇▇ Square
FOR THE ▇▇▇▇-▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
THROUGH TRUST Account No.: ▇▇▇-▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ABA#: 021-000021 Attention: Corporate Trust
Attention: Corporate Trust Administration
Administration Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Reference: Continental 322
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS PASS THROUGH TRUSTEE (National Association) One ▇▇▇▇▇▇ Square
FOR THE ▇▇▇▇-▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
THROUGH TRUST Account No.: ▇▇▇-▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ABA#: 021-000021 Attention: Corporate Trust
Attention: Corporate Trust Administration
Administration Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Reference: Continental 322
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS PASS THROUGH TRUSTEE (National Association) One ▇▇▇▇▇▇ Square
FOR THE ▇▇▇▇-▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
THROUGH TRUST Account No.: ▇▇▇-▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ABA#: 021-000021 Attention: Corporate Trust
Attention: Corporate Trust Administration
Administration Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Reference: Continental 322
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS PASS THROUGH TRUSTEE (National Association) One ▇▇▇▇▇▇ Square
FOR THE ▇▇▇▇-▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
THROUGH TRUST Account No.: ▇▇▇-▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
ABA#: 021-000021 Attention: Corporate Trust
Attention: Corporate Trust Administration
Administration Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Reference: Continental 322
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61
SCHEDULE 2
TO
PARTICIPATION AGREEMENT
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PASS THROUGH TRUSTEE SERIES OF DOLLAR AMOUNT
EQUIPMENT NOTES OF LOAN
1997 - 2A Series A $7,781,810
1997 - 2B Series B $2,657,242
1997 - 2C Series C $2,828,029
1997 - 2D Series D $2,844,973
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SCHEDULE 3 - CERTAIN
TERMS
PARTICIPATION
AGREEMENT
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CERTAIN TERMS
DEFINED TERM DEFINITION
------------ ----------
Minimum Liability Insurance Amount $200,000,000
Threshold Amount $3,500,000
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SCHEDULE 4 - PERMITTED
COUNTRIES
PARTICIPATION AGREEMENT
-------------------------------------------------------------------------------
PERMITTED COUNTRIES
Argentina
Australia
Austria
Bahamas
Belgium
Brazil
Canada
Chile
Denmark
Egypt
Ecuador
Finland
France
Germany
Greece
Hungary
Iceland
India
Indonesia
Ireland
Italy
Japan
Luxembourg
Malaysia
Malta
Mexico
Morocco
Netherlands
New Zealand
Norway
People's Republic of China
Philippines
Portugal
Republic of China (Taiwan)
Singapore
South Africa
South Korea
Spain
Sweden
Switzerland
Thailand
Tobago
Trinidad
United Kingdom
Uruguay
Venezuela
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