----------------------------------------------------------
| CONFIDENTIAL: SUBJECT TO RESTRICTIONS ON DISSEMINATION |
| SET FORTH IN SECTION 8 OF THIS AGREEMENT |
----------------------------------------------------------
================================================================================
PARTICIPATION AGREEMENT ____
Dated as of September 25, 1997
Among
CONTINENTAL AIRLINES, INC.,
Lessee,
METLIFE CAPITAL CREDIT L.P.,
Owner Participant,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Not in its individual capacity
except as expressly provided herein,
but solely as Owner Trustee,
Owner Trustee,
WILMINGTON TRUST COMPANY,
Not in its individual capacity
except as expressly provided herein,
but solely as Mortgagee, Subordination Agent
under the Intercreditor Agreement, and Pass Through
Trustee under each of the Pass Through Agreements,
Mortgagee and Loan Participant,
CORCIM, INC.
Existing Lessor,
ROLLS-ROYCE PLC,
Existing Mortgagee and Equity Guarantor
and
EMBRAER-EMPRESA BRASILEIRA DE AERONAUTICA S.A.
Airframe Manufacturer
----------------------------
One Embraer Model EMB-145 Aircraft
Bearing Manufacturer's Serial No. 145.___
and U.S. Registration No. N_____
with Two ▇▇▇▇▇▇▇ Model AE3007A Engines
================================================================================
CONTENTS
SECTION 1. DEFINITIONS AND CONSTRUCTION........................................................................... 2
SECTION 2. PARTICIPATION IN LESSOR'S COST; ISSUANCE OF EQUIPMENT NOTES; TERMINATION OF
OBLIGATION TO PARTICIPATE.............................................................................. 2
2.1 Participation in Lessor's Cost............................................................... 2
2.2 Nature of Obligations of Participants........................................................ 3
2.3 Termination of Obligation to Participate..................................................... 3
SECTION 3. SALE OF AIRCRAFT; COMMITMENT TO LEASE AIRCRAFT......................................................... 3
3.1 Sale of Aircraft............................................................................. 3
3.2 Commitment to Lease.......................................................................... 5
SECTION 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST; POSTPONEMENT OF
SCHEDULED CLOSING DATE................................................................................. 6
4.1 Notices of Scheduled Closing Date............................................................ 6
4.2 Payment of Lessor's Cost..................................................................... 6
4.3 Postponement of Scheduled Closing Date....................................................... 7
4.4 Closing...................................................................................... 8
SECTION 5. CONDITIONS PRECEDENT................................................................................... 8
5.1 Conditions Precedent to Obligations of Participants.......................................... 8
5.2 Conditions Precedent to Obligations of Owner Trustee......................................... 16
5.3 Conditions Precedent to Obligations of Mortgagee............................................. 16
5.4 Conditions Precedent to Obligations of Lessee................................................ 17
5.5 Conditions Precedent to Obligations of Existing Lessor and Existing
Mortgagee.................................................................................... 18
5.6 Post-Registration Opinion.................................................................... 18
SECTION 6. REPRESENTATIONS AND WARRANTIES......................................................................... 18
6.1 Lessee's Representations and Warranties...................................................... 18
6.2 Owner Participant's Representations and Warranties........................................... 22
6.3 First Security's Representations and Warranties.............................................. 25
6.4 WTC's Representations and Warranties......................................................... 28
6.5 Existing Lessor's Representations and Warranties............................................. 32
6.6 Existing Mortgagee's Representations and Warranties.......................................... 34
6.7 Airframe Manufacturer's Representations and Warranties....................................... 36
SECTION 7. COVENANTS, UNDERTAKINGS AND AGREEMENTS................................................................. 38
7.1 Covenants of Lessee.......................................................................... 38
7.2 Covenants of Owner Participant............................................................... 40
7.3 Covenants of First Security and Owner Trustee................................................ 43
7.4 Covenants of WTC............................................................................. 46
7.5 Covenants of Note Holders.................................................................... 47
7.6 Agreements................................................................................... 48
SECTION 8. CONFIDENTIALITY........................................................................................ 57
SECTION 9. INDEMNIFICATION AND EXPENSES........................................................................... 58
9.1 General Indemnity............................................................................ 58
9.2 Expenses..................................................................................... 64
9.3 General Tax Indemnity........................................................................ 65
9.4 Payments..................................................................................... 77
9.5 Interest..................................................................................... 78
9.6 Benefit of Indemnities....................................................................... 78
SECTION 10. ASSIGNMENT OR TRANSFER OF INTERESTS.................................................................... 78
10.1 Participants, Owner Trustee and Note Holders................................................. 78
10.2 Effect of Transfer........................................................................... 81
SECTION 11. [RESERVED]............................................................................................. 81
SECTION 12. SECTION 1110........................................................................................... 81
SECTION 13. CHANGE OF CITIZENSHIP.................................................................................. 82
13.1 Generally.................................................................................... 82
13.2 Owner Participant............................................................................ 82
13.3 Owner Trustee................................................................................ 83
13.4 Mortgagee.................................................................................... 83
SECTION 14. CONCERNING OWNER TRUSTEE............................................................................... 83
SECTION 15. MISCELLANEOUS.......................................................................................... 84
15.1 Amendments................................................................................... 84
15.2 Severability................................................................................. 84
15.3 Survival..................................................................................... 84
15.4 Reproduction of Documents.................................................................... 84
15.5 Counterparts................................................................................. 85
15.6 No Waiver.................................................................................... 85
15.7 Notices...................................................................................... 85
15.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE............................................. 86
15.9 Third-Party Beneficiary...................................................................... 87
15.10 Entire Agreement............................................................................. 87
15.11 Further Assurances........................................................................... 88
ANNEX, SCHEDULES AND EXHIBITS
ANNEX A - Definitions
SCHEDULE 1 - Accounts; Addresses
SCHEDULE 2 - Commitments
SCHEDULE 3 - Certain Terms
SCHEDULE 4 - Lessor Rent
EXHIBIT A - Opinion of special counsel to Lessee
EXHIBIT B - Opinion of corporate counsel to Lessee
EXHIBIT C-1 - Opinion of corporate counsel to Airframe Manufacturer
EXHIBIT C-2 - Opinion of special counsel to Airframe Manufacturer
EXHIBIT D - Opinion of special counsel to Owner Trustee
EXHIBIT E - Opinion of special counsel to Mortgagee
EXHIBIT F-1 - Opinion of special counsel to Owner Participant and Owner
Participant Parent
EXHIBIT F-2 - Opinion of local counsel to Owner Participant
and Owner Participant Parent
EXHIBIT G - Opinion of special counsel to Existing Lessor
EXHIBIT H - Opinion of special counsel to Existing Mortgagee
EXHIBIT I - Opinion of special counsel in Oklahoma City, Oklahoma
EXHIBIT J - Delivery Receipt
PARTICIPATION AGREEMENT ____
PARTICIPATION AGREEMENT ____, dated as of September 25, 1997 (this
"Agreement"), among (a) CONTINENTAL AIRLINES, INC., a Delaware corporation
("Lessee"), (b) METLIFE CAPITAL CREDIT L.P. ("Owner Participant"), (c) FIRST
SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as expressly provided herein, but solely as Owner
Trustee (this and all other capitalized terms used but not defined herein shall
have the respective meanings ascribed thereto in Section 1) (in its capacity as
Owner Trustee, "Owner Trustee" or "Lessor," and in its individual capacity,
"First Security"), (d) WILMINGTON TRUST COMPANY, a Delaware banking corporation,
not in its individual capacity, except as expressly provided herein, but solely
as Mortgagee (in its capacity as Mortgagee, "Mortgagee" and in its individual
capacity, "WTC"), (e) WILMINGTON TRUST COMPANY, not in its individual capacity,
except as expressly provided herein, but solely as Pass Through Trustee under
each of the Pass Through Trust Agreements, (each, a "Pass Through Trustee"), (f)
WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly
provided herein, but solely as Subordination Agent under the Intercreditor
Agreement ("Subordination Agent"), (g) CORCIM, INC., a Delaware corporation (the
"Existing Lessor"), (h) ROLLS-ROYCE PLC, a corporation organized under the laws
of England (the "Existing Mortgagee" or "Equity Guarantor"), and (i)
EMBRAER-EMPRESA BRASILEIRA DE AERONAUTICA S.A., a company organized under the
laws of Brazil ("Airframe Manufacturer").
RECITALS
A. Express and Airframe Manufacturer have entered into the Purchase
Agreement, pursuant to which, among other things, Airframe Manufacturer has
agreed to manufacture and sell to Express and Express has agreed to purchase
from Airframe Manufacturer certain aircraft, including the Aircraft.
B. Prior to the date hereof, in connection with the interim financing
of the Aircraft, (i) certain of Express' rights under the Purchase Agreement
with respect to the Aircraft were assigned to Existing Lessor, (ii) the Aircraft
was purchased by Existing Lessor, leased to Lessee pursuant to the Existing
Lease and subleased to Express pursuant to the Existing Sublease and (iii) the
Existing Lessor granted to Existing Mortgagee a security interest in, among
other things, the Aircraft and the Existing Lease pursuant to the Existing
Mortgage.
C. In order to effectuate the long-term financing of the Aircraft,
the parties hereto intend that (i) the Owner Trustee purchase the Aircraft from
the Existing Lessor utilizing the proceeds of the sale of the Equipment Notes to
the Pass Through Trustees and the investment by Owner Participant, (ii) the
Aircraft be leased to Lessee and subleased to Express, (iii) Owner Trustee grant
a security interest to Mortgagee in the Aircraft and the Lease for the benefit
of the Note Holders and (iv) the Existing Lease be terminated and the Aircraft
released from the Lien of the Existing Mortgagee.
D. Concurrently with the execution and delivery hereof, Owner
Participant Parent has, for the benefit of Lessee, Owner Trustee and Mortgagee,
issued the Owner Participant Guaranty, pursuant to which Owner Participant
Parent will guarantee the obligations of Owner Participant under the Operative
Agreements.
E. In order to induce Owner Participant to participate in the
financing of the Aircraft contemplated hereby, Equity Guarantor has agreed to
provide the Equity Guaranty.
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.
SECTION 2. PARTICIPATION IN LESSOR'S COST; ISSUANCE OF EQUIPMENT NOTES;
TERMINATION OF OBLIGATION TO PARTICIPATE
2.1 PARTICIPATION IN LESSOR'S COST
Subject to the terms and conditions of this Agreement, on the Closing
Date, Owner Participant and each Pass Through Trustee shall participate in the
payment of Lessor's Cost as follows:
(a) Owner Participant shall participate in the payment of Lessor's
Cost for the Aircraft by making an equity investment in the
beneficial ownership of the Aircraft in the amount in Dollars
equal to Owner Participant's Percentage multiplied by Lessor's
Cost; and
(b) Each Pass Through Trustee shall make a non-recourse secured loan
to Owner Trustee to finance, in part, the Owner Trustee's payment
of Lessor's Cost in the amount in Dollars equal to such Pass
Through Trustee's PTT Percentage multiplied by Lessor's Cost,
such loan to be evidenced by one or more Equipment Notes, dated
the Closing Date, issued to the Subordination Agent as the
registered holder on behalf of each such Pass Through Trustee for
the related Pass Through Trust by Owner Trustee in accordance
with this Agreement and the Trust Indenture, in an aggregate
principal amount equal to the Commitment of each such Pass
Through Trustee.
2.2 NATURE OF OBLIGATIONS OF PARTICIPANTS
The obligations hereunder of each Participant are several, and not
joint, and a Participant shall have no obligation to make available to Owner
Trustee any portion of any amount not paid hereunder by any other Participant.
The failure by any Participant to perform its obligations hereunder shall not
affect the obligations of Lessee toward the other Participants, except to the
extent provided in Section 5.4.
2.3 TERMINATION OF OBLIGATION TO PARTICIPATE
Notwithstanding any other provision of this Agreement, if the Closing
does not occur on or before the Commitment Termination Date, the Commitment of
each Participant and its obligation to participate in the payment of Lessor's
Cost shall expire and be of no further force and effect; PROVIDED, that the
liability of any Participant that has defaulted in the payment of its Commitment
shall not be released.
SECTION 3. SALE OF AIRCRAFT; COMMITMENT TO LEASE AIRCRAFT
3.1 SALE OF AIRCRAFT
Subject to the terms and conditions hereof, at the Closing, Existing
Lessor hereby agrees to sell to Owner Trustee and Owner Trustee hereby agrees to
purchase from Existing Lessor the Aircraft, on the following terms:
3.1.1 DELIVERY
The Aircraft shall be delivered by Existing Lessor to Owner Trustee
at such place as may be designated by Lessee and approved by Existing Lessor
(which approval shall not be unreasonably withheld). Upon Existing Lessor's
delivery of the Aircraft to Owner Trustee, Owner Trustee shall execute and
deliver to Existing Lessor a Delivery Receipt therefor in the form annexed
hereto as Exhibit J. This purchase and sale shall not be effective as to the
Aircraft unless and until the Aircraft is concurrently delivered under the
Lease.
3.1.2 PURCHASE PRICE
The full purchase price for the Aircraft in the amount of Lessor's
Cost shall be paid to Existing Lessor in immediately available funds on delivery
of the Aircraft.
3.1.3 DISCLAIMER
Existing Lessor does not make, has not made and shall not be deemed
to have made, and expressly disclaims, any representation or warranty, express
or implied, as to:
(v) THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR USE OR FOR ANY PARTICULAR
PURPOSE OF THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF;
(w) THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH RESPECT TO
THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF;
(x) THE ABSENCE OF LATENT OR ANY OTHER DEFECT IN THE AIRFRAME,
ANY ENGINE OR ANY PART THEREOF, WHETHER OR NOT DISCOVERABLE;
(y) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR
COPYRIGHT OR THE LIKE; OR
(z) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT,
OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR
IMPLIED, WITH RESPECT TO THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF.
The foregoing disclaimer shall in no way affect or limit (i) Existing
Lessor's obligations under the Operative Agreements, or (ii) Existing
Lessor's representations and warranties in Section 6.5 of this
Agreement, in the Aircraft ▇▇▇▇ of Sale, including without limitation
the warranty of good title, or any other express representation or
warranty in any Operative Agreement.
3.1.4 TERMINATION OF EXISTING FINANCING AGREEMENTS
(a) The Existing Lease and Existing Sublease for the Aircraft shall
be terminated, and each of the Existing Lessor and Lessee shall take such action
to evidence such termination as Owner Trustee or Mortgagee shall reasonably
request, including execution and delivery of a termination agreement for the
Existing Lease and Existing Sublease in form and substance reasonably acceptable
to Owner Trustee and satisfactory for filing with the FAA, and UCC-3 termination
statements with respect to the termination of the Existing Lease and Existing
Sublease.
(b) The Aircraft, Aircraft Documents and other collateral shall be
released from the Lien of the Existing Mortgage, and the Existing Lessor and
Existing Mortgagee shall take such action to evidence such release as Owner
Trustee, Mortgagee or Lessee shall reasonably request, including the execution
and delivery of a Lien release with respect to the Existing Mortgage in form and
substance reasonably acceptable to Owner Trustee, Mortgagee and Lessee and
satisfactory for filing with the FAA, and UCC-3 termination statements with
respect to the release of the Aircraft from the Lien of the Existing Mortgage.
(c) The Existing Participation Agreement shall be terminated,
effective as of the Closing, and the parties thereto shall have no further
obligation thereunder except for Sections 7, 10, 11 and 12 thereof and for any
breach of such Agreement arising prior to the Closing.
(d) Existing Lessor shall refund to Lessee "Basic Rent" (as defined
in the Existing Lease) paid in advance by Lessee attributable to periods on and
after the Closing Date determined by multiplying such Basic Rent by a fraction,
the numerator of which shall be the number of days remaining in the month in
which the Closing Date occurs (from and including the Closing Date) and the
denominator of which shall be the total number of days in such month.
3.1.5 TAXES
Existing Lessor shall pay and discharge all applicable sales, use or
similar Taxes, duties or fees assessed or levied by any federal, state,
provincial or local taxing authority as a result of the sale and delivery of the
Aircraft to Owner Trustee contemplated by this Agreement. Existing Lessor, Owner
Trustee and Lessee will cooperate in order to minimize Taxes applicable to the
sale and delivery of the Aircraft to Owner Trustee contemplated by this
Agreement.
3.2 COMMITMENT TO LEASE
Subject to the terms and conditions of this Agreement, concurrently
with the issuance of the Equipment Notes and the purchase of the Aircraft by the
Owner Trustee on the Closing Date, Owner Trustee shall lease the Aircraft to
Lessee, and Lessee shall lease the Aircraft from Owner Trustee, under the Lease.
SECTION 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST; POSTPONEMENT
OF SCHEDULED CLOSING DATE
4.1 NOTICES OF SCHEDULED CLOSING DATE
Existing Mortgagee agrees to give Lessee, Existing Lessor,
Participants, Owner Trustee, and Mortgagee at least five Business Days' written
notice of the Scheduled Closing Date. Each Participant agrees that making
available its respective Commitment shall constitute a waiver of such notice.
Owner Trustee and Mortgagee shall be deemed to have waived such notice if
Mortgagee shall have received from each Participant funds in the full amount of
its respective Commitment.
4.2 PAYMENT OF LESSOR'S COST
(a) Each Participant agrees, subject to the terms and conditions of
this Agreement, to make the Dollar amount of its respective Commitment
available, by wire transfer of immediately available funds to WTC's account no.
0016-1728 at Citibank, NA, New York, New York ABA# ▇▇▇-▇▇▇-▇▇▇, reference
Continental Lease ____, at or before 12:00 Noon, New York City time, on the
Scheduled Closing Date. All such funds made available by each Participant to WTC
shall, until payment thereof to Existing Lessor as provided in Section
4.2(b)(ii) or return thereof to the respective Participant as provided in
Section 4.3.2, be held by WTC in trust for the benefit of the respective
Participant, as the sole and exclusive property of the respective Participant
and not as part of the Trust Estate or the Trust Indenture Estate.
(b) Subject to the satisfaction or waiver by the applicable party of
the conditions precedent set forth in Section 5, and simultaneously with the
receipt by the parties hereto of all amounts to be paid to them on the Closing
Date pursuant to this Section 4.2, Owner Trustee shall:
(i) purchase, take title to, and accept delivery of the Aircraft,
and in connection therewith execute the Delivery Receipt in the form
of Exhibit J hereto;
(ii) in consideration of the transfer of title to the Aircraft to
Owner Trustee, direct WTC to pay, from the funds made available to WTC
hereunder by the Participants, Lessor's Cost to Existing Lessor by
wire transfer of immediately available funds to Existing Lessor's
account set forth in Schedule 1 or as otherwise directed by Existing
Lessor;
(iii) execute an application for registration of the Aircraft
with the FAA and Lease Supplement No. 1, in each case with respect to
the Aircraft;
(iv) execute the Trust Indenture and the initial Trust Indenture
Supplement and issue the Equipment Notes to the Subordination Agent in
accordance with Section 2.1(b);
(v) lease the Aircraft to Lessee pursuant to the Lease; and
(vi) take such other action as may be required to be taken by the
Owner Trustee on the Closing Date by the terms of any Operative
Agreement.
4.3 POSTPONEMENT OF SCHEDULED CLOSING DATE
4.3.1 POSTPONEMENT
If for any reason whatsoever the Closing is not consummated on the
Scheduled Closing Date, Existing Mortgagee may by telephonic notice, given by
5:00 p.m., New York City time (such telephonic notice to be promptly confirmed
in writing by personal delivery or facsimile), on the Scheduled Closing Date to
Lessee, Existing Lessor, each Participant, Owner Trustee and Mortgagee,
designate a Delayed Closing Date.
4.3.2 RETURN OF FUNDS
If the Closing fails to occur on the Scheduled Closing Date, WTC
shall promptly return to each Participant that makes funds available to it in
accordance with Section 4.2(a) such funds, together with interest or income
earned thereon.
4.3.3 INVESTMENT OF FUNDS; INTEREST
(a) If the Closing fails to occur on the Scheduled Closing Date, WTC
shall, if so instructed in the notice from Existing Mortgagee, use reasonable
efforts to invest, at the risk of Existing Mortgagee, the funds received by it
from Participants in Cash Equivalents. Any such obligations purchased by WTC,
whether directly or through a repurchase agreement, shall be held in trust by
WTC for the benefit of the respective Participants that provided such funds, and
not as part of the Trust Estate or the Trust Indenture Estate.
(b) If the Closing fails to occur on the Scheduled Closing Date,
unless WTC returns all funds to the Participants by 2:00 p.m., New York City
time, on the Scheduled Closing Date, Existing Mortgagee shall, on the Scheduled
Closing Date or on the date funds are required to be returned to Participants
pursuant to Section 4.3.2, reimburse each Participant that has made funds
available pursuant to Section 4.2 for the loss of the use of its funds, by
paying to such Participant in immediately available funds an amount equal to the
excess, if any, of (i) interest at the Debt Rate on the amount of such funds for
the period from and including the Scheduled Closing Date to but excluding the
Closing Date or, if earlier, the day on which such Participant's funds are
returned if such return is made by 2:00 p.m., New York City time (or to but
excluding the next following Business Day if such return is not made by such
time) over (ii) any amount paid to such Participant in respect of interest or
income earned by WTC pursuant to Section 4.3.3(a).
(c) On the Closing Date or on the date funds are required to be
returned to Participants pursuant to Section 4.3.2, Existing Mortgagee shall
reimburse WTC, for the benefit of Participants that provided funds which are
invested by WTC hereunder, for any losses incurred on such investments. All
income and profits on the investment of such funds shall be for the respective
accounts of such Participants, and WTC shall not be liable for failure to invest
such funds or for any losses incurred on such investments, except for its own
negligence or willful misconduct.
4.4 CLOSING
The Closing shall occur at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other place as the
parties shall agree.
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTICIPANTs
The obligation of each Participant to make the Dollar amount of its
respective Commitment available for payment as directed by the Owner Trustee on
the Closing Date is subject to satisfaction or waiver by each such Participant,
at or prior to the Closing, of the conditions precedent set forth below in this
Section 5.1; PROVIDED, that it shall not be a condition precedent to the
obligation of any Participant that any document be produced or action taken that
is to be produced or taken by such Participant or by a Person within such
Participant's control; PROVIDED, FURTHER, that Sections 5.1.2(iii), (xv) and
(xxv) (G) and 5.1.15 shall not be conditions precedent to the obligation of Loan
Participant, and Section 5.1.2 (xxviii) and Section 5.1.5 shall not be a
condition precedent to the obligation of Owner Participant.
5.1.1 NOTICE
Such Participant shall have received the notice described in Section
4.1 or, in the case of a Delayed Closing Date, 4.3, when and as required
thereby, or shall have waived such notice.
5.1.2 DELIVERY OF DOCUMENTS
Such Participant shall, except as noted below, have received executed
counterparts of the following agreements, instruments, certificates or
documents, and each of such counterparts (a) shall have been duly authorized,
executed and delivered by the respective party or parties thereto, (b) shall be
reasonably satisfactory in form and substance to such Participant and (c) shall
be in full force and effect:
(i) the Lease; PROVIDED, that only Mortgagee shall receive the
sole executed chattel paper original thereof;
(ii) Lease Supplement No. 1; PROVIDED, that only Mortgagee shall
receive the sole executed chattel paper original thereof;
(iii) the Tax Indemnity Agreement; PROVIDED, that only Owner
Participant and Lessee shall receive copies of the Tax Indemnity
Agreement;
(iv) the Trust Agreement;
(v) the Trust Indenture;
(vi) the initial Trust Indenture Supplement;
(vii) the Purchase Agreement Assignment;
(viii) the Consent and Agreement;
(ix) the Equipment Notes dated the Closing Date; PROVIDED, that
only the Subordination Agent shall receive the authenticated Equipment
Notes;
(x) an excerpted copy of the Purchase Agreement to the extent
relating to Airframe Manufacturer's warranties or related obligations
or any right in the Purchase Agreement assigned to Owner Trustee
pursuant to the Purchase Agreement Assignment; PROVIDED, that only
Owner Trustee and Mortgagee shall receive copies of such agreements
(copies of which may be inspected by Participants and their respective
special counsel on the Closing Date, but after the Closing Date such
copies shall be retained by Owner Trustee and Mortgagee and may be
inspected and reviewed by Owner Participant or Loan Participant or
their respective counsel if and only if there shall have occurred and
be continuing a Lease Default or Lease Event of Default);
(xi) the Bills of Sale;
(xii) the Express Sublease;
(xiii) termination agreements with respect to the Existing Lease
and the Existing Sublease and a release of the Aircraft, Aircraft
Documents and other collateral from the Lien of the Existing Mortgage,
as contemplated by Section 3.1.4;
(xiv) the broker's report and insurance certificates required by
Section 11 of the Lease;
(xv) an appraisal or appraisals from an Appraiser, which
appraisal or appraisals shall be reasonably satisfactory in form and
substance to Owner Participant; PROVIDED, that only Owner Participant
shall receive a copy of its appraisal (the "Appraisal");
(xvi) (A) a copy of the Certificate of Incorporation and By-Laws
of Lessee and resolutions of the board of directors of Lessee and/or
the executive committee thereof, in each case certified as of the
Closing Date, by the Secretary or an Assistant Secretary of Lessee,
duly authorizing the execution, delivery and performance by Lessee of
the Lessee Operative Agreements required to be executed and delivered
by Lessee on or prior to the Closing Date in accordance with the
provisions hereof and thereof; (B) an incumbency certificate of
Lessee, Existing Lessor, Existing Mortgagee, Airframe Manufacturer,
Owner Participant, Owner Participant Parent, First Security and WTC as
to the person or persons authorized to execute and deliver the
relevant Operative Agreements on behalf of such party; and (C) a copy
of the Certificate of Incorporation or Articles of Incorporation and
By-Laws and general authorizing resolutions of the boards of directors
(or executive committees) or other satisfactory evidence of
authorization of Existing Lessor, Existing Mortgagee, Airframe
Manufacturer, Owner Participant's General Partner, Owner Participant
Parent, First Security and WTC, and a copy of Owner Participant's
Certificate of Limited Partnership and Agreement of Limited
Partnership certified as of the Closing Date by the Secretary or an
Assistant or Attesting Secretary of Existing Lessor, Existing
Mortgagee, Airframe Manufacturer, Owner Participant, Owner Participant
Parent, First Security and WTC, respectively, which authorize the
execution, delivery and performance by Existing Lessor, Existing
Mortgagee, Airframe Manufacturer, Owner Participant, Owner Participant
Parent, First Security and WTC, respectively, of each of the Operative
Agreements to which it is a party, together with such other documents
and evidence with respect to it as Lessee or any Participant may
reasonably request in order to establish the consummation of the
transactions contemplated by this Agreement and the taking of all
corporate proceedings in connection therewith;
(xvii) an Officer's Certificate of Lessee, dated as of the
Closing Date, stating that its representations and 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);
(xviii) an Officer's Certificate of First Security, dated as of
the Closing Date, stating that its representations and warranties, in
its individual capacity and as Owner Trustee, set forth in this
Agreement are true and correct as of the 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);
(xix) an Officer's Certificate of Owner Participant, dated as of
the Closing Date, stating that its representations and 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);
(xx) 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, 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);
(xxi) an Officer's Certificate of Existing Lessor, dated as of
the Closing Date, stating that its representations and 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);
(xxii) an Officer's Certificate of Existing Mortgagee, dated as
of the Closing Date, stating that its representations and 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);
(xxiii) an application for registration of the Aircraft with the
FAA in the name of Owner Trustee; PROVIDED, that only special counsel
in Oklahoma City, Oklahoma shall receive the sole executed copy
thereof for filing with the FAA;
(xxiv) the Financing Statements;
(xxv) the following opinions of counsel, in each case dated the
Closing Date:
(A) an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, special counsel
to Lessee, substantially in the form of Exhibit A;
(B) an opinion of Lessee's Legal Department, substantially
in the form of Exhibit B;
(C) an opinion of (x) corporate counsel to Airframe
Manufacturer, substantially in the form of Exhibit C-1, and (y)
▇▇▇▇▇▇ & Forsyth, special counsel to Airframe Manufacturer,
substantially in the form of Exhibit C-2;
(D) an opinion of Ray, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special counsel to
Owner Trustee, substantially in the form of Exhibit D;
(E) an opinion of Morris, James, Hitchens & ▇▇▇▇▇▇▇▇,
special counsel to Mortgagee and Loan Participant, substantially
in the form of Exhibit E;
(F) an opinion of Special Counsel to Owner Participant and
Owner Participant Parent and an opinion of Local Counsel to Owner
Participant and Owner Participant Parent (each as defined in
Schedule 3 to this Agreement), substantially in the form of
Exhibit F-1 and F-2, respectively;
(G) an opinion of Special Tax Counsel to Owner Participant
(as defined in Schedule 3 to this Agreement), with respect to
certain tax consequences of the transactions contemplated hereby;
PROVIDED, that only Owner Participant shall receive such opinion;
(H) an opinion of ▇▇▇▇▇▇ & Forsyth, special counsel to
Existing Lessor, substantially in the form of Exhibit G;
(I) an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, special
counsel to Existing Mortgagee, substantially in the form of
Exhibit H; and
(J) an opinion of ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇, special counsel in
Oklahoma City, Oklahoma, substantially in the form of Exhibit I;
(xxvi) a copy of a current, valid Standard Certificate of
Airworthiness for the Aircraft duly issued by the FAA;
(xxvii) an Officer's Certificate of Airframe Manufacturer, dated
as of the Closing Date, stating that its representations and
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);
(xxviii) the Owner Participant Guaranty;
(xxix) the Equity Guaranty; PROVIDED that only Owner Participant,
Existing Mortgagee and Owner Trustee shall receive copies of the
Equity Guaranty; and
(xxix) the Participants and their respective counsel shall have
received copies of such documents and papers as such Participants may
reasonably request, other than (A) in the case of Loan Participant,
copies of the Purchase Agreement, provided that special counsel for
Loan Participant may inspect the Purchase Agreement in connection with
the transactions contemplated hereby or as a basis for such counsel's
closing opinion, and (B) in the case of parties other than Owner
Participant and its special counsel, the Tax Indemnity Agreement.
5.1.3 OTHER COMMITMENTS
Each other Participant shall have made available the Dollar amount of
its Commitment in accordance with Section 4.
5.1.4 VIOLATION OF LAW
No change shall have occurred after the date of this Agreement in any
applicable Law that makes it a violation of Law for (a) Lessee, Existing Lessor,
Existing Mortgagee, any Participant, Subordination Agent, Owner Trustee or
Mortgagee to execute, deliver and perform the Operative Agreements to which any
of them is a party or (b) any Participant to make the Dollar amount of its
Commitment available or, in the case of any Loan Participant, to acquire an
Equipment Note or to realize the benefits of the security afforded by the Trust
Indenture.
5.1.5 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 Trustee's right,
title and interest in the Aircraft and the Lease, subject only to Permitted
Liens.
5.1.6 REPRESENTATIONS, WARRANTIES AND COVENANTS
The representations and warranties of each other party to this
Agreement made, in each case, in this Agreement and in any other Operative
Agreement to which it is a party, shall be true and accurate in all material
respects as of the 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.
5.1.7 NO EVENT OF DEFAULT
On the Closing Date, no event shall have occurred and be continuing,
or would result from the sale, mortgage or lease of the Aircraft, which
constitutes a Lease Default or Lease Event of Default, or an Indenture Default
or Indenture Event of Default.
5.1.8 NO EVENT OF LOSS
On the Closing Date, no Event of Loss with respect to the Airframe or
any Engine shall have occurred and no circumstance, condition, act or event
that, with the giving of notice or lapse of time or both, would give rise to or
constitute an Event of Loss with respect to the Airframe or any Engine shall
have occurred.
5.1.9 TITLE
Owner Trustee shall have good title (subject to filing and
recordation of the FAA ▇▇▇▇ of Sale with the FAA) to the Aircraft, free and
clear of Liens, except (a) the rights of Lessee under the Lease and Lease
Supplement No. 1, (b) the Lien created by the Trust Indenture and the initial
Trust Indenture Supplement and (c) other Permitted Liens.
5.1.10 CERTIFICATION
The Aircraft shall have been duly certificated by the FAA as to type
and airworthiness.
5.1.11 SECTION 1110
Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee
of Owner Trustee under the Trust Indenture), shall be entitled to the benefits
of Section 1110 (as currently in effect) with respect to the right to take
possession of the Airframe and Engines as provided in the Lease in the event of
a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor.
5.1.12 FILING
On the 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.
5.1.13 NO PROCEEDINGS
No action or proceeding shall have been instituted, nor shall any
action be threatened in writing, before any Government Entity, nor shall any
order, judgment or decree have been issued or proposed to be issued by any
Government Entity, to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or any other Operative Agreement or the
transactions contemplated hereby or thereby.
5.1.14 GOVERNMENTAL ACTION
All appropriate action required to have been taken prior to the
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 required to
be in effect on the Closing Date in connection with the transactions
contemplated by this Agreement shall have been issued.
5.2 Conditions Precedent to Obligations of Owner Trustee
The obligation of Owner Trustee to apply the Commitments of the
Participants to pay Lessor's Cost on the Closing Date is subject to satisfaction
or waiver by Owner Trustee, at or prior to the Closing, of the conditions
precedent set forth below in this Section 5.2.
5.2.1 NOTICE
Owner Trustee shall have received the notice described in Section 4.1
or, in the case of a Delayed Closing Date, 4.3, when and as required thereby, or
shall have waived such notice.
5.2.2 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Owner Trustee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Owner Trustee.
5.2.3 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 5.1.4, 5.1.6, 5.1.7 and
5.1.11 shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Owner Trustee.
5.3 Conditions Precedent to Obligations of Mortgagee
The obligation of Mortgagee to authenticate the Equipment Notes on
the Closing Date is subject to the satisfaction or waiver by Mortgagee, at or
prior to the Closing, of the conditions precedent set forth below in this
Section 5.3.
5.3.1 NOTICE
Mortgagee shall have received the notice described in Section 4.1 or,
in the case of a Delayed Closing Date, 4.3, when and as required thereby, or
shall have waived such notice.
5.3.2 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Mortgagee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Mortgagee.
5.3.3 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 5.1.4, 5.1.6, 5.1.7 and
5.1.11 shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Mortgagee.
5.4 Conditions Precedent to Obligations of Lessee
The obligation of Lessee to lease the Aircraft on the Closing Date
and to take the other actions required by this Agreement to be taken by it at
the Closing is subject to the satisfaction or waiver by Lessee, at or prior to
the Closing, of the conditions precedent set forth below in this Section 5.4.
5.4.1 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Lessee, except
as specifically provided therein, and shall be satisfactory to Lessee, unless
the failure to receive any such agreement, instrument, certificate or document
is the result of any action or inaction by Lessee.
5.4.2 SALES TAX
Lessee shall be satisfied that no sales, use, value added, goods and
services or like tax, and no stamp tax duty, is payable with respect to the
delivery of the Aircraft on the Closing Date to the extent that Lessee has
liability therefor under Section 9.3.
5.4.3 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 5.1.3 (as to all
Participants), 5.1.4, 5.1.6, 5.1.7 (as to Indenture Defaults or Indenture Events
of Default not constituting Lease Defaults or Lease Events of Default,
respectively), 5.1.8, 5.1.9, 5.1.10, 5.1.11, 5.1.12, 5.1.13 and 5.1.14 shall
have been satisfied or waived by Lessee, unless the failure of any such
condition to be satisfied is the result of any action or inaction by Lessee.
5.5 CONDITIONS PRECEDENT TO OBLIGATIONS OF EXISTING LESSOR AND
EXISTING MORTGAGEE
The obligation of Existing Lessor to sell and transfer the Aircraft
to Owner Trustee at the time of the Closing and the respective obligations of
each of Existing Lessor and Existing Mortgagee to take the other actions
required by this Agreement to be taken by it at the Closing is subject to the
satisfaction or waiver by it, at or prior to the Closing, of the conditions
precedent set forth below in this Section 5.5.
5.5.1 TENDER OF LESSOR'S COST
Owner Trustee shall have tendered to Existing Lessor Lessor's Cost
pursuant to Section 4.2, subject to performance by Existing Lessor and Existing
Mortgagee of their respective obligations under this Agreement.
5.5.2 DOCUMENTS
In the case of Existing Mortgagee, in its capacity as Equity
Guarantor, executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Equity
Guarantor, 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 Equity Guarantor.
5.5.3 OTHER CONDITIONS PRECEDENT
The condition set forth in Section 5.1.4(a) shall have been satisfied
with respect to it.
5.6 POST-REGISTRATION OPINION
Promptly upon the registration of the Aircraft and the recordation of
the FAA Filed Documents pursuant to the Act, Airframe Manufacturer will cause
▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇, special counsel in Oklahoma City, Oklahoma, to deliver to
Lessee, Existing Lessor, Existing Mortgagee, each Participant, Owner Trustee and
Mortgagee a favorable opinion or opinions addressed to each of them with respect
to such registration and recordation.
SECTION 6. REPRESENTATIONS AND WARRANTIES
6.1 LESSEE'S REPRESENTATIONS AND WARRANTIES
Lessee represents and warrants to each Participant, Equity Guarantor,
Existing Mortgagee, Existing Lessor, Airframe Manufacturer, Subordination Agent,
Owner Trustee and Mortgagee that:
6.1.1 ORGANIZATION; QUALIFICATION
Lessee is a corporation duly incorporated, validly existing and in
good standing under the Laws of the State of Delaware and has the corporate
power and authority to conduct the business in which it is currently engaged and
to own or hold under lease its properties and to enter into and perform its
obligations under the Lessee Operative Agreements. Lessee is duly qualified to
do business as a foreign corporation in good standing in each jurisdiction in
which the nature and extent of the business conducted by it, or the ownership of
its properties, requires such qualification, except where the failure to be so
qualified would not give rise to a Material Adverse Change to Lessee.
6.1.2 CORPORATE AUTHORIZATION
Lessee has taken, or caused to be taken, all necessary corporate
action (including, without limitation, the obtaining of any consent or approval
of stockholders required by its Certificate of Incorporation or By-Laws) to
authorize the execution and delivery of each of the Lessee Operative Agreements,
and the performance of its obligations thereunder.
6.1.3 NO VIOLATION
The execution and delivery by Lessee of the Lessee Operative
Agreements, the performance by Lessee of its obligations thereunder and the
consummation by Lessee on the 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 Lessee, (b) violate any Law applicable to or binding
on Lessee or (c) violate or constitute any default under (other than any
violation or default that would not result in a Material Adverse Change to
Lessee), or result in the creation of any Lien (other than as permitted under
the Lease) upon the Aircraft under, any indenture, mortgage, chattel mortgage,
deed of trust, conditional sales contract, lease, loan or other material
agreement, instrument or document to which Lessee is a party or by which Lessee
or any of its properties is bound.
6.1.4 APPROVALS
The execution and delivery by Lessee of the Lessee Operative
Agreements, the performance by Lessee of its obligations thereunder and the
consummation by Lessee on the 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 Lessee and (b) any Government Entity, other than the
filing of (x) the FAA Filed Documents and the Financing Statements (and
continuation statements periodically) and (y) filings, recordings, notices or
other ministerial actions pursuant to any routine recording, contractual or
regulatory requirements applicable to it.
6.1.5 VALID AND BINDING AGREEMENTS
The Lessee Operative Agreements have been duly authorized, executed
and delivered by Lessee and, assuming the due authorization, execution and
delivery thereof by the other party or parties thereto, constitute the legal,
valid and binding obligations of Lessee and are enforceable against Lessee in
accordance with the respective terms thereof, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization, receivership, moratorium
and other similar Laws affecting the rights of creditors generally and general
principles of equity, whether considered in a proceeding at law or in equity.
6.1.6 LITIGATION
Except as set forth in Lessee's most recent Annual Report on Form
10-K, as amended, filed by Lessee with the SEC on or prior to the Closing Date,
or in any Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by
Lessee with the SEC subsequent to such Form 10-K and on or prior to the Closing
Date, no action, claim or proceeding is now pending or, to the Actual Knowledge
of Lessee, threatened, against Lessee, before any court, governmental body,
arbitration board, tribunal or administrative agency, which is reasonably likely
to be determined adversely to Lessee and if determined adversely to Lessee would
result in a Material Adverse Change.
6.1.7 FINANCIAL CONDITION
The audited consolidated balance sheet of Lessee with respect to
Lessee's most recent fiscal year included in Lessee's most recent Annual Report
on Form 10-K, as amended, filed by Lessee with the SEC, and the related
consolidated statements of operations and cash flows for the period then ended
have been prepared in accordance with GAAP and fairly present in all material
respects the financial condition of Lessee and its consolidated subsidiaries as
of such date and the results of its operations and cash flows for such period,
and since the date of such balance sheet, there has been no material adverse
change in such financial condition or operations of Lessee, except for matters
disclosed in (a) the financial statements referred to above, (b) any subsequent
Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by Lessee with
the SEC on or prior to the date hereof, or (c) any prospectus or prospectus
supplement filed by Lessee with the SEC in connection with the offering of the
Pass Through Certificates.
6.1.8 REGISTRATION AND RECORDATION
Except for (a) the registration of the Aircraft with the FAA pursuant
to the Act in the name of Owner Trustee, (b) the filing for recordation (and
recordation) of the FAA Filed Documents, (c) the filing of the Financing
Statements (and continuation statements relating thereto at periodic intervals),
(d) the taking of possession and retention by Mortgagee of the original
counterparts of the Lease and Lease Supplement No. 1 and (e) the affixation of
the nameplates referred to in Section 7.1.3 of the Lease, no further action,
including any filing or recording of any document (including any financing
statement in respect thereof under Article 9 of the UCC) is necessary in order
to establish and perfect the right, title or interest of Owner Trustee, and the
Mortgagee's security interest, in the Aircraft and the Lease, as against Lessee
and any other Person, in each case, in any applicable jurisdiction in the United
States.
6.1.9 CHIEF EXECUTIVE OFFICE
The chief executive office (as such term is defined in Article 9 of
the UCC) of Lessee is located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
6.1.10 NO DEFAULT
No event which, if the Aircraft were subject to the Lease,
constitutes a Lease Event of Default has occurred and is continuing.
6.1.11 NO EVENT OF LOSS
No Event of Loss has occurred with respect to the Airframe or any
Engine, and, to the Actual Knowledge of Lessee, no circumstance, condition, act
or event has occurred that, with the giving of notice or lapse of time or both
gives rise to or constitutes an Event of Loss with respect to the Airframe or
any Engine.
6.1.12 COMPLIANCE WITH LAWS
(a) Lessee is a Citizen of the United States and a U.S. Air Carrier.
(b) Lessee holds all licenses, permits and franchises from the
appropriate Government Entities necessary to authorize Lessee to lawfully engage
in air transportation and to carry on scheduled commercial passenger service as
currently conducted, except where the failure to so hold any such license,
permit or franchise would not give rise to a Material Adverse Change to Lessee.
(c) Lessee is not an "investment company" or a company controlled by
an "investment company" within the meaning of the Investment Company Act of
1940, as amended.
6.1.13 SECURITIES LAWS
Neither Lessee nor any person authorized to act on its behalf has
directly or indirectly offered any beneficial interest or Security relating to
the ownership of the Aircraft or the Lease or any interest in the Trust Estate
and Trust Agreement, or any of the Equipment Notes or any other interest in or
security under the Trust Indenture, for sale to, or solicited any offer to
acquire any such interest or security from, or has sold any such interest or
security to, any person in violation of the Securities Act.
6.1.14 BROKER'S FEES
No Person acting on behalf of Lessee is or will be entitled to any
broker's fee, commission or finder's fee in connection with the Transactions.
6.1.15 SECTION 1110
Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee
under the Trust Indenture), is entitled to the benefits of Section 1110 (as
currently in effect) with respect to the right to take possession of the
Airframe and Engines as provided in the Lease in the event of a case under
Chapter 11 of the Bankruptcy Code in which Lessee is a debtor.
6.2 Owner Participant's Representations and Warranties
Owner Participant represents and warrants to Lessee, Loan
Participant, Equity Guarantor, Existing Mortgagee, Existing Lessor, Airframe
Manufacturer, Subordination Agent, Owner Trustee and Mortgagee that:
6.2.1 ORGANIZATION, ETC.
Owner Participant is a limited partnership, duly formed and
organized, validly existing and in good standing under the Laws of the OP
Jurisdiction, has full power and authority to conduct the business in which it
is currently engaged and to own or hold under lease its properties and to enter
into, and perform its obligations under the Owner Participant Agreements, and
the Owner Participant Parent has a tangible net worth (exclusive of goodwill)
greater than $25,000,000.
6.2.2 NECESSARY AUTHORIZATION
Owner Participant has taken, or caused to be taken, all necessary
action (including, without limitation, the obtaining of any consent or approval
required by its partnership agreement or other governing documents) to authorize
the execution and delivery of each of the Owner Participant Agreements, and the
performance of its obligations thereunder.
6.2.3 NO VIOLATION
The execution and delivery by Owner Participant of the Owner
Participant Agreements, the performance by Owner Participant of its obligations
thereunder and the consummation by Owner Participant on the Closing Date of the
transactions contemplated thereby, do not and will not (a) violate any provision
of the partnership agreement or other governing documents of Owner Participant,
(b) violate any Law applicable to or binding on Owner Participant 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 Participant), or result in the
creation of any Lien (other than as provided for or otherwise permitted in the
Operative Agreements) upon the Trust Estate under, any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract, lease, loan or
other material agreement, instrument or document to which Owner Participant is a
party or by which Owner Participant or any of its properties is bound.
6.2.4 APPROVALS
The execution and delivery by Owner Participant of the Owner
Participant Agreements, the performance by Owner Participant of its obligations
thereunder and the consummation by Owner Participant on the 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 Participant and
(b) any Government Entity, other than the filing of the FAA Filed Documents and
the Financing Statements.
6.2.5 VALID AND BINDING AGREEMENTS
The Owner Participant Agreements have been duly authorized, executed
and delivered by Owner Participant and, assuming the due authorization,
execution and delivery by the other party or parties thereto, constitute the
legal, valid and binding obligations of Owner Participant and are enforceable
against Owner Participant in accordance with the respective terms thereof,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar Laws affecting the
rights of creditors generally and general principles of equity, whether
considered in a proceeding at law or in equity.
6.2.6 CITIZENSHIP
Based on ss. 47.7 of the FAA Regulations and assuming that the Trust
Agreement has been duly executed by the Lessor, the citizenship status of Owner
Participant does not restrict the U.S. registration of the Aircraft pursuant to
the Act.
6.2.7 NO LIENS
On the Closing Date, there are no Lessor Liens attributable to Owner
Participant in respect of all or any part of the Trust Estate.
6.2.8 INVESTMENT BY OWNER PARTICIPANT
Owner Participant's beneficial interest in the Trust Estate is being
acquired by it for its own account, for investment and not with a view to any
resale or distribution thereof, except that, subject to the restrictions on
transfer set forth in Section 10, the disposition by Owner Participant of its
beneficial interest in the Trust Estate shall at all times be within its
control.
6.2.9 ERISA
No part of the funds to be used by Owner Participant or Owner
Participant Parent to acquire or hold its interests in the Trust Estate to be
acquired by it under this Agreement directly or indirectly constitutes assets of
a Plan.
6.2.10 LITIGATION
There are no pending or, to the Actual Knowledge of Owner
Participant, threatened actions or proceedings against Owner Participant or
Owner Participant Parent before any court, governmental body, arbitration board,
administrative agency or tribunal which, if determined adversely to Owner
Participant or Owner Participant Parent, would materially adversely affect the
ability of Owner Participant to perform its obligations under the Owner
Participant Agreements or Owner Participant Parent to perform its obligations
under the Owner Participant Guaranty.
6.2.11 SECURITIES LAWS
Neither Owner Participant nor any person Owner Participant has
authorized to act on its behalf has directly or indirectly offered any
beneficial interest in or Security relating to the ownership of the Aircraft or
any interest in the Trust Estate, or any of the Equipment Notes or any other
interest in or Security under the Trust Indenture for sale to, or solicited any
offer to acquire any of the same from, any Person in violation of the
registration provisions of the Securities Act or applicable state securities
Laws.
6.2.12 BROKER'S FEES
No Person acting on behalf of Owner Participant or Owner Participant
Parent is or will be entitled to any broker's fee, commission or finder's fee in
connection with the Transactions other than Nationsbanc Investments, the fees of
which are being paid by the Owner Participant.
6.3 FIRST SECURITY'S REPRESENTATIONS AND WARRANTIES
First Security represents and warrants to Lessee, Owner Participant,
Equity Guarantor, Existing Mortgagee, Existing Lessor, Airframe Manufacturer,
Loan Participants, Subordination Agent and Mortgagee that:
6.3.1 ORGANIZATION, ETC.
First Security is a national banking association duly organized,
validly existing and in good standing under the Laws of the United States,
holding a valid certificate to do business as a national banking association
with banking authority to execute and deliver, and perform its obligations
under, the Owner Trustee Agreements.
6.3.2 CORPORATE AUTHORIZATION
First Security has taken, or caused to be taken, all necessary
corporate action (including, without limitation, the obtaining of any consent or
approval of stockholders required by Law or by its Articles of Association or
By-Laws) to authorize the execution and delivery by First Security, in its
individual capacity and as Owner Trustee, of each of the Owner Trustee
Agreements, and the performance of its obligations thereunder.
6.3.3 NO VIOLATION
The execution and delivery by First Security, in its individual
capacity and as Owner Trustee of the Owner Trustee Agreements, the performance
by First Security, in its individual capacity and as Owner Trustee, of its
obligations thereunder and the consummation by First Security in its individual
capacity and as Owner Trustee on the Closing Date of the transactions
contemplated thereby, do not and will not (a) violate any provision of the
Articles of Association or By-Laws of First Security, (b) violate any Law
applicable to or binding on Owner Trustee or First Security or (c) violate or
constitute any default under(other than any violation or default that would not
result in a Material Adverse Change to First Security, in its individual
capacity or as Owner Trustee), or result in the creation of any Lien (other than
the lien of the Trust Indenture) upon any property of First Security, in its
individual capacity and as Owner Trustee, or any of its subsidiaries under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, lease, loan or other material agreement, instrument or document to
which First Security, in its individual capacity and as Owner Trustee, is a
party or by which First Security, in its individual capacity and as Owner
Trustee, or any of its properties is or may be bound or affected.
6.3.4 APPROVALS
The execution and delivery by First Security, in its individual
capacity and as Owner Trustee, of the Owner Trustee Agreements, the performance
by First Security, in its individual capacity and as Owner Trustee, of its
obligations thereunder and the consummation by First Security, in its individual
capacity and as Owner Trustee, on the Closing Date of the transactions
contemplated thereby do not and will not require the consent, approval or
authorization of, or the giving of notice to, or the registration with, or the
recording or filing of any documents with, or the taking of any other action in
respect of, (a) any trustee or other holder of any Debt of First Security or (b)
any Government Entity, other than the filing of the FAA Filed Documents and the
Financing Statements.
6.3.5 VALID AND BINDING AGREEMENTS
The Owner Trustee Agreements have been duly authorized, executed and
delivered by First Security, in its individual capacity or as Owner Trustee, as
the case may be, and constitute the legal, valid and binding obligations of
First Security, in its individual capacity and as Owner Trustee, and, assuming
the due authorization, execution and delivery thereof by the other party or
parties thereto, are enforceable against First Security, in its individual
capacity and as Owner Trustee, in accordance with the respective terms thereof,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar Laws affecting the
rights of creditors generally and general principles of equity, whether
considered in a proceeding at law or in equity.
6.3.6 CITIZENSHIP
On the Closing Date, First Security is a Citizen of the United States.
6.3.7 CHIEF EXECUTIVE OFFICE
The chief executive office (as such term is defined in Article 9 of
the UCC) of Owner Trustee is located at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇.
6.3.8 TITLE
On the Closing Date, Owner Trustee shall have received whatever title
to the Aircraft as was conveyed to it by Existing Lessor.
6.3.9 NO LIENS; FINANCING STATEMENTS
On the Closing Date, there are no Lessor Liens attributable to First
Security or Owner Trustee in respect of all or any part of the Aircraft, Trust
Estate or the Trust Indenture Estate. Except for the Financing Statements, it
has not, either in its individual capacity or as Owner Trustee, executed any UCC
financing statements relating to the Aircraft or the Lease.
6.3.10 LITIGATION
There are no pending or, to the Actual Knowledge of First Security,
threatened actions or proceedings against First Security or Owner Trustee before
any court, governmental body, arbitration board, administrative agency or
tribunal which, if determined adversely to First Security, would materially
adversely affect the ability of First Security or Owner Trustee to perform its
obligations under the Owner Trustee Agreements.
6.3.11 SECURITIES LAWS
Neither First Security, nor any person authorized to act on its
behalf, has directly or indirectly offered any beneficial interest or Security
relating to the ownership of the Aircraft or any interest in the Trust Estate or
any of the Equipment Notes or any other interest in or security under the Trust
Indenture for sale to, or solicited any offer to acquire any such interest or
security from, or has sold any such interest or security to, any person other
than the Participants, except for the offering and sale of the Pass Through
Certificates.
6.3.12 EXPENSES AND TAXES
There are no Expenses or Taxes that may be imposed on or asserted
against the Trust, the Trust Estate or any part thereof or any interest therein,
the Trust Indenture Estate, Lessee, Owner Participant, any Pass Through Trustee,
Subordination Agent, Owner Trustee or Mortgagee (except as to Owner Trustee,
Taxes imposed on the fees payable to Owner Trustee) under the laws of Utah in
connection with the execution, delivery or performance of any Operative
Agreement by Owner Trustee or in connection with the issuance of the Equipment
Notes, which Expenses or Taxes would not have been imposed if Owner Trustee had
not (x) had its principal place of business in, (y) performed (in its individual
capacity or as Owner Trustee) any or all of its duties under the Operative
Agreements in or (z) engaged in any activities unrelated to the transactions
contemplated by the Operative Agreements in, the State of Utah.
6.4 WTC'S REPRESENTATIONS AND WARRANTIES
WTC represents and warrants (with respect to Section 6.4.10, solely
in its capacity as Subordination Agent) to Lessee, Owner Participant, Equity
Guarantor, Existing Mortgagee, Existing Lessor, Airframe Manufacturer, and Owner
Trustee that:
6.4.1 ORGANIZATION, ETC.
WTC is a Delaware banking corporation duly organized, validly
existing and in good standing under the Laws of the State of Delaware, holding a
valid certificate to do business as a Delaware banking corporation with banking
authority to execute and deliver, and perform its obligations under, the
Mortgagee Agreements, the Pass Through Trustee Agreements and the Subordination
Agent Agreements.
6.4.2 CORPORATE AUTHORIZATION
WTC has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by Law or by its Certificate of Incorporation or By-Laws)
to authorize the execution and delivery by WTC, in its individual capacity or as
Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may be, of
the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements and the performance of its obligations
thereunder.
6.4.3 NO VIOLATION
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may be, of
the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements, the performance by WTC, in its individual
capacity or as Mortgagee, 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, a Pass 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, a Pass Through Trustee
or Subordination Agent), or result in the creation of any Lien (other than the
lien of the Trust Indenture) upon any property of WTC, in its individual
capacity or as Mortgagee, 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, a Pass
Through Trustee or Subordination Agent, is a party or by which WTC, in its
individual capacity or as Mortgagee, a Pass Through Trustee or Subordination
Agent, or any of their respective properties is bound.
6.4.4 APPROVALS
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may be, of
the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements, the performance by WTC, in its individual
capacity or as Mortgagee, 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, 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.
6.4.5 VALID AND BINDING AGREEMENTS
The Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements have been duly authorized, executed and delivered
by WTC and, assuming the due authorization, execution and delivery by the other
party or parties thereto, constitute the legal, valid and binding obligations of
WTC, in its individual capacity or as Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, and are enforceable against WTC, in its
individual capacity or as Mortgagee, a Pass Through Trustee or Subordination
Agent, as the case may be, in accordance with the respective terms thereof,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar Laws affecting the
rights of creditors generally and general principles of equity, whether
considered in a proceeding at law or in equity.
6.4.6 CITIZENSHIP
WTC is a Citizen of the United States.
6.4.7 NO LIENS
On the Closing Date, there are no Lessor Liens attributable to WTC in
respect of all or any part of the Trust Estate or the Trust Indenture Estate.
6.4.8 LITIGATION
There are no pending or, to the Actual Knowledge of WTC, threatened
actions or proceedings against WTC, in its individual capacity or as Mortgagee,
a Pass Through Trustee or Subordination Agent, before any court, administrative
agency or tribunal which, if determined adversely to WTC, in its individual
capacity or as Mortgagee, a Pass Through Trustee or Subordination Agent, as the
case may be, would materially adversely affect the ability of WTC, in its
individual capacity or as Mortgagee, a Pass Through Trustee or Subordination
Agent, as the case may be, to perform its obligations under any of the Mortgagee
Agreements, the Pass Through Trustee Agreements or the Subordination Agent
Agreements.
6.4.9 SECURITIES LAWS
Neither WTC nor any person authorized to act on its behalf has
directly or indirectly offered any beneficial interest or Security relating to
the ownership of the Aircraft or any interest in the Trust Indenture Estate or
any of the Equipment Notes or any other interest in or security under the Trust
Indenture for sale to, or solicited any offer to acquire any such interest or
security from, or has sold any such interest or security to, any Person other
than the Participants, except for the offering and sale of the Pass Through
Certificates.
6.4.10 INVESTMENT
The Equipment Notes to be acquired by the Subordination Agent are
being acquired by it for the account of the Pass Through Trustees, for
investment and not with a view to any resale or distribution thereof, except
that, subject to the restrictions on transfer set forth in Section 10.1.3, the
disposition by it of its Equipment Notes shall at all times be within its
control.
6.4.11 TAXES
There are no Taxes payable by any Pass Through Trustee or WTC, as the
case may be, imposed by the State of Delaware or any political subdivision or
taxing authority thereof in connection with the execution, delivery and
performance by such Pass Through Trustee or WTC, as the case may be, of this
Agreement or any of the Pass Through Trustee Agreements (other than franchise or
other taxes based on or measured by any fees or compensation received by any
such Pass Through Trustee or WTC, as the case may be, for services rendered in
connection with the transactions contemplated by any of the Pass Through Trust
Agreements), and there are no Taxes payable by any Pass Through Trustee or WTC,
as the case may be, imposed by the State of Delaware or any political
subdivision thereof in connection with the acquisition, possession or ownership
by any such Pass Through Trustee of any of the Equipment Notes (other than
franchise or other taxes based on or measured by any fees or compensation
received by any such Pass Through Trustee or WTC, as the case may be, for
services rendered in connection with the transactions contemplated by any of the
Pass Through Trust Agreements), and, assuming that the trusts created by the
Pass Through Trust Agreements will not be taxable as corporations, but, rather,
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.
6.4.12 CONTROL
WTC is not an Affiliate of the Owner Participant or the Owner
Trustee.
6.4.13 BROKER'S FEES
No Person acting on behalf of WTC, in its individual capacity or as
Mortgagee, any Pass Through Trustee or Subordination Agent, is or will be
entitled to any broker's fee, commission or finder's fee in connection with the
Transactions.
6.5 EXISTING LESSOR'S REPRESENTATIONS AND WARRANTIES
Existing Lessor represents and warrants to Lessee, each Participant,
Equity Guarantor, Existing Mortgagee, Subordination Agent, Owner Trustee and
Mortgagee that:
6.5.1 ORGANIZATION, ETC.
Existing Lessor 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 Existing Lessor Agreements.
6.5.2 CORPORATE AUTHORIZATION
Existing Lessor has taken, or caused to be taken, all necessary
corporate action (including, without limitation, the obtaining of any consent or
approval of stockholders required by its Certificate of Incorporation or
By-Laws) to authorize the execution and delivery of each of the Existing Lessor
Agreements, and the performance of its obligations thereunder.
6.5.3 NO VIOLATION
The execution and delivery by Existing Lessor of the Existing Lessor
Agreements, the performance by Existing Lessor of its obligations thereunder and
the consummation by Existing Lessor 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 Existing Lessor, (b) violate any Law
applicable to or binding on Existing Lessor or (c) violate or constitute any
default under (other than any violation or default that would not result in a
Material Adverse Change to Existing Lessor), or result in the creation of any
Lien (other than as provided for or otherwise permitted in the Operative
Agreements) upon the Trust Estate under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, lease, loan or other
material agreement, instrument or document to which Existing Lessor is a party
or by which Existing Lessor or any of its properties is bound.
6.5.4 APPROVALS
The execution and delivery by Existing Lessor of the Existing Lessor
Agreements, the performance by Existing Lessor of its obligations thereunder and
the consummation by Existing Lessor 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 Existing Lessor and (b) any Government
Entity, other than the filing of the FAA Filed Documents and the Financing
Statements.
6.5.5 VALID AND BINDING AGREEMENTS
The Existing Lessor Agreements have been duly authorized, executed
and delivered by Existing Lessor and, assuming the due authorization, execution
and delivery by the other party or parties thereto, constitute the legal, valid
and binding obligations of Existing Lessor and are enforceable against Existing
Lessor in accordance with the respective terms thereof, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar Laws affecting the rights of
creditors generally and general principles of equity, whether considered in a
proceeding at law or in equity.
6.5.6 TITLE
On the Closing Date, Existing Lessor shall have, and the Bills of
Sale shall convey to Owner Trustee good marketable title to the Aircraft, free
and clear of all claims, Liens and encumbrances of any nature, except Permitted
Liens.
6.5.7 LITIGATION
There are no pending or, to the Actual Knowledge of Existing Lessor,
threatened actions or proceedings against Existing Lessor before any court,
governmental body, arbitration board, administrative agency or tribunal which,
if determined adversely to Existing Lessor, would materially adversely affect
the ability of Existing Lessor to perform its obligations under the Existing
Lessor Agreements.
6.5.8 SECURITIES LAWS
Neither Existing Lessor nor any person Existing Lessor has authorized
to act on its behalf has directly or indirectly offered any beneficial interest
in or Security relating to the ownership of the Aircraft or any interest in the
Trust Estate, or any of the Equipment Notes or any other interest in or Security
under the Trust Indenture for sale to, or solicited any offer to acquire any of
the same from, any Person in violation of the Securities Act or applicable state
securities Laws.
6.5.9 BROKER'S FEES
No Person acting on behalf of Existing Lessor is or will be entitled
to any broker's fee, commission or finder's fee in connection with the
Transactions.
6.6 EXISTING MORTGAGEE'S REPRESENTATIONS AND WARRANTIES
Existing Mortgagee represents and warrants to Lessee, each
Participant, Subordination Agent, Owner Trustee, Existing Lessor, Airframe
Manufacturer and Mortgagee that:
6.6.1 ORGANIZATION, ETC.
Existing Mortgagee is a corporation duly incorporated, validly
existing under the Laws of England 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
Existing Mortgagee Agreements.
6.6.2 CORPORATE AUTHORIZATION
Existing Mortgagee 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 constitutional documents) to authorize
the execution and delivery of each of the Existing Mortgagee Agreements, and the
performance of its obligations thereunder.
6.6.3 NO VIOLATION
The execution and delivery by Existing Mortgagee of the Existing
Mortgagee Agreements, the performance by Existing Mortgagee of its obligations
thereunder and the consummation by Existing Mortgagee on the Closing Date of the
transactions contemplated thereby, do not and will not (a) violate any provision
of the constitutional documents of Existing Mortgagee, (b) violate any Law
applicable to or binding on Existing Mortgagee or (c) violate or constitute any
default under (other than any violation or default that would not result in a
Material Adverse Change to Existing Mortgagee), or result in the creation of any
Lien (other than as provided for or otherwise permitted in the Operative
Agreements) upon the Trust Estate under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, lease, loan or other
material agreement, instrument or document to which Existing Mortgagee is a
party or by which Existing Mortgagee or any of its properties is bound.
6.6.4 APPROVALS
The execution and delivery by Existing Mortgagee of the Existing
Mortgagee Agreements, the performance by Existing Mortgagee of its obligations
thereunder and the consummation by Existing Mortgagee 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 Existing Mortgagee
and (b) any Government Entity, other than the filing of the FAA Filed Documents
and the Financing Statements.
6.6.5 VALID AND BINDING AGREEMENTS
The Existing Mortgagee Agreements have been duly authorized, executed
and delivered by Existing Mortgagee and, assuming the due authorization,
execution and delivery by the other party or parties thereto, constitute the
legal, valid and binding obligations of Existing Mortgagee and are enforceable
against Existing Mortgagee in accordance with the respective terms thereof,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar Laws affecting the
rights of creditors generally and general principles of equity, whether
considered in a proceeding at law or in equity.
6.6.6 LITIGATION
There are no pending or, to the Actual Knowledge of Existing
Mortgagee, threatened actions or proceedings against Existing Mortgagee before
any court, governmental body, arbitration board, administrative agency or
tribunal which, if determined adversely to Existing Mortgagee, would materially
adversely affect the ability of Existing Mortgagee to perform its obligations
under the Existing Mortgagee Agreements.
6.6.7 SECURITIES LAWS
Neither Existing Mortgagee nor any person Existing Mortgagee has
authorized to act on its behalf has directly or indirectly offered any
beneficial interest in or Security relating to the ownership of the Aircraft or
any interest in the Trust Estate, or any of the Equipment Notes or any other
interest in or Security under the Trust Indenture for sale to, or solicited any
offer to acquire any of the same from, any Person in violation of the Securities
Act or applicable state securities Laws.
6.6.8 BROKER'S FEES
No Person acting on behalf of Existing Mortgagee is or will be
entitled to any broker's fee, commission or finder's fee in connection with the
Transactions, except for the underwriters' fees and commissions payable with
respect to the public offering of the Pass Through Certificates and the fees and
expenses of Equity Advisor.
6.7 AIRFRAME MANUFACTURER'S REPRESENTATIONS AND WARRANTIES
Airframe Manufacturer represents and warrants to Lessee, each
Participant, Equity Guarantor, Existing Mortgagee, Subordination Agent, Owner
Trustee and Mortgagee that:
6.7.1 ORGANIZATION, ETC.
Airframe Manufacturer is a corporation duly incorporated, validly
existing and in good standing under the Laws of Brazil, 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 Airframe Manufacturer Agreements.
6.7.2 CORPORATE AUTHORIZATION
Airframe Manufacturer 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 constitutional documents) to authorize
the execution and delivery of each of the Airframe Manufacturer Agreements, and
the performance of its obligations thereunder.
6.7.3 NO VIOLATION
The execution and delivery by Airframe Manufacturer of the Airframe
Manufacturer Agreements, the performance by Airframe Manufacturer of its
obligations thereunder and the consummation by Airframe Manufacturer on the
Closing Date of the transactions contemplated thereby, do not and will not (a)
violate any provision of the constitutional documents of Airframe Manufacturer,
(b) violate any Law applicable to or binding on Airframe Manufacturer or (c)
violate or constitute any default under (other than any violation or default
that would not result in a Material Adverse Change to Airframe Manufacturer), or
result in the creation of any Lien (other than as provided for or otherwise
permitted in the Operative Agreements) upon the Trust Estate under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, lease, loan or other material agreement, instrument or document to
which Airframe Manufacturer is a party or by which Airframe Manufacturer or any
of its properties is bound.
6.7.4 APPROVALS
The execution and delivery by Airframe Manufacturer of the Airframe
Manufacturer Agreements, the performance by Airframe Manufacturer of its
obligations thereunder and the consummation by Airframe Manufacturer 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 Airframe Manufacturer and (b) any Government Entity, other than the
filing of the FAA Filed Documents and the Financing Statements.
6.7.5 VALID AND BINDING AGREEMENTS
The Airframe Manufacturer Agreements have been duly authorized,
executed and delivered by Airframe Manufacturer and, assuming the due
authorization, execution and delivery by the other party or parties thereto,
constitute the legal, valid and binding obligations of Airframe Manufacturer and
are enforceable against Airframe Manufacturer in accordance with the respective
terms thereof, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium and other similar Laws
affecting the rights of creditors generally and general principles of equity,
whether considered in a proceeding at law or in equity.
6.7.6 TITLE
On the Closing Date, Existing Lessor shall have, and the Bills of
Sale shall convey to the Owner Trustee, good and marketable title to, the
Aircraft, free and clear of all claims, Liens and encumbrances of any nature,
except Permitted Liens.
6.7.7 TAXES
The Existing Lessor has filed or will cause to be filed all Federal
and all material state, local and foreign tax returns which are required to be
filed by it and have paid or will cause to be paid all Taxes which are due and
payable in connection with the Aircraft.
6.7.8 LITIGATION
There are no pending or, to the Actual Knowledge of Airframe
Manufacturer, threatened actions or proceedings against Airframe Manufacturer
before any court, governmental body, arbitration board, administrative agency or
tribunal which, if determined adversely to Airframe Manufacturer, would
materially adversely affect the ability of Airframe Manufacturer to perform its
obligations under the Airframe Manufacturer Agreements.
6.7.9 SECURITIES LAWS
Neither Airframe Manufacturer nor any person Airframe Manufacturer
has authorized to act on its behalf has directly or indirectly offered any
beneficial interest in or Security relating to the ownership of the Aircraft or
any interest in the Trust Estate, or any of the Equipment Notes or any other
interest in or Security under the Trust Indenture for sale to, or solicited any
offer to acquire any of the same from, any Person in violation of the Securities
Act or applicable state securities Laws.
6.7.10 BROKER'S FEES
No Person acting on behalf of Airframe Manufacturer is or will be
entitled to any broker's fee, commission or finder's fee in connection with the
Transactions, except for the underwriters' fees and commissions payable with
respect to the public offering of the Pass Through Certificates and the fees and
expenses of Equity Advisor.
SECTION 7. COVENANTS, UNDERTAKINGS AND AGREEMENTS
7.1 COVENANTS OF LESSEE
Lessee covenants and agrees with Owner Participant, Loan Participant,
Owner Trustee, Equity Guarantor and Mortgagee as follows:
7.1.1 CORPORATE EXISTENCE; U.S. AIR CARRIER
Lessee shall at all times maintain its corporate existence, except as
permitted by Section 13.2 of the Lease, and shall at all times remain a U.S. Air
Carrier.
7.1.2 NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE
Lessee will give Owner Participant, Owner Trustee and Mortgagee
timely written notice (but in any event within 30 days prior to the expiration
of the period of time specified under applicable Law to prevent lapse of
perfection) of any relocation of its chief executive office (as such term is
defined in Article 9 of the UCC) from its then present location and will
promptly take any action required by Section 7.1.3(c) as a result of such
relocation.
7.1.3 CERTAIN ASSURANCES
(a) Lessee shall duly execute, acknowledge and deliver, or shall
cause to be executed, acknowledged and delivered, all such further agreements,
instruments, certificates or documents, and shall do and cause to be done such
further acts and things, in any case, as Owner Participant, Owner Trustee,
Equity Guarantor or Mortgagee shall reasonably request for accomplishing the
purposes of this Agreement and the other Operative Agreements, PROVIDED THAT any
instrument or other document so executed by Lessee will not expand any
obligations or limit any rights of Lessee in respect of the transactions
contemplated by any Operative Agreement.
(b) Lessee shall promptly take such action with respect to the
recording, filing, re-recording and re-filing of the Lease, the Trust Agreement
and the Trust Indenture and the respective supplements thereto, including,
without limitation, Lease Supplement No. 1 and the initial Trust Indenture
Supplement, as shall be necessary to establish, perfect and protect the
interests and rights of Owner Trustee in and to the Aircraft and under the Lease
and the perfection and priority of the Lien created by the Trust Indenture, and
Lessee shall pay all out-of-pocket costs and expenses thereof to the extent not
paid by another party as Transaction Expenses. Lessee shall furnish to Owner
Participant or Owner Trustee such information (other than with respect to the
citizenship of Owner Participant and Owner Trustee) in Lessee's possession or
otherwise reasonably available to Lessee as may be required to enable Owner
Participant or Owner Trustee to make application for registration of the
Aircraft under the Act (subject to Lessee's rights under Section 7.1.2 of the
Lease).
(c) Lessee will cause the FAA Filed Documents, the Financing
Statements and all continuation statements (and any amendments necessitated by
any combination, consolidation or merger pursuant to Section 13.2 of the Lease,
or any relocation of its chief executive office) in respect of the Financing
Statements to be prepared and, subject only to the execution and delivery
thereof by Owner Trustee and Mortgagee, as applicable, duly and timely filed and
recorded, or filed for recordation, to the extent permitted under the Act (with
respect to the FAA Filed Documents) or the UCC or similar law of any other
applicable jurisdiction (with respect to such other documents).
(d) If the Aircraft has been registered in a country other than the
United States pursuant to Section 7.1.2 of the Lease, Lessee will furnish to
Owner Trustee, Equity Guarantor, Mortgagee and each Participant annually after
such registration, commencing with the calendar year after such registration is
effected, an opinion of special counsel reasonably satisfactory to Owner Trustee
and Mortgagee stating that, in the opinion of such counsel, either that (i) such
action has been taken with respect to the recording, filing, re-recording and
re-filing of the Operative Agreements and any supplements and amendments thereto
as is necessary to establish, perfect and protect Owner Trustee's and
Mortgagee's respective right, title and interest in and to the Aircraft and the
Operative Agreements, reciting the details of such actions, or (ii) no such
action is necessary to maintain the perfection of such right, title and
interest.
7.1.4 SECURITIES LAWS
Neither Lessee nor any person authorized to act on its behalf will
directly or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or the Lease or any interest in the Trust Estate and
Trust Agreement or any of the Equipment Notes or any other interest in or
security under the Trust Indenture, for sale to, or solicit any offer to acquire
any such interest or security from, or sell any such interest or security to,
any person in violation of the Securities Act or applicable state or foreign
securities Laws.
7.2 COVENANTS OF OWNER PARTICIPANT
Owner Participant covenants and agrees with Lessee, and except with
respect to Section 7.2.4, Loan Participant, Equity Guarantor, Owner Trustee and
Mortgagee as follows:
7.2.1 LIENS
Owner Participant (a) will not directly or indirectly create, incur,
assume or suffer to exist any Lessor Lien attributable to it on or with respect
to all or any part of the Trust Estate, the Trust Indenture Estate or the
Aircraft, (b) will, at its own cost and expense, take such action as may be
necessary to discharge any Lessor Lien attributable to Owner Participant on all
or any part of the Trust Estate, the Trust Indenture Estate or the Aircraft,
PROVIDED that Owner Participant shall not be in breach of its obligations under
this sentence so long as (i) Owner Participant shall, at its own cost and
expense, be diligently contesting such Lessor Lien in good faith by appropriate
proceedings and (ii) such Lessor Lien and such proceedings do not involve (x)
any material danger of the sale, forfeiture, or loss of the Aircraft, the
Airframe, any Engine or any Part thereof or (y) any restriction on the use or
operation of the Aircraft or title thereto. Owner Participant will hold harmless
and indemnify Lessee, Owner Trustee, each Note Holder, Mortgagee, Equity
Guarantor, each of their respective Affiliates, successors and permitted
assigns, the Trust Estate and the Trust Indenture Estate from and against (i)
any and all Expenses, (ii) any reduction in the amount payable out of the Trust
Estate or the Trust Indenture Estate and (iii) any interference with the
possession, operation or other use of all or any part of the Aircraft, in each
case imposed on, incurred by or asserted against any of the foregoing as a
consequence of any such Lessor Lien.
7.2.2 REVOCATION OF TRUST AGREEMENT
(a) Owner Participant will comply with the provisions of the Trust
Agreement applicable to it, and will not terminate or revoke the Trust Agreement
or the trusts created thereunder without the prior written consent of Lessee and
Mortgagee and will not amend, modify or supplement the Trust Agreement, or waive
any of the provisions thereof, if such amendment, modification, supplement or
waiver would have a material adverse effect on Lessee, without the consent of
Lessee, or on Mortgagee or any Note Holder, without the consent of Mortgagee.
(b) Notwithstanding Section 7.2.2(a), Owner Participant may at any
time remove Owner Trustee pursuant to Section 9.1 of the Trust Agreement or
terminate the Trust Agreement pursuant to Section 11.2 of the Trust Agreement.
7.2.3 CHANGE OF SITUS OF OWNER TRUST
If, at any time, any Tax Indemnitee or the Trust Estate becomes
subject to any Taxes for which it is indemnified pursuant to Section 9.3 of this
Agreement and if, as a consequence thereof, Lessee should request that the situs
of the Trust be moved to another state in the United States from the state in
which it is then located, the situs of the Trust may be moved with the written
consent of Owner Participant (which consent shall not be unreasonably withheld)
and Owner Participant will take whatever action may be reasonably necessary to
accomplish such removal; PROVIDED, that, in any event, (a) Lessee shall provide
such additional tax indemnification as Owner Participant and the Note Holders or
the Pass Through Trustees may reasonably request to cover any additional
unindemnified Taxes or loss of Tax benefits described in the assumptions in the
Tax Indemnity Agreement resulting from such change in the situs of the Trust (it
being agreed that if a Lease Event of Default shall have occurred and is then
continuing, it shall not be unreasonable for Owner Participant to withhold its
consent to moving the situs of the Trust, notwithstanding the provision by
Lessee of such additional tax indemnification, unless a Section 1110 Event shall
have occurred and is then continuing), (b) the rights and obligations under the
Operative Agreements of Owner Participant, Equity Guarantor, the Note Holders,
Pass Through Trustees and Mortgagee shall not be adversely affected as a result
of the taking of such action, (c) the Lien of the Trust Indenture on the Trust
Indenture Estate shall not be adversely affected by such action, and Lessee and
Owner Trustee shall execute and deliver such documents as may be necessary or as
may reasonably be requested by Mortgagee to protect and maintain the perfection
and priority of such Lien, (d) Owner Participant, Equity Guarantor, Pass Through
Trustees and Mortgagee shall have received an opinion or opinions of counsel
(which counsel is reasonably satisfactory to Owner Participant, Equity
Guarantor, Pass Through Trustees and Mortgagee) in scope, form and substance
reasonably satisfactory to Owner Participant, Equity Guarantor, Pass Through
Trustees and Mortgagee to the effect that (i) the Trust, as thus removed, shall
remain a validly established trust, (ii) any amendments to the Trust Agreement
necessitated by such removal shall have been duly authorized, executed and
delivered by the parties thereto and shall constitute the valid and binding
obligations of such parties, enforceable in accordance with their terms, (iii)
covering such other matters as Owner Participant, Equity Guarantor, Pass Through
Trustees or Mortgagee may reasonably request, (e) if such removal involves the
replacement of Owner Trustee, then Owner Participant, Equity Guarantor, Pass
Through Trustees and Mortgagee shall have received an opinion of counsel to such
successor Owner Trustee in form and substance reasonably satisfactory to Owner
Participant, Equity Guarantor, Pass Through Trustees and Mortgagee covering the
matters described in the opinion delivered pursuant to Section 5.1.2(xxv)(D) and
(f) Lessee shall indemnify and hold harmless Owner Participant, Equity
Guarantor, Note Holders, Pass Through Trustees and First Security, in its
individual capacity and as Owner Trustee, on a net after-tax basis against any
and all reasonable out-of-pocket costs and expenses including attorneys' fees
and disbursements, fees and expenses of any new owner trustee, registration,
recording or filing fees and taxes incurred by Owner Participant, Equity
Guarantor, Note Holders, Pass Through Trustees or Owner Trustee in connection
with such change of situs. Owner Participant agrees with Lessee that it will not
consent to or direct a change in the situs of the Trust Estate without the prior
written consent of Lessee, except that if a Lease Event of Default shall have
occurred and is then continuing, except during a Section 1110 Period, such
consent shall not be required.
7.2.4 COMPLIANCE WITH LEASE PROVISIONS
Owner Participant will, solely for the benefit of Lessee, comply with
the express provisions applicable to it contained in the Lease.
7.2.5 SECURITIES ACT
Owner Participant will not directly or indirectly offer any
beneficial interest or security relating to the ownership of the Aircraft or any
interest in the Trust Estate or any of the Equipment Notes or any other interest
in or security under the Trust Indenture for sale to, or solicit any offer to
acquire any such interest or security from, or sell any such interest or
security to, any Person in violation of the registration provisions of the
Securities Act or applicable state or foreign securities Laws, provided that the
foregoing shall not be deemed to impose on Owner Participant any responsibility
with respect to any such offer, sale or solicitation by any other party hereto.
7.2.6 REGARDING THE OWNER TRUSTEE
Owner Participant will instruct Owner Trustee to perform its
obligations under each Owner Trustee Agreement.
7.3 COVENANTS OF FIRST SECURITY AND OWNER TRUSTEE
First Security, in its individual capacity and/or as Owner Trustee,
as provided below, covenants and agrees with Lessee, Owner Participant, Equity
Guarantor, each Note Holder and Mortgagee as follows:
7.3.1 LIENS
First Security (a) will not directly or indirectly create, incur,
assume or suffer to exist any Lessor Lien attributable to it or Owner Trustee
with respect to all or any part of the Trust Estate, the Trust Indenture Estate
or the Aircraft, (b) will, at its own cost and expense, take such action as may
be necessary to discharge any Lessor Lien attributable to First Security or
Owner Trustee on all or any part of the Trust Estate, the Trust Indenture Estate
or the Aircraft, PROVIDED that First Security shall not be in breach of its
obligations under this sentence so long as (i) First Security shall, at its own
cost and expense, be diligently contesting such Lessor Lien in good faith by
appropriate proceedings and (ii) such Lessor Lien and such proceedings do not
involve (x) any material danger of the sale, forfeiture, or loss of the
Aircraft, the Airframe, any Engine or any Part thereof or (y) any restriction on
the use or operation of the Aircraft or title thereto First Security will in its
individual capacity hold harmless and indemnify Lessee, Owner Participant,
Equity Guarantor, each Note Holder, Mortgagee, each of their respective
Affiliates, successors and permitted assigns, the Trust Estate and the Trust
Indenture Estate from and against (i) any and all Expenses, (ii) any reduction
in the amount payable out of the Trust Estate or the Trust Indenture Estate and
(iii) any interference with the possession, operation or other use of all or any
part of the Aircraft, in each case imposed on, incurred by or asserted against
any of the foregoing as a consequence of any such Lessor Lien.
7.3.2 OTHER BUSINESS
Owner Trustee will not enter into any business or other activity
except as contemplated by the Operative Agreements.
7.3.3 NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE
First Security, in its individual capacity and as Owner Trustee, will
give Lessee, each Participant, Equity Guarantor and Mortgagee 30 days' prior
written notice of any relocation of its chief executive office (as such term is
defined in Article 9 of the UCC) from its then present location and will
promptly take any action required by Section 7.3.8 as a result of such
relocation.
7.3.4 SECURITIES ACT
First Security, in its individual capacity and as Owner Trustee, will
not directly or indirectly offer any beneficial interest or Security relating to
the ownership of the Aircraft or any interest in the Trust Estate or any of the
Equipment Notes or any other interest in or security under the Trust Indenture
for sale to, or solicit any offer to acquire any such interest or security from,
or sell any such interest or security to, any Person in violation of the
registration provisions of the Securities Act or applicable state or foreign
securities Laws, provided that the foregoing shall not be deemed to impose on
First Security in its individual capacity or as Owner Trustee, any
responsibility with respect to any such offer, sale or solicitation by any other
party hereto.
7.3.5 PERFORMANCE OF AGREEMENTS
Owner Trustee shall perform its obligations under the Owner Trustee
Agreements in accordance with the terms thereof.
7.3.6 RELEASE OF LIEN OF TRUST INDENTURE
Owner Trustee, in each instance referred to in the Lease in which a
transfer of any property is required to be made by Owner Trustee to Lessee or
any other Person (other than Mortgagee or Owner Participant), shall, at Lessee's
request and expense, use its reasonable efforts to procure from Mortgagee the
prompt release of the Lien of the Trust Indenture with respect to such property.
7.3.7 NOTICES; DOCUMENTS
In the event any claim with respect to any liabilities is filed
against the Owner Trustee in its capacity as such and Owner Trustee shall have
Actual Knowledge thereof, the Owner Trustee shall promptly notify Lessee and
Mortgagee in writing thereof. Owner Trustee further agrees to provide to Lessee
promptly any documents (including the certificate of aircraft registration) that
it receives from the FAA with respect to the Aircraft.
7.3.8 FILINGS
After the Closing Date, Owner Trustee shall duly execute and deliver
to Lessee all filings and recordings (including, without limitation, all filings
and UCC financing statements under the Act and the UCC and any amendments to UCC
financing statements necessitated by any relocation of its chief executive
office), prepared and delivered to it by Lessee required to perfect Owner
Trustee's title to the Aircraft and the liens of and security interests granted
by the Trust Indenture (or to maintain such perfection) and to make such title,
liens and security interests valid and enforceable.
7.3.9 TRUST AGREEMENT
Each of First Security and Owner Trustee hereby agrees with Lessee,
Loan Participant and Mortgagee not to revoke the trust created by the Trust
Agreement so long as the Trust Indenture remains undischarged or if such
revocation would have an adverse effect on the Lessee. Nothing contained in this
Agreement shall impair any right under the Trust Agreement of First Security to
resign as Owner Trustee in accordance with the provisions of the Trust
Agreement.
7.4 COVENANTS OF WTC
WTC in its individual capacity or as Mortgagee, each Applicable Pass
Through Trustee or Subordination Agent, as the case may be, covenants and agrees
with Lessee, Owner Participant, Equity Guarantor and Owner Trustee as follows:
7.4.1 LIENS
WTC (a) will not directly or indirectly create, incur, assume or
suffer to exist any Lessor Lien attributable to it on or with respect to all or
any part of the Trust Estate, the Trust Indenture Estate or the Aircraft, (b)
will, at its own cost and expense, promptly take such action as may be necessary
to discharge any Lessor Lien attributable to WTC on all or any part of the Trust
Estate, the Trust Indenture Estate or the Aircraft and (c) will in its
individual capacity hold harmless and indemnify Lessee, Owner Participant,
Equity Guarantor, each Note Holder, Owner Trustee, each of their respective
Affiliates, successors and permitted assigns, the Trust Estate and the Trust
Indenture Estate from and against (i) any and all Expenses, (ii) any reduction
in the amount payable out of the Trust Estate or the Trust Indenture Estate and
(iii) any interference with the possession, operation or other use of all or any
part of the Aircraft, in each case imposed on, incurred by or asserted against
any of the foregoing as a consequence of any such Lessor Lien.
7.4.2 SECURITIES ACT
WTC in its individual capacity or as Mortgagee, a Pass Through
Trustee or Subordination Agent, will not offer any beneficial interest or
Security relating to the ownership of the Aircraft or any interest in the Trust
Indenture Estate, or any of the Equipment Notes or any other interest in or
security under the Trust Indenture for sale to, or solicit any offer to acquire
any such interest or security from, or sell any such interest or security to,
any Person in violation of the Securities Act or applicable state or foreign
securities Laws, provided that the foregoing shall not be deemed to impose on
WTC any responsibility with respect to any such offer, sale or solicitation by
any other party hereto.
7.4.3 PERFORMANCE OF AGREEMENTS
WTC, in its individual capacity and as Mortgagee, a Pass Through
Trustee or Subordination Agent, as the case may be, shall perform its
obligations under the Indenture Agreements, the Pass Through Trustee Agreements
and the Subordination Agent Agreements in accordance with the terms thereof.
7.4.4 WITHHOLDING TAXES
WTC shall indemnify (on an after-tax basis) and hold harmless Lessee,
Lessor and Owner Participant against any United States withholding taxes (and
related interest, penalties and additions to tax) as a result of the failure by
WTC to withhold on payments to any Note Holder if such Note Holder failed to
provide to Mortgagee necessary certificates or forms to substantiate the right
to exemption from such withholding tax.
7.5 COVENANTS OF NOTE HOLDERS
Each Note Holder (including Subordination Agent) as to itself only
covenants and agrees with Lessee, Owner Participant, Owner Trustee, Equity
Guarantor and Mortgagee as follows:
7.5.1 WITHHOLDING TAXES
Such Note Holder (if it is a Non-U.S. Person) agrees to indemnify (on
an after-tax basis) and hold harmless Lessee, Lessor, Owner Participant and
Mortgagee against any United States withholding taxes (and related interest,
penalties and additions to tax) as a result of the inaccuracy or invalidity of
any certificate or form provided by such Note Holder to Mortgagee in connection
with such withholding taxes. Any amount payable hereunder shall be paid within
30 days after receipt by a Note Holder of a written demand therefor.
7.5.2 TRANSFER; COMPLIANCE
(a) Such Note Holder will (i) not transfer any Equipment Note or
interest therein in violation of the Securities Act or applicable state or
foreign securities Law; PROVIDED, that the foregoing provisions of this section
shall not be deemed to impose on such Note Holder any responsibility with
respect to any such offer, sale or solicitation by any other party hereto, and
(ii) perform and comply with the obligations specified to be imposed on it (as a
Note Holder) under each of the Trust Indenture and the form of Equipment Note
set forth in the Trust Indenture.
(b) Except as otherwise required by the terms of Section 2.13 of the
Trust Indenture, each Note Holder will not sell, assign, convey, exchange or
otherwise transfer any Equipment Note or any interest in, or represented by, any
Equipment Note (it being understood that this provision is not applicable to the
Pass Through Certificates) unless the proposed transferee thereof first provides
Lessee, Owner Participant and Equity Guarantor 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 constitute, the assets of any Plan or (b) the transfer, and subsequent
holding, of such Equipment Note or interest shall not involve or give rise
to a transaction that constitutes a prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975(c)(1) of the Code involving
Lessee, Owner Participant, a Pass Through Trustee, the Subordination Agent
or the proposed transferee (other than a transaction that is exempted from
the prohibitions of such sections by applicable provisions of ERISA or the
Code or administrative exemptions or regulations issued thereunder); and
(ii) a written covenant that it will not transfer any Equipment
Note or any interest in, or represented by, any Equipment Note unless the
subsequent transferee also makes the representation described in clause (i)
above and agrees to comply with this clause (ii) and the other covenants of
the Note Holders contained in the Operative Agreements.
7.6 AGREEMENTS
7.6.1 OWNER TRUSTEE IS OWNER FOR ALL PURPOSES
Lessee, the Owner Participant, Equity Guarantor and Owner Trustee
agree that for all purposes, after the Closing, Owner Trustee will be the owner
of the Aircraft (except that Owner Participant will be the owner for income tax
purposes) and Lessee will be the lessee thereof. No transfer, by operation of
Law or otherwise, of the beneficial interest of Owner Participant in and to the
Trust Estate shall operate to transfer legal title to any part of the Trust
Estate to any transferee thereof.
7.6.2 COMMENCEMENT OF BANKRUPTCY PROCEEDINGS
Lessee, each Participant, Equity Guarantor, each Note Holder, First
Security, Owner Trustee, WTC and Mortgagee agree for the benefit of each of the
others that it will not commence or join in any proceeding under the Bankruptcy
Code to commence a case under Section 303 of the Bankruptcy Code against the
Trust Estate. Nothing contained herein shall be deemed to preclude any
Participant, Equity Guarantor, any Note Holder, First Security, Owner Trustee,
WTC or Mortgagee from filing any claim against the Trust Estate in any case
commenced against the Trust Estate.
7.6.3 CERTAIN BANKRUPTCY MATTERS
If (a) all or any part of the Trust Estate becomes the property of,
or Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (b) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code,
First Security or Owner Participant is required, by reason of First Security or
Owner Participant being held to have recourse liability to any Note Holder or
Mortgagee directly or indirectly (other than the recourse liability of First
Security or Owner Participant under this Agreement, the Trust Indenture or by
separate agreement), to make payment on account of any amount payable as
principal, Make-Whole Amount, if any, interest or other amounts on the Equipment
Notes, and (c) any Note Holder or Mortgagee actually receives any Excess Amount,
as defined below, which reflects any payment by First Security or Owner
Participant on account of (b) above, then such Note Holder or Mortgagee, as the
case may be, shall promptly refund to First Security or Owner Participant
(whichever shall have made such payment) such Excess Amount.
For purposes of this Section 7.6.3, "Excess Amount" means the amount
by which such payment exceeds the amount that would have been received by a Note
Holder or Mortgagee if First Security or Owner Participant had not become
subject to the recourse liability referred to in clause (b) above, and such Note
Holder or Mortgagee receives written notice that such amount is an Excess Amount
prior to its distribution thereof. Nothing contained in this Section 7.6.3 shall
prevent a Note Holder or Mortgagee from enforcing any personal recourse
obligation (and retaining the proceeds thereof) of First Security or Owner
Participant under this Agreement (other than as referred to in clause (b) above)
or the Trust Indenture (and any exhibits or annexes thereto) or from retaining
any amount paid by Owner Participant under Sections 2.13 or 4.03 of the Trust
Indenture.
7.6.4 QUIET ENJOYMENT; SALE BY OWNER TRUSTEE BINDING
(a) Owner Participant, Equity Guarantor, each Pass Through Trustee,
Subordination Agent, each Note Holder, Owner Trustee and Mortgagee agrees as to
itself with Lessee that, so long as no Lease Event of Default shall have
occurred and be continuing, such Person shall not (and shall not permit any
Affiliate or other Person claiming by, through or under it to) interfere with
Lessee's rights in accordance with the Lease to the quiet enjoyment, possession
and use of the Aircraft during the Term.
(b) Any assignment, sale, transfer or other conveyance of the
Aircraft by Owner Trustee made pursuant to the terms of this Agreement or the
Lease shall bind Owner Participant and Equity Guarantor and shall be effective
to transfer or convey all right, title and interest of Owner Trustee, Owner
Participant and Equity Guarantor in and to the Aircraft. No purchaser or other
grantee shall be required to inquire as to the authorization, necessity,
expediency or regularity of such assignment, sale, transfer or conveyance, or as
to the application of any sale or other proceeds with respect thereto by Owner
Trustee, as regards Owner Participant and Equity Guarantor.
7.6.5 RELEASE OF LIEN TRUST INDENTURE
Each of Lessee, Lessor and Mortgagee agrees that in each instance
referred to in the Lease in which a transfer of any property is required to be
made by Lessor to Lessee or any other Person (other than Mortgagee), Mortgagee
shall, upon request of Lessor and compliance with the applicable provisions of
the Lease and Trust Indenture, promptly execute (at Lessee's cost and expense)
such instruments as Lessor or Lessee may reasonably request to evidence the
release of the Lien of the Trust Indenture with respect to such property.
7.6.6 NON-RECOURSE
Loan Participant and Mortgagee agree that (a) obligations of Owner
Trustee under the Trust Indenture or any other Operative Agreement and with
respect to the Equipment Notes shall be non-recourse to Owner Participant and to
First Security and (b) they will look solely to the income and proceeds from the
Trust Estate and the Trust Indenture Estate to the extent available for
distribution to Note Holder or Mortgagee as provided in the Trust Indenture and
that neither Owner Participant nor First Security will be personally liable to
Loan Participant or Mortgagee for any amounts payable by Owner Trustee under the
Trust Indenture or any other Operative Agreement; PROVIDED, HOWEVER, that the
foregoing is not intended nor shall it be construed to limit any recourse
liability of Owner Participant or First Security to the extent that such
liability is expressly set forth in this Agreement or in any of the Operative
Agreements or arises by reason of the breach of any representation or warranty
or covenant given by such Person (in the case of First Security, in its
individual capacity).
7.6.7 OTHER DOCUMENTS; AMENDMENT
(a) Each of the Owner Participant, Equity Guarantor and the Owner
Trustee hereby agrees with Lessee, the Loan Participant, and the Mortgagee not
to amend, supplement or otherwise modify any provision of the Trust Agreement in
a manner that could materially adversely affect such party without the prior
written consent of such party. Notwithstanding the foregoing, so long as the
Lease has not been terminated or expired, each Participant, Equity Guarantor,
the Mortgagee and the Owner Trustee hereby agree for the benefit of Lessee that
without the consent of Lessee they will not amend, supplement or otherwise
modify (i) Article III, Article IX or Sections 2.05 or 2.15 of the Trust
Indenture, (ii) any provision of any Operative Agreement that will affect the
stated principal amount of or premium or interest on the Equipment Notes or
(iii) any other provision of the Trust Indenture or Equipment Notes in a manner
that could materially adversely affect Lessee. Mortgagee and Owner Trustee agree
promptly to furnish to Lessee copies of any supplement, amendment, waiver or
modification of any of the Operative Agreements to which Lessee is not a party.
Loan Participant agrees that it will not take any action in respect of the Trust
Indenture Estate except through the Mortgagee pursuant to the Trust Indenture or
as otherwise permitted by Trust Indenture.
(b) Owner Trustee agrees to join with Lessee to the extent that
action on its part is necessary or appropriate (i) to cause the following to be
duly accomplished in accordance with applicable United States federal Law by the
time the Aircraft is delivered under this Agreement and the Lease: (A) the
application for registration of the Aircraft in the name of Owner Trustee and
(B) all related action necessary in order for Lessee to have temporary or
permanent authority to operate the Aircraft as contemplated by the Lease and
(ii) forthwith upon delivery of the Aircraft under this Agreement and the Lease,
to cause all necessary documents to be duly filed for recording in accordance
with applicable United States federal Law.
7.6.8 CONSENTS
Owner Participant, Equity Guarantor, and Owner Trustee each covenants
and agrees, for the benefit of Lessee, that it shall not unreasonably withhold
its consent to any consent or approval requested of it or of Owner Trustee or
Mortgagee under the terms of any of the Operative Agreements which by its terms
is not to be unreasonably withheld; provided, however, that the consent of the
Owner Participant shall not be deemed to be unreasonably withheld if such
consent is withheld because of the failure of the Equity Guarantor to consent
thereto.
7.6.9 INSURANCE
Each of Owner Participant, Equity Guarantor, the Pass Through
Trustees, the Subordination Agent and the Owner Trustee agrees not to obtain or
maintain insurance for its own account as permitted by Section 11.2 of the Lease
if such insurance would limit or otherwise materially adversely affect the
coverage of any insurance required to be obtained or maintained by Lessee
pursuant to Section 11 and Annex D of the Lease.
7.6.10 EXTENT OF INTEREST OF NOTE HOLDERS
A Note Holder shall not, as such, have any further interest in, or
other right with respect to, the Trust Estate or the Trust Indenture Estate when
and if the principal and Make-Whole Amount, if any, of and interest on the
Equipment Note held by such Holder, and all other sums, then due and payable to
such Holder hereunder and under any other Operative Agreement, shall have been
paid in full.
7.6.11 FOREIGN REGISTRATION
Each Participant, Equity Guarantor, Owner Trustee and Mortgagee
hereby agree, for the benefit of Lessee but subject to the provisions of Section
7.1.2 of the Lease:
(a) that Lessee shall be entitled to register the Aircraft or cause
the Aircraft to be registered in a country other than the United States subject
to compliance with the following:
(i) each of the following requirements is satisfied:
(A) such registration shall be made only after the Tax Attribute
Period, unless Lessee prepays on a lump sum basis calculated
pursuant to Section 5(f) of the Tax Indemnity Agreement any
liability due under the Tax Indemnity Agreement as a result
of such registration based upon the assumption that such
registration would continue for the remainder of the term of
the Permitted Sublease described in clause (C) below,
PROVIDED, that notwithstanding the foregoing, such
registration may be made during -------- the taxable year in
which the seventh anniversary of the Closing Date occurs so
long as the Aircraft is not "used predominantly outside the
United States" within the meaning of Section 168(g) of the
Code during such taxable years;
(B) no Lease Event of Default shall have occurred and be
continuing at the time of such registration;
(C) such proposed change of registration is made in connection
with a Permitted Sublease to a Permitted Air Carrier;
(D) such country is a Permitted Country with which the United
States then maintains normal diplomatic relations.
(ii) the Owner Trustee, Owner Participant and Mortgagee shall
have received an opinion, in form and substance reasonably
satisfactory to the Owner Participant (subject to customary
exceptions) of counsel reasonably satisfactory to the Owner
Participant addressed to each such party to the effect that:
(A) such country would recognize the Owner Trustee's title to,
ownership interest in and right to possession of, the
Aircraft;
(B) the obligations of Lessee, and the rights and remedies of
Owner Trustee, under the Lease are valid, binding and
enforceable under the laws of such country (or the laws of
the country to which the laws of such country would refer as
the applicable governing law);
(C) after giving effect to such change in registration, the Lien
of the Trust Indenture on the Owner Trustee's right, title
and interest in and to the Aircraft and the Lease shall
continue as a valid and duly perfected first priority
security interest and all filing, recording or other action
necessary to protect the same shall have been accomplished
(or, if such opinion cannot be given at the time of such
proposed change in registration because such change in
registration is not yet effective, (1) the opinion shall
detail what filing, recording or other action is necessary
and (2) Owner Trustee and the Mortgagee shall have received
a certificate from Lessee that all possible preparations to
accomplish such filing, recording and other action shall
have been done, and such filing, recording and other action
shall be accomplished and a supplemental opinion to that
effect shall be delivered to Owner Trustee and the Mortgagee
on or prior to the effective date of such change in
registration;
(D) it is not necessary, solely as a consequence of such change
in registration and without giving effect to any other
activity of Owner Trustee, the Owner Participant or the
Mortgagee (or any Affiliate thereof), as the case may be,
for Owner Trustee, the Owner Participant or the Mortgagee to
qualify to do business in such country as a result of such
reregistration;
(E) there is no tort liability of the owner or lessor of an
aircraft not in possession thereof under the laws of such
country (it being agreed that, in the event such latter
opinion cannot be given in a form satisfactory to the Owner
Participant, such opinion shall be waived if insurance
reasonably satisfactory to the Owner Participant is provided
to cover such risk); and
(F) unless Lessee shall have agreed to provide insurance
reasonably satisfactory to Owner Participant covering the
risk of requisition of use of the Aircraft by the government
of such country (so long as the Aircraft is registered under
the laws of such country), the laws of such country require
fair compensation by the government of such country payable
in currency freely convertible into Dollars and freely
removable from such country (without license or permit,
unless Lessee prior to such proposed reregistration has
obtained such license or permit) for the taking or
requisition by such government of such use.
(b) In addition, as a condition precedent to any change in
registration Lessee shall have given to Lessor and Mortgagee assurances
reasonably satisfactory to each of them:
(i) to the effect that the provisions of Section 11 of the Lease
have been complied with after giving effect to such change
of registration; and
(ii) of the payment by Lessee of all reasonable out-of-pocket
expenses at no after-tax cost to any Participant of Lessor,
each Participant and Mortgagee in connection with such
change of registry, including, without limitation (1) the
reasonable fees and disbursements of counsel to Lessee,
Lessor and Mortgagee, (2) any filing or recording fees,
Taxes or similar payments incurred in connection with the
change of registration of the Aircraft and the creation and
perfection of the security interest therein in favor of
Mortgagee for the benefit of Note Holders, (3) all costs and
expenses incurred in connection with any filings necessary
to continue in the United States the perfection of the
security interest in the Aircraft and the Lease in favor of
Mortgagee for the benefit of Note Holders and (4) costs in
connection with the calculation of the lump sum payment
described in clause (i)(A) of this Section 7.6.11.
7.6.12 OTHER COMMERCIAL RELATIONS UNAFFECTED
Notwithstanding anything to the contrary set forth in any Operative
Agreement:
(a) Except as set forth in the Purchase Agreement Assignment, nothing
contained in the Operative Agreements shall constitute or be deemed to be a
waiver by Lessee of any rights, remedies or claims it may have against Airframe
Manufacturer or Engine Manufacturer or any subcontractor or supplier of either;
and the Operative Agreements do not and shall not be construed or deemed to
create any rights, waivers, immunities or indemnities in favor of Airframe
Manufacturer, Engine Manufacturer or any subcontractor or supplier of either
with respect to any such rights, remedies or claims of Lessee; and
(b) The Airframe Manufacturer, by its execution and delivery of the
Consent and Agreement, shall not be deemed to have waived any rights, remedies
or claims which Airframe Manufacturer (or any subcontractor or supplier of
Airframe Manufacturer) may have against Lessee; and the Operative Agreements do
not and shall not be construed or deemed to create any rights, waivers,
immunities or indemnities in favor of Lessee with respect to any such rights,
remedies or claims of Airframe Manufacturer (or any subcontractor or supplier of
Airframe Manufacturer).
7.6.13 INTEREST IN CERTAIN ENGINES
Each Participant, Equity Guarantor, Owner Trustee, and Mortgagee
agree, for the benefit of each of the lessor, conditional seller, mortgagee or
secured party of any airframe or engine leased to, or purchased by, Lessee or
any Permitted Sublessee subject to a lease, conditional sale, trust indenture or
other security agreement that it will not acquire or claim, as against such
lessor, conditional seller, mortgagee or secured party, any right, title or
interest in any engine as the result of such engine being installed on the
Airframe at any time while such engine is subject to such lease, conditional
sale, trust indenture or other security agreement and owned by such lessor or
conditional seller or subject to a trust indenture or security interest in favor
of such mortgagee or secured party.
7.6.14 GUARANTY FEE
Each Participant, Owner Trustee and Mortgagee (i) acknowledges that
in consideration of the issuance of the Equity Guaranty, the Equity Guarantor
shall be paid a fee and such fee shall be paid in installments during the Base
Lease Term on each Payment Date and (ii) agrees that on each Payment Date, to
the extent that Basic Rent paid on such Payment Date shall be in an amount in
excess of Lessor Rent as set forth in Schedule 4 with respect to such Payment
Date, upon the receipt of Basic Rent, Mortgagee shall distribute such Basic Rent
in accordance with the terms of Section 3.01 of the Trust Indenture to the Owner
Trustee and Owner Trustee shall, after distribution of Lessor Rent due to Owner
Participant on such Payment Date, if any, distribute the remainder to Equity
Guarantor in payment of guaranty fees for the Equity Guaranty.
7.6.15 CERTAIN RIGHTS OF EQUITY GUARANTOR
(a) Lessee, each Participant, Note Holders, Owner Trustee and
Mortgagee agree for the benefit of Equity Guarantor that Equity Guarantor may,
but shall not be obligated to, exercise any right to cure a Lease Default, Lease
Event of Default, Default or Event of Default which may be cured by Owner
Trustee or Owner Participant, in lieu of Owner Trustee or Owner Participant,
pursuant to the terms of Section 15.3 of the Lease or Section 4.03 of the Trust
Indenture, as the case may be. If the Lease Event of Default shall be due to a
failure by Lessee to pay Basic Rent due under the Lease, whether in whole or in
part, unless Equity Guarantor, Owner Trustee or Owner Participant have, in the
aggregate, cured Lease Events of Default in respect of payments of Basic Rent on
each of the six immediately preceding Payment Dates or Equity Guarantor, Owner
Trustee or Owner Participant have cured, in the aggregate, twelve previous Lease
Events of Default in respect of payments of Basic Rent, such payment by Equity
Guarantor shall be deemed to cure any Lease Event of Default which would
otherwise have arisen on account of the nonpayment by Lessee of such installment
of Basic Rent.
(b) The Loan Participant, Note Holders and Mortgagee agree for the
benefit of Equity Guarantor that Equity Guarantor may, but shall not be
obligated to exercise Owner Trustee's and Owner Participant's option to
purchase, or cause an Affiliate to purchase, the Equipment Notes pursuant to
Section 2.13 of the Trust Indenture.
(c) In each case in which Equity Guarantor shall have cured a Lease
Default, Lease Event of Default, Default or Event of Default, Equity Guarantor
shall be entitled to the rights of subrogation afforded to Owner Trustee or
Owner Participant pursuant to the terms of the Lease or the Trust Indenture, as
the case may be.
SECTION 8. CONFIDENTIALITY
Lessee, Owner Participant, Note Holders, Owner Trustee, Mortgagee,
Existing Lessor, Existing Mortgagee and Airframe Manufacturer shall keep Annexes
B, C and D and Schedules 1, 2, 3 and 4 to the Lease, the Purchase Agreement
Assignment, the Equity Guaranty and the Tax Indemnity Agreement confidential and
shall not disclose, or cause to be disclosed, the same to any Person, except (A)
to prospective and permitted transferees of Lessee's, Owner Participant's,
Equity Guarantor's, a Note Holder's, a Liquidity Provider's, Owner Trustee's,
Mortgagee's or other Indenture Indemnitee's interest or their respective counsel
or special counsel, independent insurance brokers, auditors, or other agents who
agree to hold such information confidential, (B) to Lessee's, Owner
Participant's, Equity Guarantor's, a Note Holder's, a Liquidity Provider's, a
Pass Through Trustee's, Owner Trustee's, Mortgagee's or other Indenture
Indemnitee's counsel or special counsel, independent insurance brokers,
auditors, or other agents, Affiliates or investors who agree to hold such
information confidential, (C) as may be required by any statute, court or
administrative order or decree, legal process or governmental ruling or
regulation, including those of any applicable insurance regulatory bodies
(including, without limitation, the National Association of Insurance
Commissioners), federal or state banking examiners, Internal Revenue Service
auditors or any stock exchange, (D) with respect to Lessee and Owner
Participant, by mutual agreement of such parties, (E) with respect to a Note
Holder or any Pass 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 (F) such
other Persons as are reasonably deemed necessary by the disclosing party in
order to protect the interests of such party or for the purposes of enforcing
such documents by such party; PROVIDED, that any and all disclosures permitted
by clauses (C), (D), (E) or (F) above shall be made only to the extent necessary
to meet the specific requirements or needs of the Persons making such
disclosures.
SECTION 9. INDEMNIFICATION AND EXPENSES
9.1 GENERAL INDEMNITY
9.1.1 INDEMNITY
If the Closing occurs, Lessee shall indemnify, protect, defend and
hold harmless each Indemnitee from, against and in respect of, and shall pay on
a net after-tax basis, any and all Expenses of any kind or nature whatsoever
that may be imposed on, incurred by or asserted against any Indemnitee, relating
to, resulting from, or arising out of or in connection with, any one or more of
the following:
(a) The Operative Agreements, the Pass Through Agreements, or the
enforcement of any of the terms of any of the Operative Agreements or the Pass
Through Agreements;
(b) The Aircraft, the Airframe, any Engine or any Part, including,
without limitation, with respect thereto, (i) the manufacture, design, purchase,
acceptance, nonacceptance or rejection, ownership, registration, reregistration,
deregistration, delivery, nondelivery, lease, sublease, assignment, possession,
use or non-use, operation, maintenance, testing, repair, overhaul, condition,
alteration, modification, addition, improvement, storage, airworthiness,
replacement, repair, sale, substitution, return, abandonment, redelivery or
other disposition of the Aircraft, any Engine or any Part, (ii) any claim or
penalty arising out of violations of applicable Laws by Lessee (or any Permitted
Sublessee), (iii) tort liability, whether or not arising out of the negligence
of any Indemnitee (whether active, passive or imputed), (iv) death or property
damage of passengers, shippers or others, (v) environmental control, noise or
pollution and (vi) any Liens in respect of the Aircraft, any Engine or any Part;
(c) The offer, sale, or delivery of any Equipment Notes, Pass Through
Certificates or any interest therein or represented thereby; and
(d) Any breach of or failure to perform or observe, or any other
noncompliance with, any covenant or agreement or other obligation to be
performed by Lessee under any Lessee Operative Agreement or any Pass Through
Agreement or the falsity of any representation or warranty of Lessee in any
Lessee Operative Agreement or any Pass Through Agreement other than in the Tax
Indemnity Agreement.
9.1.2 EXCEPTIONS
Notwithstanding anything contained in Section 9.1.1, Lessee shall not
be required to indemnify, protect, defend and hold harmless any Indemnitee
pursuant to Section 9.1.1 in respect of any Expense of such Indemnitee:
(a) For any Taxes or a loss of Tax benefit, whether or not Lessee is
required to indemnify therefor pursuant to Section 9.3 or the Tax Indemnity
Agreement;
(b) Except to the extent attributable to acts or events occurring
prior thereto, acts or events (other than acts or events related to the
performance or failure to perform by Lessee of its obligations pursuant to the
terms of the Lessee Operative Agreements) that occur after the earliest of: (i)
with respect to the Airframe, any Engine or any Part, the return of possession
(it being understood that the date of the placement of the Aircraft in storage
as provided in Section 5 of the Lease constitutes the date of return of the
Aircraft under the Lease) of such Airframe, Engine or Part pursuant to the terms
of and in compliance with the Lease (other than pursuant to Section 15 thereof,
in which case Lessee's liability under this Section 9.1 shall survive for so
long as Lessor or Mortgagee shall be entitled to exercise remedies under such
Section 15) or (ii) the termination of the Term in accordance with the Lease;
(c) To the extent attributable to any Transfer (voluntary or
involuntary) by or on behalf of such Indemnitee of any Equipment Note or
interest therein, except (i) for out-of-pocket costs and expenses incurred as a
result of any such Transfer pursuant to the exercise of remedies under any
Operative Agreement resulting from a Lease Event of Default and (ii) as
otherwise required by the terms of Section 2.13 of the Trust Indenture;
(d) To the extent attributable to any Transfer (voluntary or
involuntary) by or on behalf of Owner Participant of any interest in the
Aircraft, or the Trust Estate except for costs and expenses incurred as a result
of such Transfer, if such Transfer arises directly from a Lease Event of Default
that shall have occurred and be continuing;
(e) To the extent attributable to the gross negligence or willful
misconduct of such Indemnitee or any related Indemnitee (as defined below)
(other than gross negligence or willful misconduct imputed to such person by
reason of its interest in the Aircraft or any Operative Agreement);
(f) In the case of First Security, to the extent attributable to
matters enumerated in the proviso to Section 14;
(g) To the extent attributable to the incorrectness or breach of any
representation or warranty of such Indemnitee or any related Indemnitee
contained in or made pursuant to any Operative Agreement or any Pass Through
Agreement;
(h) To the extent attributable to the failure by such Indemnitee or
any related Indemnitee to perform or observe any agreement, covenant or
condition on its part to be performed or observed in any Operative Agreement or
any Pass Through Agreement;
(i) To the extent attributable to the offer or sale by such
Indemnitee or any related Indemnitee of any interest in the Aircraft, the
Equipment Notes, the Pass Through Certificates, the Trust Estate or the Trust
Agreement or any similar interest, in violation of the Securities Act or other
applicable federal, state or foreign securities Laws (other than any offer or
sale thereof caused by the acts or omissions of Lessee);
(j) (i) With respect to any Indemnitee (other than Mortgagee), to the
extent attributable to the failure of the Mortgagee to distribute funds received
and distributable by it in accordance with the Trust Indenture, (ii) with
respect to any Indemnitee (other than the Owner Trustee), to the extent
attributable to the failure of the Owner Trustee to distribute funds received
and distributable by it in accordance with the Trust Agreement, (iii) with
respect to any Indemnitee (other than the Subordination Agent), to the extent
attributable to the failure of the Subordination Agent to distribute funds
received and distributable by it in accordance with the Intercreditor Agreement,
(iv) with respect to any Indemnitee (other than the Pass Through Trustees), to
the extent attributable to the failure of a Pass Through Trustee to distribute
funds received and distributable by it in accordance with the Pass Through Trust
Agreements, (v) with respect to 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 Owner Trustee, to the extent attributable to the negligence or
willful misconduct of Owner Trustee in the distribution of funds received and
distributable by it in accordance with the Trust Agreement, (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 a Lease Event of Default,
to the extent attributable to the authorization or giving or withholding of any
future amendments, supplements, waivers or consents with respect to any
Operative Agreement or Pass Through Agreement other than such as have been
requested by Lessee or as are required by or made pursuant to the terms of the
Operative Agreements or Pass Through Agreements (unless such requirement results
from the actions of an Indemnitee not required by or made pursuant to the
Operative Agreements or the Pass Through Agreements);
(l) To the extent attributable to any amount which any Indemnitee
expressly agrees to pay or such Indemnitee expressly agrees shall not be paid by
or be reimbursed by Lessee;
(m) To the extent that it is an ordinary and usual operating or
overhead expense;
(n) With respect to the Owner Participant or the Owner Trustee, or
any related Indemnitee, to the extent attributable to the deregistration of the
Aircraft under the Act as a result of Owner Participant's or Owner Trustee's (or
any related Indemnitee of either) not being a Citizen of the United States as a
result of any act (other than reregistration of the Aircraft pursuant to Section
7.1.2 of the Lease) of Owner Participant or Owner Trustee, or any related
Indemnitee of either of the foregoing (not taken at the request of the Lessee);
(o) For any Lessor Lien attributable to such Indemnitee or any
related Indemnitee;
(p) If another provision of an Operative Agreement or a Pass Through
Agreement specifies the extent of Lessee's responsibility or obligation with
respect to such Expense, to the extent arising from other than failure of Lessee
to comply with such specified responsibility or obligation;
(q) To the extent relating to, resulting from, or arising out of or
in connection with the Equity Guaranty, the obligation to pay the guaranty fees
for the Equity Guaranty;
(r) To the extent it is a Transaction Expense;
(s) To the extent constituting principal, Make-Whole Amount or
interest on the Equipment Notes attributable solely to an Event of Default not
constituting a Lease Event of Default; or
(t) 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.
For purposes of this Section 9.1, a Person shall be considered a
"related" Indemnitee with respect to an Indemnitee if such Person is an
Affiliate or employer of such Indemnitee, a director, officer, employee, agent,
or servant of such Indemnitee or any such Affiliate or a successor or permitted
assignee of any of the foregoing.
9.1.3 SEPARATE AGREEMENT
This Agreement constitutes a separate agreement with respect to each
Indemnitee and is enforceable directly by each such Indemnitee.
9.1.4 NOTICE
If a claim for any Expense that an Indemnitee shall be indemnified
against under this Section 9.1 is made, such Indemnitee shall give prompt
written notice thereof to Lessee. Notwithstanding the foregoing, the failure of
any Indemnitee to notify Lessee as provided in this Section 9.1.4, or in Section
9.1.5, shall not release Lessee from any of its obligations to indemnify such
Indemnitee hereunder, except to the extent that such failure results in an
additional Expense to Lessee (in which event Lessee shall not be responsible for
such additional Expense) or materially impairs Lessee's ability to contest such
claim.
9.1.5 NOTICE OF PROCEEDINGS; DEFENSE OF CLAIMS; LIMITATIONS
(a) In case any action, suit or proceeding shall be brought against
any Indemnitee for which Lessee is responsible under this Section 9.1, such
Indemnitee shall notify Lessee of the commencement thereof and Lessee may, at
its expense, participate in and to the extent that it shall wish (subject to the
provisions of the following paragraph), assume and control the defense thereof
and, subject to Section 9.1.5(c), settle or compromise the same.
(b) Lessee or its insurer(s) shall have the right, at its or their
expense, to investigate or, if Lessee or its insurer(s) shall agree in writing
not to dispute liability to the Indemnitee giving notice of such action, suit or
proceeding under this Section 9.1.5 for indemnification hereunder or under any
insurance policies pursuant to which coverage is sought, control the defense of,
any action, suit or proceeding, relating to any Expense for which
indemnification is sought pursuant to this Section 9.1, and each Indemnitee
shall cooperate with Lessee or its insurer(s) with respect thereto; PROVIDED,
that Lessee shall not be entitled to control the defense of any such action,
suit, proceeding or compromise any such Expense (i) during the continuance of
any Lease Event of Default arising under Section 14.1 of the Lease, (ii) if such
proceedings would entail a material risk of the sale, forfeiture or loss of the
Aircraft or (iii) if such proceedings would entail a risk of criminal liability
or greater than de minimis risk of material civil penalties being imposed on
such Indemnitee. In connection with any such action, suit or proceeding being
controlled by Lessee, such Indemnitee shall have the right to participate
therein, at its sole cost and expense, with counsel reasonably satisfactory to
Lessee; PROVIDED, that such Indemnitee's participation does not, in the
reasonable opinion of the independent counsel appointed by the Lessee or its
insurers to conduct such proceedings, interfere with the defense of such case.
(c) In no event shall any Indemnitee enter into a settlement or other
compromise with respect to any Expense without the prior written consent of
Lessee, which consent shall not be unreasonably withheld or delayed, unless such
Indemnitee waives its right to be indemnified with respect to such Expense under
this Section 9.1.
(d) In the case of any Expense indemnified by the Lessee hereunder
which is covered by a policy of insurance maintained by Lessee pursuant to
Section 11 of the Lease, at Lessee's expense, each Indemnitee agrees to
cooperate with the insurers in the exercise of their rights to investigate,
defend or compromise such Expense as may be required to retain the benefits of
such insurance with respect to such Expense.
(e) If an Indemnitee is not a party to this Agreement, Lessee may
require such Indemnitee to agree in writing to the terms of this Section 9 and
Section 15.8 prior to making any payment to such Indemnitee under this Section
9.
(f) Nothing herein shall be deemed to be an assumption by Lessee of
obligations of Owner Trustee with respect to, or a guarantee by Lessee of, any
amounts payable by Owner Trustee upon Equipment Notes or a guarantee of any
residual value of the Aircraft.
(g) Nothing contained in this Section 9.1.5 shall be deemed to
require an Indemnitee to contest any Expense or to assume responsibility for or
control of any judicial proceeding with respect thereto.
9.1.6 INFORMATION
Lessee will provide the relevant Indemnitee with such information not
within the control of such Indemnitee, as is in Lessee's control or is
reasonably available to Lessee, which such Indemnitee may reasonably request and
will otherwise cooperate with such Indemnitee so as to enable such Indemnitee to
fulfill its obligations under Section 9.1.5. The Indemnitee shall supply Lessee
with such information not within the control of Lessee, as is in such
Indemnitee's control or is reasonably available to such Indemnitee, which Lessee
may reasonably request to control or participate in any proceeding to the extent
permitted by Section 9.1.5.
9.1.7 EFFECT OF OTHER INDEMNITIES; SUBROGATION; FURTHER
ASSURANCES
Upon the payment in full by Lessee of any indemnity provided for
under this Agreement, Lessee, without any further action and to the full extent
permitted by Law, will be subrogated to all rights and remedies of the person
indemnified (other than with respect to any of such Indemnitee's insurance
policies or in connection with any indemnity claim such Indemnitee may have
under Section 5.03 or 7.01 of the Trust Indenture or Section 5.3 or 7 of the
Trust Agreement) in respect of the matter as to which such indemnity was paid.
Each Indemnitee will give such further assurances or agreements and cooperate
with Lessee to permit Lessee to pursue such claims, if any, to the extent
reasonably requested by Lessee and at Lessee's expense.
9.1.8 REFUNDS
If an Indemnitee receives any refund, in whole or in part, with
respect to any Expense paid by Lessee hereunder, it will promptly pay the amount
refunded (but not an amount in excess of the amount Lessee or any of its
insurers has paid in respect of such Expense) over to Lessee unless a Lease
Event of Default shall have occurred and be continuing, in which case such
amounts shall be paid over to Owner Trustee (or, so long as the Trust Indenture
shall not have been discharged, to Mortgagee) to hold as security for Lessee's
obligations under the Lessee Operative Agreements or, if requested by Lessee,
applied to satisfy such obligations.
9.2 EXPENSES
9.2.1 TRANSACTION EXPENSES
Owner Participant shall pay all Transaction Expenses (other than the
ongoing fees, disbursements and expenses of Mortgagee and the Owner Trustee), up
to an aggregate amount equal to the Expense Limit. Airframe Manufacturer shall
pay all Transaction Expenses in excess of the Expense Limit and the ongoing
fees, disbursements and expenses of Mortgagee and the Owner Trustee. Lessee
shall have no liability or obligation with respect to Transaction Expenses.
9.2.2 PAYMENT OF OTHER EXPENSES
Lessee will be responsible for the fees and charges of its counsel
incurred in connection with the preparation, execution and delivery of the
Operating Agreements. All out-of-pocket costs and expenses of Lessee (including,
without limitation, reasonable attorney's fees and charges) incurred in
performance of Sections 7.1.3(a), (b) and (c) (other than with respect to the
first parenthetical of Section 7.1.3(c)) to the extent constituting Transaction
Expenses, shall be paid pursuant to Section 9.2.1 and, otherwise, shall be paid
by Airframe Manufacturer. Existing Lessor and Airframe Manufacturer shall each
pay all costs and expenses incurred by it in connection with the Operative
Agreements.
9.3 GENERAL TAX INDEMNITY
9.3.1 GENERAL
Except as provided in Section 9.3.2, Lessee agrees that each payment
of Rent paid by Lessee pursuant to the Lease, and any other payment or indemnity
paid by Lessee to a Tax Indemnitee under any Operative Agreement, shall be free
of all withholdings or deductions with respect to Taxes of any nature (other
than U.S. federal withholding taxes on, based on or measured by gross or net
income), and in the event that Lessee shall be required by applicable law to
make any such withholding or deduction for any such payment (x) Lessee shall
make all such withholdings or deductions, (y) the amount payable by Lessee shall
be increased so that after making all required withholdings or deductions such
Tax Indemnitee receives (at no after-Tax cost to the Tax Indemnitee) the same
amount that it would have received had no such withholdings or deductions been
made, and (z) Lessee shall pay the full amount withheld or deducted to the
relevant Taxing Authority in accordance with applicable law. Lessee further
agrees that, in the event it is required to withhold from any payment of Basic
Rent, Termination Value, Stipulated Loss Value (and amounts determined by
reference thereto), and amounts payable upon exercise of Lessee's purchase
option pursuant to Section 17.3 of the Lease, any Tax imposed upon Owner
Participant or Owner Trustee (including any withholding Tax based on income or
receipts of Owner Participant or Owner Trustee) and such Tax is excluded from
indemnification pursuant to Section 9.3.2, Lessee shall pay such additional
amount, if any, required so that the total amount paid by Lessee (after making
all required withholdings) is equal to (assuming timely payment of the Equipment
Notes prior to the relevant Payment Date) the aggregate principal amount of
scheduled installments due on the Equipment Notes outstanding on the relevant
Payment Date, together with accrued and unpaid interest, due on the Equipment
Notes; Owner Participant or Owner Trustee, as the case may be, shall reimburse
Lessee for any such additional amounts within two Business Days after demand
therefor. Except as provided in Section 9.3.2 and whether or not any of the
transactions contemplated hereby are consummated, Lessee shall pay, indemnify,
protect, defend and hold each Tax Indemnitee harmless from all Taxes imposed by
any Taxing Authority that may from time to time be imposed on or asserted
against any Tax Indemnitee or the Aircraft, the Airframe, any Engine or any Part
or any interest in any of the foregoing (whether or not indemnified against by
any other Person), upon or with respect to the Operative Agreements or the
transactions or payments contemplated thereby, including but not limited to any
Tax imposed upon or with respect to (x) the Aircraft, the Airframe, any Engine,
any Part, any Operative Agreement (including without limitation any Equipment
Notes) or any data or any other thing delivered or to be delivered under an
Operative Agreement, (y) the purchase, manufacture, acceptance, rejection, sale,
transfer of title, return, ownership, mortgaging, delivery, transport, charter,
rental, lease, re-lease, sublease, assignment, possession, repossession,
presence, use, condition, storage, preparation, maintenance, modification,
alteration, improvement, operation, registration, transfer or change of
registration, reregistration, repair, replacement, overhaul, location, control,
the imposition of any Lien (other than a Lessor Lien), financing, refinancing
requested by the Lessee, abandonment or other disposition of the Aircraft, the
Airframe, any Engine, any Part, any data or any other thing delivered or to be
delivered under an Operative Agreement, or (z) rent, interest, fees or any other
income, proceeds, receipts or earnings, whether actual or deemed, arising upon,
in connection with, or in respect of, any of the Operative Agreements (including
the property or income or other proceeds with respect to property held as part
of the Trust Estate) or the transactions contemplated thereby.
9.3.2 CERTAIN EXCEPTIONS
The provisions of Section 9.3.1 shall not apply to, and Lessee shall
have no liability hereunder for, Taxes:
(a) imposed on a Tax Indemnitee by the federal government of the
United States or any Taxing Authority of any jurisdiction within the United
States in which such Tax Indemnitee is incorporated or maintains its principal
place of business or is otherwise subject to Taxes of such type as a result of
transactions or activities other than those contemplated by the Operative
Agreements (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, value added taxes imposed in lieu of any of the
foregoing, airport excise taxes or any excise taxes imposed in the nature of or
in lieu of any of the foregoing or any Hawaii general excise tax and related
county surcharges imposed as a result of the use or location of the Aircraft in
Hawaii by a Lessee Person; and other than, in the case of clause (ii), any doing
business taxes imposed by a taxing authority in any jurisdiction (other than a
jurisdiction within which such Tax Indemnitee is incorporated or maintains its
principal place of business) if such doing business taxes attributable to the
transactions contemplated by the Operative Agreements were subject to indemnity
pursuant to the provisions of this clause 9.3.2(a) (without regard to this
parenthetical) solely as a result of the usage or location of the Aircraft in
such jurisdiction by a Lessee Person when such Tax Indemnitee was not
incorporated or doing business or otherwise subject to Taxes of such type in
such jurisdiction, if in a subsequent taxable period such Tax Indemnitee becomes
subject to Taxes of such type as a result of activities or transactions other
than those contemplated by the Operative Agreements, to the extent that such
Taxes (and in an amount no more than the amount of such Taxes that) would have
continued to be imposed solely as a result of the usage or location of the
Aircraft by a Lessee Person in such jurisdiction in the absence of any
additional nexus between such Tax Indemnitee and such jurisdiction);
(b) any Taxes imposed in connection with the sale or transfer of the
Aircraft from the Existing Lessor to the Owner Trustee or the purchase by Owner
Trustee for the benefit of the Owner Participant of the Aircraft from the
Existing Lessor;
(c) on, or with respect to, or measured by, any trustee fees,
commissions or compensation received by Owner Trustee, Pass Through Trustee,
Subordination Agent or Mortgagee;
(d) on the Trust or the Trust Estate that result from treatment of
the Trust or the Trust Estate as an entity, such as a corporation, separate and
apart from the Owner Participant;
(e) that are being contested as provided in Section 9.3.4 hereof, for
so long as such contest is continuing;
(f) imposed on any Tax Indemnitee to the extent that such Taxes
result from the gross negligence or willful misconduct of such Tax Indemnitee, a
related Tax Indemnitee or any Affiliate thereof;
(g) imposed on or with respect to a Tax Indemnitee (including the
transferee in those cases in which the Tax on transfer is imposed on, or is
collected from, the transferee) as a result of a transfer or other disposition
(including a deemed transfer or disposition) by such Tax Indemnitee or a related
Tax Indemnitee (or, in the case of the Owner Participant, by Owner Trustee
(unless requested by the Lessee), or, in the case of Taxes imposed on a
transferee, by the transferor) of any interest in the Aircraft, the Airframe,
any Engine or any Part, the Rent (other than the assignment of Rent to the Loan
Trustee pursuant to the Trust Indenture), the Trust, the Trust Estate, the Trust
Indenture Estate, the Lease or any interest arising under the Operative
Agreements or any Equipment Note or a transfer or disposition (including a
deemed transfer or disposition) of any interest in a Tax Indemnitee (other than
(A) a substitution or replacement of the Aircraft, the Airframe, any Engine or
any Part by a Lessee Person that is treated for Tax purposes as a transfer or
disposition, (B) a transfer pursuant to an exercise of remedies upon a Lease
Event of Default that shall have occurred and have been continuing, or (C) a
transfer to Lessee pursuant to Section 17.3 of the Lease);
(h) except with respect to gross-ups, imposed subsequent to (and not
in respect of) a transfer or other disposition described in paragraph (g) above
and in excess of those that would have been imposed had there not been a
transfer or other disposition by or to such Tax Indemnitee or a related Tax
Indemnitee described in paragraph (g) above;
(i) imposed on the Owner Participant and indemnified by Lessee
pursuant to the Tax Indemnity Agreement;
(j) imposed with respect to any period after the expiration or
earlier termination of the Term and, if required pursuant to the terms of the
Lease, the return of possession of the Aircraft to Lessor or placement in
storage at the request of Lessor in accordance with the Lease (provided that
this exclusion (j) shall not apply to Taxes imposed after such period arising as
a result of events occurring prior to such expiration or earlier termination);
(k) consisting of any interest, penalties or additions to tax imposed
on a Tax Indemnitee resulting from a failure of such Tax Indemnitee or a related
Tax Indemnitee to file any return properly and timely, unless such failure shall
be caused by the failure of Lessee to fulfill its obligations, if any, under
Section 9.3.6 with respect to such return, PROVIDED that if any such return is
required to be filed in a jurisdiction outside the United States, which return
would not have been required to be filed in the absence of the transactions
contemplated under the Operative Agreements or Lessee's transactions or
activities in such jurisdiction, this exclusion shall not apply if (A) Lessee
has not informed the Tax Indemnitee in writing of the need to file such return
at least 30 days prior to the due date thereof (or such shorter period as would
reasonably allow the Tax Indemnitee to file such return if, under the
circumstances, the Lessee could not have reasonably informed the Tax Indemnitee
of the need to file at least 30 days prior to the due date thereof), or (B) the
Tax Indemnitee had determined in good faith that such filing would subject it or
any Affiliate to adverse consequences in such jurisdiction for which it had not
been (and would not have been) indemnified;
(l) resulting from, or that would not have been imposed but for, any
Lessor Liens arising as a result of claims against, or acts or omissions of, or
otherwise attributable to such Tax Indemnitee or a related Tax Indemnitee;
(m) imposed on any Tax Indemnitee as a result of the breach by such
Tax Indemnitee or a related Tax Indemnitee of any covenant of such Tax
Indemnitee or any Affiliate thereof contained in any Operative Agreement or the
inaccuracy of any representation or warranty by such Tax Indemnitee or any
Affiliate thereof in any Operative Agreement;
(n) in the nature of an intangible or similar Tax (i) upon or with
respect to the value or principal amount of the interest of Loan Participant or
any Note Holder in any Equipment Note or the loan evidenced thereby or (ii) upon
or with respect to the value of the interest of the Owner Participant in the
Trust Estate or the Trust, in each case only if such Taxes are in the nature of
franchise Taxes or result from the Tax Indemnitee doing business in the taxing
jurisdiction and are imposed because of the place of incorporation or the
activities unrelated to the transactions contemplated by the Operative
Agreements in the taxing jurisdiction of such Tax Indemnitee;
(o) that are included in Lessor's Cost and paid to the appropriate
Taxing Authority;
(p) imposed on a Tax Indemnitee by a Taxing Authority of a
jurisdiction outside the United States within which such Tax Indemnitee is
incorporated or maintains its principal place of business or to the extent that
such Taxes would not have been imposed but for a connection between the Tax
Indemnitee or a related Tax Indemnitee and such jurisdiction imposing such Tax
unrelated to the transactions contemplated by the Operative Agreements; or
(q) Taxes relating to ERISA or Section 4975 of the Code.
For purposes hereof, a Tax Indemnitee and any other Tax Indemnitees
that are successors, assigns, agents, servants or Affiliates of such Tax
Indemnitee shall be related Tax Indemnitees.
9.3.3 PAYMENT
(a) Lessee's indemnity obligation to a Tax Indemnitee under this
Section 9.3 shall equal the amount which, after taking into account any Tax
imposed upon the receipt or accrual of the amounts payable under this Section
9.3 and any tax benefits actually recognized by such Tax Indemnitee as a result
of the indemnifiable Tax (including, without limitation, any benefits recognized
as a result of an indemnifiable Tax being utilized by such Tax Indemnitee as a
credit against Taxes not indemnifiable under this Section 9.3), shall equal the
amount of the Tax indemnifiable under this Section 9.3.
(b) At Lessee's request, the computation of the amount of any
indemnity payment owed by Lessee or any amount owed by a Tax Indemnitee to
Lessee pursuant to this Section 9.3 shall be verified and certified by an
independent public accounting firm selected by such Tax Indemnitee and
reasonably satisfactory to Lessee. Such verification shall be binding. The costs
of such verification (including the fee of such public accounting firm) shall be
borne by Lessee unless such verification shall result in an adjustment in
Lessee's favor of 5% or more of the net present value (computed using a discount
rate equal to the Debt Rate, compounded semiannually) of the payment as computed
by such Tax Indemnitee, in which case the costs shall be paid by such Tax
Indemnitee.
(c) Each Tax Indemnitee shall provide Lessee with such
certifications, information and documentation as shall be in such Tax
Indemnitee's possession and as shall be reasonably requested by Lessee to
minimize any indemnity payment pursuant to this Section 9.3; provided, that
notwithstanding anything to the contrary contained herein, no Tax Indemnitee
shall be required to provide Lessee with any Tax returns.
(d) Each Tax Indemnitee shall promptly forward to Lessee any written
notice, ▇▇▇▇ or advice received by it from any Taxing Authority concerning any
Tax for which it seeks indemnification under this Section 9.3. Lessee shall pay
any amount for which it is liable pursuant to this Section 9.3 directly to the
appropriate Taxing Authority if legally permissible or upon demand of a Tax
Indemnitee, to such Tax Indemnitee within 30 days of such demand (or, if a
contest occurs in accordance with Section 9.3.4, within 30 days after a Final
Determination (as defined below)), but in no event more than two Business Days
prior to the date the Tax to which such amount payable hereunder relates is due.
If requested by a Tax Indemnitee in writing, Lessee shall furnish to the
appropriate Tax Indemnitee the original or a certified copy of a receipt for
Lessee's payment of any Tax paid by Lessee or such other evidence of payment of
such Tax as is acceptable to such Tax Indemnitee. Lessee shall also furnish
promptly upon written request such data as any Tax Indemnitee may reasonably
require to enable such Tax Indemnitee to comply with the requirements of any
taxing jurisdiction unless such data is not reasonably available to Lessee or,
unless such data is specifically requested by a Taxing Authority, is not
customarily furnished by domestic air carriers under similar circumstances. For
purposes of this Section 9.3, a "Final Determination" shall mean (i) a decision,
judgment, decree or other order by any court of competent jurisdiction that
occurs pursuant to the provisions of Section 9.3.4, which decision, judgment,
decree or other order has become final and unappealable (by law or by Lessee
hereunder), (ii) a closing agreement or settlement agreement entered into in
accordance with Section 9.3.4 that has become binding and is not subject to
further review or appeal (absent fraud, misrepresentation, etc.), or (iii) the
termination of administrative proceedings and the expiration of the time for
instituting a claim in a court proceeding.
(e) If any Tax Indemnitee shall actually realize a tax savings by
reason of any Tax paid or indemnified by Lessee pursuant to this Section 9.3
(whether such tax savings shall be by means of a foreign tax credit,
depreciation or cost recovery deduction or otherwise) and such savings is not
otherwise taken into account in computing such payment or indemnity, such Tax
Indemnitee shall pay to Lessee (within 30 days after the realization of such tax
savings) an amount equal to the lesser of (i) the amount of such tax savings,
plus any additional tax savings recognized as the result of any payment made
pursuant to this sentence, when, as, if, and to the extent, realized or (ii) the
amount of all payments (other than in respect of contest costs) pursuant to this
Section 9.3 by Lessee to such Tax Indemnitee (less any payments previously made
by such Tax Indemnitee to Lessee pursuant to this Section 9.3.3 (e)) (and the
excess, if any, of the amount described in clause (i) over the amount described
in clause (ii) shall be carried forward and applied to reduce pro tanto any
subsequent obligations of Lessee to make payments to such Tax Indemnitee
pursuant to this Section 9.3); provided, that such Tax Indemnitee shall not be
required to make any payment pursuant to this sentence so long as a Lease Event
of Default of a monetary nature has occurred and is continuing. If a tax benefit
is later disallowed or denied, the disallowance or denial shall be treated as a
Tax indemnifiable under Section 9.3.1 without regard to the provisions of
Section 9.3.2 (other than Section 9.3.2 (f)). Each such Tax Indemnitee shall in
good faith use reasonable efforts in filing its tax returns and in dealing with
Taxing Authorities to seek and claim any such tax benefit.
(f) For purposes of this Section 9.3, items of foreign Tax of any Tax
Indemnitee shall be deemed to be utilized by such Tax Indemnitee as credits or
deductions for any taxable year in accordance with the following priorities:
(x) First, all utilizable foreign Taxes (taking into account the
limitations of Section 904(d) of the Code) other than those described in clause
(y) below;
(y) Second, all utilizable foreign Taxes (taking into account
the limitations of Section 904(d) of the Code) arising out of the transactions
contemplated by the Operative Agreements and other equipment leasing
transactions to the extent such Tax Indemnitee is indemnified or held harmless
for such Taxes by the Lessee or a lessee on a pari passu basis.
9.3.4 CONTEST
(a) If a written claim is made against a Tax Indemnitee for Taxes
with respect to which Lessee could be liable for payment or indemnity hereunder,
or if a Tax Indemnitee makes a determination that a Tax is due for which Lessee
could have an indemnity obligation hereunder, such Tax Indemnitee shall promptly
give Lessee notice in writing of such claim (provided, that failure to so notify
Lessee shall not relieve Lessee of its indemnity obligations hereunder unless
such failure to notify forecloses Lessee's rights to require a contest of such
claim) and shall take no action with respect to such claim without the prior
written consent of Lessee for 30 days following the receipt of such notice by
Lessee; provided, that, in the case of a claim made against a Tax Indemnitee, if
such Tax Indemnitee shall be required by law to take action prior to the end of
such 30-day period, such Tax Indemnitee shall, in such notice to Lessee, so
inform Lessee, and such Tax Indemnitee shall take no action for as long as it is
legally able to do so (it being understood that a Tax Indemnitee shall be
entitled to pay the Tax claimed and ▇▇▇ for a refund prior to the end of such
30-day period if (i)(A) the failure to so pay the Tax would result in
substantial penalties (unless immediately reimbursed by Lessee) and the act of
paying the Tax would not materially prejudice the right to contest or (B) the
failure to so pay would result in criminal penalties and (ii) such Tax
Indemnitee shall take any action so required in connection with so paying the
Tax in a manner that, in its good faith opinion, is the least prejudicial to the
pursuit of the contest). In addition, such Tax Indemnitee shall (provided, that
Lessee shall have agreed to keep such information confidential other than to the
extent necessary in order to contest the claim) furnish Lessee with copies of
any requests for information from any Taxing Authority relating to such Taxes
with respect to which Lessee may be required to indemnify hereunder. If
requested by Lessee in writing within 30 days after its receipt of such notice,
such Tax Indemnitee shall, at the expense of Lessee (including, without
limitation, all reasonable costs, expenses and reasonable attorneys' and
accountants' fees and disbursements), in good faith contest (or, if permitted by
applicable law to be contested by the Lessee in its own name, allow Lessee to
contest) through appropriate administrative and judicial proceedings the
validity, applicability or amount of such Taxes by (I) resisting payment
thereof, (II) not paying the same except under protest if protest is necessary
and proper or (III) if the payment is made, using reasonable efforts to obtain a
refund thereof in an appropriate administrative and/or judicial proceeding. If
requested to do so by Lessee, the Tax Indemnitee shall appeal any adverse
administrative or judicial decision, except that the Tax Indemnitee shall not be
required to pursue any appeals to the United States Supreme Court. If and to the
extent the Tax Indemnitee is able to separate the contested issue or issues from
other issues arising in the same administrative or judicial proceeding that are
unrelated to the transactions contemplated by the Operative Agreements without,
in the good faith judgment of such Tax Indemnitee, adversely affecting such Tax
Indemnitee, such Tax Indemnitee shall permit Lessee to contest such matter in
its own name, if permitted by applicable law, and shall provide to Lessee (at
Lessee's cost and expense) such information or data that is in such Tax
Indemnitee's control or possession that is reasonably necessary to conduct such
contest (other than such Tax Indemnitee's federal income tax returns). In the
case of a contest controlled by a Tax Indemnitee, such Tax Indemnitee shall
consult with Lessee in good faith regarding the manner of contesting such claim
and shall keep Lessee reasonably informed regarding the progress of such
contest. A Tax Indemnitee shall not fail to take any action expressly required
by this Section 9.3.4 (including, without limitation, any action regarding any
appeal of an adverse determination with respect to any claim) or settle or
compromise any claim without the prior written consent of the Lessee (except as
contemplated by Section 9.3.4(b) or (c)).
(b) Notwithstanding the foregoing, in no event shall a Tax Indemnitee
be required to pursue any contest (or to permit Lessee to pursue any contest)
unless (i) Lessee shall have agreed to pay such Tax Indemnitee on demand all
reasonable costs and expenses incurred by such Tax Indemnitee in connection with
contesting such Taxes, including, without limitation, all reasonable out of
pocket costs and expenses and reasonable attorneys' and accountants' fees and
disbursements, (ii) if such contest shall involve the payment of the claim,
Lessee shall advance the amount thereof (to the extent indemnified hereunder)
plus interest, penalties and additions to tax with respect thereto that are
required to be paid prior to the commencement of such contest on an
interest-free and after-Tax basis to such Tax Indemnitee (and such Tax
Indemnitee shall promptly pay to the Lessee any net realized tax benefits
resulting from such advance including any tax benefits resulting from making
such payment), (iii) such Tax Indemnitee shall have reasonably determined that
the action to be taken will not result in any material risk of forfeiture, sale
or loss of the Aircraft (unless Lessee shall have made provisions to protect the
interests of any such Tax Indemnitee and the Owner Participant in a manner
reasonably satisfactory to such Tax Indemnitee and the Owner Participant)
(provided, that such Tax Indemnitee agrees to notify Lessee in writing promptly
after it becomes aware of any such risk), (iv) no Lease Event of Default shall
have occurred and be continuing unless Lessee has provided adequate security for
its obligations hereunder by advancing to such Tax Indemnitee before proceeding
or continuing with such contest, the amount of the Tax being contested, plus any
interest and penalties and an amount estimated in good faith by such Tax
Indemnitee for expenses, and (v) prior to commencing any judicial action
controlled by Lessee, Lessee shall have acknowledged its liability for such
claim hereunder, provided that Lessee shall not be bound by its acknowledgment
if the Final Determination articulates conclusions of law and fact that
demonstrate that Lessee has no liability for the contested amounts hereunder.
Notwithstanding the foregoing, if any Tax Indemnitee shall release, waive,
compromise or settle any claim which may be indemnifiable by Lessee pursuant to
this Section 9.3 without the written permission of Lessee, Lessee's obligation
to indemnify such Tax Indemnitee with respect to such claim (and all directly
related claims and claims based on the outcome of such claim) shall terminate,
subject to Section 9.3.4(c), and subject to Section 9.3.4(c), such Tax
Indemnitee shall repay to Lessee any amount previously paid or advanced to such
Tax Indemnitee with respect to such claim (other then contest costs), plus
interest at the rate that would have been payable by the relevant Taxing
Authority with respect to a refund of such Tax.
(c) Notwithstanding anything contained in this Section 9.3, a Tax
Indemnitee will not be required to contest the imposition of any Tax and shall
be permitted to settle or compromise any claim without Lessee's consent if such
Tax Indemnitee (i) shall waive its right to indemnity under this Section 9.3
with respect to such Tax (and any directly related claim and any claim the
outcome of which is determined based upon the outcome of such claim), (ii) shall
pay to Lessee any amount previously paid or advanced by Lessee pursuant to this
Section 9.3 (other than contest costs) with respect to such Tax, plus interest
at the rate that would have been payable by the relevant Taxing Authority with
respect to a refund of such Tax, and (iii) shall agree to discuss with Lessee
the views or positions of any relevant Taxing Authority with respect to the
imposition of such Tax.
9.3.5 REFUND
If any Tax Indemnitee shall receive a refund of, or be entitled to a
credit against other liability for, all or any part of any Taxes paid,
reimbursed or advanced by Lessee, such Tax Indemnitee shall pay to Lessee within
30 days of such receipt an amount equal to the lesser of (a) the amount of such
refund or credit plus any net tax benefit (taking into account any Taxes
incurred by such Tax Indemnitee by reason of the receipt of such refund or
realization of such credit) actually realized by such Tax Indemnitee as a result
of any payment by such Tax Indemnitee made pursuant to this sentence (including
this clause (a)) and (b) such tax payment, reimbursement or advance by Lessee to
such Tax Indemnitee theretofore made pursuant to this Section 9.3 (and the
excess, if any, of the amount described in clause (a) over the amount described
in clause (b) shall be carried forward and applied to reduce pro tanto any
subsequent obligation of Lessee to make payments to such Tax Indemnitee pursuant
to this Section 9.3). If, in addition to such refund or credit, such Tax
Indemnitee shall receive (or be credited with) an amount representing interest
on the amount of such refund or credit, such Tax Indemnitee shall pay to Lessee
within 30 days of such receipt or realization of such credit that proportion of
such interest that shall be fairly attributable to Taxes paid, reimbursed or
advanced by Lessee prior to the receipt of such refund or realization of such
credit.
9.3.6 TAX FILING
If any report, return or statement is required to be filed with
respect to any Tax which is subject to indemnification under this Section 9.3,
Lessee shall timely file the same (except for any such report, return or
statement which a Tax Indemnitee has timely notified the Lessee in writing that
such Tax Indemnitee intends to file or which a Tax Indemnitee is required by law
to file in its own name); provided, that the relevant Tax Indemnitee shall
furnish Lessee with any information in such Tax Indemnitee's possession or
control that is reasonably necessary to file any such return, report or
statement and is reasonably requested in writing by Lessee (it being understood
that the Tax Indemnitee shall not be required to furnish copies of its actual
tax returns, although it may be required to furnish relevant information
contained therein). Lessee shall either file such report, return or statement
and send a copy of such report, return or statement to such Tax Indemnitee, and
Owner Trustee if the Tax Indemnitee is not Owner Trustee, or, where Lessee is
not permitted to file such report, return or statement, or if the same is
required by law to be filed in the Tax Indemnitee's own name, it shall notify
such Tax Indemnitee in writing 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.
9.3.7 FORMS
Each Tax Indemnitee agrees to furnish from time to time to Lessee or
Loan Trustee or to such other person as Lessee or Loan Trustee may designate, at
Lessee's or Loan Trustee's request, such duly executed and properly completed
forms as may be necessary or appropriate in order to claim any reduction of or
exemption from any withholding or other Tax imposed by any Taxing Authority, if
(x) such reduction or exemption is available to such Tax Indemnitee, (y) Lessee
has provided such Tax Indemnitee with any information necessary to complete such
form not otherwise reasonably available to such Tax Indemnitee, and (z) if such
return is required to be filed in a jurisdiction outside the United States, the
Tax Indemnitee has not made a good faith determination that such filing would
subject it or any Affiliate to any adverse consequences in such jurisdiction for
which it has not been (and would not have been) indemnified.
9.3.8 NON-PARTIES
If a Tax Indemnitee is not a party to this Agreement, Lessee may
require the Tax Indemnitee to agree in writing, in a form reasonably acceptable
to Lessee, to the terms of this Section 9.3 and Section 15.8 prior to making any
payment to such Tax Indemnitee under this Section 9.3.
9.3.9 SUBROGATION
Upon payment of any Tax by Lessee pursuant to this Section 9.3 to or
on behalf of a Tax Indemnitee, Lessee, without any further action, shall be
subrogated to any claims that such Tax Indemnitee may have relating thereto.
Such Tax Indemnitee shall cooperate with Lessee (to the extent such cooperation
does not result in any unreimbursed cost, expense or liability to such Tax
Indemnitee) to permit Lessee to pursue such claims.
9.3.10 FOREIGN TAX ON LOAN PAYMENTS
If an Owner Participant is incorporated or organized, or maintains a
place of business or conducts activities (other than any activities of the Owner
Participant resulting from its participation in the transactions contemplated by
the Operative Agreements or resulting from any activities of Lessee in such
jurisdiction) in a country other than the United States or in a territory,
possession or commonwealth of the United States (within the meaning of the tax
law of that foreign jurisdiction) and if as a result thereof any foreign Taxes
(including withholding Taxes) are imposed on the Pass Through Trustees, Pass
Through Trusts, or Note Holders, then Owner Participant shall reimburse Lessee
for any payments Lessee is required to make to or on behalf of any Pass Through
Trustee, Pass Through Trust, or Note Holder under this Section 9.3 as a result
of the imposition of such Taxes. The amount payable by Owner Participant to
Lessee shall be an amount which, after taking into account any such Taxes, any
Tax imposed upon the receipt or accrual by Lessee of such payment by Owner
Participant and any tax benefits or tax savings realized by Lessee with respect
to the payment of such withholding Tax or the payment hereunder, shall equal the
amount of Lessee's payment to or on behalf of such Pass Through Trustee, or Note
Holder.
9.4 PAYMENTS
Any payments made pursuant to Section 9.1 and Section 9.3 shall be
due on the 60th day after demand is made to the indemnifying party therefor
(other than any payments for which a different time is provided under Section
9.3.3 hereof) and shall be made directly to the relevant Indemnitee or Tax
Indemnitee or to Lessee, in immediately available funds at such bank or to such
account as specified by such Indemnitee or Tax Indemnitee or Lessee, as the case
may be, in written directives to the payor, or, if no such direction shall have
been given, by check of the payor payable to the order of, and mailed to, such
Indemnitee or Tax Indemnitee or Lessee, as the case may be, by certified mail,
postage prepaid, at its address as set forth in this Agreement.
9.5 INTEREST
If any amount, payable by Lessee, any Indemnitee or any Tax
Indemnitee under Section 9.1 or 9.3 is not paid when due, the person obligated
to make such payment shall pay on demand, to the extent permitted by Law, to the
person entitled thereto, interest on any such amount for the period from and
including the due date for such amount to but excluding the date the same is
paid, at the Payment Due Rate. Such interest shall be paid in the same manner as
the unpaid amount in respect of which such interest is due.
9.6 BENEFIT OF INDEMNITIES
The obligations of Lessee in respect of all indemnities, obligations,
adjustments and payments in Section 9.1 or 9.3 are expressly made for the
benefit of, and shall be enforceable by, the Indemnitee or Tax Indemnitee
entitled thereto, without declaring the Lease to be in default or taking other
action thereunder, and notwithstanding any provision of the Trust Indenture.
SECTION 10. ASSIGNMENT OR TRANSFER OF INTERESTS
10.1 PARTICIPANTS, OWNER TRUSTEE AND NOTE HOLDERS
10.1.1 OWNER PARTICIPANT
(a) Owner Participant shall not Transfer any or all of its right,
title or interest in the Trust Estate or the Trust Agreement and to this
Agreement unless:
(i) The Transferee shall have full power, authority and legal
right to execute and deliver and to perform the obligations of Owner
Participant under this Agreement and the other Owner Participant
Agreements and shall provide reasonably satisfactory evidence of such
power and authority to Lessee, Equity Guarantor, Owner Trustee and
Mortgagee;
(ii) The Transferee shall enter into one or more legal, valid,
binding and enforceable agreements effective to confirm that such
Transferee agrees to be bound by all the terms of, and to undertake
all of the obligations arising after such transfer of, the
transferring Owner Participant contained in the Owner Participant
Agreements and in which it makes representations and warranties
substantially the same as those contained in Section 6.2 of this
Participation Agreement;
(iii) Lessee shall not be obligated to pay any greater amount or
incur any greater obligation than that which it would have been
obliged to pay or incur under the Lease or other Lessee Operative
Agreement if no transfer or assignment had taken place, and the terms
and conditions of the Lease and the other Lessee Operative Agreements
insofar as they relate to the rights and obligations of Lessee or the
Loan Participants shall not be altered;
(iv) Owner Participant shall deliver to Lessee, Equity Guarantor,
Owner Trustee and Mortgagee an opinion of counsel reasonably
satisfactory to each of them (which, if the Transferee is an Affiliate
of the Owner Participant, may be in-house counsel to such Owner
Participant) to the effect that such agreement or agreements referred
to in Section 10.1.1(a)(ii) and, if applicable, 10.1.1(a)(vi) are
legal, binding and enforceable in accordance with its or their terms
and that such transfer will not violate applicable securities laws,
the Act or any other applicable law and is in accordance with this
Section 10.1.1;
(v) The Transferee is a Citizen of the United States (it being
understood that the existence of any such requirement is to be
determined without giving consideration to Section 47.9 of the FAA
Regulations or any other provision that would restrict Lessee's use or
operation of the Aircraft), or shall use a voting powers trust or
similar arrangement in order to hold an interest in the Trust Estate
such that the Aircraft can be registered in the United States (without
giving consideration to Section 47.9 of the FAA Regulations or any
other provision that would restrict Lessee's use or operation of the
Aircraft);
(vi) The Transferee shall be one person and shall be either (A) a
Permitted Institution or (B) any other person (other than, without
Lessee's consent, a commercial air carrier, a commercial aircraft
operator, a freight forwarder or an Affiliate of any of the foregoing)
the obligations of which under the Owner Participant Agreements are
guaranteed by a Permitted Institution in any case, pursuant to a
written guaranty, in form and substance reasonably satisfactory to
Lessee, Owner Trustee and Mortgagee;
(vii) Equity Guarantor shall not be obligated to pay any greater
amount or incur any greater obligation than that which it would have
been obliged to pay or incur under the Equity Guaranty if no Transfer
had taken place, and the terms and conditions of the Equity Guaranty
insofar as they relate to the rights and obligations of Equity
Guarantor shall not be altered; and
(viii) The Transferee shall be a "U.S. Person" as defined in
Section 7701(a)(30) of the Code (or any successor provision thereto).
(b) Owner Participant shall give written notice to Lessee, Mortgagee
and Owner Trustee at least 10 days prior to any such Transfer, specifying the
name and address of the proposed Transferee, and providing financial statements
of the proposed Transferee evidencing satisfaction of the requirements described
in Section 10.1.1(a)(vi)(A) or (B) above.
(c) Any fees, charges and expenses, including the reasonable legal
fees, charges and expenses incurred by Lessee, Owner Participant, Mortgagee, any
Note Holder or Owner Trustee in connection with any Transfer by Owner
Participant permitted by this Section 10.1.1, or by the Transferee in any such
case, will be paid for by Owner Participant.
10.1.2 OWNER TRUSTEE
Owner Trustee may transfer its interests in the Trust Agreement
pursuant to Section 9 thereof.
10.1.3 NOTE HOLDERS
Subject to Section 7.5.2 hereof and Section 2.07 of the Trust
Indenture, any Note Holder may, at any time and from time to time, Transfer or
grant participations in all or any portion of the Equipment Notes and/or all or
any portion of its beneficial interest in its Equipment Notes and the Trust
Indenture Estate to any person (it being understood that the sale or issuance of
Pass Through Certificates by a Pass Through Trustee shall not be considered a
Transfer or participation); provided, that any participant in any such
participations shall not have any direct rights under the Operative Agreements
or any Lien on all or any part of the Aircraft or Trust Indenture Estate and
neither Lessee, Lessor, nor Owner Participant shall have any increased liability
or obligations as a result of any such participation. In the case of any such
Transfer, the Transferee, by acceptance of Equipment Notes in connection with
such Transfer, shall be deemed to be bound by all of the covenants of Note
Holders contained in the Operative Agreements.
10.2 EFFECT OF TRANSFER
Upon any Transfer in accordance with Section 10.1.1, 10.1.2 or 10.1.3
(other than any Transfer by any Note Holder, to the extent it only grants
participations in Equipment Notes or in its beneficial interest therein),
Transferee shall be deemed an "Owner Participant," "Owner Trustee" or a "Note
Holder," respectively, for all purposes of this Agreement and the other
Operative Agreements and, in the case of a Transferee of any Participant or Note
Holder, shall be deemed to have paid its ratable portion of Lessor's Cost
previously made by Owner Participant or Loan Participant, respectively, making
such conveyance and represented by the interest being conveyed, and each
reference herein to Owner Participant, Owner Trustee or Note Holder,
respectively, shall thereafter be deemed a reference to such Transferee for all
purposes, and the transferring Owner Participant, Owner Trustee, Loan
Participant or Note Holder shall be released (except, in the case of Owner
Participant, to the extent of any guaranty provided by it under Section
10.1.1(a)(vi)) from all of its liabilities and obligations under this Agreement
and any other Operative Agreements to the extent such liabilities and
obligations arise after such Transfer and, in each case, to the extent such
liabilities and obligations are assumed by the transferee; PROVIDED, that such
transferring Owner Participant, Owner Trustee or Note Holder (and its respective
Affiliates, successors, assigns, agents, servants, representatives, directors
and officers) will continue to have the benefit of any rights or indemnities
under any Operative Agreement vested or relating to circumstances, conditions,
acts or events prior to such Transfer.
SECTION 11. [RESERVED]
SECTION 12. SECTION 1110
It is the intention of each of Lessee, Owner Participant, Loan
Participant, the Note Holders (such intention being evidenced by each of their
acceptance of an Equipment Note), Owner Trustee and Mortgagee that Owner
Trustee, as lessor under the Lease (and Mortgagee as assignee of Owner Trustee
under the Trust Indenture), shall be entitled to the benefits of Section 1110 in
the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a
debtor. Lessee shall at all times be certificated and registered to the extent
necessary to entitle Owner Trustee to the rights afforded to lessors of aircraft
equipment under Section 1110 of the United States Bankruptcy Code.
SECTION 13. CHANGE OF CITIZENSHIP
13.1 GENERALLY
Without prejudice to the representations, warranties or covenants
regarding the status of any party hereto as a Citizen of the United States:
(a) Each of Lessee, First Security and WTC agrees that it will,
immediately upon obtaining knowledge of any facts that would cast doubt upon its
continuing status as a Citizen of the United States and promptly upon public
disclosure of negotiations in respect of any transaction which would or might
adversely affect such status, notify in writing all parties hereto of all
relevant matters in connection therewith; and
(b) Owner Participant agrees that, in the event its citizenship
status is to change or has changed in any way that would restrict the U.S.
registration of the Aircraft pursuant to the Act, or it makes public disclosure
of circumstances as a result of which it believes that such status is likely to
change in such manner, it will notify all the other parties to this
Participation Agreement of (i) such change in status promptly after obtaining
Actual Knowledge thereof or (ii) such belief as soon as practicable after such
public disclosure but in any event within ten Business Days after such public
disclosure.
13.2 OWNER PARTICIPANT
Owner Participant agrees, solely for the benefit of Lessee and the
Note Holders that if, during such time as the Aircraft is registered in the
United States, (a) it shall experience any change in citizenship status and (b)
the Aircraft shall be, or would therefore become, ineligible for registration in
the name of Owner Trustee under the Act and regulations then applicable
thereunder (without giving consideration to Section 47.9 of the FAA Regulations
or any other provision that may restrict Lessee's use or operation of the
Aircraft), then Owner Participant shall as soon as is reasonably practicable,
but in any event within 30 days after obtaining Actual Knowledge of such
ineligibility and of such change in status, (y) effect voting trust or other
similar arrangements (in which case any provisions contained in the Operative
Agreements restricting Owner Participant's or Owner Trustee's ability to amend
the Trust Agreement shall not apply to the extent necessary to permit the use of
such a voting trust or other similar arrangement) or take any other action as
may be necessary to prevent any deregistration or maintain the United States
registration of the Aircraft or (z) transfer in accordance with the terms of
this Agreement all its right, title and interest in and to this Agreement, the
Trust Estate and the Trust Agreement in accordance with Section 10.1.
13.3 OWNER TRUSTEE
Upon First Security giving any notice in accordance with Section
13.1(a), Owner Trustee shall, subject to Section 9.1.1 of the Trust Agreement,
resign as Owner Trustee. Upon its receipt of such notice, Owner Participant
shall as promptly as practicable appoint a Citizen of the United States as
successor Owner Trustee pursuant to Section 9.1 of the Trust Agreement.
13.4 MORTGAGEE
Upon WTC giving any notice in accordance with Section 13.1(a),
Mortgagee shall (if and so long as such citizenship is necessary under the Act
as in effect at such time or, if it is not necessary, if and so long as
Mortgagee's citizenship could have any adverse effect on Lessee, any Participant
or any Note Holder), subject to Section 8.02 of the Trust Indenture, resign as
Mortgagee promptly upon its ceasing to be such a citizen.
SECTION 14. CONCERNING OWNER TRUSTEE
It is understood and agreed that, except as otherwise expressly
provided herein or in the Trust Agreement or the Trust Indenture, Owner Trustee
is entering into this Agreement solely in its capacity as trustee as provided in
the Trust Agreement and not in its individual capacity and in no case whatsoever
will it be liable or accountable in its individual capacity for any of the
statements, representations, warranties, agreements or obligations of Owner
Trustee hereunder, or for any loss in respect thereof, as to all of which the
parties agree to look solely to the Trust Estate; PROVIDED, that nothing in this
Section 14 shall be deemed to limit in scope or substance the personal liability
of First Security (a) to Owner Participant as expressly set forth in the Trust
Agreement, (b) in respect of the representations, warranties and agreements of
First Security expressly made as such herein or in any other Operative Agreement
to which it is a party, and (c) for the consequences of its own gross
negligence, willful misconduct, and, in receiving, handling or remitting of
funds only, its willful misconduct or simple negligence as a trustee.
SECTION 15. MISCELLANEOUS
15.1 AMENDMENTS
No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to amend, supplement, waive, modify, discharge,
terminate or otherwise vary and is signed by the party against which the
enforcement of the amendment, supplement, waiver, modification, discharge,
termination or variance is sought. Each such amendment, supplement, waiver,
modification, discharge, termination or variance shall be effective only in the
specific instance and for the specific purpose for which it is given. No
provision of this Agreement shall be varied or contradicted by oral
communication, course of dealing or performance or other manner not set forth in
an agreement, document or instrument in writing and signed by the party against
which enforcement of the same is sought.
15.2 SEVERABILITY
If any provision hereof shall be held invalid, illegal or
unenforceable in any respect in any jurisdiction, then, to the extent permitted
by Law, (a) all other provisions hereof shall remain in full force and effect in
such jurisdiction and (b) such invalidity, illegality or unenforceability shall
not affect the validity, legality or enforceability of such provision in any
other jurisdiction. If, however, any Law pursuant to which such provisions are
held invalid, illegal or unenforceable may be waived, such Law is hereby waived
by the parties hereto to the full extent permitted, to the end that this
Agreement shall be deemed to be a valid and binding agreement in all respects,
enforceable in accordance with its terms.
15.3 SURVIVAL
The indemnities set forth herein shall survive the delivery or return
of the Aircraft, the Transfer of any interest of Owner Participant in this
Agreement, the Trust Estate and the Trust Agreement, the Transfer of any
interest by any Note Holder of its Equipment Note and the expiration or other
termination of this Agreement or any other Operative Agreement.
15.4 REPRODUCTION OF DOCUMENTS
This Agreement, all annexes, schedules and exhibits hereto and all
agreements, instruments and documents relating hereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed and (b) financial statements, certificates and other information
previously or hereafter furnished to any party hereto, may be reproduced by such
party by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process, and such party may destroy any original
documents so reproduced. Any such reproduction shall be as admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such party in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction likewise is
admissible in evidence.
15.5 COUNTERPARTS
This Agreement and any amendments, waivers, consents or supplements
hereto may be executed in any number of counterparts (or upon separate signature
pages bound together into one or more counterparts), each of which when so
executed shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.
15.6 NO WAIVER
No failure on the part of any party hereto to exercise, and no delay
by any party hereto in exercising, any of its respective rights, powers,
remedies or privileges under this Agreement or provided at Law, in equity or
otherwise shall impair, prejudice or constitute a waiver of any such right,
power, remedy or privilege or be construed as a waiver of any breach hereof or
default hereunder or as an acquiescence therein nor shall any single or partial
exercise of any such right, power, remedy or privilege preclude any other or
further exercise thereof by it or the exercise of any other right, power, remedy
or privilege by it. No notice to or demand on any party hereto in any case
shall, unless otherwise required under this Agreement, entitle such party to any
other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of any party hereto to any other or further
action in any circumstances without notice or demand.
15.7 NOTICES
Unless otherwise expressly permitted by the terms hereof, all
notices, requests, demands, authorizations, directions, consents, waivers and
other communications required or permitted to be made, given, furnished or filed
hereunder shall be in writing (it being understood that the specification of a
writing in certain instances and not in others does not imply an intention that
a writing is not required as to the latter), shall refer specifically to this
Agreement or other applicable Operative Agreement, and shall be personally
delivered, sent by facsimile 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.
15.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE
(A) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(B) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS
ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
IN THE CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING
WITH RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT.
(C) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES 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 15.7. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 15.8(C), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH
PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS
TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT
IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED
IN ANY ACTION OR PROCEEDING BASED THEREON.
(D) TO THE EXTENT THAT ANY PARTY HERETO HAS OR HEREAFTER MAY ACQUIRE
ANY IMMUNITY FROM JURISDICTION OF ANY OF THE ABOVE-NAMED COURTS OR FROM ANY
LEGAL PROCESS THEREIN, SUCH PARTY HEREBY IRREVOCABLY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, SUCH IMMUNITY, AND 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, (I) THE DEFENSE
OF SOVEREIGN IMMUNITY, (II) THAT IT OR ANY OF ITS PROPERTY IS IMMUNE FROM THE
ABOVE DESCRIBED LEGAL PROCESS AND (III) THAT SUCH ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS
IMPROPER OR THAT THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE
ENFORCED IN OR BY SUCH COURTS.
(E) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION BASED
UPON OR ARISING OUT OF OR RELATING TO THIS AGREEMENT.
15.9 THIRD-PARTY BENEFICIARY
This Agreement is not intended to, and shall not, provide any person
not a party hereto (other than the Liquidity Provider, which is an intended
third party beneficiary with respect to the provisions of Section 9.1, and the
other persons referred to in Section 7.6.13, who are intended third party
beneficiaries of 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
Liquidity Provider, with respect to the provisions of Section 9.1, and the other
persons referred to in Section 7.6.13, with respect to 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.
15.10 ENTIRE AGREEMENT
This Agreement, together with the other Operative Agreements, on and
as of the date hereof, constitutes the entire agreement of the parties hereto
with respect to the subject matter hereof, and all prior or contemporaneous
understandings or agreements, whether written or oral, among any of the parties
hereto with respect to such subject matter are hereby superseded in their
entireties (except that the letter agreement, dated May 14, 1997, among Lessee,
Existing Mortgagee and Airframe Manufacturer shall not be superseded).
15.11 FURTHER ASSURANCES
Each party hereto shall execute, acknowledge and deliver or shall
cause to be executed, acknowledged and delivered, all such further agreements,
instruments, certificates or documents, and shall do and cause to be done such
further acts and things, in any case, as any other party hereto shall reasonably
request in connection with the administration of, or to carry out more
effectively the purposes of, or to better assure and confirm into such other
party the rights and benefits to be provided under this Agreement and the other
Operative Agreements.
[This space intentionally left blank]
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., Lessee
By _________________________________________
Name:
Title:
METLIFE CAPITAL CREDIT L.P.,
Owner Participant
By: CLJFINCO, INC.,
General Partner
By _________________________________________,
Name:
Title:
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity, except
as expressly provided herein, but solely
as Owner Trustee
By __________________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except
as expressly provided herein, but solely
as Mortgagee
By _________________________________________
Name:
Title:
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,
1997-3A
By _________________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except
as expressly provided herein, but solely
as Pass Through Trustee under the Pass
Through Trust Agreement for the
Continental Airlines Pass Through Trust,
1997-3B
By _________________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except
as expressly provided herein, but solely
as Pass Through Trustee under the Pass
Through Trust Agreement for the
Continental Airlines Pass Through Trust,
1997-3C
By _________________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except
as expressly provided herein, but solely
as Subordination Agent
By _________________________________________
Name:
Title:
CORCIM, INC.,
Existing Lessor
By _________________________________________
Name:
Title:
ROLLS-ROYCE PLC,
Existing Mortgagee and Equity Guarantor
By _________________________________________
Name:
Title:
EMBRAER-EMPRESA BRASILEIRA DE
AERONAUTICA S.A.,
Airframe Manufacturer
By _________________________________________
Name:
Title:
ANNEX A
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Agreement, unless otherwise expressly provided,
a reference to:
(i) each of "Lessee," "Lessor," "Loan Participant," "Owner
Trustee," "Owner Participant," "Mortgagee," "Note Holder" or any other
person includes, without prejudice to the provisions of any Operative
Agreement, any successor in interest to it and any permitted
transferee, permitted purchaser or permitted assignee of it;
(ii) words importing the plural include the singular and
words importing the singular include the plural;
(iii) any agreement, instrument or document, or any annex,
schedule or exhibit thereto, or any other part thereof, includes,
without prejudice to the provisions of any Operative Agreement, that
agreement, instrument or document, or annex, schedule or exhibit, or
part, respectively, as amended, modified or supplemented from time to
time in accordance with its terms and in accordance with the Operative
Agreements, and any agreement, instrument or document entered into in
substitution or replacement therefor;
(iv) any provision of any Law includes any such provision as
amended, modified, supplemented, substituted, reissued or reenacted
prior to the Closing Date, and thereafter from time to time;
(v) the words "Agreement," "this Agreement," "hereby,"
"herein," "hereto," "hereof" and "hereunder" and words of similar
import when used in any Operative Agreement refer to such Operative
Agreement as a whole and not to any particular provision of such
Operative Agreement;
(vi) the words "including," "including, without limitation,"
"including, but not limited to," and terms or phrases of similar
import when used in any Operative Agreement, with respect to any
matter or thing, mean including, without limitation, such matter or
thing; and
(vii) a "Section," an "Exhibit," an "Annex" or a "Schedule"
in any Operative Agreement, or in any annex thereto, is a reference to
a section of, or an exhibit, an annex or a schedule to, such Operative
Agreement or such annex, respectively.
(b) Each exhibit, annex and schedule to each Operative Agreement is
incorporated in, and shall be deemed to be a part of, such Operative Agreement.
(c) Unless otherwise defined or specified in any Operative Agreement,
all accounting terms therein shall be construed and all accounting
determinations thereunder shall be made in accordance with GAAP.
(d) Headings used in any Operative Agreement are for convenience only
and shall not in any way affect the construction of, or be taken into
consideration in interpreting, such Operative Agreement.
(e) For purposes of each Operative Agreement, the occurrence and
continuance of a Lease Default or Lease Event of Default referred to in Section
14.5 shall not be deemed to prohibit the Lessee from taking any action or
exercising any right that is conditioned on no Lease Event of Default,
Bankruptcy Default or Lease Default having occurred and be continuing if a
Section 1110 Event shall have occurred and is then continuing.
DEFINED TERMS
"ACT" means part A of subtitle VII of title 49, United States Code.
"ACTUAL KNOWLEDGE" means (a) as it applies to Owner Trustee or
Mortgagee, as the case may be, actual knowledge of a responsible officer in the
Corporate Trust Department or the Corporate Trust Office, respectively, and (b)
as it applies to Owner Participant, Lessee, Existing Lessor, Existing Mortgagee
and Airframe Manufacturer, actual knowledge of a Vice President or more senior
officer of Owner Participant or Lessee, respectively, or any other officer of
Owner Participant or Lessee, respectively, having responsibility for the
transactions contemplated by the Operative Agreements; PROVIDED that each of
Lessee, Owner Participant, Owner Trustee, Mortgagee, Existing Lessor, Existing
Mortgagee and Airframe Manufacturer shall be deemed to have "Actual Knowledge"
of any matter as to which it has received notice from Lessee, Owner Participant,
any Note Holder, Owner Trustee or Mortgagee, such notice having been given
pursuant to Section 15.7 of the Participation Agreement.
"ADDITIONAL INSURED" is defined in Section D of Annex D to the Lease.
"AFFILIATE" means, with respect to any person, any other person
directly or indirectly controlling, controlled by or under common control with
such person. For purposes of this definition, "control" means the power,
directly or indirectly, to direct or cause the direction of the management and
policies of such person, whether through the ownership of voting securities or
by contract or otherwise and "controlling," "controlled by" and "under common
control with" have correlative meanings.
"AIRCRAFT" means, collectively, the Airframe and Engines.
"AIRCRAFT ▇▇▇▇ OF SALE" means the full warranty ▇▇▇▇ of sale covering
the Aircraft delivered by Existing Lessor to Owner Trustee on the Closing Date.
"AIRCRAFT DOCUMENTS" means all technical data, manuals and log books,
and all inspection, modification and overhaul records and other service, repair,
maintenance and technical records that are required by the FAA (or the relevant
Aviation Authority) to be maintained with respect to the Aircraft, Airframe,
Engines or Parts; and such term shall include all additions, renewals, revisions
and replacements of any such materials from time to time made, or required to be
made, by the FAA (or other Aviation Authority) regulations, and in each case in
whatever form and by whatever means or medium (including, without limitation,
microfiche, microfilm, paper or computer disk) such materials may be maintained
or retained by or on behalf of Lessee (PROVIDED, that all such materials shall
be maintained in the English language).
"AIRFRAME" means (a) the aircraft (excluding Engines or engines from
time to time installed thereon) manufactured by Airframe Manufacturer and
identified by Airframe Manufacturer's model number, United States registration
number and Airframe Manufacturer's serial number set forth in Lease Supplement
No. 1 and (b) any and all Parts incorporated or installed in or attached or
appurtenant to such airframe, and any and all Parts removed from such airframe,
unless title to such Parts shall not be vested in Lessor in accordance with
Section 8.1 and Annex C of the Lease.
"AIRFRAME MANUFACTURER" means Embraer-Empresa Brasileira de
Aeronautica S.A., a Brazilian corporation.
"AIRFRAME MANUFACTURER AGREEMENTS" means, collectively, the
Participation Agreement, the Purchase Agreement and the Consent and Agreement.
"AMORTIZATION AMOUNT" means, with respect to any Equipment Note, as
of any Payment Date, the amount determined by multiplying the percentage set
forth opposite such Date on the Amortization Schedule by the Original Amount of
such Equipment Note.
"AMORTIZATION SCHEDULE" means, with respect to each Equipment Note,
the amortization schedule for such Equipment Note delivered pursuant to Section
2.02 of the Trust Indenture.
"APPRAISAL" is defined in Section 5.1.2(xv) of the Participation
Agreement.
"APPRAISER" means a firm of internationally recognized, independent
aircraft appraisers.
"AVERAGE LIFE DATE" for any Equipment Note shall be the date which
follows the time of determination by a period equal to the Remaining Weighted
Average Life of such Equipment Note. "Remaining Weighted Average Life" on a
given date with respect to any Equipment Note shall be the number of days equal
to the quotient obtained by dividing (a) the sum of each of the products
obtained by multiplying (i) the amount of each then remaining scheduled payment
of principal of such Equipment Note by (ii) the number of days from and
including such determination date to but excluding the date on which such
payment of principal is scheduled to be made, by (b) the then outstanding
principal amount of such Equipment Note.
"AVIATION AUTHORITY" means the FAA or, if the Aircraft is permitted
to be, and is, registered with any other Government Entity under and in
accordance with Section 7.1.2 of the Lease, such other Government Entity.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C.
ss. 101 ET SEQ.
"BANKRUPTCY DEFAULT" means a Lease Event of Default under Section
14.5 of the Lease.
"BASE LEASE TERM" means the period beginning on and including the
Closing Date and ending on the Scheduled Expiration Date, or such earlier date
on which the Term terminates in accordance with the provisions of the Lease.
"BASIC PASS THROUGH TRUST AGREEMENT" means the Pass Through Trust
Agreement, dated the Issuance Date, between Lessee and Pass Through Trustee, as
such agreement may be supplemented, amended or modified, but does not include
any Trust Supplement.
"BASIC RENT" means the rent payable for the Aircraft pursuant to
Section 3.2.1 of the Lease.
"BENEFICIAL OWNER" when used in relation to an Equipment Note means a
Person that, by reason of direct ownership, contract, share ownership or
otherwise, has the right to receive or participate in receiving, directly or
indirectly, payments of principal, interest or Make-Whole Amount in respect of
such Equipment Note; provided that a Person shall not be deemed to be a
Beneficial Owner of an Equipment Note solely because another Person in which
such a Person owns common stock or other equity securities is a registered
holder or Beneficial Owner of such Equipment Note unless such Person is an
Affiliate of such other Person.
"BILLS OF SALE" means the FAA ▇▇▇▇ of Sale and the Aircraft ▇▇▇▇ of
Sale.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other
day on which commercial banks are authorized or required by law to close in New
York, New York, Houston, Texas, Wilmington, Delaware, or Salt Lake City, Utah.
"CASH EQUIVALENTS" means the following securities (which shall mature
within 90 days of the date of purchase thereof): (a) direct obligations of the
U.S. Government; (b) obligations fully guaranteed by the U.S. Government; (c)
certificates of deposit issued by, or bankers' acceptances of, or time deposits
or a deposit account with, Owner Trustee, Mortgagee or any bank, trust company
or national banking association incorporated or doing business under the laws of
the United States or any state thereof having a combined capital and surplus and
retained earnings of at least $500,000,000 and having a rate of "C" or better
from the Thomson BankWatch Service; or (d) commercial paper of any issuer doing
business under the laws of the United States or one of the states thereof and in
each case having a rating assigned to such commercial paper by Standard & Poor's
Rating Services or ▇▇▇▇▇'▇ Investors Service, Inc. equal to A1 or higher.
"CITIZEN OF THE UNITED STATES" is defined in Section 40102(a)(15) of
the Act and in the FAA Regulations.
"CHANGE IN TAX LAW" means any change or proposed change in the Code
or the regulations promulgated thereunder or any change in the interpretation of
the Code or such regulations in a decision by the United States Supreme Court,
the United States Tax Court, the United States Claims Court or any of the United
States Courts of Appeal or District Courts, or any issuance of an Internal
Revenue Ruling, Revenue Procedure or administrative pronouncement by the
Internal Revenue Service or the Department of the Treasury.
"CLOSING" means the occurrence of the following concurrent events:
(i) sale of the Aircraft to the Owner Trustee and the filing of the FAA ▇▇▇▇ of
Sale with the FAA in connection therewith; (ii) payment of Lessor's Cost by
Owner Trustee to Existing Lessor; (iii) lease of the Aircraft by Owner Trustee
to Lessee pursuant to the Lease; and (iv) completion of the other events
contemplated by the Participation Agreement to occur at the Closing.
"CLOSING DATE" means the Business Day specified in Lease Supplement
No. 1 as the Closing Date, which shall be the date on which the Closing occurs.
"CODE" means the Internal Revenue Code of 1986, as amended; PROVIDED,
that when used in relation to a Plan, "Code" shall mean the Internal Revenue
Code of 1986 and any regulations and rulings issued thereunder, all as amended
and in effect from time to time.
"COMMITMENT" means, for any Participant, the amount of its
participation in the payment of Lessor's Cost.
"COMMITMENT TERMINATION DATE" is defined in Schedule 3 to the
Participation Agreement.
"CONSENT AND AGREEMENT" means the Manufacturer Consent and Agreement
____, dated as of even date with the Participation Agreement, of Airframe
Manufacturer.
"CONTINUOUS STAY PERIOD" is defined in Section 4.04(a) of the Trust
Indenture.
"CORPORATE TRUST DEPARTMENT" or "TRUST OFFICE" means the principal
corporate trust office of Owner Trustee located from time to time at Owner
Trustee's address for notices under the Participation Agreement or such other
office at which Owner Trustee's corporate trust business shall be administered
which Owner Trustee shall have specified by notice in writing to Lessee,
Mortgagee and each Note Holder.
"CORPORATE TRUST OFFICE" means the principal office of Mortgagee
located at Mortgagee's address for notices under the Participation Agreement or
such other office at which Mortgagee's corporate trust business shall be
administered which Mortgagee shall have specified by notice in writing to
Lessee, Owner Trustee and each Note Holder.
"CRAF" means the Civil Reserve Air Fleet Program established pursuant
to 10 U.S.C. ss. 9511-13 or any similar substitute program.
"DEBT" means any liability for borrowed money, or any liability for
the payment of money in connection with any letter of credit transaction or any
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments.
"DEBT RATE" means, with respect to (i) any Series, the rate per annum
specified for such Series under the heading "Interest Rate" in Schedule I to the
Trust Indenture and (ii) any other purpose, with respect to any period, the
weighted average interest rate per annum during such period borne by the
outstanding Equipment Notes, excluding any interest payable at the Payment Due
Rate.
"DEFAULT" means any event or condition that with the giving of notice
or the lapse of time or both would become an Event of Default.
"DELAYED CLOSING DATE" means a delayed Closing Date notified to
Lessee, Existing Lessor, each Participant, Owner Trustee and Mortgagee by
Existing Mortgagee pursuant to Section 4.3 of the Participation Agreement, which
delayed Closing Date shall be a Business Day not later than the Commitment
Termination Date.
"DELIVERY DATE" means the date on which the Aircraft was leased to
Lessee by Corcim, Inc., as lessor, under the Existing Lease.
"DOLLARS," "UNITED STATES DOLLARS" or "$" means the lawful currency
of the United States.
"DOT" means the Department of Transportation of the United States or
any Government Entity succeeding to the functions of such Department of
Transportation.
"ENFORCEMENT DATE" is defined in Section 4.03 of the Trust Indenture.
"ENGINE" means (a) each of the engines manufactured by Engine
Manufacturer and identified by Engine Manufacturer's model number and Engine
Manufacturer's serial number set forth in Lease Supplement No. 1 and originally
installed on the Airframe on delivery thereof pursuant to the Lease, and any
Replacement Engine, in any case whether or not from time to time installed on
such Airframe or installed on any other airframe or aircraft, and (b) any and
all Parts incorporated or installed in or attached or appurtenant to such
engine, and any and all Parts removed from such engine, unless title to such
Parts shall not be vested in Lessor in accordance with Section 8.1 and Annex C
of the Lease. Upon substitution of a Replacement Engine under and in accordance
with the Lease, such Replacement Engine shall become subject to the Lease and
shall be an "Engine" for all purposes of the Lease and the other Operative
Agreements and thereupon the Engine for which the substitution is made shall no
longer be subject to the Lease, and such replaced Engine shall cease to be an
"Engine."
"ENGINE MANUFACTURER" means ▇▇▇▇▇▇▇ Engine Company, Inc., a Delaware
corporation.
"EQUIPMENT NOTE REGISTER" is defined in Section 2.07 of the Trust
Indenture.
"EQUIPMENT NOTES" means and includes any equipment notes issued under
the Trust Indenture in the form specified in Section 2.01 thereof (as such form
may be varied pursuant to the terms of the Trust Indenture) and any Equipment
Note issued under the Trust Indenture in exchange for or replacement of any
Equipment Note.
"EQUITY ADVISOR" has the meaning provided in Schedule 3 to the
Participation Agreement.
"EQUITY GUARANTOR" means Rolls-Royce plc, a corporation organized
under the laws of England.
"EQUITY GUARANTY" means the Equity Guaranty ____ issued by the Equity
Guarantor dated of even date with the Participation Agreement, including the
side letter dated of even date with the Participation Agreement between the
Equity Guarantor and the Owner Participant.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
any regulations and rulings issued thereunder all as amended and in effect from
time to time.
"EVENT OF DEFAULT" is defined in Section 4.02 of the Trust Indenture.
"EVENT OF LOSS" means, with respect to the Aircraft, Airframe or any
Engine, any of the following circumstances, conditions or events with respect to
such property, for any reason whatsoever:
(a) the destruction of such property, damage to such property beyond
economic repair or rendition of such property permanently unfit
for normal use by Lessee;
(b) the actual or constructive total loss of such property or any
damage to such property, or requisition of title or use of such
property, which results in an insurance settlement with respect
to such property on the basis of a total loss or constructive or
compromised total loss;
(c) any theft, hijacking or disappearance of such property for a
period of 180 consecutive days or more or, if earlier, the end of
the Term;
(d) any seizure, condemnation, confiscation, taking or requisition
(including loss of title) of such property by any Government or
purported Government Entity (other than a requisition of use by
the U.S. Government) for a period exceeding 180 consecutive days
or, if earlier, at the end of the Term;
(e) any seizure, condemnation, confiscation, taking or requisition of
use of such property by the U.S. Government that continues until
the last day of the Term, PROVIDED that no such Event of Loss
shall exist if Lessor shall have elected not to treat such event
as an Event of Loss pursuant to Section 10.6 of the Lease; and
(f) as a result of any law, rule, regulation, order or other action
by the Aviation Authority or by any Government Entity of the
government of registry of the Aircraft or by any Government
Entity otherwise having jurisdiction over the operation or use of
the Aircraft, the use of such property in the normal course of
Lessee's business of passenger air transportation is prohibited
for a period of 180 consecutive days, unless Lessee, prior to the
expiration of such 180 day period, shall have undertaken and
shall be diligently carrying forward such steps as may be
necessary or desirable to permit the normal use of such property
by Lessee, but in any event if such use shall have been
prohibited for a period of 720 days, provided that no Event of
Loss shall be deemed to have occurred if such prohibition has
been applicable to Lessee's (or a Permitted Sublessee's) entire
U.S. fleet of such property and Lessee (or a Permitted
Sublessee), prior to the expiration of such 720-day period, shall
have conformed at least one unit of such property in its fleet to
the requirements of any such law, rule, regulation, order or
other action and commenced regular commercial use of the same in
such jurisdiction and shall be diligently carrying forward, in a
manner which does not discriminate against such property in so
conforming such property, steps which are necessary or desirable
to permit the normal use of such property by Lessee, but in any
event if such use shall have been prohibited for a period of
three years or such use shall be prohibited at the expiration of
the Term.
"EXCLUDED PAYMENTS" means (i) indemnity payments paid or payable by
Lessee to or in respect of Owner Participant, or Owner Trustee in its individual
capacity, their respective Affiliates, successors and permitted assigns and
their directors, officers, employees, servants and agents pursuant to Section 9
of the Participation Agreement or any corresponding payments under the Lease,
(ii) proceeds of public liability insurance paid or payable as a result of
insurance claims made, or losses suffered, by Owner Trustee in its individual
capacity or by Owner Participant, that are payable directly to Owner Trustee in
its individual capacity, or Owner Participant, respectively, for their own
account, (iii) proceeds of insurance maintained with respect to the Aircraft by
Owner Participant or any Affiliate thereof for its or their own account or
benefit (whether directly or through Owner Trustee) and permitted under Section
11.2 of the Lease, (iv) all payments required to be made under the Tax Indemnity
Agreement by Lessee whether or not denominated as Supplemental Rent, (v) all
payments of guaranty fees pursuant to Section 7.6.14 of the Participation
Agreement, (vi) any amount payable to the Owner Participant by any transferee as
the purchase price of the Owner Participant's interest in the Trust Estate,
(vii) all rights of the Owner Participant or the Owner Trustee in and to the
Equity Guaranty and any amounts payable thereunder, (viii) any interest that
pursuant to the Operative Agreements may from time to time accrue in respect of
any of the amounts described in clauses (i) through (vii) above, (ix) proceeds
of any right to enforce the payment of any amount described in clauses (i)
through (viii) above (PROVIDED, that the rights referred to in this clause (ix)
shall not be deemed to include the exercise of any remedies provided for in the
Lease other than the right to ▇▇▇ for specific performance of any covenant to
make such payment or to ▇▇▇ for damages in respect of the breach of any such
covenant) and (x) any right to exercise any election or option or make any
decision or determination, or to give or receive any notice, consent, waiver or
approval, or to take any other action in respect of, but in each case, only to
the extent relating to, any Excluded Payments.
"EXISTING LEASE" has the meaning provided in Schedule 3 to the
Participation Agreement.
"EXISTING LESSOR" means Corcim, Inc., a Delaware corporation.
"EXISTING LESSOR AGREEMENTS" means the Participation Agreement, the
Purchase Agreement Assignment, the Bills of Sale and the Termination Agreement
with respect to the Existing Lease.
"EXISTING MORTGAGE" has the meaning provided in Schedule 3 to the
Participation Agreement.
"EXISTING MORTGAGEE" means Rolls-Royce plc, a corporation organized
under the laws of England.
"EXISTING MORTGAGEE AGREEMENTS" means the Participation Agreement,
the Equity Guaranty and the Termination Agreement with respect to the Existing
Mortgage.
"EXISTING PARTICIPATION AGREEMENT" has the meaning provided in
Schedule 3 to the Participation Agreement.
"EXISTING SUBLEASE" means the Aircraft Sublease Agreement, dated the
date of the Existing Participation Agreement, between Lessee and Express
relating to the Aircraft.
"EXPENSE LIMIT" has the meaning provided in Schedule 3 to the
Participation Agreement.
"EXPENSES" means any and all liabilities, obligations, losses,
damages, settlements, penalties, claims, actions, suits, costs, expenses and
disbursements (including, without limitation, reasonable fees and disbursements
of legal counsel, accountants, appraisers, inspectors or other professionals,
and costs of investigation).
"EXPRESS" means Continental Express, Inc., a wholly owned subsidiary
of Lessee.
"EXPRESS SUBLEASE" means the Permitted Sublease, dated as of the date
of the Participation Agreement, between Lessee and Express relating to the
Aircraft.
"FAA" means the Federal Aviation Administration of the United States
or any Government Entity succeeding to the functions of such Federal Aviation
Administration.
"FAA ▇▇▇▇ OF SALE" means a ▇▇▇▇ of sale for the Aircraft on AC Form
8050-2 (or such other form as may be approved by the FAA) delivered to Owner
Trustee on the Closing Date by Existing Lessor.
"FAA FILED DOCUMENTS" means the Lease, Lease Supplement No. 1, the
Express Sublease, the Trust Indenture, the Trust Agreement, the Trust Indenture
Supplement, the FAA ▇▇▇▇ of Sale, an application for registration of the
Aircraft with the FAA in the name of Owner Trustee and the Termination
Agreements.
"FAA REGULATIONS" means the Federal Aviation Regulations issued or
promulgated pursuant to the Act from time to time.
"FAIR MARKET RENTAL VALUE" means the fair market rental value in
Dollars for the Aircraft that would apply in an arm's-length transaction between
an informed and willing lessee under no compulsion to lease, and an informed and
willing lessor under no compulsion to lease, the Aircraft, for the applicable
Renewal Lease Term, assuming that (a) the Aircraft has been maintained in
accordance with, and is in the condition required by, the Lease, (b) payments of
rent would be made quarterly, and (c) the Aircraft would be leased during any
such Renewal Term on the same terms and conditions as are set forth in the Lease
with respect to the Base Lease Term.
"FAIR MARKET SALES VALUE" means the fair market sales value in
Dollars for the Aircraft that would apply in an arm's-length transaction between
an informed and willing buyer under no compulsion to buy, and an informed and
willing seller under no compulsion to sell, the Aircraft, in a transaction that
would close on or about the relevant time of determination, assuming (except as
otherwise provided in Section 15.4 of the Lease) that (a) the Aircraft has been
maintained in accordance with, and is in the condition required by, the Lease
and (b) the Aircraft would be delivered to such informed and willing buyer in
the return condition required by the Lease.
"FINANCING STATEMENTS" means, collectively, (a) UCC-1 financing
statements (i) covering the Trust Indenture Estate, by Owner Trustee, as debtor,
showing Mortgagee as secured party, for filing in Utah and each other
jurisdiction that, in the opinion of Mortgagee, is necessary to perfect its Lien
on the Trust Indenture Estate and (ii) covering the Lease and the Aircraft, as a
precautionary matter, by Lessee, as lessee, showing Owner Trustee as lessor and
Mortgagee as assignee of Owner Trustee, for filing in Texas and each other
jurisdiction that, in the opinion of Owner Trustee and Mortgagee, is reasonably
desirable and (b) UCC-3 financing statements (i) evidencing the termination of
the Existing Lease and the Existing Sublease, for filing in Texas and each other
jurisdiction that, in the opinion of Owner Trustee and Mortgagee, is reasonably
desirable and (ii) evidencing the release of the Aircraft, Aircraft Documents
and other collateral from the Lien of the Existing Mortgage for filing in
Delaware and each other jurisdiction that, in the opinion of Owner Trustee and
Mortgagee, is reasonably desirable.
"FIRST SECURITY" means First Security Bank, National Association, a
national banking association, not in its capacity as Owner Trustee under the
Trust Agreement, but in its individual capacity.
"GAAP" means generally accepted accounting principles as set forth in
the statements of financial accounting standards issued by the Financial
Accounting Standards Board of the American Institute of Certified Public
Accountants, as such principles may at any time or from time to time be varied
by any applicable financial accounting rules or regulations issued by the SEC
and, with respect to any person, shall mean such principles applied on a basis
consistent with prior periods except as may be disclosed in such person's
financial statements.
"GOVERNMENT ENTITY" means (a) any federal, state, provincial or
similar government, and any body, board, department, commission, court,
tribunal, authority, agency or other instrumentality of any such government or
otherwise exercising any executive, legislative, judicial, administrative or
regulatory functions of such government or (b) any other government entity
having jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"INDEMNITEE" MEANS (i) First Security and Owner Trustee, (ii) WTC and
Mortgagee, (iii) each separate or additional trustee appointed pursuant to the
Trust Agreement or the Trust Indenture, (iv) each Participant, (v) Owner
Participant Parent, (vi) the Trust Estate and the Trust Indenture Estate, (vii)
the Subordination Agent, (viii) the Liquidity Providers, (ix) the Pass Through
Trustees, (x) each Affiliate of the persons described in clauses (i) through
(v), inclusive, (xi) each Affiliate of the persons described in clauses (vi),
(vii), (viii) and (ix), (xii) the respective directors, officers, employees,
agents and servants of each of the persons described in clauses (i) through (v)
inclusive and in clause (x), (xiii) the respective directors, officers,
employees, agents and servants of each of the persons described in clauses
(vii), (viii), (ix) and (xi), (xiv) the successors and permitted assigns of the
persons described in clauses (i) through (v), inclusive, and in clauses (x) and
(xii), and (xv) the successors and permitted assigns of the persons described in
clauses (vii), (viii), (ix), (xi) and (xiii); PROVIDED THAT the persons
described in clauses (vii), (viii), (ix), (xi), (xiii) and (xv) are indemnitees
only for purposes of Section 9.1 of the Participation Agreement. if any
Indemnitee is Airframe Manufacturer or Engine Manufacturer or any subcontractor
or supplier of either thereof, such Person shall be an Indemnitee only in its
capacity as Owner Participant, Loan Participant or Note Holder.
"INDENTURE AGREEMENTS" means the Participation Agreement, the Lease,
the Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Bills of Sale and any other contract, agreement or instrument
from time to time assigned or pledged under the Trust Indenture.
"INDENTURE DEFAULT" means any condition, circumstance, act or event
that, with the giving of notice, the lapse of time or both, would constitute an
Indenture Event of Default.
"INDENTURE EVENT OF DEFAULT" means any one or more of the conditions,
circumstances, acts or events set forth in Section 4.02 of the Trust Indenture.
"INDENTURE INDEMNITEE" means (i) WTC and the Mortgagee, (ii) each
separate or additional trustee appointed pursuant to the Trust Indenture, (iii)
the Subordination Agent, (iv) each Liquidity Provider, (v) each Pass Through
Trustee and (vi) each of the respective directors, officers, employees, agents
and servants of each of the persons described in clauses (i) through (v)
inclusive above.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement
among the Pass Through Trustees, the Liquidity Providers and the Subordination
Agent, dated as of the Issuance Date, PROVIDED that, for purposes of any
obligation of Lessee, no amendment, modification or supplement to, or
substitution or replacement of, such Intercreditor Agreement shall be effective
unless consented to by Lessee.
"IRS" means the Internal Revenue Service of the United States or any
Government Entity succeeding to the functions of such Internal Revenue Service.
"ISSUANCE DATE" means September 25, 1997.
"LAW" means (a) any constitution, treaty, statute, law, decree,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"LEASE" or "LEASE AGREEMENT" means the Lease Agreement ____, dated as
of even date with the Participation Agreement, between Owner Trustee and Lessee.
"LEASE DEFAULT" means any condition, circumstance, act or event that,
with the giving of notice, the lapse of time or both, would constitute a Lease
Event of Default.
"LEASE EVENT OF DEFAULT" means any one or more of the conditions,
circumstances, acts or events set forth in Section 14 of the Lease.
"LEASE SUPPLEMENT" means a supplement to the Lease, in the form of
Exhibit A to the Lease.
"LEASE SUPPLEMENT NO. 1" means the initial Lease Supplement, dated
the Closing Date. "LESSEE" means Continental Airlines, Inc., a Delaware
corporation.
"LESSEE OPERATIVE AGREEMENTS" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Express Sublease, the Termination Agreement
with respect to the Existing Sublease and the Tax Indemnity Agreement.
"LESSEE PERSON" means Lessee, any sublessee, assignee, successor or
other user or person in possession of the Aircraft, Airframe or an Engine with
or without color of right, or any Affiliate of any of the foregoing (excluding
any Tax Indemnitee or any related Tax Indemnitee with respect thereto, or any
person using or claiming any rights with respect to the Aircraft, Airframe or an
Engine directly by or through any of the persons in this parenthetical, but not
excluding any Person claiming directly or indirectly through or under the
Lease).
"LESSOR" means Owner Trustee in its capacity as lessor under the
Lease.
"LESSOR LIEN" means, with respect to any person and in respect of any
property (including, without limitation, the Trust Estate, the Trust Indenture
Estate, the Aircraft, Airframe, Engines, Parts or Aircraft Documents) or any
payments, any Lien on such property or payments which (a) arises from claims
against such person (if such person is a trustee, whether in its individual
capacity or in its capacity as a trustee) not related to any of the transactions
contemplated by the Operative Agreements, (b) results from acts or omissions of
such person (if such person is a trustee, whether in its individual capacity or
in its capacity as a trustee) in violation of such person's obligations under
any of the terms of the Operative Agreements, or not related to the transactions
contemplated by the Operative Agreements, (c) is imposed as a result of Taxes
against such person (if such person is a trustee, whether in its individual
capacity or in its capacity as a trustee) or any of its Affiliates not required
to be indemnified by Lessee under the Participation Agreement, or (d) claims
against such person arising out of any transfer by such person of its interest
in the Aircraft, the Trust Estate or the Operative Agreements, other than a
Transfer permitted by the terms of the Operative Agreements or pursuant to the
exercise of remedies set forth in Section 15 of the Lease.
"LESSOR RENT" means, with respect to any Payment Date, the amount set
forth in Schedule 4 to the Participation Agreement with respect to such Payment
Date. "LESSOR'S COST" means the amount paid by Owner Trustee to Existing Lessor
to purchase the Aircraft pursuant to the Participation Agreement, and is
designated by Dollar amount in Schedule 3 to the Participation Agreement.
"LETTER AGREEMENT" means the Letter Agreement, dated the date of the
Participation Agreement, between Lessee and Owner Participant, which includes a
statement that it is the Letter Agreement for purposes of this Annex A.
"LIEN" means any mortgage, pledge, lien, charge, claim, encumbrance,
lease or security interest affecting the title to or any interest in property.
"LIQUIDITY FACILITIES" means the three Revolving Credit Agreements
(consisting of a separate Revolving Credit Agreement with the Liquidity Provider
with respect to each Pass Through Trust) between the Subordination Agent, as
borrower, and a Liquidity Provider, each dated as of the Issuance Date, PROVIDED
that, for purposes of any obligation of Lessee, no amendment, modification or
supplement to, or substitution or replacement of, any such Liquidity Facility
shall be effective unless consented to by Lessee.
"LIQUIDITY PROVIDER" means ABN AMRO Bank N.V., Chicago Branch, as a
Class A Liquidity Provider, Class B Liquidity Provider and Class C Liquidity
Provider (as such terms are defined in the Intercreditor Agreement) under the
respective Liquidity Facilities, or any successor thereto.
"LOAN PARTICIPANTS" mean, until the Closing shall have been
consummated, the Pass Through Trustees, and after the Closing shall have been
consummated, each Note Holder.
"LOSS PAYMENT DATE" means the date on which payment is due pursuant
to Section 10.1.2(a)(i) of the Lease.
"MAINTENANCE PROGRAM" is defined in Annex C to the Lease.
"MAJORITY IN INTEREST OF NOTE HOLDERS" means as of a particular date
of determination, the holders of a majority in aggregate unpaid Original Amount
of all Equipment Notes outstanding as of such date (excluding any Equipment
Notes held by Owner Trustee, Lessee, or Owner Participant or any Affiliate of
any such party or any interests of Owner Trustee or Owner Participant therein by
reason of subrogation pursuant to Section 4.03 of the Trust Indenture (unless
all Equipment Notes then outstanding shall be held by Owner Trustee, Lessee,
Owner Participant or any Affiliate of any thereof)); PROVIDED that for the
purposes of directing any action or casting any vote or giving any consent,
waiver or instruction hereunder any Note Holder of an Equipment Note or
Equipment Notes may allocate, in such Note Holder's sole discretion, any
fractional portion of the principal amount of such Equipment Note or Equipment
Notes in favor of or in opposition to any such action, vote, consent, waiver or
instruction.
"MAKE-WHOLE AMOUNT" means, with respect to any Equipment Note, an
amount (as determined by an independent investment banker of national standing)
equal to the excess, if any, of (a) the present value of the remaining scheduled
payments of principal and interest to maturity of such Equipment Note computed
by discounting such payments on a quarterly basis on each Payment Date (assuming
a 360-day year of twelve 30-day months) using a discount rate equal to the
Treasury Yield over (b) the outstanding principal amount of such Equipment Note
plus accrued interest to the date of determination. For purposes of determining
the Make-Whole Amount, "Treasury Yield" means, at the date of determination with
respect to any Equipment Note, the interest rate (expressed as a quarterly
equivalent and as a decimal and, in the case of United States Treasury bills,
converted to a bond equivalent yield) determined to be the per annum rate equal
to the semi-annual yield to maturity for United States Treasury securities
maturing on the Average Life Date of such Equipment Note and trading in the
public securities markets either as determined by interpolation between the most
recent weekly average yield to maturity for two series of United States Treasury
securities, trading in the public securities markets, (A) one maturing as close
as possible to, but earlier than, the Average Life Date of such Equipment Note
and (B) the other maturing as close as possible to, but later than, the Average
Life Date of such Equipment Note, in each case as published in the most recent
H.15(519) or, if a weekly average yield to maturity for United States Treasury
securities maturing on the Average Life Date of such Equipment Note is reported
on the most recent H.15(519), such weekly average yield to maturity as published
in such H.15(519) "H.15(519)" means the weekly statistical release designated as
such, or any successor publication, published by the Board of Governors of the
Federal Reserve System. The date of determination of a Make-Whole Amount shall
be the third Business Day prior to the applicable payment or redemption date and
the "most recent H.15(519)" means the H.15(519) published prior to the close of
business on the third Business Day prior to the applicable payment or redemption
date.
"MATERIAL ADVERSE CHANGE" means, with respect to any person, any
event, condition or circumstance that materially and adversely affects such
person's business or consolidated financial condition, or its ability to observe
or perform its obligations, liabilities and agreements under the Operative
Agreements.
"MORTGAGED PROPERTY" is defined in Section 3.03 of the Trust
Indenture.
"MORTGAGEE" means Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as loan trustee under the
Trust Indenture.
"MORTGAGEE AGREEMENTS" means, collectively, the Participation
Agreement and the Trust Indenture.
"MORTGAGEE EVENT" means (i) in the event of a reorganization
proceeding involving the Lessee under Chapter 11 of the Bankruptcy Code, (A) the
trustee in such proceeding or the Lessee not assuming or agreeing to perform its
obligations under the Lease, as contemplated under Section 1110, during the
60-day period under Section 1110(a)(1)(A) of the Bankruptcy Code (or such longer
period as may apply under Section 1110(b) of the Bankruptcy Code) or (B) at any
time after agreeing to perform or assume such obligations, such trustee or the
Lessee ceasing to perform or assuming such obligations with the result that the
Continuous Stay Period comes to an end or (ii) either the Equipment Notes shall
have become due and payable pursuant to Section 4.04(b) of the Trust Indenture
or Mortgagee has taken action or notified Owner Trustee that it intends to take
action to foreclose the Lien of the Trust Indenture or otherwise commence the
exercise of any significant remedy in accordance with Section 4.04(a) of the
Trust Indenture.
"NET ECONOMIC RETURN" means the Owner Participant's net after-tax
yield utilizing the multiple investment sinking fund method of analysis and
aggregate net after-tax cash flow, computed on the basis of the same methodology
and assumptions as were utilized by the initial Owner Participant in determining
Lessor Rent, Stipulated Loss Value percentages and Termination Value
percentages, as of the Closing Date.
"NET WORTH" means, for any person, the excess of its total assets
over its total liabilities in accordance with GAAP.
"NON-U.S. PERSON" means any Person other than a United States person,
as defined in Section 7701(a)(30) of the Code.
"NOTE HOLDER" MEANS AT ANY TIME EACH REGISTERED HOLDER OF ONE OR MORE
EQUIPMENT NOTES.
"OFFICER'S CERTIFICATE" means, in respect of any party to the
Participation Agreement, a certificate signed by the Chairman, the President,
any Vice President (including those with varying ranks such as Executive,
Senior, Assistant or Staff Vice President), the Treasurer or the Secretary of
such party.
"OPERATIVE AGREEMENTS" means, collectively, the Participation
Agreement, the Trust Agreement, the Purchase Agreement Assignment, the Consent
and Agreement, the Lease, Lease Supplement No. 1, the Trust Indenture, the
initial Trust Indenture Supplement, the Bills of Sale, the Tax Indemnity
Agreement, the Owner Participant Guaranty, the Equipment Notes, the Letter
Agreement and the Termination Agreements.
"OPERATIVE INDENTURES" means each of the indentures under which notes
have been issued and purchased by the Pass Through Trustees.
"OP JURISDICTION" is defined in Schedule 3 to the Participation
Agreement.
"ORIGINAL AMOUNT," with respect to an Equipment Note, means the
stated original principal amount of such Equipment Note and, with respect to all
Equipment Notes, means the aggregate stated original principal amounts of all
Equipment Notes.
"OWNER PARTICIPANT" means the person executing the Participation
Agreement as "Owner Participant" or, if a second person becomes an "Owner
Participant" pursuant to Section 10.1.1 of the Participation Agreement, both of
such persons; PROVIDED that if an Owner Participant Transfers 100% of its
interest to a successor Owner Participant, such transferring Owner Participant
shall thereafter no longer be considered an "Owner Participant."
"OWNER PARTICIPANT AGREEMENTS" means, collectively, the Participation
Agreement, the Tax Indemnity Agreement and the Trust Agreement.
"OWNER PARTICIPANT GUARANTY" means the Guaranty by Corporate
Affiliate of Owner Participant dated the Delivery Date from Owner Participant
Parent to the beneficiaries named therein.
"OWNER PARTICIPANT PARENT" means the person executing the Owner
Participant Guaranty.
"OWNER PARTICIPANT'S PERCENTAGE" means the percentage of Lessor's
Cost allocated to the Owner Participant in Schedule 2 to the Participation
Agreement.
"OWNER TRUSTEE" means First Security Bank, National Association, a
national banking association, not in its individual capacity, except as
expressly provided in any Operative Agreement, but solely as Owner Trustee under
the Trust Agreement.
"OWNER TRUSTEE AGREEMENTS" means, collectively, the Participation
Agreement, the Lease, Lease Supplement No. 1, the Trust Agreement, the Trust
Indenture, the initial Trust Indenture Supplement, the Equipment Notes and the
Purchase Agreement Assignment.
"PARTICIPANTS" means, collectively, Owner Participant and each Loan
Participant and "Participant" means Owner Participant or a Loan Participant,
individually.
"PARTICIPATION AGREEMENT" means the Participation Agreement ____
dated as of September 25, 1997 among Lessee, Owner Participant, Owner Trustee,
the Pass Through Trustees, Subordination Agent, Mortgagee, the Existing Lessor,
the Existing Mortgagee and Airframe Manufacturer.
"PARTS" means all appliances, parts, components, avionics, landing
gear, instruments, appurtenances, accessories, furnishings, seats and other
equipment of whatever nature (other than (a) Engines or engines, and (b) any
items leased by Lessee from a third party other than Lessor)), that may from
time to time be installed or incorporated in or attached or appurtenant to the
Airframe or any Engine.
"PASS THROUGH AGREEMENTS" means the Pass Through Trust Agreements,
the Intercreditor Agreement, the Liquidity Facilities and the Fee Letter (as
defined in the Intercreditor Agreement), provided, that no amendment,
modification or supplement to, or substitution or replacement of, any such Fee
Letter shall be effective for purposes of any obligation of Lessee, unless
consented to by Lessee.
"PASS THROUGH CERTIFICATES" means the pass through certificates
issued by the Pass Through Trusts (and any other pass through certificates for
which such pass through certificates may be exchanged).
"PASS THROUGH TRUST" means each of the three separate pass through
trusts created under the Pass Through Trust Agreements.
"PASS THROUGH TRUST AGREEMENT" means each of the three separate Trust
Supplements, together in each case with the Basic Pass Through Trust Agreement,
each dated as of the Issuance Date, by and between the Lessee and Pass Through
Trustee.
"PASS THROUGH TRUSTEE" means Wilmington Trust Company, a Delaware
banking corporation, in its capacity as trustee under each Pass Through Trust
Agreement.
"PASS THROUGH TRUSTEE AGREEMENTS" means the Participation Agreement,
the Pass Through Trust Agreements, and the Intercreditor Agreement.
"PAYMENT DATE" means the Closing Date and each March 24, June 24,
September 24 and December 24 during the Term, commencing with the first such
date to occur after the Closing Date.
"PAYMENT DEFAULT" means the failure by Lessee to pay any amount of
Basic Rent, Renewal Rent, Stipulated Loss Value or Termination Value when due.
"PAYMENT DUE RATE" is defined in Schedule 1 to the Lease.
"PAYMENT PERIOD" means each of the consecutive quarterly periods
during the Term ending on a Payment Date, the first such period commencing on
and including the Closing Date.
"PERMITTED AIR CARRIER" means (i) any Permitted Foreign Air Carrier,
(ii) any person approved in writing by Lessor or (iii) any U.S. Air Carrier.
"PERMITTED COUNTRY" means any country listed on Schedule 5 to the
Lease.
"PERMITTED FOREIGN AIR CARRIER" means any air carrier with its
principal executive offices in any Permitted Country and which is authorized to
conduct commercial airline operations and to operate jet aircraft similar to the
Aircraft under the applicable Laws of such Permitted Country.
"PERMITTED GOVERNMENT ENTITY" means (i) the U.S. Government or (ii)
any Government Entity if the Aircraft is then registered under the laws of the
country of such Government Entity.
"PERMITTED INSTITUTION" means any bank, trust company, insurance
company, financial institution or corporation (other than, without Lessee's
consent, a commercial air carrier, a commercial aircraft operator, a freight
forwarder or Affiliate of any of the foregoing), in each case with a combined
capital and surplus or net worth of at least $25,000,000.
"PERMITTED LIEN" means any Lien described in clauses (a) through (f),
inclusive, of Section 6 of the Lease.
"PERMITTED SUBLEASE" means a sublease permitted under Section 7.2.7
of the Lease.
"PERMITTED SUBLESSEE" means the sublessee under a Permitted Sublease.
"PERSONS" or "PERSONS" means individuals, firms, partnerships, joint
ventures, trusts, trustees, Government Entities, organizations, associations,
corporations, government agencies, committees, departments, authorities and
other bodies, corporate or incorporate, whether having distinct legal status or
not, or any member of any of the same.
"PLAN" means any employee benefit plan within the meaning of Section
3(3) of ERISA, or any plan within the meaning of Section 4975(e)(1) of the Code.
"PRELIMINARY NOTICE" is defined in Section 17.1 of the Lease.
"PREMIUM TERMINATION DATE" means August 22, 2008 in the case of the
Series A Equipment Notes, April 30, 2004 in the case of the Series B Equipment
Notes and February 16, 2002 in the case of the Series C Equipment Notes.
"PTT PERCENTAGE" means, with respect to each Pass Through Trustee,
the percentage of Lessor's Cost allocated to such Pass Through Trustee in
Schedule 2 to the Participation Agreement.
"PURCHASE AGREEMENT" means the Purchase Agreement GPJ-003/96 between
Airframe Manufacturer and Express (including all exhibits thereto, together with
all letter agreements entered into that by their terms constitute part of such
Purchase Agreement), to the extent assigned pursuant to the Purchase Agreement
Assignment.
"PURCHASE AGREEMENT ASSIGNMENT" means the Purchase Agreement
Assignment ____, dated as of even date with the Participation Agreement, between
Existing Lessor and Owner Trustee.
"PURCHASE DATE" means the last Business Day of the Base Lease Term or
any Renewal Lease Term, as specified in any Purchase Notice.
"PURCHASE NOTICE" is defined in Section 17.3.1 of the Lease.
"QIB" is defined in Section 2.08 of the Trust Indenture.
"RENEWAL LEASE TERM" means each two year term for which the Lease is
extended by Lessee, if any, pursuant to the first or second such extensions in
accordance with Section 17 of the Lease.
"RENEWAL NOTICE" is defined in Section 17.2.1 of the Lease.
"RENEWAL RENT" for the Aircraft means the rent payable therefor in
respect of a Renewal Lease Term determined pursuant to Section 17.2.2 of the
Lease.
"RENT" means, collectively, Basic Rent, Renewal Rent and Supplemental
Rent.
"REPLACEMENT ENGINE" means an engine substituted for an Engine
pursuant to the Lease.
"RETURN ACCEPTANCE SUPPLEMENT" means a Return Acceptance Supplement,
dated as of the date the Aircraft is returned to Lessor pursuant to Section 5 of
the Lease, by Lessor and Lessee substantially in the form of Exhibit B to the
Lease.
"SCHEDULED CLOSING DATE" means the expected Closing Date notified to
Lessee, Existing Lessor, each Participant, Owner Trustee and Mortgagee by
Existing Mortgagee pursuant to Section 4.1 of the Participation Agreement, which
expected Closing Date shall be a Business Day not later than the Commitment
Termination Date.
"SCHEDULED EXPIRATION DATE" is defined in Schedule 1 to the Lease.
"SCHEDULED RENEWAL TERM EXPIRATION DATE" means, in the case of the
first Renewal Lease Term, the second anniversary of the Scheduled Expiration
Date, and in the case of the second Renewal Lease Term, the fourth anniversary
of the Scheduled Expiration Date.
"SEC" means the Securities and Exchange Commission of the United
States, or any Government Entity succeeding to the functions of such Securities
and Exchange Commission.
"SECTION 1110" means 11 U.S.C. ss. 1110 of the Bankruptcy Code or any
successor or analogous section of the federal bankruptcy Law in effect from time
to time.
"SECTION 1110 EVENT" means the institution of reorganization
proceedings with respect to Lessee under Chapter 11 of the Bankruptcy Code and
the trustee or debtor-in-possession in such proceedings (i) having agreed to
perform its obligations under the Lease with the approval of the applicable
court and thereafter having continued to perform such obligations in accordance
with Section 1110 or (ii) having assumed the Lease with the approval of the
relevant court and thereafter having continued to perform its obligations under
the Lease.
"SECTION 1110 PERIOD" means the continuous period of 60 days, or such
other period as may be specified in Section 1110(a)(1)(A) of the U.S. Bankruptcy
Code, plus an additional period, if any, resulting from the trustee or
debtor-in-possession in such proceeding assuming, or agreeing to perform its
obligations under, the Lease with the approval of the applicable court.
"SECURED OBLIGATIONS" is defined in Section 2.06 of the Trust
Indenture.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY" means a "security" as defined in Section 2(1) of the
Securities Act.
"SENIOR HOLDER" is defined in Section 2.14(c) of the Trust Indenture.
"SERIES" means any of Series A, Series B or Series C.
"SERIES A" or "SERIES A EQUIPMENT NOTES" means Equipment Notes issued
under the Trust Indenture and designated as "Series A" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series A."
"SERIES B" or "SERIES B EQUIPMENT NOTES" means Equipment Notes issued
under the Trust Indenture and designated as "Series B" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series B."
"SERIES C" or "SERIES C EQUIPMENT NOTES" means Equipment Notes issued
under the Trust Indenture and designated as "Series C" thereunder, in the
Original Amount and maturities and bearing interest as specified in Schedule I
to the Trust Indenture under the heading "Series C."
"SIMILAR AIRCRAFT" is defined in Schedule 1 to the Lease.
"SLV RATE" is defined in Schedule 1 to the Lease.
"STIPULATED LOSS VALUE" means, with respect to the Aircraft, (a)
during the Base Lease Term, the amount determined by multiplying (i) the
percentage set forth in Schedule 3 to the Lease (as adjusted from time to time
in accordance with Section 3.2.3 of the Lease) opposite the Stipulated Loss
Value Date by (ii) Lessor's Cost and (b) during any Renewal Term, the amount
determined pursuant to Section 17.2.3 of the Lease. Notwithstanding anything to
the contrary in any Operative Agreement, Stipulated Loss Value shall always be
sufficient to pay in full, as of the date of payment thereof (assuming timely
payment of the Equipment Notes prior to such date), the aggregate unpaid
principal amount of all Equipment Notes outstanding as of such date, together
with accrued and unpaid interest on all such Equipment Notes as of such date.
"STIPULATED LOSS VALUE DATE" means, for any month, the day in such
month specified in Schedule 3 to the Lease or, if such day is not a Business
Day, the immediately succeeding Business Day.
"SUBORDINATION AGENT" means Wilmington Trust Company, as
subordination agent under the Intercreditor Agreement.
"SUBORDINATION AGENT AGREEMENTS" means the Participation Agreement,
the Liquidity Facilities and the Intercreditor Agreement.
"SUPPLEMENTAL RENT" means, without duplication (a) all amounts,
liabilities, indemnities and obligations (other than Basic Rent or Renewal Rent
but including Make-Whole Amount, if any) that Lessee assumes or becomes
obligated to or agrees to pay under any Lessee Operative Agreement to or on
behalf of Lessor or any other person, including, without limitation, payments of
Stipulated Loss Value, Termination Value and payments of indemnities under
Section 9 of the Participation Agreement, (b) any amount payable by Owner
Trustee pursuant to Section 2.15 of the Trust Indenture, to the extent not paid
when due by the Existing Mortgagee pursuant to the Fee Letter (as defined in the
Intercreditor Agreement), PROVIDED that, in calculating any such amount that is
determined based on interest payable on any "Advance" pursuant to any Liquidity
Facility, the interest rate utilized in determining the amount payable by Lessee
hereunder shall be 0.4% per annum less than the interest rate applicable thereto
pursuant to the terms of such Liquidity Facility, and PROVIDED, FURTHER, that
Lessee shall have no obligation to pay any commitment fee payable under any
Liquidity Facility to extent calculated at a rate of 0.4% per annum or less, (c)
Lessee's pro rata share of all compensation and reimbursement of expenses,
disbursements and advances payable by Lessee under the Pass Through Trust
Agreements, and (d) Lessee's pro rata share of all compensation and
reimbursement of expenses and disbursements payable to the Subordination Agent
under the Intercreditor Agreement except with respect to any income or franchise
taxes incurred by the Subordination Agent in connection with the transactions
contemplated by the Intercreditor Agreement. As used herein, "Lessee's pro rata
share" means as of any time a fraction, the numerator of which is the principal
balance then outstanding of Equipment Notes and the denominator of which is the
aggregate principal balance then outstanding of all "Equipment Notes" (as such
term is defined in each of the Operative Indentures).
"TAX ATTRIBUTE PERIOD" is defined in Section 1(e) of the Tax
Indemnity Agreement.
"TAX INDEMNITEE" means (a) First Security and Owner Trustee, (b) WTC
and Mortgagee, (c) each separate or additional trustee appointed pursuant to the
Trust Agreement or the Trust Indenture, (d) each Participant, (e) the Trust
Estate and the Trust Indenture Estate and (f) the respective successors,
assigns, agents and servants of the foregoing. For purposes of this definition,
the term "Owner Participant" shall include any member of an affiliated group
(within the meaning of Section 1504 of the Code) of which Owner Participant is,
or may become, a member if consolidated, joint or combined returns are filed for
such affiliated group for federal, state or local income tax purposes.
"TAX INDEMNITY AGREEMENT" means the Tax Indemnity Agreement, dated as
of even date with the Participation Agreement, between Lessee and Owner
Participant. "TAXES" means all license, recording, documentary, registration and
other similar fees and all taxes, levies, imposts, duties, charges, assessments
or withholdings of any nature whatsoever imposed by any Taxing Authority,
together with any penalties, additions to tax, fines or interest thereon or
additions thereto.
"TAXING AUTHORITY" means any federal, state or local government or
other taxing authority in the United States, any foreign government or any
political subdivision or taxing authority thereof, any international taxing
authority or any territory or possession of the United States or any taxing
authority thereof.
"TERM" means the term, commencing on the Closing Date, for which the
Aircraft is leased pursuant to Section 3 of the Lease, and shall include the
Base Lease Term and, if applicable, any Renewal Lease Term; PROVIDED that if at
the scheduled end of the Term the Aircraft or Airframe is being used, or was
within six (6) months prior thereto being used, by the U.S. Government pursuant
to CRAF, the Term shall be deemed extended for the period necessary to
accommodate usage of the Aircraft or Airframe pursuant to CRAF plus six months
thereafter, and Lessee shall be obligated to pay Basic Rent with respect to any
such period of extension at a rate equal to the Basic Rent paid during the Base
Lease Term or the applicable Renewal Lease Term, whichever shall have ended
immediately prior to such extension.
"TERMINATION AGREEMENTS" means, collectively, the termination
agreement with respect to the Existing Lease, the termination agreement with
respect to the Existing Sublease and the release from the Lien of the Existing
Mortgage, in each case delivered pursuant to Section 5.1.2(xiii) of the
Participation Agreement.
"TERMINATION DATE" means any Payment Date occurring after the end of
the Tax Attribute Period on which the Lease shall terminate in accordance with
Section 9 of the Lease.
"TERMINATION VALUE" means, with respect to the Aircraft, the amount
determined by multiplying (a) the percentage set forth in Schedule 4 to the
Lease (as adjusted from time to time in accordance with Section 3.2.3 of the
Lease) opposite the applicable Payment Date by (b) Lessor's Cost.
Notwithstanding anything to the contrary in any Operative Agreement, Termination
Value shall always be sufficient to pay in full, as of the date of payment
thereof (assuming timely payment of the Equipment Notes prior to such date), the
aggregate unpaid principal amount of all Equipment Notes outstanding as of such
date, together with accrued and unpaid interest on all such Equipment Notes as
of such date.
"THRESHOLD AMOUNT" is defined in Schedule 1 to the Lease.
"TRANSACTIONS" means the transactions contemplated by the
Participation Agreement and the other Operative Agreements to occur on the
Closing Date.
"TRANSACTION EXPENSES" means (a) all costs and expenses incurred by
Existing Mortgagee, Owner Participant, the Pass Through Trustees, the
Subordination Agent, Owner Trustee and Mortgagee in connection with the
preparation, execution and delivery of the Operative Agreements and, in the case
of the Owner Participant and the Equity Guaranty (including, without limitation,
the reasonable fees and expenses of counsel for such parties), (b) all costs and
expenses for the recording or filing of any documents, certificates or
instruments in accordance with any Operative Agreement, including, without
limitation, the FAA Filed Documents and the Financing Statements, (c) one ninth
of (i) the underwriting fees and expenses attributable to the offering and sale
of the Pass Through Certificates and (ii) all costs and expenses incurred by
Existing Mortgagee, the Pass Through Trustees, the Subordination Agent, Owner
Trustee and Mortgagee in connection with the preparation, execution and delivery
of the Pass Through Agreements and the Equity Guaranty (including, without
limitation, the reasonable fees and expenses of counsel for such parties), (d)
the equity placement fee and expenses of Equity Advisor attributable to the
Aircraft, (e) the reasonable fees and disbursements of special counsel in
Oklahoma City, Oklahoma, in connection with the Closing, (f) all initial and
ongoing fees, disbursements and expenses of Owner Trustee and Mortgagee, and (g)
the fees and expenses of the Appraiser contemplated by Section 5.1.2(xv) of the
Participation Agreement.
"TRANSFER" means the transfer, sale, assignment or other conveyance
of all or any interest in any property, right or interest.
"TRANSFEREE" means a person to which any Owner Participant, Owner
Trustee or any Loan Participant or Note Holder purports or intends to Transfer
any or all of its right, title or interest in the Trust Estate or in its
Equipment Note and the Trust Indenture Estate, respectively, as described in
Section 10.1.1(a), 10.1.2 or 10.1.3 (but excluding participants in any
participation referred to in Section 10.1.3), respectively, of the Participation
Agreement.
"TRUST" means the trust created by the Trust Agreement.
"TRUST AGREEMENT" means the Trust Agreement ____, dated as of even
date with the Participation Agreement, between Owner Participant and Owner
Trustee.
"TRUST ESTATE" means all estate, right, title and interest of Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement and the Purchase
Agreement including, without limitation, all amounts of Basic Rent and
Supplemental Rent including, without limitation, insurance proceeds (other than
insurance proceeds payable to or for the benefit of Owner Participant, Note
Holders or WTC) and requisition, indemnity or other payments of any kind for of
with respect to the Aircraft (except amounts owing to Owner Participant, Note
Holders or WTC, or to any of their respective directors, officers, employees,
servants and agents, pursuant to Section 10 of the Participation Agreement).
Notwithstanding the foregoing, "Trust Estate" shall not include any Excluded
Payment.
"TRUST INDENTURE" means the Trust Indenture and Mortgage ____, dated
as of even date with the Participation Agreement, between Owner Trustee and
Mortgagee.
"TRUST INDENTURE ESTATE" is defined in the "Granting Clause" of the
Trust Indenture.
"TRUST INDENTURE SUPPLEMENT" means a Trust Indenture and Mortgage
____ Supplement, substantially in the form of Exhibit A to the Trust Indenture,
with appropriate modifications to reflect the purpose for which it is being
used.
"TRUST SUPPLEMENT" means an agreement supplemental to the Basic Pass
Through Trust Agreement pursuant to which (i) a separate trust is created for
the benefit of the holders of the Pass Through Certificates of a series, (ii)
the issuance of the Pass Through Certificates of such series representing
fractional undivided interests in such trust is authorized and (iii) the terms
of the Pass Through Certificates of such series are established.
"UCC" means the Uniform Commercial Code as in effect in any
applicable jurisdiction.
"UNITED STATES" or "U.S." means the United States of America;
PROVIDED, that for geographic purposes, "United States" means, in aggregate, the
50 states and the District of Columbia of the United States of America.
"U.S. AIR CARRIER" means any United States air carrier that is a
Citizen of the United States holding an air carrier operating certificate issued
by the Secretary of Transportation pursuant to chapter 447 of title 49 of the
United States Code for aircraft capable of carrying 10 or more individuals or
6000 pounds or more of cargo, and as to which there is in force an air carrier
operating certificate issued pursuant to Part 121 of the FAA Regulations, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provisions therefor or in the absence thereof.
"U.S. PERSON" means any Person described in Section 7701(a)(30) of
the Code.
"U.S. GOVERNMENT" means the federal government of the United States,
or any instrumentality or agency thereof the obligations of which are guaranteed
by the full faith and credit of the federal government of the United States.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, with respect to any
specified Debt, at the time of the determination thereof the number of years
obtained by dividing the then Remaining Dollar-years of such Debt by the then
outstanding principal amount of such Debt. The term "Remaining Dollar-years"
shall mean the amount obtained by (1) multiplying the amount of each
then-remaining principal payment on such Debt by the number of years (calculated
at the nearest one-twelfth) that will elapse between the date of determination
of the Weighted Average Life to Maturity of such Debt and the date of that
required payment and (2) totaling all the products obtained in clause (1) above.
"WET LEASE" means any arrangement whereby Lessee or a Permitted
Sublessee agrees to furnish the Aircraft, Airframe or any Engine to a third
party pursuant to which the Aircraft, Airframe or Engine shall at all times be
in the operational control of Lessee or a Permitted Sublessee, provided that
Lessee's obligations under this Lease shall continue in full force and effect
notwithstanding any such arrangement.
"WTC" means Wilmington Trust Company, a Delaware banking corporation,
not in its capacity as Mortgagee under the Trust Indenture, but in its
individual capacity.
------------------------------
| SCHEDULE 1 |
| TO |
| PARTICIPATION AGREEMENT ___|
------------------------------
ACCOUNTS; ADDRESSES
ACCOUNT FOR PAYMENTS ADDRESS FOR NOTICES
-------------------- -------------------
CONTINENTAL AIRLINES, INC. The Chase Manhattan Bank Continental Airlines, Inc.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Account No.: ▇▇▇-▇-▇▇▇▇▇▇ Suite 2010
ABA#: 021-000021 ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇ Attention: Executive Vice
Voice: ▇▇▇-▇▇▇-▇▇▇▇ President and Chief
Facsimile: 212-552-0107 Financial Officer
Reference: Continental Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Lease ____
OWNER PARTICIPANT MetLife Capital Credit L.P.
c/o MetLife Capital Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Large Ticket Operations
Fax: (▇▇▇)▇▇▇-▇▇▇▇
with a copy to Rolls-Royce plc
FIRST SECURITY BANK, NATIONAL First Security Bank, First Security Bank,
ASSOCIATION National Association National Association
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Account No.: 051-▇▇▇▇▇▇▇ Attention: Corporate Trust Department
Corporate Trust Department Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
ABA#: ▇▇▇-▇▇▇▇-▇▇
Reference: Continental
Lease ____
WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank Wilmington Trust Company
MORTGAGEE ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ One ▇▇▇▇▇▇ Square
Account No.: ▇▇▇-▇-▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
ABA#: 021-000021 ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Attention: Corporate Trust Administration
Administration Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Reference: Continental
Lease ____
WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank Wilmington Trust Company
SUBORDINATION AGENT ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ One ▇▇▇▇▇▇ Square
Account No.: ▇▇▇-▇-▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
ABA#: 021-000021 ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Continental Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Lease ____
WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank Wilmington Trust Company
PASS THROUGH TRUSTEE FOR THE ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇-▇▇ ▇▇▇▇ THROUGH TRUST Account No.: ▇▇▇-▇-▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
ABA#: 021-000021 ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Continental Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Lease ____
WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank Wilmington Trust Company
PASS THROUGH TRUSTEE FOR THE ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇-▇▇ ▇▇▇▇ THROUGH TRUST Account No.: ▇▇▇-▇-▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
ABA#: 021-000021 ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Continental Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Lease ____
WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank Wilmington Trust Company
PASS THROUGH TRUSTEE FOR THE ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇-▇▇ ▇▇▇▇ THROUGH TRUST Account No.: ▇▇▇-▇-▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
ABA#: 021-000021 ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Continental Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Lease ____
CORCIM, INC. None CT Corporation System
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copy to:
EMBRAER-Empresa Brasileira de Aeronautica S.A.
EMBRAER-EMPRESA BRASILEIRA DE Banco do Brasil S.A. EMBRAER-Empresa Brasileira de Aeronautica S.A.
AERONAUTICA S.A. ▇▇. ▇▇▇▇▇▇ ▇'▇▇▇▇▇, ▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
12245-030, Sao ▇▇▇▇ dos ▇▇▇▇▇-▇▇▇ ▇▇▇ ▇▇▇▇ dos ▇▇▇▇▇▇ -SP Brazil
▇▇▇▇▇▇-SP Brazil Attention: General Counsel
Swift Code: ▇▇▇▇▇▇▇▇▇▇▇ Facsimile: (55-123) 41-1679
Account No.: 9405-6
Reference: COEX Lease
ROLLS-ROYCE PLC Citibank, NA Rolls-Royce plc
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Account No. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇
For further credit: 794-508 Attn: Company Secretary
ABA#: 021-000089 Facsimile: 011-44-171-233-1733
Reference: Paying Agent
------------------------------
| SCHEDULE 2 |
| TO |
| PARTICIPATION AGREEMENT ___|
------------------------------
COMMITMENTS
PARTICIPANT PERCENTAGE OF LESSOR'S DOLLAR AMOUNT
----------- ---------------------- -------------
COST
----
OWNER PARTICIPANT OWNER PARTICIPANT'S
PERCENTAGE
PASS THROUGH TRUSTEE LOAN PARTICIPANT'S
PTT PERCENTAGE
TOTAL 100%
-----------------------------
| SCHEDULE 3 |
| TO |
|PARTICIPATION AGREEMENT ___|
-----------------------------
CERTAIN TERMS
DEFINED TERM DEFINITION
Commitment Termination Date October 15, 1997
Existing Lease
Lease Agreement ____, dated as
of January 8, 1997, between
Existing Lessor and Lessee
Existing Mortgage Aircraft Mortgage and Security
Agreement ____, dated as of
January 8, 1997, between Existing
Lessor, as Debtor, and Existing
Mortgagee, as Secured Party
Existing Participation Agreement Participation Agreement ____,
dated as of January 8, among
Lessee, Existing Lessor, Express,
Airframe Manufacturer and
Existing Mortgagee
Equity Advisor ▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
Expense Limit
Lessor's Cost $12,600,000
Local Counsel to the Owner
Participant and Owner Participant
Parent ▇▇▇▇ ▇. ▇▇▇▇
OP Jurisdiction Delaware
Special Counsel to the Owner
Participant and Owner Participant
Parent ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
Special Tax Counsel to the Owner
Participant ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP