EXHIBIT 4.15
Aircraft N171UA
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FIRST AMENDED AND RESTATED PARTICIPATION AGREEMENT
(1989 I)
Dated as of July 20, 2000
Among
UNITED AIR LINES, INC.,
Lessee,
BANCBOSTON UNITED LEASING LLC,
Owner Participant,
STATE STREET BANK AND TRUST COMPANY,
Not in its Individual Capacity,
except as expressly provided herein,
but solely as Owner Trustee,
and
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
In its Individual Capacity and as Indenture Trustee
___________
United Air Lines, Inc.
1989 I Equipment Trust
One Boeing 747-422 Aircraft
___________
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TABLE OF CONTENTS
Page
SECTION 1. Certain Definitions............................................................... 2
SECTION 2. Lessee's Notice of Delivery Date.................................................. 2
SECTION 3. Instructions to the Owner Trustee and Indenture Trustee........................... 2
SECTION 4. Conditions........................................................................ 2
(a) Conditions Precedent to the Participations in the Aircraft........................ 2
(b) Conditions Precedent to the Obligations of Lessee................................. 3
SECTION 5. [Intentionally omitted.].......................................................... 3
SECTION 6. Extent of Interest of Certificate Holders......................................... 3
SECTION 7. Lessee's Representations, Warranties and Indemnities.............................. 3
(a) In General........................................................................ 3
(b) General Tax Indemnity............................................................. 7
(c) General Indemnity................................................................. 17
SECTION 8. Representations, Warranties and Covenants......................................... 22
SECTION 9. [Intentionally omitted.].......................................................... 40
SECTION 10. Other Documents; Amendment........................................................ 40
SECTION 11. Certain Covenants of Lessee....................................................... 40
SECTION 12. Owner for Federal Tax Purposes.................................................... 41
SECTION 13. Notices; Consent to Jurisdiction.................................................. 42
SECTION 14. Change of Situs of Owner Trust.................................................... 42
SECTION 15. Miscellaneous..................................................................... 43
SECTION 16. [Intentionally omitted]........................................................... 45
SECTION 17. Optional Redemption of Certificates............................................... 45
i
SECTION 18. [Intentionally omitted]........................................................... 48
SECTION 19. Confidentiality of Purchase Agreement............................................. 48
SECTION 20. Effectiveness..................................................................... 49
ii
SCHEDULES
SCHEDULE I - Names and Addresses
iii
FIRST AMENDED AND RESTATED PARTICIPATION AGREEMENT
(1989 I)
THIS FIRST AMENDED AND RESTATED PARTICIPATION AGREEMENT (1989 I)
dated as of July 20, 2000 (this "Agreement") among (i) United Air Lines, Inc., a
Delaware corporation (the "Lessee"), (ii) BancBoston United Leasing LLC, a
Delaware limited liability company (the "Owner Participant"), (iii) State Street
Bank and Trust Company, a Massachusetts trust company, not in its individual
capacity, except as expressly provided herein, but solely as Owner Trustee under
the Trust Agreement (the "Owner Trustee") as successor to the Original Lessor
(as defined below), and (iv) State Street Bank and Trust Company of Connecticut,
National Association, a national banking association, in its individual capacity
and as Indenture Trustee under the Trust Indenture (the "Indenture Trustee")
amends and restates that certain Participation Agreement (1989 I) dated as of
August 1, 1989 among Lessee, BancBoston United Leasing LLC, as lessor (the
"Original Lessor"), and State Street Bank and Trust Company, as successor to The
Connecticut Bank and Trust Company, National Association, in its individual
capacity and as Indenture Trustee (the "Original Indenture Trustee"), as amended
by that certain First Amendment to Participation Agreement (1989 I) dated as of
February 1, 1990 among Lessee, the Original Lessor, and the Original Indenture
Trustee (such Participation Agreement, as amended as set forth above, being
referred to herein as the "Original Participation Agreement").
WITNESSETH:
WHEREAS, except as otherwise defined in this Agreement,
capitalized terms used herein shall have the meanings attributed thereto in
Section 1 hereof;
WHEREAS, concurrently with the execution and delivery of the
Original Participation Agreement, Lessee executed and delivered to and in favor
of the Owner Participant the Japanese Lease Assignment whereby Lessee assigned
to Owner Participant all of its rights and interests in the Japanese Lease, the
Primary Lessor Mortgage, Sections 11 and 23(b) of the Omnibus Agreement, the
Primary Lessor Comfort Letter and the Aircraft, all as more particularly
described in the Original Participation Agreement; and
WHEREAS, pursuant to that certain Assignment and Assumption
Agreement (1989 I) dated as of even date herewith, between the Owner Trustee and
the Owner Participant, the Owner Participant assigned to the Owner Trustee, and
the Owner Trustee assumed, all of the rights and obligations of the Owner
Participant under the Operative Documents (as such terms are defined in the
Lease); and
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant and State Street Bank and Trust Company, in its
individual capacity, are entering into the Trust Agreement (1989 I) (the "Trust
Agreement") pursuant to which Trust
[First Amended and Restated Participation Agreement (1989 I)]
Agreement the Owner Trustee agrees, among other things, to hold the Trust Estate
defined in Section 1.01 thereof (the "Trust Estate") for the use and benefit of
the Owner Participant; and
WHEREAS, the Indenture Trustee and the Owner Trustee concurrently
with the execution and delivery of this Agreement are entering into the Amended
and Restated Trust Indenture and Mortgage (1989 I) dated as of July 20, 2000
(the "Trust Indenture") pursuant to which the Owner Trustee agrees, among other
things, on the Refinancing Date, to issue one or more Certificates in the form
set forth in Exhibit A to the Trust Indenture to each Pass Through Trustee on
behalf of the related grantor trusts created by the applicable Pass Through
Trust Agreement as evidence of the Owner Trustee's indebtedness to each Pass
Through Trustee, which Certificates are to be secured by the mortgage and
security interest in the Aircraft created pursuant to the Trust Indenture by the
Owner Trustee in favor of the Indenture Trustee; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Trustee and Lessee are entering into the Amended and
Restated Lease Agreement (1989 I) dated as of July 20, 2000 (the "Lease
Agreement") whereby, subject to the terms and conditions set forth therein, the
Owner Trustee is leasing to Lessee, and Lessee is leasing from the Owner
Trustee, the Aircraft; and
WHEREAS, in connection with the foregoing transactions, the
parties hereto desire to amend and restate the Original Participation Agreement
in its entirety; and
NOW THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
SECTION 1. Certain Definitions. The terms "Lessee," "Owner
-------------------
Participant," "Pass Through Trustee," "Owner Trustee" and "Indenture Trustee"
shall have the further meanings attributed thereto in the Lease Agreement
referred to above and, except as otherwise defined in this Agreement, terms used
herein in capitalized form shall have the meanings attributed thereto in the
Lease Agreement referred to above. Unless the context otherwise requires, any
reference herein to any of the Operative Documents refers to such document as it
may be amended from time to time in accordance with its terms and the terms of
each other agreement restricting the amendment thereof.
SECTION 2. Lessee's Notice of Delivery Date. [Intentionally omitted.]
--------------------------------
SECTION 3. Instructions to the Owner Trustee and Indenture Trustee.
-------------------------------------------------------
[Intentionally omitted.]
SECTION 4. Conditions. (a) Conditions Precedent to the Participations
---------- ------------------------------------------
in the Aircraft. It is agreed that the respective obligations of the Original
---------------
Indenture Trustee and the Original Lessor to participate in the payments of
Lessor's Cost were subject to the satisfaction prior to or on the Delivery Date
of the conditions precedent set forth in Section 4(a) of the Original
[First Amended and Restated Participation Agreement (1989 I)]
Participation Agreement and the respective obligations of the Owner Participant,
Owner Trustee, Indenture Trustee and the Pass Through Trustees to enter into a
refinancing are set forth in the Note Purchase Agreement.
(1) Conditions Precedent to the Obligations of Lessee. It is
-------------------------------------------------
agreed that the obligations of Lessee (A) to sell the Aircraft to the Original
Lessor, (B) to accept delivery of the Aircraft under the Original Lease and (C)
to enter into its other Operative Documents, were all subject to the fulfillment
to the satisfaction of Lessee prior to or on the Delivery Date of the conditions
precedent set forth in the Original Participation Agreement and the obligations
of Lessee to enter into a refinancing transaction are set forth in the Note
Purchase Agreement.
SECTION 5. [Intentionally omitted.]
SECTION 6. Extent of Interest of Certificate Holders. The Indenture
-----------------------------------------
Trustee, on behalf of the Certificate Holders, hereby acknowledges that no
Certificate Holder shall have any further interest in, or other right with
respect to, the mortgage and security interests created by the Trust Indenture
when and if the Original Amount of, Make-Whole Amount (on and after the
Refinancing Date only) if any, premium (prior to the Refinancing Date only), if
any, and interest on all Certificates held by such Certificate Holder and all
other sums payable to such Certificate Holder hereunder, under the Trust
Indenture and under such Certificates shall have been paid in full. The
Indenture Trustee, on behalf of the Certificate Holders, further acknowledges
that each of the Certificate Holders, by its acceptance of a Certificate, agrees
that it will look solely to the income and proceeds from the Trust Indenture
Estate to the extent available for distribution to such Certificate Holder as
provided in Section 2.10 of the Trust Indenture and that neither the Owner
Participant nor the Owner Trustee shall be personally liable to any Certificate
Holder for any amounts payable under the Certificates, the Trust Indenture,
hereunder, or under any other Operative Documents (including, without
limitation, on and after the Refinancing Date only, amounts payable as Make-
Whole Amount and, prior to the Refinancing Date only, premium, if any), except
as expressly provided in this Agreement or (in the case of the Owner Trustee) in
the Trust Indenture.
SECTION 7. Lessee's Representations, Warranties and Indemnities. (a)
----------------------------------------------------
In General. Without prejudice to the representations and warranties made by
----------
Lessee under the Original Participation Agreement, Lessee represents and
warrants as follows:
(i) Lessee is a corporation duly organized and validly
existing in good standing pursuant to the laws of the State of
Delaware; is duly qualified to do business as a foreign corporation in
each jurisdiction in which its operations or the nature of its
business requires, except where the failure to be so qualified would
not have a material adverse effect on Lessee or its business; is a
Citizen of the United States and a U.S. Air Carrier; has its chief
executive office (as such term is defined in Article 9 of the Uniform
3
[First Amended and Restated Participation Agreement (1989 I)]
Commercial Code) in Elk Grove Township, Illinois; and has the corporate
power and authority to conduct its business as it is presently being
conducted, to hold under lease the Aircraft and to enter into and
perform its obligations under the Lessee Documents;
(ii) the execution, delivery and performance by
Lessee of the Lessee Documents have been duly authorized by all
necessary corporate action on the part of Lessee, do not require any
stockholder approval, or approval or consent of any trustee or holders
of any indebtedness or obligations of Lessee except such as have been
duly obtained, and none of such Lessee Documents contravenes any law,
judgment, government rule, regulation or order binding on Lessee or the
certificate of incorporation or by-laws of Lessee or contravenes the
provisions of, or constitutes a default under, or results in the
creation of any Lien (other than Permitted Liens) upon the property of
Lessee under any indenture, mortgage, contract or other agreement to
which Lessee is a party or by which it or its properties may be bound
or affected;
(iii) neither the execution and delivery by Lessee of
the Lessee Documents nor the performance by Lessee of its obligations
thereunder require the consent or approval of, the giving of notice to,
or the registration with, or the taking of any other action in respect
of any federal, state or foreign government authority or agency, except
for (A) the orders, permits, waivers, exemptions, authorizations and
approvals of the regulatory authorities having jurisdiction over the
operation of the Aircraft by Lessee, which orders, permits, waivers,
exemptions, authorizations and approvals have been duly obtained, and
are in full force and effect, (B) the registration of the Aircraft
referred to in Section 4(a)(ix)(3) of the Original Participation
Agreement and (C) any normal periodic and other reporting requirements
under the applicable rules and regulations of the FAA to the extent
required to be given or obtained only after the Delivery Date;
(iv) each of the Lessee Documents has been duly
executed and delivered by Lessee and constitutes legal, valid and
binding obligations of Lessee enforceable against Lessee in accordance
with the terms thereof;
(v) there are no pending or threatened actions or
proceedings before any court or administrative agency which
individually (or in the aggregate in the case of any group of related
lawsuits) is expected to have a material adverse effect on the
financial condition of Lessee or the ability of Lessee to perform its
obligations under the Lessee Documents;
(vi) except for (A) the registration of the Aircraft
pursuant to the Federal Aviation Act, (B) the filing for recording
pursuant to said Act of the Trust Agreement, the Lease with the Lease
Supplement covering the Aircraft, the Trust Indenture and the Trust
Supplement attached thereto and made a part thereof, (C) the
4
[First Amended and Restated Participation Agreement (1989 I)]
filing of financing statements (and continuation statements at periodic
intervals) with respect to the security and other interests created by
such documents under the Uniform Commercial Code of Illinois and such
other states as may be specified in the opinions furnished pursuant to
Section 4(a)(xi) of the Original Participation Agreement and (D) the
taking of possession by the Indenture Trustee of the original
counterparts of the Lease and the Lease Supplement covering the
Aircraft, no further action, including any filing or recording of any
document (including any financing statement in respect thereof under
Article 9 of the Uniform Commercial Code of any applicable
jurisdiction), is necessary or advisable in order to establish and
perfect Lessor's interest in and the Indenture Trustee's security
interest in the Aircraft as against Lessee and as against any third
parties in any applicable jurisdictions in the United States;
(vii) there has not occurred any event which
constitutes a Default or an Event of Default under the Lease which is
presently continuing and there has not occurred any event which
constitutes or would, with the passage of time or the giving of notice,
or both, constitute an Event of Loss;
(viii) [Intentionally omitted];
(ix) the Owner Trustee has received the U.S.
Ownership Interest in the Aircraft free and clear of all Liens, except
the rights created pursuant to the Japanese Lease, the Japanese Lease
Assignment, the Primary Lessor Mortgage and the rights of Lessee under
the Lease and Lease Supplement covering the Aircraft, the Lien of the
Trust Indenture, the beneficial interest of the Owner Participant in
the Aircraft, and the Liens permitted by clauses (ii) and (iii) (solely
for taxes not yet due) of Section 6 of the Lease;
(x) none of the proceeds from the issuance of the
Certificates or from the acquisition by the Owner Participant of its
beneficial interest in the Trust Estate will be used directly or
indirectly by Lessee to purchase or carry any "margin stock" as such
term is defined in Regulation T or U of the Board of Governors of the
Federal Reserve System;
(xi) neither Lessee nor anyone acting on behalf of
Lessee has (A) directly or indirectly offered any interest in the Trust
Estate for sale to, or solicited any offer to acquire any of the same
from, anyone other than the Owner Participant, and not more than
thirty-five (35) other institutions believed capable of evaluating and
bearing the risks of investment in the transactions contemplated
hereby, or (B) directly or indirectly offered any interest in the Trust
Estate or any Certificate in a manner which would violate the
Securities Act of 1933, as amended, the rules and regulations
thereunder, administrative and judicial interpretation thereof or the
securities laws, rules or regulations of any state; or (C) directly or
indirectly offered any interest as Primary
5
[First Amended and Restated Participation Agreement (1989 I)]
Lessor in the Japanese Lease to any entity other than entities
organized under the laws of Japan and located in places other than the
United States;
(xii) Lessee is not and shall not be in material
default in the performance of any term or condition of the Purchase
Agreement;
(xiii) no governmental approval of any kind is
required of the Owner Participant, any Certificate Holder, the Owner
Trustee or the Indenture Trustee for their respective execution of or
performance under this Agreement, the Pass Through Documents (on and
after the Refinancing Date only) or any agreement contemplated hereby
solely by reason of any fact or circumstance peculiar to: (a) Lessee,
(b) the nature of the Aircraft, or (c) Lessee's proposed operations or
use of the Aircraft;
(xiv) all sales or use taxes then due and for which
Lessee is responsible pursuant to Section 7(b)(i) hereof have been
paid, other than such taxes which are being contested by Lessee in good
faith and by appropriate proceedings (and for which Lessee has
established adequate reserves) so long as such proceedings do not
involve any material risk of the sale, forfeiture or loss of the
Aircraft or any interest therein;
(xv) Lessee is solvent and will not be rendered
insolvent by the consummation of the transactions contemplated herein;
after such consummation the capital of Lessee will not be unreasonably
small for the conduct of the business in which Lessee is engaged or is
about to engage; Lessee has no intention or belief that it is about to
incur debts beyond its ability to pay as they mature; and Lessee's
participation in such transactions is made without any intent to
hinder, delay or defraud either present or future creditors of Lessee;
(xvi) The Aircraft has been duly certified by the
FAA as to type and airworthiness and such certification remains in full
force and effect;
(xvii) Owner Trustee, as lessor under the Lease, and
the Indenture Trustee, as assignee of the Owner Trustee's rights under
the Lease pursuant to the Trust Indenture, are entitled to the benefits
of Section 1110 of the United States Bankruptcy Code with respect to
the Aircraft;
(xviii) neither Lessee nor any subsidiary of Lessee
is an "investment company" or a company "controlled by an investment
company" within the meaning of the Investment Company Act of 1940, as
amended;
(xix) each of Lessee and each "related person" as
described in Section 414(b) or (c) of the Code has fulfilled its
respective obligations under the
6
[First Amended and Restated Participation Agreement (1989 I)]
minimum funding standards of ERISA and the Code with respect to each
Plan and is in compliance in all material respects with each Plan and
is in compliance in all material respects with the presently applicable
provisions of ERISA and the Code, and have not incurred any liability
to the Pension Benefit Guaranty Corporation (other than for the payment
of annual premiums), or any unsatisfied complete or partial withdrawal
liability with respect to any Multiemployer Plan;
(xx) upon delivery on the Delivery Date, the
Aircraft will be in a condition as good as the condition it was in when
delivered by the Manufacturer to Lessee (ordinary wear and tear
excepted), the Aircraft will be fully equipped to operate in commercial
service and the Aircraft will comply with all governmental requirements
governing such service; and
(xxi) none of the transactions contemplated by this
Agreement (including, without limitation, the use of the proceeds from
the issuance of the Certificates) will violate or result in a violation
of Section 7 of the Securities Exchange Act of 1934, as amended, or any
regulations issued pursuant thereto, including, without limitation,
Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System.
(b) General Tax Indemnity. (i) Indemnity. Except as provided
--------------------- ---------
in Section 7(b)(ii) hereof, 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 Document, shall be free of all
withholdings or deductions with respect to Taxes of any nature (other than U.S.
federal, state or local withholding taxes on, based on or measured by gross or
net income), and in the event that Lessee shall be required by applicable law to
make any such withholding or deduction for any such payment (x) Lessee shall
make all such withholdings or deductions, (y) the amount payable by Lessee shall
be increased so that after making all required withholdings or deductions such
Tax Indemnitee receives the same amount that it would have received had no such
withholdings or deductions been made, and (z) Lessee shall pay the full amount
withheld or deducted to the relevant Taxing Authority in accordance with
applicable law. Lessee further agrees that, in the event it is required to
withhold from any payment of Basic Rent, Stipulated Loss Value or Termination
Value (and amounts determined by reference to either), and amounts payable upon
exercise of Lessee's purchase option pursuant to Section 9 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 7(b)(ii), 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 Certificates prior to the relevant Payment Date) the aggregate principal
amount of scheduled installments due on the Certificates outstanding on the
relevant Payment Date, together with accrued and unpaid interest,
7
[First Amended and Restated Participation Agreement (1989 I)]
due on the Certificates; 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 7(b)(ii) hereof, Lessee
shall pay, protect, save and on written demand shall indemnify and hold harmless
each Tax Indemnitee from and against (x) any and all Taxes howsoever asserted or
imposed by any Taxing Authority against any Tax Indemnitee, Lessee or against
any party to the Relevant Documents, all or any part of the Aircraft, the
Airframe, the Engines, the Parts or any part thereof or otherwise upon or in
connection with, relating to, or measured by (A) the construction, assembly,
improvement, location, conditioning, installation, financing, refinancing,
purchase, acquisition, acceptance, rejection, delivery, transport, ownership,
registration, reregistration, possession, repossession, operation, use,
maintenance, repair, sale, return, abandonment, storage, redelivery, leasing,
subleasing, alteration, modification, rebuilding of, transfer of title to,
transfer of registration of, exportation or disposition of, or the imposition of
any Lien (or the incurrence of any liability to refund or pay over any amount as
the result of any Lien) on or in respect of, the Aircraft, the Airframe, the
Engines, the Parts or any part thereof, (B) the rentals, income, proceeds,
receipts or earnings from the Aircraft, the Airframe, the Engines, the Parts or
any part thereof, (C) any amount paid or payable pursuant to any Operative
Documents, Pass Through Documents or any document related thereto, (D) the
Aircraft, the Airframe, the Engines, the Parts or any part thereof, (E) any or
all of the Operative Documents, Pass Through Documents or any other documents
contemplated hereby or thereby and amendments and supplements hereto and thereto
which have been approved by Lessee or the execution, delivery or performance of
any thereof or the issuance, acquisition, holding or subsequent transfer
thereof, (F) otherwise with respect to or in connection with any of the
transactions contemplated by the Operative Documents or the Pass Through
Documents, or (G) any change in the Owner Trustee or the situs of the Trust
Estate made pursuant to Section 8(b) or 14 hereof; and (y) any reasonable
out-of-pocket costs and expenses fairly attributed to any of the foregoing
incurred by any Indemnitee. For purposes of this Section 7(b) the term "Tax
Indemnitee" shall include each Certificate Holder until, but not including, the
day following the Refinancing Date.
(ii) Exclusions from General Tax Indemnity. The provisions of
-------------------------------------
Section 7(b)(i) shall not apply:
(1) in the case of a Tax Indemnitee which is the Owner
Participant, Owner Trustee, the Trust Estate or a successor,
assign, or Affiliate of any thereof, to any Income Tax (as
defined in Section 7(b)(xii) hereof other than an Income Tax
which is a withholding tax imposed on payments (whether actual
or offset) under the Relevant Documents) imposed by (A) the
United States Federal government, (B) any state or local taxing
jurisdictions or authorities in the United States; or (C) any
foreign government or any political subdivision or taxing
authority thereof or any territory or possession of the United
States or by any international authority; provided, however,
that clauses (B) and (C) shall not
8
[First Amended and Restated Participation Agreement (1989 I)]
apply to any Income Tax imposed by any such jurisdiction solely
as a result of the registration, operation, location or use to
or in such jurisdiction of the Aircraft, Airframe, Engines, the
Parts or any part thereof or by reason of the activities in
such jurisdiction of the Lessee or any Lessee Person (as
defined in Section 7(b)(xiii)) (but only to the extent
attributable to the Aircraft, Airframe, Engines, the Parts or
any part thereof or activities in such jurisdiction of the
Lessee or any sublessee);
(2) in the case of an Indemnitee which is a
Certificate Holder or any successor, assign, or Affiliate
thereof, to Income Taxes relating to any payments of
principal, interest or premium, if any, on the Certificates
imposed by any government or taxing authority;
(3) to any Tax imposed on a Tax Indemnitee which
is the Owner Participant, Owner Trustee, or the Trust Estate,
or any successor, assign or Affiliate of any thereof, as a
result of a voluntary transfer or disposition by such Tax
Indemnitee including, without limitation, the revocation of
the Trust Agreement or an involuntary transfer or disposition
of all or any portion of its respective equitable or legal
ownership interest in the Aircraft, the Airframe, the Engines,
the Parts or any part thereof, the Trust Estate or the
Operative Documents, unless any such transfer or disposition
shall occur, (A) during a period when an Event of Default has
occurred and is continuing under the Lease at the time of
transfer or disposition and such transfer or disposition is a
direct result of such Event of Default, or (B) in connection
with the termination of the Lease or action or direction of
the Lessee pursuant to Sections 7, 8, 9, 10 or 19 thereof;
(4) to any Tax imposed on a Tax Indemnitee which
is a Certificate Holder, the Indenture Trustee or the Trust
Indenture Estate or any successor, assign or Affiliate of any
thereof, as a result of a voluntary or involuntary transfer or
other disposition of all or any portion of its respective
equitable or legal interests in the Trust Indenture, the
Operative Documents or the Pass Through Documents unless, in
each case, such transfer or disposition shall occur (A)
pursuant to the exercise of remedies under Section 15 of the
Lease, or (B) in connection with the termination of the Lease
or action or direction of the Lessee pursuant to Sections 7,
8, 9, 10 or 19 thereof;
(5) to any Tax imposed on the Owner Participant,
Trust Estate or Owner Trustee which results from the willful
misconduct or gross negligence of (x) the Owner Participant to
the extent imposed on the Owner Participant, Trust Estate or
Owner Trustee, or (y) the Owner Trustee to the extent imposed
on the Owner Trustee;
9
[First Amended and Restated Participation Agreement (1989 I)]
(6) to any Tax imposed on a Tax Indemnitee which
is a Certificate Holder, the Indenture Trustee or the Trust
Indenture Estate which results from the willful misconduct or
gross negligence of a Certificate Holder or the Indenture
Trustee;
(7) to any Tax based on or measured by any fees
received by the Owner Trustee, Indenture Trustee or Pass
Through Trustee in connection with any transaction
contemplated by the Operative Documents or Pass Through
Documents;
(8) so long as no Event of Default or event
which, with the passage of time or the giving of notice or
both, would become an Event of Default, shall be continuing,
to any Tax imposed with respect to (A) the portion of any
period after the expiration of the Term, (B) the earlier
discharge in full of Lessee's obligation to pay the Stipulated
Loss Value or the Termination Value and all other amounts due
under the Lease or (C) placement in storage of the Aircraft
pursuant to Section 5(d)of the Lease; provided, however, that
this Section 7(b)(ii)(8) shall not apply to any Tax (x)
relating to events occurring or matters arising upon or prior
to such expiration, discharge, storage or parking, or (y)
imposed on or with respect to any payments of Tax indemnified
hereunder which are due after such expiration, discharge,
storage or parking until after such payments have been made;
(9) in the case of a Tax Indemnitee which is a
Certificate Holder, the Trust Indenture Estate or Pass Through
Trustee or any successor, assign or Affiliate thereof, to
Taxes in the nature of an intangible or similar tax upon or
with respect to the value of the interest of any Certificate
Holder, the Trust Indenture Estate or in any of the
Certificates imposed by any government or taxing authority;
(10) to any Tax imposed on or with respect to a
transferee (or subsequent transferee) of an original Tax
Indemnitee to the extent such Tax would not have been required
to be withheld or imposed on or with respect to such original
Tax Indemnitee; provided, that the exception in this Section
7(b)(ii)(10) shall not apply to any transferee (or subsequent
transferee) where such transfer shall have occurred at any
time pursuant to the exercise of remedies under Section 15 of
the Lease while an Event of Default has occurred and is
continuing under the Lease at the time of transfer or
disposition;
10
[First Amended and Restated Participation Agreement (1989 I)]
(11) to any Tax imposed on the Owner Trustee or
Owner Participant resulting from, or which would not have
occurred but for, a Lessor Lien (including for this purpose
Liens that would be Lessor Liens but for the proviso to the
definition of Lessor Liens);
(12) to any Tax which Lessee or a Tax
Indemnitee is contesting in good faith under the provisions of
Section 7(b)(iv) until the conclusion of such contest;
(13) to any Tax which has been included in
Lessor's Cost;
(14) to any Tax imposed by any jurisdiction
which (A) is imposed on a Tax Indemnitee for activities in
such jurisdiction unrelated to the transactions contemplated
by the Operative Documents and Pass Through Documents, or (B)
is imposed on, based on or measured by transactions of a Tax
Indemnitee unrelated to the transactions contemplated by the
Operative Documents and Pass Through Documents; and
(15) to any Tax for which Lessee is obligated
to pay the Owner Participant under the Tax Indemnity
Agreement.
The provisions of this Section 7(b)(ii) shall not apply to any
Tax imposed in respect of the receipt or accrual of any indemnity payment made
by Lessee pursuant to this Section 7(b) or Section 7(c) hereof; provided,
however, that this clause shall not result in any duplication of any amounts of
any gross-up payable under Section 7(b)(iii) or Section 7(c) hereof.
(iii) Calculation of General Tax Indemnity Payments.
---------------------------------------------
Any payment which Lessee shall be required to make to or for the
account of any Tax Indemnitee with respect to any Tax which is subject
to indemnification under this Section 7(b) shall be in an amount which,
after reduction by the amount of all Taxes required to be paid in
respect of the receipt or accrual of such amount and after
consideration of any current savings of such Tax Indemnitee resulting
by way of any deduction, credit or other tax benefit attributable to
such indemnified Tax that actually reduces any taxes for which Lessee
is not actually required to indemnify such Tax Indemnitee pursuant to
Section 7(b) hereof or the Tax Indemnity Agreement, shall be equal to
the payment otherwise required hereunder.
If, by reason of any Tax payment made to or for the account of a
Tax Indemnitee by Lessee pursuant to this Section 7(b), such Tax
Indemnitee subsequently realizes a tax deduction or credit (including
foreign tax credit and any reduction in Taxes) not
11
[First Amended and Restated Participation Agreement (1989 I)]
previously taken into account in computing such payment, such Tax
Indemnitee shall promptly pay to Lessee, provided an Event of Default
shall not have occurred and be continuing, an amount equal to the sum
of (I) the actual reduction in Taxes, if any, realized by such Tax
Indemnitee which is attributable to such deduction or credit and (II)
the actual reduction in Taxes realized by such Tax Indemnitee as a
result of any payment made by such Tax Indemnitee pursuant to this
sentence; provided, however, that such Tax Indemnitee shall not be
-------- -------
obligated to make any payment pursuant to this Section 7(b) to the
extent that the amount of such payment pursuant to (I) above would
exceed (x) the amount of all prior payments made by Lessee pursuant to
this Section 7(b) net of any amount paid in respect of Taxes required
to be paid by such Tax Indemnitee in respect of the receipt or accrual
of such amounts received by such Tax Indemnitee from Lessee, less (y)
the portion of all prior payments computed pursuant to (I) above by
such Tax Indemnitee to the Lessee hereunder.
For purposes of this Section 7(b)(iii) items of foreign Tax of
any Tax Indemnitee shall be deemed to be utilized by such Indemnitee as
credits or deductions for any taxable year in accordance with the
following priorities:
First, all available foreign Taxes, other than those
arising out of a leveraged lease transaction, for which such
Tax Indemnitee was not indemnified or held harmless by anyone;
and
Second, all remaining available foreign Taxes (other
than those in third below) on a pari passu basis; and
---- -----
Third, any remaining foreign Taxes arising from any
transaction entered into prior to the date hereof in which
there is an express agreement that such Taxes shall be
utilized after such Taxes described above.
Once the foreign Tax for which such Tax Indemnitee was indemnified by
Lessee is deemed to be utilized pursuant to the ordering rules
contained in this paragraph, it shall not subsequently be
recharacterized as not having been utilized as a result of a foreign
tax liability arising in a subsequent year.
Any Taxes that are imposed on any Tax Indemnitee as a result
of the disallowance or reduction of any tax benefit referred to in this
subsection as to which such Tax Indemnitee has made in full the payment
to Lessee required hereby (or as to which such Tax Indemnitee would
have made its payment but for Section 7(b)(vii) hereof) or which tax
benefit was otherwise taken into account in computing Lessee's
indemnity obligation pursuant to this Section 7(b), in a taxable year
subsequent to the utilization by such Tax Indemnitee (including the
expiration of any tax credit carryovers or carrybacks of such
12
[First Amended and Restated Participation Agreement (1989 I)]
Tax Indemnitee that would not otherwise have expired) shall be treated
as a Tax for which Lessee is obligated to indemnify such Tax Indemnitee
pursuant to the provisions of this Section 7(b) without regard to the
exclusions in Section 7(b)(ii) or conditions in Section 7(b)(iv).
(iv) General Tax Indemnity -- Contests. If a written claim
---------------------------------
shall be made against any Tax Indemnitee for any Tax for which Lessee
is obligated pursuant to this Section 7(b), such Tax Indemnitee shall
notify Lessee in writing promptly after receipt thereof (as well as the
name of independent tax counsel for purposes of this Section 7(b)(iv))
and shall provide Lessee such information regarding such claim as
Lessee may reasonably request, but the failure to give such notice or
to provide such information shall not diminish Lessee's obligation
hereunder unless such failure materially and adversely affects Lessee's
ability to (A) require such Tax Indemnitee to contest the Tax or (B)
contest the Tax itself.
If a written claim shall be made for any Tax, other than an
Income Tax, for which Lessee is obligated pursuant to this Section
7(b), and under applicable law of the Taxing Authority Lessee is
allowed to directly contest such Tax in its own name, then the Lessee
shall be permitted, at its expense at no after-tax cost to the Tax
Indemnitee and in its own name, to contest the imposition of such Tax.
If requested by Lessee in writing (A) within 30 days of Lessee's
receipt of notice from a Tax Indemnitee under the first paragraph of
this Section 7(b)(iv) and (B) with respect to a Tax not described in
the previous paragraph, such Tax Indemnitee shall in good faith at
Lessee's expense at no after-tax cost to the Tax Indemnitee contest the
imposition of any such Tax. After consulting with Lessee and Lessee's
counsel concerning the forum in which the adjustment is most likely to
be favorably resolved, such Tax Indemnitee shall, in its sole
discretion, select the forum for such contest and determine whether any
such contest shall be by (A) resisting payment of such Tax, (B) paying
such Tax under protest or (C) paying such Tax and seeking a refund or
other repayment thereof.
In no event shall such Tax Indemnitee be requested to contest the
imposition of any Tax for which Lessee is liable under this Section
7(b), or in the case of clauses (II) and (VI), shall the Lessee be
permitted to contest such Tax unless (I) in Lessee's request to the Tax
Indemnitee to contest such Tax, Lessee shall have agreed to pay such
Tax Indemnitee on demand and on an after-tax basis all reasonable costs
and expenses that such Tax Indemnitee actually incurs in connection
with contesting such claim (including, without limitation, all costs,
expenses, losses, reasonable legal and accounting fees, disbursements,
penalties, interest and additions to tax), (II) such action to be taken
will not result in the risk of an imposition of criminal penalties or
the material risk of any sale,
13
[First Amended and Restated Participation Agreement (1989 I)]
forfeiture or loss of the Aircraft, or the creation of any Lien other
than Liens for Taxes of Lessee (x) either not yet due or being
contested in good faith by appropriate proceedings so long as such
proceedings do not involve the risk of an imposition of criminal
penalties or the material risk of any sale, forfeiture or loss of the
Aircraft and (y) for the payment of which such reserves, if any, as are
required to be provided under generally accepted accounting principles
have been provided by Lessee and, to the extent permitted by law
payment may be withheld during the pendency of such contest, (III) if
such contest shall be conducted in a manner requiring the payment of
the claim, Lessee shall have paid the amount required directly to the
appropriate authority or made an advance of the amount thereof to such
Tax Indemnitee on an interest-free basis and agreed to indemnify the
Tax Indemnitee against any additional net after-tax cost to such Tax
Indemnitee with respect to such advance or the interest-free nature
thereof, (IV) independent tax counsel selected by such Tax Indemnitee
and reasonably satisfactory to the Lessee shall furnish an opinion,
prepared at the Lessee's expense, to the effect that there is a
reasonable basis to contest such claim, (V) prior to the commencement
of an administrative appeal Lessee shall have delivered to such Tax
Indemnitee a written acknowledgment of Lessee's obligation to indemnify
fully such Tax Indemnitee to the extent that the contest is not
successful; provided, however, that Lessee will not be bound by its
acknowledgment of liability if and to the extent that the contest
results in a determination which clearly demonstrates that Lessee is
not otherwise liable under this Section 7(b) with respect to such Tax,
(VI) if an Event of Default shall have occurred and be continuing, the
Lessee shall have, at the option of the Tax Indemnitee, either (i)
provided security for its obligations hereunder reasonably satisfactory
to the Tax Indemnitee by placing in escrow sufficient funds to cover
any such contested Tax or (ii) paid such Tax.
If any Tax Indemnitee shall obtain a refund of all or any part
of any Tax paid by Lessee such Tax Indemnitee shall pay Lessee, but not
before Lessee shall have made all payments theretofore due to such
Indemnitee pursuant to this Section 7(b) and any other payments
theretofore due under any of the Operative Documents, an amount equal
to the sum of (I) the amount of such refund, including interest
received attributable thereto, net of taxes required to be paid by such
Tax Indemnitee as a result of any refund or interest received and (II)
any tax benefit realized by such Tax Indemnitee as a result of any
payment by such Tax Indemnitee made pursuant to this sentence.
Nothing contained in this Section 7(b)(iv) shall require any Tax
Indemnitee to contest, or permit Lessee to contest, a claim with
respect to the imposition of any Tax if such Tax Indemnitee shall waive
its right to indemnification under this Section 7 with respect to such
claim.
(v) General Tax Indemnity -- Reports. Lessee will provide
--------------------------------
such information as may be reasonably requested by a Tax Indemnitee or
required to enable a
14
[First Amended and Restated Participation Agreement (1989 I)]
Tax Indemnitee to fulfill its tax filing and audit requirements with
respect to the transactions contemplated by the Operative Documents. In
the event any return, statement or report is required to be made or
filed with respect to any Tax imposed on or indemnified against by
Lessee under this Section 7(b) (other than with respect to Income
Taxes), Lessee shall notify the Tax Indemnitee of such requirement and
(i) to the extent permitted by law or required by law, Lessee shall
make and file in its own name, and pay the tax shown due on such
return, statement or report in such manner as will show the ownership
of the Aircraft in the Owner Trustee and furnish the Tax Indemnitee
with a copy of such return, statement or report; provided, however,
that Lessee shall have no obligation under this clause (i) to the
extent such Tax Indemnitee after receipt of Lessee's written request
shall have failed to furnish Lessee with such information as is
peculiarly within such Tax Indemnitee's control and is necessary to
file such returns, statements or reports, (ii) in the case of a return,
statement or report required to be in the name of or filed by such Tax
Indemnitee, Lessee shall prepare and furnish such return, statement or
report for filing by such Tax Indemnitee in such manner as shall be
reasonably satisfactory to such Tax Indemnitee and send the same to
such Tax Indemnitee for filing no later than 20 Business Days prior to
the due date; provided, however, that Lessee shall have no obligation
under this clause (ii) to the extent such Tax Indemnitee after receipt
of Lessee's written request specifying that information is required to
be provided pursuant to Section 7(b)(v) of this Agreement, shall have
failed to furnish Lessee with such information as is peculiarly within
such Tax Indemnitee's control and is necessary to prepare such return,
statement or report, and (iii) in the case of a return, statement or
report required to reflect items in addition to Taxes imposed on or
indemnified against by the Lessee under this Section 7(b), Lessee
shall, upon the written request of such Tax Indemnitee, provide such
Tax Indemnitee with such information as is within Lessee's reasonable
control. Lessee shall hold each Tax Indemnitee harmless from and
against any liabilities, including, but not limited to penalties,
additions to tax, fines and interest, arising out of any insufficiency
or inaccuracy in any such return, statement, report or information if
such insufficiency or inaccuracy is attributable to Lessee.
(vi) General Tax Indemnity -- Payment. Except as provided
--------------------------------
in Section 7(b)(iv) hereof, Lessee shall pay any Tax directly to the
appropriate taxing authority if legally permissible and upon demand of
a Tax Indemnitee shall pay such Tax and any other amounts due hereunder
to such Tax Indemnitee within 20 Business Days of such demand, but in
no event shall any such payments be made more than 10 Business Days
prior to the date the Tax to which any such payment hereunder relates
is due (unless Lessee has not received such demand at least 15 Business
Days prior to such date in which case within five Business Days after
receipt of such demand), in immediately available funds. Any such
demand for payment from a Tax Indemnitee shall specify in reasonable
detail, the payment and the facts upon which the right to payment is
based. Each Tax Indemnitee shall promptly forward to Lessee any notice,
▇▇▇▇ or advice received
15
[First Amended and Restated Participation Agreement (1989 I)]
by it concerning any Tax indemnified against hereunder. As soon as
practicable after each payment by Lessee of any Tax indemnified against
hereunder, Lessee shall furnish the appropriate Tax Indemnitee the
original or a certified copy of a receipt for Lessee's payment of such
Tax or such other evidence of payment of such Tax as is acceptable to
such Tax Indemnitee. Lessee shall also furnish promptly upon request
such data as any Tax Indemnitee may reasonably require to enable such
Tax Indemnitee to comply with the requirements of any taxing
jurisdiction.
(vii) Application of Payments During Existence of Event of
----------------------------------------------------
Default or Default. Any amount payable to Lessee pursuant to the terms
------------------
of this Section 7(b) shall not be paid to or retained by Lessee if at
the time of such payment or retention a Default or an Event of Default
shall have occurred and be continuing under the Lease. At such time as
there shall not be continuing any such Default or Event of Default,
such amount shall be paid to the Lessee to the extent not previously
applied against Lessee's obligations hereunder as and when due after
the Owner Trustee shall have declared the Lease in default pursuant to
Section 15 thereof.
(viii) Reimbursements by Indemnitees Generally. If, for any
---------------------------------------
reason, Lessee is required to make any payment with respect to any
Taxes imposed on any Indemnitee in respect of the transactions
contemplated by the Operative Documents or on the Aircraft, the
Airframe, the Engines, the Parts or any part thereof, which Taxes are
not the responsibility of Lessee under this Section 7(b), then such Tax
Indemnitee shall pay to Lessee an amount which equals the amount paid
by Lessee with respect to such Taxes plus interest thereon computed at
an annual interest rate equal to the Base Rate plus one percent.
(ix) Forms, etc. Each Tax Indemnitee agrees to furnish to
----------
Lessee from time to time and not inconsistent with its filing position,
at the Lessee's written request and expense, 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 tax imposed by
any taxing authority in respect of any payments otherwise required to
be made by Lessee pursuant to the Operative Documents and Pass Through
Documents, which reduction or exemption may be available to such Tax
Indemnitee.
(x) Non-Parties. If a Tax Indemnitee is not a party to this
-----------
Agreement, Lessee may require the Tax Indemnitee to agree to the terms
of this Section 7(b) prior to making any payment to such Tax Indemnitee
under this Section 7(b).
(xi) Owner Participant. For the purposes of this Section
-----------------
7(b), the term "Owner Participant" shall mean and include BancBoston
United Leasing, LLC (and its permitted successors and assigns), and
where appropriate the affiliated group of
16
[First Amended and Restated Participation Agreement (1989 I)]
corporations (and each member thereof) making a consolidated or
combined return of which BancBoston United Leasing, LLC (and its
permitted successors and assigns), is a member.
(xii) Income Tax. For purposes of this Section 7, the term
----------
"Income Tax" means any Tax based on or measured by or with respect to
gross or net income (including, without limitation, capital gains
taxes, minimum taxes, income taxes collected by withholding and taxes
on tax preference items) or receipts and Taxes which are capital, doing
business, franchise, excess profits, net worth taxes or Taxes in the
nature of an Income Tax or such Income Taxes or any of them (excluding
in each case sales, use, rental, services, license, ad valorem, value-
added, property, property transfer, air carrier, transportation,
registration, or aircraft registration Taxes or Taxes in the nature of
such Taxes or any of them) and interest, additions to tax, penalties,
or other charges in respect thereof.
(xviii) Lessee Person. For purposes of this Section 7(b),
-------------
the term "Lessee Person" shall mean Lessee, any sublessee of the
Aircraft, or any Affiliate, transferee, agent, sublessee, employee,
successor or assignee of any of the foregoing, or any party to the
Relevant Documents or any user of the Aircraft or any person in
possession of the Aircraft with or without color of right (including
any trustee, receiver, liquidator, debtor in possession or Affiliate of
any of the foregoing). The term "Lessee Person" shall not include the
Lessor or any person claiming from or through it (other than the Lessee
or any person claiming from or through the Lessee).
(c) General Indemnity. Lessee hereby agrees to indemnify each
-----------------
Indemnitee against, and agrees to protect, save and keep harmless each of them
from (whether or not the transactions contemplated herein or in any of the other
Operative Documents or, on and after the Refinancing Date only, the Pass Through
Documents are consummated), any and all liabilities, obligations, losses,
damages, penalties, claims, actions, suits, out-of-pocket costs, expenses and
disbursements (including without limitation reasonable legal fees and expenses
and Transaction Expenses to the extent not required to be paid by Lessor
pursuant to Section 16 hereof and all costs and expenses relating to amendments,
supplements, waivers and consents to and under the Operative Documents, but
excluding internal costs and expenses such as salaries and overhead), of
whatsoever kind and nature (collectively called "Expenses") imposed on, incurred
by or asserted against any Indemnitee or any directors, officers, employees,
servants or agents thereof, in any way relating to or arising out of or which
would not have occurred but for (A) the Operative Documents, and, on and after
the Refinancing Date only, each Pass Through Document (and any amendments
thereto), including without limitation any breach by Lessee of any of its
covenants contained therein, or any sublease or the enforcement of any of the
terms
17
[First Amended and Restated Participation Agreement (1989 I)]
thereof, (B) the manufacture, purchase, acceptance or rejection of the Airframe
or any Engine, (C) the ownership, delivery, nondelivery, lease, sublease,
possession, use, operation, maintenance, condition, sale, return or other
disposition of, or any modification or alteration to, the Aircraft including,
without limitation, latent or other defects, whether or not discoverable, strict
tort liability and any loss or damage to any property or the environment, death
or injury to any person and any claim for patent, trademark or copyright
infringement, (D) the offer, sale, holding, transfer or delivery of any
Certificates or the Pass Through Certificates (on and after the Refinancing Date
only), or any other certificates issued pursuant to Sections 17, 18 or 20 hereof
or otherwise with Lessee's consent whether before, on or after the Delivery Date
(the indemnity in this clause (D) to extend also to any person who controls an
Indemnitee, its successors, assigns, employees, servants and agents within the
meaning of Section 15 of the Securities Act of 1933, as amended), (E) the offer
or sale of any interest in the Lessor Aircraft Assets or the Trust Estate or any
similar interest on or prior to the Delivery Date, or (F) the offer or sale of
any interest in the Japanese Lease or any similar interest on or prior to the
Delivery Date; provided, that the foregoing indemnity shall not extend to any
Expense resulting from or arising out of or which would not have occurred but
for one or more of the following: (1) any representation or warranty by such
Indemnitee in the Operative Documents or, on and after the Refinancing Date
only, in any Pass Through Document being incorrect, or (2) the failure by such
Indemnitee to perform or observe any agreement, covenant or condition in any of
the Operative Documents or, on and after the Refinancing Date only, in any Pass
Through Document including, without limitation, the creation or existence of a
Lessor Lien (including for this purpose Liens that would be Lessor Liens but for
the proviso to the definition of Lessor Liens), or (3) the willful misconduct or
the gross negligence of such Indemnitee (other than gross negligence imputed to
such Indemnitee solely by reason of its interest in the Aircraft), or (4) a
disposition (voluntary or involuntary) by Lessor of all or any part of its
interest in the Airframe or any Engine (other than as contemplated by the Lease
or the Trust Indenture), a disposition (voluntary or involuntary) by such
Indemnitee of all or any part of such Indemnitee's interest in the Airframe, any
Engine or in the Operative Documents other than during the continuance of an
Event of Default under the Lease, or (5) except as provided in the two
immediately following paragraphs of this Section 7(c), any Tax (as defined in
Section 7(b) hereof) whether or not Lessee is required to indemnify for such Tax
pursuant to Section 7(b) hereof (it being understood that Section 7(b) hereof,
the two immediately following paragraphs of this Section 7(c) and the Tax
Indemnity Agreement exclusively provide for Lessee's liability with respect to
Taxes), or (6) the offer or sale by Lessor after the Delivery Date of any
interest in the Trust Estate or any similar interest, unless such offer or sale
shall occur, but only to the extent that Lessor has not received payment in full
of the Termination Value, Stipulated Loss Value and all other amounts then owed
to Lessor under the Operative Documents, (A) during a period when an Event of
Default has occurred and is continuing under the Lease at the time of such offer
or sale; provided, however, that in regard to an Event of Default described in
Section 14(a) of the Lease not before the earlier of (x) notice to Lessee of
such Event of Default, or (y) the written declaration of Default under Section
15 of the Lease, or (B) in connection with the termination of the Lease or
action or
18
[First Amended and Restated Participation Agreement (1989 I)]
direction of the Lessee pursuant to Sections 8, 9 or 10 thereof, or (7) in the
case of the Indenture Trustee, in its individual capacity, and the successors
and assigns thereof, a failure on the part of the Indenture Trustee to
distribute in accordance with the Trust Indenture any amounts received and
distributable by it thereunder or, in the case of a Certificate Holder, a
failure on the part of the Indenture Trustee to distribute in accordance with
the Trust Indenture any amounts received and distributable by it thereunder to
such Certificate Holder or, on and after the Refinancing Date only, a failure on
the part of any Pass Through Trustee to distribute in accordance with the
applicable Pass Through Trust Agreement any amounts received and distributable
by such Pass Through Trustee under such Pass Through Trust Agreement, or (8) so
long as no Default or Event of Default shall have occurred and be continuing,
the authorization or giving or withholding of any future amendments,
supplements, waivers or consents with respect to any of the Operative Documents
or any Pass Through Document (on and after the Refinancing Date only) which
amendments, supplements, waivers or consents (a) do not require or receive the
approval of Lessee pursuant to the terms of the Operative Documents or any Pass
Through Document and (b) are not required pursuant to the terms of the Operative
Documents or, on and after the Refinancing Date only, any Pass Through Document,
or (9) any loss of tax benefits or increase in tax liability under any tax law
whether or not Lessee is required to indemnify therefor pursuant to this
Agreement or the Tax Indemnity Agreement (it being understood that Section 7(b)
hereof, the two immediately following paragraphs of this Section 7(c) and the
Tax Indemnity Agreement exclusively provide for Lessee's liability with respect
to Taxes), or (10) except to the extent fairly attributable to acts or events
occurring prior thereto, acts or events which occur after the earlier of: (I)
the return of possession of the Airframe or any Engine or any Part to Lessor or
its designee pursuant to the terms of the Lease (other than pursuant to Section
15 thereof, in which case Lessee's liability under this Section 7(c) shall
survive for so long as Lessor shall be entitled to exercise remedies under such
Section 15), (II) the termination of the Term in accordance with Section 9 of
the Lease, (III) the 30th day beyond the end of the Term if Lessor shall have
furnished the notice referred to in Section 10(d) of the Lease and Lessee shall
have failed to return possession to Lessor on such day or (IV) the payment by
Lessee of all amounts required to be paid under the Lease following an Event of
Loss with respect to the Aircraft, or (11) any other Expense which any Person
has expressly agreed to bear pursuant to any of the Operative Documents.
Lessee further agrees that any payment or indemnity pursuant to this
Section 7(c) in respect of any "Expenses" shall be in an amount which, after
deduction of all Taxes required to be paid by an Indemnitee with respect to such
amount under the laws of any federal, state or local government or taxing
authority in the United States, or under the laws of any taxing authority or
governmental subdivision of a foreign country, or any territory or possession of
the United States or any international authority, shall be equal to the excess,
if any, of (A) the amount of such Expense over (B) the current net reduction in
Taxes required to be paid by such Indemnitee resulting from the accrual or
payment of such Expense.
19
[First Amended and Restated Participation Agreement (1989 I)]
If, by reason of any Expense payment made to or for the
account of an Indemnitee by Lessee pursuant to this Section 7(c), such
Indemnitee subsequently realizes a tax deduction or credit (including foreign
tax credit and any reduction in Taxes) not previously taken into account in
computing such payment, such Indemnitee shall promptly pay to Lessee, but only
if Lessee shall have made all payments then due and owing to such Indemnitee
under the Operative Documents, an amount equal to the sum of (I) the actual
reduction in Taxes, if any, realized by such Indemnitee which is attributable to
such deduction or credit and (II) the actual reduction in Taxes realized by such
Indemnitee as a result of any payment made by such Indemnitee pursuant to this
sentence; provided, however, that such Indemnitee shall not be obligated to make
any payment pursuant to this Section 7(c) to the extent that the amount
calculated pursuant to (I) above would exceed (x) the amount of all prior
Expense payments net of any amount paid in respect of Taxes required to be paid
by such Indemnitee in respect of the receipt or accrual of such amounts received
by such Indemnitee from Lessee pursuant to this Section 7(c), less (y) the
portion of all prior payments computed pursuant to (I) above by such Indemnitee
to Lessee hereunder. Any subsequent loss, disallowance or reduction of any tax
benefit for which an Indemnitee has made a payment to Lessee under this
paragraph (or which was otherwise taken into account in computing Lessee's
indemnity obligation) shall be treated as a Tax for which Lessee is obligated to
indemnify such Indemnitee pursuant to Section 7(b) without regard to Sections
7(b)(ii) or 7(b)(iv).
Nothing in this Section 7(c) shall be construed as a guaranty
by Lessee of payments due pursuant to the Certificates or the Pass Through
Certificates (on and after the Refinancing Date only) or of the residual value
of the Aircraft.
If a claim is made against an Indemnitee involving one or more
Expenses and such Indemnitee has notice thereof, such Indemnitee shall promptly,
upon receiving such notice, give notice of such claim to Lessee; provided that
the failure to provide such notice shall not release Lessee from any of its
obligations to indemnify hereunder, and no payment by Lessee to an Indemnitee
pursuant to this Section 7(c) shall be deemed to constitute a waiver or release
of any right or remedy which the Lessee may have against such Indemnitee for any
actual damages as a result of the failure by such Indemnitee to give Lessee such
notice. Lessee shall be entitled, at its sole cost and expense, and without
cost, on an after-tax basis, to Lessor, acting through counsel reasonably
acceptable to the respective Indemnitee, (A) in any judicial or administrative
proceeding that involves solely a claim for one or more Expenses, to assume
responsibility for and control thereof, (B) in any judicial or administrative
proceeding involving a claim for one or more Expenses and other claims related
or unrelated to the transactions contemplated by the Operative Documents, to
assume responsibility for and control of such claim for Expenses to the extent
that the same may be and is severed from such other claims (and such Indemnitee
shall use its best efforts to obtain such severance), and (C) in any other case,
to be consulted by such Indemnitee with respect to judicial proceedings subject
to the control of such Indemnitee and to be allowed, at Lessee's sole expense,
to participate therein. Notwithstanding any of the
20
[First Amended and Restated Participation Agreement (1989 I)]
foregoing to the contrary, Lessee shall not be entitled to assume responsibility
for and control of any such judicial or administrative proceedings if any
Default or Event of Default shall have occurred and be continuing or if such
proceedings will involve a material risk of the sale, forfeiture or loss of, or
the creation of any Lien (other than a Permitted Lien) on the Aircraft or the
Trust Indenture Estate or any part thereof or any risk of criminal liability or
material risk of civil liability to any Indemnitee unless Lessee shall have
posted a bond or other security satisfactory to the relevant Indemnitee in
respect to such risk. The Indemnitee may participate at its own expense and with
its own counsel in any judicial proceeding controlled by Lessee pursuant to the
preceding provisions.
The Indemnitee shall supply Lessee with such information
reasonably requested by Lessee as is necessary or advisable for Lessee to
control or participate in any proceeding to the extent permitted by this Section
7(c). Such Indemnitee shall not 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 7(c).
Lessee shall supply the Indemnitee with such information
reasonably requested by the Indemnitee as is necessary or advisable for the
Indemnitee to control or participate in any proceeding to the extent permitted
by this Section 7(c).
Upon payment of any Expense pursuant to this Section 7(c),
Lessee, without any further action, shall be subrogated to any claims the
Indemnitee may have relating thereto other than claims under Section 9.06 of the
Trust Indenture. The Indemnitee agrees to give such further assurances or
agreements and to cooperate with Lessee to permit Lessee to pursue such claims,
if any, to the extent reasonably requested by Lessee.
In the event that Lessee shall have paid an amount to an
Indemnitee pursuant to this Section 7(c), and such Indemnitee subsequently shall
be reimbursed in respect of such indemnified amount from any other person, such
Indemnitee shall promptly pay Lessee, but not before Lessee shall have made all
payments then due to such Indemnitee pursuant to this Section 7(c) and any other
payments then due under any of the Operative Documents, an amount equal to the
sum of (I) the amount of such reimbursement, including interest received
attributable thereto, net of taxes required to be paid by such Indemnitee as a
result of any refund or interest received and (II) any tax benefit realized by
such Indemnitee as a result of any payment by such Indemnitee made pursuant to
this sentence, provided, however, that such amount attributable to (I) above
shall not be in excess of the amount of such Expense payment net of any amount
paid in respect of Taxes required to be paid by such Indemnitee in respect of
the receipt or accrual of such payment or advance made by Lessee to such
Indemnitee plus interest received, if any, from the relevant taxing authority
with respect to any such Expense payment, it being intended that such Indemnitee
shall realize a net benefit pursuant to this Section 7(c) only if Lessee shall
first have been reimbursed for any payments by it to such Indemnitee pursuant to
this Section 7(c).
21
[First Amended and Restated Participation Agreement (1989 I)]
Lessee agrees to pay the reasonable fees and expenses of the
Indenture Trustee (including, but not limited to, the reasonable fees and
expenses of its counsel and any agent appointed in accordance with Section
9.02(c) of the Trust Indenture) and each Pass Through Trustee (on and after the
Refinancing Date only) (including, but not limited to, the reasonable fees and
expenses of its counsel) and, as provided in Section 6.3 of the Trust Agreement,
the Owner Trustee (including, but not limited to, the reasonable fees and
expenses of its counsel), in each case, without cost, on a net after-tax basis,
to Lessor, for acting as such, other than such fees and expenses which
constitute Transaction Expenses. In the event Lessee believes such fees and
expenses are not reasonable, Lessor agrees to cooperate with Lessee in
considering an alternative trustee to the Indenture Trustee. To the extent
permitted by applicable law, interest at the Past Due Rate shall be paid, on
demand, on any amount or indemnity not paid when due pursuant to this Section 7
until the same shall be paid. Such interest shall be paid in the same manner as
the unpaid amount in respect of which such interest is due.
Any amount which is payable to Lessee by any Person pursuant
to this Section 7 shall not be paid to Lessee if an Event of Default shall have
occurred and be continuing or if any payment is due and owing by Lessee under
the Lease or to such Person under any other Operative Document. Any such amount
shall be held by such Person and, if Lessor declares the Lease to be in default
pursuant to Section 15 of the Lease, shall be applied against Lessee's
obligations hereunder to such Person as and when due (and, to the extent that
Lessee has no obligations hereunder to such Person, such amount shall be paid to
the Lessee). At such time as there shall not be continuing any such Event of
Default or there shall not be due and owing any such payment, such amount shall
be paid to Lessee.
SECTION 8. Representations, Warranties and Covenants. Without
-----------------------------------------
prejudice to the representations and warranties made in Section 8 of the
Original Participation Agreement, the parties hereto represent, warrant and
covenant as follows, except that the representations and warranties are made as
of the Effective Date only, unless expressly made as of another date, in which
case such representation or warranty, as the case may be, is made as of such
other date.
(a) The Owner Participant represents that it is acquiring its
interest in the Trust Estate for investment purposes only and not with a present
intent as to any resale or distribution thereof (subject nonetheless to any
requirement of law that the disposition of its properties shall at all times be
and remain within its control) and that neither it nor anyone acting on its
behalf (other than, for purposes of this paragraph, Lessee) has directly or
indirectly offered any interest in the Trust Estate or any Certificates or Pass
Through Certificates or any similar securities for sale to, or solicited any
offer to acquire any of the same from, anyone in a manner which would result in
a violation of either the Securities Act of 1933, as amended, or the securities
laws of any state.
22
[First Amended and Restated Participation Agreement (1989 I)]
(b) State Street Bank and Trust Company, in its individual
capacity, represents and warrants to the other parties to this Agreement that it
is, and on the Effective Date will be, a Citizen of the United States. The Owner
Participant represents and warrants that the sole member of Owner Participant is
Fleet National Bank, and the manager of Owner Participant is an individual who
is a Citizen of the United States. Owner Participant and Fleet National Bank
have entered into a voting trust arrangement whereby 100% of Fleet National
Bank's membership interest in Owner Participant has been transferred to a voting
trustee so as to permit the registration of the Aircraft under the Federal
Aviation Act in the name of the Lessor and agrees, solely for the benefit of
Lessee and the Certificate Holders, that if during such time as the Aircraft is
registered in the United States (or if Lessee desires to register the Aircraft
in the United States) the Aircraft shall be ineligible for registration in the
name of the Owner Trustee under the Federal Aviation Act and regulations then
applicable thereunder, then the Owner Participant shall (at its own expense and
without any reimbursement or indemnification from Lessee) as soon as is
reasonably practicable but in any event within 60 days of such ineligibility and
of such loss of citizenship (A) effect voting trust or other similar
arrangements or take any other action as may be necessary to prevent any
deregistration or to maintain the United States registration of the Aircraft, or
(B) transfer its beneficial interest in the Trust Estate in accordance with
Section 8(l) hereof. It is understood that: (1) the Owner Participant shall be
liable to any of the other parties hereto for any damages suffered by any such
other party as the result of the representation and warranty of the Owner
Participant in the second sentence of this Section 8(b) proving to be untrue as
of the Effective Date; and (2) the Owner Participant shall be liable to Lessee,
any Sublessee, the Indenture Trustee and any Certificate Holder for any damages
which may be incurred by Lessee, any Sublessee, the Indenture Trustee or such
Certificate Holder as a result of the Owner Participant's failure to comply with
its obligations pursuant to the second sentence of this Section 8(b) (including
any damages suffered by any such party during such 60 day period), unless such
failure is a result of such party's breach of its obligations to cooperate set
forth in the following sentence. Each party hereto agrees, upon the request and
at the sole expense of the Owner Participant, to reasonably cooperate with the
Owner Participant in complying with its obligations under the provisions of the
second sentence of this Section 8(b) and such request shall not be subject to
the indemnity contained in Section 7(c) hereof. State Street Bank and Trust
Company, in its individual capacity, agrees that if at any time a responsible
officer of State Street Bank and Trust Company shall obtain actual knowledge
that State Street Bank and Trust Company has ceased to be a Citizen of the
United States, it will promptly resign as Owner Trustee (if and so long as such
citizenship is necessary under the Federal Aviation Act as in effect at such
time or, if it is not necessary, if and so long as the Owner Trustee's
citizenship would have any adverse effect on a Certificate Holder, the Owner
Trustee, Lessee or the Owner Participant), effective upon the appointment of a
successor Owner Trustee in accordance with Section 9.1 of the Trust Agreement.
If the Owner Participant or State Street Bank and Trust Company, in its
individual capacity, does not comply with the requirements of this Section 8(b),
the Owner Trustee, the Indenture Trustee and the Owner Participant hereby
23
[First Amended and Restated Participation Agreement (1989 I)]
agree that a Default or an Event of Default shall not have occurred and be
continuing under the Lease due to non-compliance by Lessee with the registration
requirements in the Lease.
(c) State Street Bank and Trust Company, in its individual
capacity represents and warrants that both the principal place of business of
the Owner Trustee and the place where the Owner Trustee's records concerning the
Aircraft and all of its interest in, to and under the Operative Documents to
which it is a party are or will be kept is Boston, Massachusetts (other than
such as may be maintained or held by the Indenture Trustee pursuant to the Trust
Indenture) and that it has its chief executive office (as such term is used in
Article 9 of the Uniform Commercial Code) in The Commonwealth of Massachusetts.
State Street Bank and Trust Company, in its individual capacity agrees that it
will not change the location of such office to a location outside of Boston,
Massachusetts, without prior written notice to Lessee, Indenture Trustee and the
Owner Participant.
(d) [Intentionally omitted.]
(e) Each of Lessor and Owner Participant agrees that, if, at
any time after the Restricted Period and so long as no Default or Event of
Default under the Lease shall have occurred or be continuing, Lessee has
requested its consent to the registration of the Aircraft, in the name of the
Lessor (or, if appropriate under the laws of any jurisdiction referred to below,
in the name of Lessee or a Sublessee as a "lessee" or a "sublessee"), at
Lessee's expense, (i) in a country listed in Exhibit G (which shall not,
however, be Japan so long as the Primary Lessor has any interest in the
Aircraft) to the Lease and with which country the United States maintains
diplomatic relations at the time of such change in registration (the Lessee
having no responsibility to effect a further change in such registration if
diplomatic relations are severed with such country subsequent to such change in
registration), or (ii) in any other country with which the United States
maintains diplomatic relations (which shall not, however, be Japan so long as
the Primary Lessor has any interest in the Aircraft) at the time of such change
in registration (the Lessee having no responsibility to effect a further change
in such registration if diplomatic relations are severed with such country
subsequent to such change in registration) and it has not determined, acting
reasonably, that such other country would not provide substantially equivalent
protection for the rights of lessors in similar transactions as provided under
United States law, neither Owner Participant nor Lessor will, in the case of (i)
withhold its consent, or in the case of (ii) unreasonably withhold its consent
to such change of registration, and, upon giving said consent, each of Owner
Participant and Lessor will permit Lessee to cause such change of registration;
provided, however, that in the case of a change in registry to a country other
than the United States or a country listed on Exhibit G to the Lease, Owner
Participant and, so long as the Lien of the Trust Indenture has not been
released, the Indenture Trustee shall have received:
(i) assurances reasonably satisfactory to Owner
Participant (A) of the payment by Lessee of any expenses of Lessor,
Owner Participant and the Indenture
24
[First Amended and Restated Participation Agreement (1989 I)]
Trustee, on a net after-tax basis to each such recipient, in connection
with such change of registry, (B) to the effect that the original
indemnities in favor of Lessor and the Indenture Trustee, the
Certificate Holders and the Trust Indenture Estate, under this
Agreement, the Trust Indenture and the Tax Indemnity Agreement, afford
each such party substantially the same protection as provided prior to
such change of registry, (C) that such change will not result in the
imposition of, or increase in the amount of, any Tax for which Lessee
is not required to indemnify, or is not then willing to enter into a
binding agreement to indemnify Owner Participant, Lessor (in its
individual and trust capacities), the Indenture Trustee and the Trust
Estate pursuant to Section 7(b) hereof, (D) that such new country of
registry imposes aircraft maintenance standards not materially less
stringent than those of the FAA, (E) to the effect that the insurance
or self-insurance provisions of the Lease have been complied with after
giving effect to such change of registry, (F) that the appropriate
documents necessary to effect such reregistration have been executed
and delivered by the appropriate parties and, to the extent required by
applicable law, filed or recorded in the appropriate filing or
recording office, (G) as to the airworthiness of the Aircraft under the
laws of the new country of registration and (H) such supplements and
amendments to the Operative Documents as shall be required in order to
implement the reregistration of the Aircraft and to continue in favor
of Lessor (in its individual capacity and trust capacities), the
Indenture Trustee, Owner Participant, the Trust Estate and the Trust
Indenture Estate substantially similar protection as is provided prior
to such reregistration; and
(ii) a favorable opinion of counsel (reasonably
satisfactory to the Owner Trustee and Owner Participant) in the new
jurisdiction of registry (A) that the terms (including, without
limitation, the governing-law, service-of-process and jurisdictional-
submission provisions thereof) of the Lease and the Trust Indenture are
legal, valid, binding and enforceable in such jurisdiction, (B) that it
is not necessary for Owner Participant, Lessor or the Indenture Trustee
to register or qualify to do business in such jurisdiction, (C) that
there is no tort liability of the owner of an aircraft not in
possession thereof under the laws of such jurisdiction other than tort
liability which might have been imposed on such owner under the laws of
the United States or any state thereof (it being understood that, in
the event such latter opinion cannot be given in a form satisfactory to
Owner Participant, such opinion shall be waived if insurance reasonably
satisfactory to Owner Participant is obtained by Lessee, at its sole
expense, to cover such risk), (D) (unless Lessee shall have agreed to
provide insurance covering the risk of requisition of use of the
Aircraft by the government of such jurisdiction so long as the Aircraft
is registered under the laws of such jurisdiction) that the laws of
such jurisdiction require fair compensation by the government of such
jurisdiction payable in currency freely convertible into United States
Dollars for the loss of use of the Aircraft in the event of the
requisition by such government of such use, and (E) to such further
effect with
25
[First Amended and Restated Participation Agreement (1989 I)]
respect to such other matters as the Owner Trustee or Owner
Participant may reasonably request.
Upon receipt by Owner Participant, Owner Trustee and the
Indenture Trustee of the opinion of counsel referred to in Section 8(e)(ii)
above, Exhibit G to the Lease shall be amended to add such country. If at any
time Owner Participant, with respect to a country then listed on Exhibit G to
the Lease, delivers to Lessee an opinion of a reputable law firm located in such
jurisdiction that such law firm would not, as of the date of such opinion, be
able to deliver an opinion of counsel as to each of those matters listed in
subsections (A) through (D) of subparagraph (ii) of this paragraph 8(e), then
Exhibit G to the Lease shall be amended to delete such country, provided that
such deletion will not impair any registration then in effect. Any change to
Exhibit G to the Lease shall automatically be made in respect of Exhibit F to
the Lease.
(f) The Owner Participant represents and warrants as follows:
(i) the Owner Participant is a limited liability company
duly organized and validly existing in good standing under the laws of
its jurisdiction of organization, and has the power and authority to
carry on its business as now conducted, to own or hold under lease its
properties and to enter into and perform its obligations under the
Owner Participant Documents;
(ii) the Owner Participant Documents have been duly
authorized by all necessary action on the part of the Owner
Participant, do not require any approval not already obtained of
members of the Owner Participant or any approval or consent not already
obtained of any trustee or holders of any indebtedness or obligations
of the Owner Participant, and have been duly executed and delivered by
the Owner Participant, and neither the execution and delivery thereof
by the Owner Participant, nor the consummation of the transactions
contemplated thereby by the Owner Participant, nor compliance by the
Owner Participant with any of the terms and provisions thereof will
contravene any United States federal or state law, judgment,
governmental rule, regulation or order applicable to or binding on the
Owner Participant (it being understood that no representation or
warranty is made with respect to laws, rules or regulations relating to
aviation or to the nature of the equipment owned by the Owner Trustee,
other than such laws, rules or regulations relating to the citizenship
requirements of the Owner Participant under applicable aviation law) or
contravene or result in any breach of or constitute any default under,
or result in the creation of any Lien (other than Liens provided for in
the Operative Documents) upon the Trust Estate under, any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract,
bank loan or credit agreement, charter, operating agreement or other
constitutional agreement, or other agreement or instrument to which the
Owner Participant is a party or by which it or its properties may be
bound or affected (it being understood that no representation or
warranty is made in this subsection (f)(ii) with respect to ERISA);
26
[First Amended and Restated Participation Agreement (1989 I)]
(iii) each of the Owner Participant Documents
constitutes a legal, valid and binding obligation of the Owner
Participant enforceable against the Owner Participant in accordance
with the terms thereof, and the trust intended to be formed by the
Trust Agreement has been duly and validly formed and the Assignment and
Assumption Agreement is effective to convey to the Owner Trustee the
property that it purports to convey;
(iv) Neither the execution and delivery by the Owner
Participant of this Agreement or any other Owner Participant Document,
nor the consummation by it of any of the transactions contemplated
hereby or thereby, requires the consent or approval of, the giving of
notice to, the registration with, the recording or filing of any
document with, or the taking of any other action in respect of, any
federal or other governmental authority or agency, except those
contemplated by the Operative Documents (it being understood that no
representation or warranty is made with respect to the laws, rules or
regulations relating to aviation or to the nature of the equipment
owned by the Owner Trustee, other than such laws, rules or regulations
relating to the citizenship requirements of the Owner Participant under
applicable aviation law);
(v) there are no pending or, to the knowledge of the
Owner Participant, threatened actions or proceedings against the Owner
Participant before any court or administrative agency which, if
determined adversely to Owner Participant, would materially adversely
affect the ability of the Owner Participant to perform its obligations
under the Owner Participant Documents;
(vi) on the Effective Date, the Aircraft will be free
of Lessor Liens (including for this purpose Liens that would be Lessor
Liens but for the proviso to the definition of Lessor Liens)
attributable to the Owner Participant;
(vii) there has not occurred any event which
constitutes (or to the best of its knowledge would, with the passage of
time or the giving of notice or both, constitute) an Event of Default
as defined in the Trust Indenture which has been caused by or relates
to Lessor and which is presently continuing; and
(viii) on the Delivery Date, Original Lessor received
whatever interest in the Aircraft was conveyed to it pursuant to the
Lessor's Purchase Agreement and the Japanese Lease Assignment.
(g) Each of State Street Bank and Trust Company in its
individual capacity and the Owner Participant severally covenants and agrees (i)
that it shall not cause or permit to exist any Lessor Lien attributable to it
with respect to the Aircraft or any other portion of the
27
[First Amended and Restated Participation Agreement (1989 I)]
Indenture Estate, (ii) that it will promptly, at its own expense, take such
action as may be necessary duly to discharge such Lessor Lien attributable to it
and (iii) to make restitution to the Indenture Estate for any actual diminution
of the assets of the Indenture Estate resulting from such Lessor Liens
attributable to it. The Owner Participant agrees to make restitution to the
Indenture Estate for any actual diminution of the assets of the Indenture Estate
resulting from any Taxes or Expenses (as such terms are defined in Section 7
hereof) imposed on the Indenture Estate against which Lessee is not required to
indemnify the Indenture Estate pursuant to Section 7 hereof, but excluding Taxes
or Expenses referred to in Section 7(b)(ii)(5) and 7(b)(ii)(7) and excluding any
diminution of the Indenture Estate attributable to or caused by State Street
Bank and Trust Company, in its individual capacity; provided that if the Owner
Participant shall make restitution to the Trust Estate on account of any
diminution of the Indenture Estate attributable to or caused by State Street
Bank and Trust Company in its individual capacity, then State Street Bank and
Trust Company, in its individual capacity, shall reimburse the Owner Participant
for such amount together with interest thereon at the overnight funds rate.
(h) State Street Bank and Trust Company of Connecticut,
National Association, in its individual capacity, covenants and agrees that it
shall not cause or permit to exist any Lien, arising as a result of (i) claims
against the Indenture Trustee not related to its interest in the Aircraft or the
administration of the Indenture Estate pursuant to the Trust Indenture, (ii)
acts of the Indenture Trustee not permitted by, or failure of the Indenture
Trustee to take any action required by, the Operative Documents to the extent
such acts arise or such failure arises from or constitutes gross negligence or
willful misconduct, (iii) claims against the Indenture Trustee relating to Taxes
or Expenses which are excluded from the indemnification provided by Section 7
pursuant to said Section 7, or (iv) claims against the Indenture Trustee arising
out of the transfer by the Indenture Trustee of all or any portion of its
security interest in the Aircraft, the Trust Estate, the Indenture Estate or the
Operative Documents other than (A) a transfer of the Aircraft pursuant to
Section 8, 9, 10 or 19 of the Lease or Article 5 or 8 of the Trust Indenture,
(B) any borrowing pursuant to Section 17 hereof or (C) a transfer of the
Aircraft pursuant to Section 15 of the Lease while an Event of Default is
continuing and prior to the time that the Indenture Trustee has received all
amounts due pursuant to the Trust Indenture.
(i) Lessee agrees and covenants that, if Lessee or any
Affiliate of Lessee owns (directly or indirectly) any Certificates or, on and
after the Refinancing Date only, any Pass Through Certificates, Lessee shall not
exercise any voting control over any such Certificates or Pass Through
Certificates so long as either (x) the Lease has not been terminated pursuant to
Section 9(a)(1) thereof or (y) any Certificates or Pass Through Certificates are
outstanding and held by any entity other than Lessee or an Affiliate thereof.
(j) The Indenture Trustee, and by the acceptance of a
Certificate each Certificate Holder (including, on and after the Refinancing
Date only, each Pass Through Trustee, so long as it is a Certificate Holder),
each hereby waives to the fullest extent permitted
28
[First Amended and Restated Participation Agreement (1989 I)]
by law the benefit of the provisions of Section 1111(b) of Title 11 of the
United States Code with respect to recourse against the Owner Trustee (in its
individual capacity) and the Owner Participant on account of any amount payable
as principal of, Make-Whole Amount, if any, and interest on the Certificates. If
(i) all or any part of the Trust Estate becomes the property of, or the Owner
Participant becomes, a debtor subject to the reorganization provisions of the
Bankruptcy Code or any successor provision, (ii) pursuant to such reorganization
provisions the Owner Trustee (in its individual capacity) or the Owner
Participant is required, by reason of the Owner Trustee (in its individual
capacity) or the Owner Participant being held to have recourse liability to a
Certificate Holder (including, on and after the Refinancing Date only, each Pass
Through Trustee so long as it is a Certificate Holder) or the Indenture Trustee,
directly or indirectly (other than the recourse liability of the Owner
Participant under this Participation Agreement), to make payment on account of
any amount payable as principal, Make-Whole Amount, if any, or interest on the
Certificates and (iii) such Certificate Holder (including, on and after the
Refinancing Date only, each Pass Through Trustee so long as it is a Certificate
Holder) or the Indenture Trustee actually receives any Excess Payment (as
hereinafter defined) which reflects any payment by the Owner Trustee (in its
individual capacity) or the Owner Participant on account of clause (ii) above,
then such Certificate Holder (including, on and after the Refinancing Date only,
each Pass Through Trustee so long as it is a Certificate Holder) or the
Indenture Trustee, as the case may be, shall promptly refund to the Owner
Trustee or the Owner Participant (whichever shall have made such payment) such
Excess Payment. For purposes of this Section 8(j), "Excess Payment" means the
amount by which such payment exceeds the amount which would have been received
by such Certificate Holder, such Pass Through Trustee (on and after the
Refinancing Date only) or the Indenture Trustee if the Owner Trustee (in its
individual capacity) or the Owner Participant had not become subject to the
recourse liability referred to in clause (ii) above. Nothing contained in this
Section 8(j) shall prevent any Certificate Holder, any Pass Through Trustee (on
and after the Refinancing Date only) or the Indenture Trustee from enforcing any
personal recourse obligation (and retaining the proceeds thereof) of the Owner
Trustee (in its individual capacity) or the Owner Participant under this
Participation Agreement or the Trust Indenture (and any exhibits or annexes
hereto or thereto).
(k) State Street Bank and Trust Company of Connecticut,
National Association, in its individual capacity ("State Street Connecticut")
and as Indenture Trustee and upon the Pass Through Trustee becoming a party
hereto in accordance with the Note Purchase Agreement, Pass Through Trustee as
provided below, represents as follows:
(i) State Street Connecticut, in its individual
capacity, agrees that if at any time a responsible officer of State
Street Connecticut shall obtain actual knowledge that State Street
Connecticut has ceased to be a Citizen of the United States, it will
promptly resign as Indenture Trustee (if and so long as such
citizenship is necessary under the Federal Aviation Act as in effect at
such time or, if it is not necessary, if and so long as the Indenture
Trustee's citizenship would have any adverse effect on a Certificate
29
[First Amended and Restated Participation Agreement (1989 I)]
Holder, Lessee or the Owner Participant), effective upon the
appointment of a successor Indenture Trustee in accordance with Section
9.07 of the Trust Indenture.
(ii) it is a national banking association and has the
full corporate power, authority and legal right under the laws of the
United States of America to enter into and perform its obligations
under the Trust Indenture, this Agreement, the Basic Agreement and each
of the Pass Through Documents and, in its capacity as Indenture Trustee
and Pass Through Trustee, respectively, to authenticate the
Certificates and the Pass Through Certificates;
(iii) the Indenture Trustee Documents, and the
authentication of the Certificates and the Pass Through Certificates
have been duly authorized by all necessary corporate action on the part
of State Street Connecticut, the Indenture Trustee and the relevant
Pass Through Trustee, as it shall be a party thereto in any such
capacity, and neither the execution (or, in the case of the
Certificates and the Pass Through Certificates, the authenticatio) and
delivery thereof in any such capacity nor the performance by it in any
such capacity of any of the terms and provisions thereof will violate
any federal or Connecticut law or regulation relating to the banking or
trust powers of State Street Connecticut or contravene or result in any
breach of, or constitute any default under its charter or by-laws or
the provisions of any indenture, mortgage, contract or other agreement
to which State Street Connecticut, the Indenture Trustee or the Pass
Through Trustee is a party or by which it or its properties may be
bound or affected;
(iv) each of the Indenture Trustee Documents has been
duly executed (or, in the case of the Certificates and the Pass Through
Certificates, authenticated) and delivered by State Street Connecticut,
the Indenture Trustee and the relevant Pass Through Trustee, as it
shall be a party thereto in any such capacity, and, assuming that each
such agreement is the legal, valid and binding obligation of each other
party thereto (other than State Street Connecticut, the Indenture
Trustee and the relevant Pass Through Trustee), is the legal, valid and
binding obligation of State Street Connecticut, the Indenture Trustee
and the relevant Pass Through Trustee, as it shall be a party thereto
in any such capacity, enforceable against it in accordance with its
terms;
(v) neither the execution (or, in the case of the
Certificates and the Pass Through Certificates, the authentication) and
delivery by State Street Connecticut, the Indenture Trustee or any Pass
Through Trustee, as it is a party in any such capacity to any of the
Indenture Trustee Documents, nor the consummation by it in any such
capacity of any of the transactions contemplated hereby, by the Trust
Indenture, by the Pass Through Trust Agreements, by the Certificates or
by the Pass Through Certificates requires the consent or approval of,
the giving of notice to, or the registration with, or the taking of any
other action with respect to, any Connecticut state or federal
governmental
30
[First Amended and Restated Participation Agreement (1989 I)]
authority or agency regulating the banking, trust or fiduciary powers
of State Street Connecticut;
(vi) there are no Taxes payable by State Street
Connecticut, the Indenture Trustee or any Pass Through Trustee imposed
by the State of Connecticut or any political subdivision or taxing
authority thereof in connection with the execution (or, in the case of
the Certificates and the Pass Through Certificates, the authentication)
and delivery by it as a party in any such capacity to any Indenture
Trustee Document or the performance by it as a party in any such
capacity of any Indenture Trustee Document (other than franchise or
other taxes based on or measured by any fees or compensation received
by State Street Connecticut, the Indenture Trustee or any Pass Through
Trustee, as the case may be, for services rendered in connection with
the transactions contemplated thereby), and there are no Taxes payable
by State Street Connecticut, the Indenture Trustee or any Pass Through
Trustee imposed by the State of Connecticut or any political
subdivision thereof in connection with the acquisition, possession or
ownership by any Pass Through Trustee of any of the Certificates (other
than franchise or other taxes based on or measured by any fees or
compensation received by a Pass Through Trustee for services rendered
in connection with the transactions contemplated by the respective Pass
Through Trust Agreement) and, assuming that the trust created by the
respective Pass Through Trust Agreement will not be taxable as a
corporation, but, rather, will be characterized as a grantor trust
under subpart E, Part I of Subchapter J of the Code, such trust will
not be subject to any Taxes imposed by the State of Connecticut or any
political subdivision thereof;
(vii) there are no pending or threatened actions or
proceedings against any of State Street Connecticut, the Indenture
Trustee, or the Pass Through Trustees before any court or
administrative agency which individually (or in the aggregate in the
case of any group of related lawsuits) purports to affect the legality,
validity or enforceability of, or which is reasonably likely to
materially adversely affect the ability of State Street Connecticut,
the Indenture Trustee, or the Pass Through Trustees to perform its
obligations as a party in any such capacity under any Indenture Trustee
Document; and
(viii) except for the issuance and sale pursuant to
the respective Pass Through Trust Agreement of the Pass Through
Certificates contemplated hereby, neither State Street Connecticut nor
any Pass Through Trustee has directly or indirectly offered any
Certificate for sale to any Person, or solicited any offer to acquire
any Certificate from any Person other than the Owner Trustee and the
Owner Participant, and neither State Street Connecticut nor any Pass
Through Trustee has authorized anyone to act on its behalf to offer
directly or indirectly any Certificate for sale to any Person, or to
solicit any offer to acquire any Certificate from any Person other than
the Owner Trustee and the
31
[First Amended and Restated Participation Agreement (1989 I)]
Owner Participant, and no Pass Through Trustee is in default under any
respective Pass Through Trust Agreement.
(l) Owner Participant will not sell, assign, convey or
otherwise transfer any of its right, title or interest in and to this Agreement,
the Trust Estate or any proceeds therefrom to any person or entity, unless (i)
the proposed transferee is a "Transferee" (as defined below), (ii) Owner
Participant shall have delivered to Lessee and the Indenture Trustee an opinion
of counsel reasonably satisfactory to the Lessee to the effect that the
agreement referred to in clause (O) below and any guaranty and the guaranty
required by clause (C) below, if any, are the legal, valid, binding and
enforceable obligation of the Transferee and the guarantor, as the case may be,
(subject to the normal exceptions contained in an opinion on such matters), and
(iii) Lessee shall have (1) received an opinion (in form and substance
reasonably satisfactory to Lessee) of counsel to Owner Participant (who shall be
reasonably satisfactory to Lessee) to the effect that such transfer will not
result in an increase in the tax liability of Lessee or (2) received from Owner
Participant indemnification pursuant to an agreement reasonably satisfactory to
Lessee for any loss of tax benefits to or increase in the tax liability of
Lessee. A "Transferee" shall mean either (A) a bank or other financial
institution with a combined capital, surplus and undivided profits of at least
$100,000,000 or any other entity whose net worth is at least $100,000,000, (B)
any subsidiary of such a bank, financial institution or entity, provided that
such bank, financial institution or entity furnishes to the Indenture Trustee
and Lessee a guaranty with respect to Owner Participant's obligations hereunder
and under the Trust Indenture, or (C) any other entity, provided such
obligations are guaranteed by Owner Participant; provided, however, that any
Transferee shall not be an airline, a commercial air carrier, an air freight
forwarder, an entity engaged in the business of parcel transport by air or other
similar person or a corporation or other entity controlling, controlled by or
under common control with such an airline, a commercial air carrier, an air
freight forwarder, an entity engaged in the business of parcel transport by air
or other similar person. Each such transfer to a Transferee shall be subject to
the conditions that (M) upon giving effect to such transfer, the Transferee is a
"citizen of the United States" within the meaning of the Federal Aviation Act or
Transferee shall have entered into a voting trust or similar arrangement which
permits the registration of the Aircraft under the Federal Aviation Act, (N) the
Transferee has the requisite corporate power and authority to enter into and
carry out the transactions contemplated hereby, (O) the Transferee enters into
an agreement or agreements, in form and substance reasonably satisfactory to
Lessee, whereby the Transferee confirms that it shall be deemed a party to this
Agreement and agrees to be bound by all the terms of, and to undertake all of
the obligations of Owner Participant contained in the Owner Participant
Documents (to the extent of the participation so transferred to it), (P) such
transfer does not violate any provision of the Federal Aviation Act, or any
rules or regulations promulgated thereunder or create a relationship which would
be in violation thereof or violate any provisions of the Securities Act of 1933,
as amended, and (Q) the transferor Owner Participant assumes the risk of any
loss of Interest Deductions, MACRS Deductions,
32
[First Amended and Restated Participation Agreement (1989 I)]
Amortization Deductions, State Tax Deductions or any Inclusion Event (each as
defined in the Tax Indemnity Agreement) resulting to it from such transfer; and
Lessee may request such Transferee to provide an opinion of counsel (who shall
be reasonably satisfactory to Lessee) in form and substance reasonably
satisfactory to Lessee as to any matter set forth in clauses (N) or (P) but only
as to matters relating to the Securities Act of 1933, as amended. Upon any such
transfer by Owner Participant as above provided, the Transferee shall be deemed
Owner Participant for all purposes hereof and of the other Operative Documents
and each reference herein to Owner Participant shall thereafter be deemed for
all purposes to be to the Transferee and Owner Participant shall be relieved of
all obligations of Owner Participant under the Owner Participant Documents
arising after the date of such transfer except to the extent fairly attributable
to acts or events occurring prior thereto and not assumed by the Transferee (in
each case, to the extent of the participation so transferred). If Owner
Participant intends to transfer its interests hereunder, it shall give prior
written notice thereof as soon as practicable but in no event less than 6
Business Days prior thereto to the Indenture Trustee and Lessee, specifying the
name and address of the proposed Transferee. Owner Participant shall pay all of
its costs and shall reimburse the reasonable costs and expenses (other than
internal costs and expenses) of the Indenture Trustee and Lessee in connection
with any such transfer. For purposes of this paragraph, "Net Worth" shall mean
the excess of total assets over total liabilities, each to be determined in
accordance with generally accepted accounting principles consistently applied.
Any transfer by Owner Participant, as above provided, shall
only be accomplished by Owner Participant's transfer of its entire right, title
and interest in this Agreement and the Trust Estate; provided, however, Owner
Participant may, subject to compliance with the provisions of this Section 8(k),
transfer its residual interest in this Agreement and the Trust Estate so long as
Owner Participant retains the remaining entire right, title and interest in the
same.
(m) Notwithstanding the provisions of Section 8(r) hereof,
unless waived by each Certificate Holder, Lessee shall not be entitled to
terminate the Lease or assume the Certificates on a Termination Date if on such
Termination Date a Default or an Event of Default under the Lease shall have
occurred and be continuing.
(n) State Street Bank and Trust Company and State Street Bank
and Trust Company of Connecticut, National Association, each in its individual
capacity, agrees for the benefit of Lessee to comply with the terms of the Trust
Indenture with which it is required to comply in its individual capacity.
(o) The Owner Participant represents and warrants that its
interest in the Trust Estate was not acquired with assets of any "employee
benefit plan" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or of any "plan"
33
[First Amended and Restated Participation Agreement (1989 I)]
within the meaning of Section 4975(e)(1) of the Code (such employee benefit
plans and plans hereinafter referred to as "ERISA Plans").
(p) State Street Bank and Trust Company (A) in its individual
capacity ("SSBTC") represents and warrants that:
(i) the Trust Agreement and, assuming due
authorization, execution and delivery of the Trust Agreement by the
Owner Participant, each of the other Owner Trustee Documents has been
duly executed and delivered by one of its officers who is duly
authorized to execute and deliver such instruments on behalf of the
Owner Trustee;
(ii) the Trust Estate is free and clear of Lessor
Liens attributable to SSBTC, and there are no Liens affecting the title
of the Owner Trustee to the Aircraft or resulting from any act or claim
against SSBTC arising out of any event or condition not related to the
ownership, leasing, use or operation of the Aircraft or to any other
transaction contemplated by this Agreement or any of the other
Operative Documents, including any Lien resulting from the nonpayment
by SSBTC of any Taxes imposed or measured by its net income;
(iii) there has not occurred any event which
constitutes (or to the best of its knowledge would, with the passage of
time or the giving of notice or both, constitute) an Event of Default
as defined in the Trust Indenture which has been caused by or relates
to SSBTC and which is presently continuing;
(iv) it is a Massachusetts trust company duly
organized and validly existing in good standing under the laws of The
Commonwealth of Massachusetts and (assuming due authorization,
execution and delivery of the Trust Agreement by the Owner Participant)
has the corporate power and authority to enter into and perform its
obligations under the Trust Agreement, and (assuming due authorization,
execution and delivery of the Trust Agreement by the Owner Participant)
has full right, power and authority to enter into and perform its
obligations as Owner Trustee pursuant to the Trust Agreement under each
of the other Owner Trustee Documents;
(v) each of the Owner Trustee Documents has been duly
authorized by all necessary corporate action on its part, and neither
the execution and delivery thereof nor its performance of any of the
terms and provisions thereof will violate any federal or Massachusetts
Commonwealth law or regulation relating to its banking or trust powers
or contravene or result in any breach of, or constitute any default
under, its charter or by-laws or the provisions of any indenture,
mortgage, contract or other agreement to which it is a party or by
which it or its properties may be bound or affected;
34
[First Amended and Restated Participation Agreement (1989 I)]
(vi) assuming due authorization, execution and
delivery of the Trust Agreement by the Owner Participant, each of the
Owner Trustee Documents has been duly executed and delivered by it, and
each of the Trust Agreement and the Participation Agreement (to the
extent executed by the Owner Trustee in its individual capacity) is a
legal, valid and binding obligation of SSBTC and as Owner Trustee, as
the case may be, enforceable against such party in accordance with the
terms thereof;
(vii) on the Effective Date, the Owner Trustee shall
have received whatever title to the Aircraft as was conveyed to it by
the Original Lessor;
(viii) it has not offered any interest in the Trust
Estate or any Certificates or Pass Through Certificates or any similar
securities for sale to, or solicited any offer to acquire the same
from, anyone other than the Indenture Trustee, the Pass Through
Trustees and the Owner Participant;
(ix) assuming due authorization, execution and
delivery of each of the Owner Trustee Documents by each of the parties
thereto (other than the Owner Trustee), each of the Owner Trustee
Documents is a legal, valid and binding obligation of the Owner
Trustee, enforceable against the Owner Trustee in accordance with its
respective terms; and
(x) neither the due execution and delivery of the
Owner Trustee Documents by SSBTC, in its individual capacity or as
Owner Trustee under the Trust Agreement, as the case may be, nor the
consummation by it of any of the transactions contemplated thereby
require the consent or approval of, the giving of notice to, or the
registration with, any federal or Massachusetts Commonwealth
governmental authority or agency pursuant to any federal or
Massachusetts Commonwealth law governing the banking or trust powers of
SSBTC; and
(B) solely in its capacity as Owner Trustee further
represents and warrants that:
(i) SSBTC is a trust company duly organized and
validly existing in good standing under the laws of The Commonwealth of
Massachusetts and has the corporate power and authority to enter into
this Agreement and to perform its obligations hereunder;
(ii) assuming due authorization, execution and
delivery of the Trust Agreement by the Owner Participant, each of the
Trust Agreement, this Agreement, the Assignment and Assumption
Agreement, the Trust Indenture, the Lease and the Certificates has
been, or on the Effective Date will have been, duly executed and
35
[First Amended and Restated Participation Agreement (1989 I)]
delivered by it, and each of this Agreement, the Assignment and
Assumption Agreement, the Trust Agreement, the Lease and the Trust
Indenture, on the Effective Date, will constitute a legal, valid and
binding obligation of the Owner Trustee, enforceable against it in
accordance with the terms thereof;
(iii) the Owner Trustee has never directly or indirectly
offered any Certificate or any interest in or to the Trust Estate, the
Trust Agreement, the Assignment and Assumption Agreement, or any
similar interest for sale to, or solicited any offer to acquire any of
the same from, any Person other than the Indenture Trustee, each of the
Pass Through Trustees and the Owner Participant; and it has not
authorized any Person to act on its behalf (other than for purposes of
this paragraph, the Lessee and the Underwriters) to offer directly or
indirectly any Certificate or any interest in and to the Trust Estate,
the Trust Agreement, the Assignment and Assumption Agreement, or any
similar interest for sale to, or to solicit any offer to acquire any of
the same from, any Person; and
(iv) there are no pending or threatened actions or
proceedings against SSBTC or the Owner Trustee before any court or
administrative agency which, if determined adversely to it, would
materially adversely affect the ability of SSBTC or the Owner Trustee,
as the case may be, to perform its obligations under any of the Owner
Trustee Documents or any other documents executed by the Owner Trustee
or SSBTC in connection with the transactions contemplated by the
Operative Documents.
(q) The Owner Participant agrees, solely for the benefit of
Lessee, that it will comply with any obligation expressly required of it under
Section 9(c) of the Lease. The Owner Participant further covenants and agrees to
pay or cause the Owner Trustee to pay those costs and expenses specified to be
paid by the Owner Participant pursuant to the Lease and all costs and expenses
that are for the account of the Lessor pursuant to Sections 5(a), 5(c) and 5(d),
12 and 19(c) of the Lease.
(r) Subject to compliance by Lessee with all of its
obligations under the Lessee Documents, each of the Owner Trustee, the Indenture
Trustee, each Certificate Holder (including, on and after the Refinancing Date
only, each Pass Through Trustee so long as it is a Certificate Holder) and the
Owner Participant covenants and agrees that, at Lessee's expense on a net after-
tax basis (including, without limitation, reasonable attorney's fees and
expenses of each of such parties), if Lessee elects to terminate the Lease
pursuant to Section 9(a)(1) of the Lease and to purchase the U.S. Ownership
Interest pursuant to Section 9(b) of the Lease, then each such party will
execute and deliver appropriate documentation transferring all right, title and
interest in the U.S. Ownership Interest to Lessee without recourse or warranty
except as to Lessor Liens (including for this purpose Liens that would be Lessor
Liens but for the proviso to the definition of Lessor Liens) with respect to
such party (including without limitation, such bills of
36
[First Amended and Restated Participation Agreement (1989 I)]
sale and other instruments and documents as Lessee shall reasonably request to
evidence (on the public record or otherwise) such transfer and the vesting in
Lessee of all of Lessor's right, title and interest in and to the U.S. Ownership
Interest), and the Indenture Trustee shall execute and deliver appropriate
documentation to release its mortgage on the Aircraft, and if Lessee, in
connection with such purchase, elects to assume the obligations of Lessor
pursuant to the Trust Indenture and the Certificates each of the parties shall
execute and deliver appropriate documentation permitting Lessee to assume such
obligations on the basis of full recourse to Lessee, maintaining the security
interest in the Aircraft created by the Trust Indenture, releasing Lessor from
all future obligations in respect of the Certificates, the Trust Indenture and
all other Operative Documents and all such other actions as are reasonably
necessary to permit such assumption by Lessee. Lessor agrees that, should any
provision of the Lease require transfer of legal title to the Aircraft, the
Airframe, or an Engine, to or at the direction of Lessee at a time when the
Japanese Lease is in effect, Lessor shall use its reasonable best efforts to
cause such title to be transferred pursuant to the terms of the Japanese Lease
to or at the direction of the Lessee, at the sole cost of the Lessee, and shall
take, at Lessee's sole cost, all actions as may be reasonably necessary in
connection therewith.
(s) Lessee will not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person unless:
(i) the corporation formed by such consolidation or
into which Lessee is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of Lessee as an
entirety shall be a Citizen of the United States and shall be a U.S.
Air Carrier;
(ii) the corporation formed by such consolidation or
into which Lessee is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of Lessee as an
entirety shall execute and deliver to the Owner Trustee, the Indenture
Trustee, the Owner Participant and, on and after the Refinancing Date
only, the Pass Through Trustees a duly authorized, valid, binding and
enforceable agreement in form and substance reasonably satisfactory to
the Owner Participant containing an assumption by such successor
corporation or Person of the due and punctual performance and
observance of each covenant and condition of the Operative Documents
and, on and after the Refinancing Date only, the Pass Through Documents
to be performed or observe d by Lessee;
(iii) immediately after giving effect to such
transaction, no Default or Event of Default under the Lease shall have
occurred and be continuing;
(iv) Lessee shall have delivered to the Owner
Trustee, the Indenture Trustee, the Pass Through Trustees (on and after
the Refinancing Date only) and the
37
[First Amended and Restated Participation Agreement (1989 I)]
Owner Participant a certificate signed by the President or any Vice
President and by the Secretary or an Assistant Secretary of Lessee, and
an opinion of counsel (which may be Lessee's General Counsel)
reasonably satisfactory to the Owner Participant, each stating that
such consolidation, merger, conveyance, transfer or lease and the
assumption agreement mentioned in clause (ii) above comply with this
Section 8(s) and that all conditions precedent herein provided for
relating to such transaction have been complied with; and
(v) the corporation formed by such consolidation or
into which Lessee is merged or the Person which acquires by conveyance,
transfer or lease substantially all of the assets of Lessee, shall make
such filings and recordings with the FAA pursuant to the Federal
Aviation Act, as shall be necessary or desirable to evidence such
consolidation, merger, conveyance, transfer or lease with or to such
entity.
Upon any consolidation or merger, or any conveyance, transfer
or lease of substantially all of the assets of Lessee as an entirety in
accordance with this Section 8(s), the successor corporation or Person formed by
such consolidation or into which Lessee is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, Lessee under this Agreement and, on and after
the Refinancing Date only, under the Pass Through Documents with the same effect
as if such successor corporation or Person had been named as Lessee herein and
therein. No such conveyance, transfer or lease of substantially all of the
assets of Lessee as an entirety shall have the effect of releasing Lessee or any
successor corporation or Person which shall theretofore have become such in the
manner prescribed in this Section 8(s) from its liability in respect of any
Operative Document to which it is a party or, on and after the Refinancing Date
only, any of the Pass Through Documents. Nothing contained herein shall permit
any lease, sublease or other arrangement for the use, operation or possession of
the Aircraft except in compliance with the applicable provisions of the Lease.
(x) Lessee, at its expense, will, at the request of any
party hereto, take, or cause to be taken, such action with respect to the
recording, filing, re-recording and re-filing of the Trust Agreement, the
Assignment and Assumption Agreement, the Lease, the Lease Supplement, the Trust
Indenture, the Trust Supplement, the Japanese Lease, the Japanese Lease
Supplement, the Japanese Lease Assignment, the Japanese Lease Assignment
Supplement, the Primary Lessor Mortgage and any financing statements or other
instruments as are necessary to maintain, so long as the Trust Indenture or the
Lease is in effect, the perfection of the security interests created by the
Trust Indenture and any security interest that may be claimed to have been
created by the Lease and the ownership interest of the Owner Trustee in the
Aircraft or will furnish to Owner Participant, Lessor and the Indenture Trustee
timely notice of the necessity of such action, together with such instruments,
in execution form, and such other information as may be required to enable them
to take such action.
38
[First Amended and Restated Participation Agreement (1989 I)]
(u) Section 3 of the Lease contemplates that, under certain
circumstances, the Owner Participant will make certain recalculations of Basic
Rent, Excess Amount, Stipulated Loss Value percentages and Termination Value
percentages, and the Owner Participant hereby agrees to make such recalculations
as and when contemplated by the Lease and subject to all the terms and
conditions of the Lease and promptly to take such further actions as may be
necessary or desirable to give effect to and to cause the Owner Trustee to give
effect to the provisions of Section 3 of the Lease.
(v) The Owner Participant hereby agrees not to revoke the Trust
Agreement or the trusts created thereunder without the prior written consent of
(i) the Lessee so long as the Lease shall remain in effect and no Event of
Default under the Lease shall have occurred and be continuing and (ii) the
Indenture Trustee so long as the Trust Indenture shall be in effect.
(w) Lessee covenants and agrees with the Owner Participant, the
Indenture Trustee and the Owner Trustee that at all times during the Term it
will be a U.S. Air Carrier.
(x) [Intentionally omitted.]
(y) The Owner Trustee agrees that any profit, income, interest,
dividend or gain realized upon the maturity, sale or other disposition of any
Permitted Investment made by the Indenture Trustee pursuant to Section 9.04 of
the Trust Indenture, and paid to Lessee on behalf of the Owner Trustee by the
Indenture Trustee in accordance with the terms of such Section 9.04, shall be
entirely for the account of, and the sole property of, Lessee who, for such
purposes, shall not be deemed to be acting as agent of the Owner Trustee, and
Lessee shall have no obligation to pay over such income, interest, dividend or
gain to the Owner Trustee, except to the extent the Owner Trustee or Owner
Participant are owed any amounts under the Operative Documents by Lessee and
such amounts are not paid when due, in which event the Owner Participant may
cause the Owner Trustee to distribute and apply such income, interest, dividend
or gain in satisfaction or partial satisfaction of the amounts so due.
(z) The Owner Participant hereby agrees to instruct the Owner
Trustee to promptly distribute any money received by it pursuant to Section 7.01
or 10.04 of the Trust Indenture to Lessee to the extent such amounts were paid
by Lessee or on behalf of Lessee and the Owner Trustee or the Owner Participant
is not owed any amounts under any of the Operative Documents by Lessee (and if
the Owner Trustee or Owner Participant is owed any such amount, the monies
received under Section 7.01 or 10.04 of the Trust Indenture may be applied in
satisfaction or partial satisfaction thereof). Lessee agrees to hold any money
received by it pursuant to the foregoing sentence in trust for the benefit of
the Owner Participant and may, in its discretion, invest and reinvest all money
so held by it in such Permitted Investments as Lessee deems appropriate. Lessee
will apply such money to the payment of previously unclaimed
39
[First Amended and Restated Participation Agreement (1989 I)]
payments with respect to the Certificates when and as claims for payment are
made by the Holders of such Certificates. As compensation for its services
pursuant to this Section 8(z), Lessee shall be entitled to an annual fee from
the Owner Participant in an amount to be agreed to at the time by Lessee and the
Owner Participant but in no event shall such fee exceed at any time the amount
of earnings on the monies so held in trust distributable at such time to the
Owner Participant. Any net losses on such investment shall be for the account of
Lessee. Any net earnings on such investment shall be distributed from time to
time by Lessee to the Owner Participant after deducting therefrom any portion of
such fee then due and unpaid. Upon the date required by applicable law dealing
with unclaimed property, Lessee will distribute to the Owner Participant any
amount held by it pursuant to this Section 8(z) and not previously applied to
the payment of the Certificates, after deducting therefrom any portion of such
fee then due and unpaid.
(aa) The Owner Participant agrees that, at Lessee's expense
(including, without limitation, reasonable attorneys fees and other out-of-
pocket expense of the Owner Trustee and Owner Participant), upon request of the
Lessee, the Owner Participant will negotiate promptly in good faith with respect
to any arrangements pursuant to which the Trust Indenture may be satisfied and
discharged in respect of the Certificates in accordance with subsection (y) of
Section 10.01 of the Trust Indenture, provided, that there shall be no adverse
impact upon the rights or interests of the Owner Participant or Owner Trustee,
and the Owner Trustee agrees to act upon the instructions of the Owner
Participant in connection therewith. The Owner Trustee agrees that it will not,
and the Owner Participant agrees that during such time as an Event of Default
has not occurred under the Lease it will not cause the Owner Trustee to take any
action to effect such satisfaction and discharge except upon the request of the
Lessee made pursuant to this Section 8(aa).
(bb) Each of the parties hereto acknowledges that the
bankruptcy or legal incapacity of the Owner Participant will not terminate the
Trust Agreement, nor entitle such person's legal representatives or heirs to
claim an accounting or to take any action or proceeding in any court for a
partition or winding up of the Trust Estate, nor otherwise affect the rights,
obligations and liabilities of the parties hereto. No creditor of the Owner
Participant shall obtain legal title to or exercise legal or equitable remedies
with respect to the Trust Estate as a result of the Owner Participant's status.
No transfer, by operation of law or otherwise, of any right, title and interest
of the Owner Participant in and to its beneficial interest in the Trust Estate
shall operate to terminate the Trust Agreement or the Trusts created thereby.
SECTION 9. [Intentionally omitted.]
SECTION 10. Other Documents; Amendment. Each of the Owner
--------------------------
Participant and the Owner Trustee hereby (A) agrees with Lessee, the Certificate
Holders and the Indenture Trustee to comply with all of the terms of the Trust
Agreement (as the same may hereafter be amended or
40
supplemented from time to time in accordance with the terms thereof) applicable
to it, to the extent such non-compliance would be adverse to such party; and (B)
agrees with Lessee, the Certificate Holders and the Indenture Trustee not to
amend, supplement or otherwise modify any provision of the Trust Agreement in a
manner adversely affecting such party without the prior written consent of such
party. Notwithstanding the foregoing, unless an Event of Default shall have
occurred and be continuing and so long as the Lease has not been terminated, the
Indenture Trustee and the Owner Participant hereby agree for the benefit of
Lessee that without the consent of Lessee they will not (and the Owner
Participant agrees that it will not cause the Owner Trustee to) amend,
supplement or otherwise modify any provision of the Trust Indenture in a manner
adversely affecting Lessee. The Indenture Trustee and the Owner Trustee agree to
promptly furnish to Lessee copies of any supplement, amendment, waiver or
modification of any of the Operative Documents to which Lessee is not a party.
SECTION 11. Certain Covenants of Lessee. Lessee covenants and
---------------------------
agrees with the Participants, the Indenture Trustee and the Owner Trustee, in
its capacity as such and in its individual capacity, as follows:
(1) Lessee will cause to be done, executed, acknowledged
and delivered all and every such further acts, conveyances and assurances as the
Owner Trustee, the Indenture Trustee or the Owner Participant shall reasonably
require for accomplishing the purposes of this Agreement and the other Operative
Documents, including, without limitation, the filing in Delaware of appropriate
Uniform Commercial Code financing statements upon or prior to the adoption and
effectiveness in Illinois of revised Article 9 of the Uniform Commercial Code;
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 Documents. Lessee, forthwith upon
execution of the Japanese Lease Assignment, shall cause the Aircraft to be duly
registered, and at all times thereafter to remain duly registered, in the name
of the Owner Trustee, except as otherwise required or permitted hereunder or
under the Lease, under the Federal Aviation Act or under the applicable law of
another permitted government of registry, or shall furnish to the Owner Trustee
such information as may be required to enable the Owner Trustee to make
application for such registration (at the expense of Lessee, including, without
limitation, reasonable attorney's fees and expenses), and shall promptly furnish
to the Owner Trustee such information as may be required to enable the Owner
Trustee to timely file any reports required to be filed by it as the lessor
under the Lease with any governmental authority (including, without limitation,
tax authorities).
(2) Lessee, at its expense, has caused the documents set
forth in clauses first through fifth of the next succeeding sentence
----- -----
(collectively, the "FAA Recorded Documents"), as well as the Amended and
Restated Lease Agreement, the Amended and Restated Trust Indenture, the Trust
Agreement and the Assignment and Assumption Agreement and all supplements and
amendments of such documents to be promptly filed and recorded, or filed for
recording, to the
41
extent permitted under the Federal Aviation Act, or required under any other
applicable law. Upon the execution and delivery of each of the FAA Recorded
Documents and each of the FAA registration applications, Lessee has caused each
such document and registration application to be filed for recording or
registered, as the case may be, with the Federal Aviation Administration and, in
the case of the FAA Recorded Documents, in the following order of priority;
first, the Japanese FAA ▇▇▇▇ of Sale, second, the Japanese Lease with the
----- ------
Japanese Lease Supplement covering the Aircraft, the Lessee's FAA registration
application, and the Primary Lessor's Mortgage covering the Aircraft, third the
-----
Japanese Lease Assignment with the Japanese Lease Assignment Supplement covering
the Aircraft, fourth, the Lessor's FAA registration application, fifth, the
------ -----
Lease with the Lease Supplement covering the Aircraft and the Trust Indenture
with the Trust Supplement covering the Aircraft. Lessee agrees to furnish
Lessor, the Indenture Trustee and Owner Participant with copies of certified
copies of the foregoing documents with recording data as promptly as practicable
following the issuance of same by the FAA.
SECTION 12. Owner for Federal Tax Purposes. It is hereby agreed among
-------------------------------
Lessee, the Owner Participant and the Owner Trustee that for U.S. federal income
tax purposes the Owner Participant will be the owner of the Aircraft to be
delivered under the Lease and Lessee will be the lessee thereof, and each party
hereto agrees to characterize the Lease as a lease for U.S. Federal tax
purposes. It is understood and agreed among Lessee, the Owner Participant and
the Owner Trustee that for U.S. federal income tax purposes, the Lease Agreement
shall constitute a substantial modification of the Original Lease, within the
meaning of Treasury Regulations section 1.467-1(f)(5)(ii).
SECTION 13. Notices; Consent to Jurisdiction. (a) All notices, demands,
--------------------------------
instructions and other communications required or permitted to be given to or
made upon any party hereto shall be in writing and shall be personally delivered
or sent by registered or certified mail, postage prepaid, or by telecopier (with
a copy of such notice to follow by registered or certified mail or prepaid
courier), or by prepaid courier service, and shall be deemed to be given for
purposes of this Agreement on the day that such writing is delivered or received
or if given by certified mail, three Business Days after being deposited in the
mails, in accordance with the provisions of this Section 13(a). Unless otherwise
specified in a notice sent or delivered in accordance with the foregoing
provisions of this Section 13(a), notices, demands, instructions and other
communications in writing shall be given to or made upon the respective parties
hereto at their respective addresses (or to their respective telecopier numbers)
as follows: (A) if to Lessee, the Owner Trustee, the Indenture Trustee, the Pass
Through Trustees (on and after the Refinancing Date only) or the Owner
Participant, to the respective addresses set forth on Schedule I hereto (and in
the case of Owner Trustee a copy shall be sent to the Owner Participant) or (B)
if to a subsequent Owner Participant, addressed to such subsequent Owner
Participant at such address as such subsequent Owner Participant shall have
furnished by notice to the parties hereto or (C) if to any subsequent
Certificate Holder, addressed to such Certificate
42
Holder at its address set forth in the Certificate Register maintained pursuant
to Section 2.03 of the Trust Indenture.
(1) Each party to this Agreement including (to the extent it
is deemed or has agreed to be a party hereto) each Certificate Holder
(individually a "Party" and collectively "Parties") irrevocably agrees that any
legal suit, action or proceeding brought by any other Party, which arises solely
out of or relates solely to the Operative Documents or any of the transactions
contemplated hereby or thereby or any document referred to herein or therein,
may be instituted in the Circuit Court of the State of Illinois, ▇▇▇▇ County or
the United States District Court for the Northern District of Illinois and that
they hereby waive the right to trial by jury in any such proceeding; provided,
however, that the foregoing provisions shall not apply to third party tort
claims (but shall apply to an indemnity claim with respect to such tort claim)
and that the foregoing shall not apply to any right a Party may have to seek
removal of such legal suit, action or proceeding to federal court or to seek
consolidation of any separate legal suits, actions or proceedings brought by any
one or more of the other Parties in the same or different jurisdictions. The
agreement set forth in this Section 13(b) is given solely for the benefit of the
Parties and such agreement is not intended to and shall not inure to the benefit
of any other person.
SECTION 14. Change of Situs of Owner Trust. The Owner Participant
------------------------------
agrees that if, at any time, the Trust Estate becomes subject to any Taxes for
which it is indemnified pursuant to Section 7(b) hereof and if, as a consequence
thereof, Lessee shall 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 the Owner Participant
(which consent shall not be unreasonably withheld) and the Owner Participant
will take whatever action may be reasonably necessary to accomplish such
removal; provided that (A) Lessee shall provide such additional tax
indemnification, as the Owner Participant may reasonably request, (B) the rights
and obligations under the Operative Documents of the Owner Participant shall not
be altered 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 the Lessee shall execute and deliver such documents as may be
requested by the Indenture Trustee to continue the perfection of the lien on the
Trust Indenture Estate, (D) the Owner Participant and the Indenture Trustee
shall have received an opinion or opinions of counsel (reasonably satisfactory
to the Owner Participant) in scope, form and substance reasonably satisfactory
to the Owner Participant 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)
such removal will not result in the imposition of, or increase in the amount of,
any Tax for which Lessee is not required to indemnify the Owner Participant, the
Owner Trustee, the Trust Estate or, on and after the Refinancing Date only, the
Pass Through Trust pursuant to Section 7(b) hereof (taking into account any
additional indemnification provided by Lessee pursuant to clause (A) of this
sentence), (IV) such removal will not, in the Owner Participant's judgment,
result in any Loss of MACRS Deductions, FSC Benefits, Interest Deductions or an
Inclusion Event (as defined in the Tax Indemnity Agreement) with respect to
which Lessee is not required to indemnify the Owner Participant pursuant to
Section 5 of the Tax Indemnity Agreement (taking into account any additional
indemnification provided by Lessee pursuant to clause (A) of this
43
[First Amended and Restated Participation Agreement (1989 I)]
sentence), and (V) covering such other matters as the Owner Participant may
reasonably request, (E) if such removal involves the replacement of the Owner
Trustee, the Owner Participant shall have received an opinion of counsel to such
successor Owner Trustee in form and substance reasonably satisfactory to the
Owner Participant and (F) Lessee shall indemnify and hold harmless the Owner
Participant on a net after-tax basis against any and all reasonable and actual
costs and expenses including attorneys' fees and disbursements, registration,
recording or filing fees and Taxes incurred by the Owner Trustee or Owner
Participant, in connection with such change of situs.
SECTION 15. Miscellaneous. (a) Each of the Participants and the
-------------
Certificate Holders covenants and agrees that it shall not unreasonably withhold
its consent to any consent requested of the Owner Trustee, as Lessor, or the
Indenture Trustee under the terms of the Lease, which by its terms is not to be
unreasonably withheld by the Owner Trustee, as Lessor, or by the Indenture
Trustee.
(1) The representations, warranties, indemnities and
agreements of Lessee, the Owner Trustee, the Indenture Trustee, the Participants
and the Certificate Holders provided for in this Agreement, and Lessee's, the
Owner Trustee's, Indenture Trustee's, the Participants' and the Certificate
Holders' obligations under any and all thereof, shall survive the making
available of the respective Commitments by the Participants, the delivery or
return of the Aircraft, the transfer of any interest of the Owner Participant in
the Trust Estate or the Aircraft or any Engine or the transfer of any interest
by any Certificate Holder in any Certificate or the Trust Indenture Estate and
the expiration or other termination of this Agreement or any other Operative
Document or, on and after the Refinancing Date only, any of the Pass Through
Documents.
(2) This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified, except by an instrument
in writing signed by the party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no such
termination, amendment, supplement, waiver or modification shall be effective
unless a signed copy thereof shall have been delivered to the Lessee, the
Indenture Trustee and the Owner Trustee. The terms of this Agreement shall be
binding upon, and inure to the benefit of and shall be enforceable by, Lessee,
the Participants, the Indenture Trustee, the Certificate Holders and the Owner
Trustee. This Agreement shall in all respects be governed by, and construed in
accordance with, the
44
[First Amended and Restated Participation Agreement (1989 I)]
internal laws of the State of Illinois, including all matters of construction,
validity and performance. This Agreement is being delivered in the State of
Illinois.
(3) The parties hereto agree that all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Agreement and any agreement referred to
herein other than the Trust Agreement, are made and intended only for the
purpose of binding the Trust Estate and establishing the existence of rights and
remedies which can be exercised and enforced against the Trust Estate.
Therefore, anything contained in this Agreement or such other agreements to the
contrary notwithstanding (except for any express provisions that the Owner
Trustee is responsible for or is acting in or making representations or
agreements in its individual capacity), no recourse shall be had with respect to
this Agreement or such other agreements against the Owner Trustee in its
individual capacity or against any institution or person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling person or persons of any of them;
provided, however, that this Section 15(d) shall not be construed to prohibit
any action or proceeding against any party hereto for its own willful misconduct
or grossly negligent conduct; and provided, further, that nothing contained in
this Section 15(d) shall be construed to limit the exercise and enforcement in
accordance with the terms of this Agreement or such other agreements of rights
and remedies against the Trust Estate. The foregoing provisions of this Section
15(d) shall survive the termination of this Agreement, the other Operative
Documents and, on and after the Refinancing Date only, the Pass Through Trust
Agreements.
(4) No Participant shall have any obligation or duty to the
Lessee, to any other Participant or to others with respect to the transactions
contemplated hereby except those obligations or duties of such Participant
expressly set forth in this Agreement and the other Operative Documents and no
Participant shall be liable for performance by any other party hereto of such
other party's obligations or duties hereunder. Without limitation of the
generality of the foregoing, under no circumstances whatsoever shall any
Participant be liable to Lessee, nor shall any Participant be liable to any
other Participant, for any action or inaction on the part of the Indenture
Trustee or the Owner Trustee in connection with the transactions contemplated
herein, whether or not such action or inaction is caused by the willful
misconduct or gross negligence of the Indenture Trustee or the Owner Trustee.
(5) This Agreement shall be binding upon and shall inure to
the benefit of and shall be enforceable against, the parties hereto and their
respective successors and permitted assigns including each successive holder of
the Owner Participant's interest and each successive holder of any Certificate
issued and delivered pursuant to this Agreement or the Trust Indenture whether
or not an express assignment to such holder of rights and obligations under this
Agreement has been made.
45
[First Amended and Restated Participation Agreement (1989 I)]
(6) The Owner Participant hereby consents to the Owner
Trustee's appointment of Lessee as its exclusive agent pursuant to the terms of
Section 7(a)(4) of the Lease.
SECTION 16. [Intentionally omitted].
SECTION 17. Optional Redemption of Certificates. (a) Subject to
-----------------------------------
subparagraph (d) below, in the event that at any time Lessee shall have given
written notice to Lessor, Owner Participant and the Indenture Trustee that there
be effected a voluntary redemption of the Certificates in compliance with the
provisions of Section 6.01(c) of the Trust Indenture by Lessor as part of a
refunding or refinancing transaction Lessor agrees to negotiate promptly in good
faith to conclude an agreement, in form and substance reasonably satisfactory to
Owner Participant, with Lessee as to the terms of such refunding or refinancing
transaction (including the terms of any debt to be issued in connection with
such refunding or refinancing transaction and the documentation to be executed
in connection therewith), and if after such good faith negotiation Lessee and
Owner Participant shall have concluded an agreement, in form and substance
reasonably satisfactory to Owner Participant and Lessee, with respect to such
terms:
(1) within ten Business Days after the reaching of such
agreement, Owner Participant will deliver to Lessee a certificate of an
authorized representative of Owner Participant (the "Refinancing
Certificate") setting forth (i) the proposed date on which the
outstanding Certificates will be redeemed (such date, the "Refinancing
Date") and describing the new debt to be issued and the other aspects
of such refunding or refinancing transaction and (ii) the following
information calculated pursuant to the provisions of this Section
17(a): (A) subject to the limitations set forth in this Section 17, the
proposed adjusted ratio of the debt evidenced by the Certificates to
Owner Participant's investment in its interest in the Aircraft (such
ratio, the "Debt/Equity Ratio"), (B) the principal amount of debt to be
issued by Lessor on the Refinancing Date, (C) the amount, if any, by
which Owner Participant's aggregate investment in its interest in the
Aircraft is to be decreased and (D) the proposed revised schedules of
Basic Rent, Excess Amount, debt amortization, Stipulated Loss Value
percentages and Termination Value percentages, which shall be
calculated so as to maintain Net Economic Return. The Refinancing
Certificate shall not provide for a Debt/Equity Ratio of more than 4:1.
Within ten Business Days of its receipt of the Refinancing Certificate,
Lessee may demand a verification pursuant to Exhibit E to the Lease of
the information set forth in the Refinancing Certificate. Upon the
acceptance by Lessee of the accuracy of the information set forth in
the Refinancing Certificate or the determination pursuant to such
verification procedures of the revised Basic Rent, Excess Amount, debt
amortization, Stipulated Loss Value percentages and Termination Value
percentages and the Debt/Equity Ratio (such information, the
"Refinancing Information") the appropriate parties will take the
actions specified in paragraphs (ii) through (vi) below;
46
[First Amended and Restated Participation Agreement (1989 I)]
(2) the appropriate parties will enter into a financing or
loan agreement in form and substance reasonably satisfactory to Owner
Participant and Lessee (which may involve an underwriting agreement in
connection with a public offering of such debt or the purchase of such
debt by a publicly funded entity (or entities) or, if Owner Participant
so agrees, the sale of Lessor's interest in the Aircraft and its resale
to Lessor) with the institution or institutions to be named therein
providing for (i) the issuance and sale by Lessor to such institution
or institutions on the Refinancing Date of debt securities in an
aggregate principal amount specified in the Refinancing Information,
which amount shall be at least equal to the aggregate principal amount
of all Certificates outstanding on the Refinancing Date (such debt
securities, the "New Debt"), (ii) the application of the proceeds of
the sale of the New Debt to the redemption of all such Certificates on
the Refinancing Date and (iii) the payment of the excess, if any, of
such proceeds over the amounts necessary to effect such redemption to
Lessor;
(3) Lessee and Lessor will amend the Lease to provide that
(i) Basic Rent and Excess Amount payable in respect of the period from
and after the Refinancing Date shall be as provided in the Refinancing
Information and (ii) amounts payable in respect of Stipulated Loss
Value and Termination Value from and after the Refinancing Date shall
be as provided in the Refinancing Information;
(4) Lessor will enter into an agreement in form and
substance reasonably satisfactory to Owner Participant to provide for
the securing thereunder of the New Debt in like manner as the
Certificates and will enter into such amendments and supplements to the
Trust Indenture (or such new indenture or other security agreement) as
may be necessary to effect such refunding or refinancing;
(5) unless otherwise agreed or required by Owner
Participant, and whether or not such refunding or refinancing
transaction is consummated, Lessee shall pay, without cost, on a net
after-tax basis, to Owner Participant, all of the reasonable expenses
of all parties to such refunding or refinancing, including without
limitation, the reasonable fees and expenses of such parties' counsel
and Owner Participant's, and any related loan or commitment, fees; and
(6) subject to compliance by Lessor with all applicable
terms and conditions for voluntary prepayment under the Trust Indenture
and this Agreement (which compliance may be conditioned on compliance
by Lessee with all applicable provisions of the Lease and payment of
all amounts due thereunder in connection therewith), no sooner than
thirty days after the giving of the notice referred to in the lead-in
paragraph of this Section 17, each Certificate Holder will transfer to
Lessor the Certificates held by it immediately prior to such refunding
or refinancing for cancellation
47
(and Lessor shall cancel the same), against receipt of the then
outstanding principal amount of such Certificates, accrued and unpaid
interest thereon, plus premium, if any, together with payment in full
of all other amounts then payable to such Certificate Holder and the
Indenture Trustee hereunder or under the Trust Indenture.
(2) In the case of a refunding or refinancing involving a
public offering of the New Debt, it is expressly understood that Owner
Participant shall have no obligation hereunder to consent thereto if, in its
good faith judgment, such refunding or refinancing increases its, any of its
Affiliates or Owner Participant's exposure to (i) liabilities under federal or
state securities laws, (ii) regulation under state or federal securities laws,
(iii) the need to publicly disclose information that is not generally available
to the public, or (iv) being adversely affected in its respective ability to
engage in any other financing transaction, in each case to a level unacceptable
to it in its good faith judgment. Any trustee of public debt shall be a bank or
trust company having its principal place of business in the Borough of
Manhattan, City and State of New York, or Boston, Massachusetts, or Chicago,
Illinois, or Hartford, Connecticut, and having a combined capital and surplus of
at least $100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of trustee upon reasonable or customary terms.
(3) No such optional redemption shall be permitted until the
fifth anniversary of the Delivery Date, and only two such optional redemptions
shall be permitted during the Basic Term, it being expressly agreed to by Lessee
that the refinancing transaction being consummated on the Refinancing Date
pursuant to this Agreement shall constitute the first of such optional
redemptions. Lessee shall give Owner Participant and the Indenture Trustee at
least thirty days revocable written notice of the proposed date of the optional
redemption. Such notice shall become irrevocable ten days prior to the proposed
date of the optional redemption.
(4) The Certificates shall be subject to voluntary redemption
by the Lessor without the consent of Lessee unless Lessee shall suffer adverse
economic consequences as a result of such redemption. Under no circumstances
shall the preceding sentence be construed to obligate Lessee to provide any
funds for the financing of any such redemption.
(5) Notwithstanding the foregoing, Owner Participant shall
have no obligation to proceed with any refunding or refinancing transaction as
contemplated by this Section 17:
(1) if in Owner Participant's good faith judgment, such
transaction would have a material adverse impact (including, without
limitation, the risk of adverse tax consequences) on it;
(2) unless a third party or parties, unaffiliated with
Lessee and Owner Participant, shall have committed to (and shall)
provide the financing needed to
48
consummate the proposed refunding or refinancing transaction, it being
understood that Owner Participant shall have no obligation to locate
any such party or parties; or
(3) unless Lessee (A) indemnifies Owner Participant
and Lessor by agreement in form and substance satisfactory to it on an
after-tax basis, for any liability, obligation (other than the
obligation to pay principal and interest in respect of the New Debt),
cost or expense (including, without limitation, any tax expense and any
reasonable attorneys' fees) related to or arising out of any such
refunding or refinancing transaction, and (B) in connection with any
refinancing other than the first such refinancing (or the second such
refinancing if the first such refinancing occurs prior to the
Commencement Date and is a refinancing with interim debt), pays to
Owner Participant a nonrefundable fee of $10,000.
SECTION 18. [Intentionally omitted].
SECTION 19. Confidentiality of Purchase Agreement. Lessor, Owner
-------------------------------------
Participant and the Indenture Trustee shall keep the Purchase Agreement
confidential and shall not disclose the same to any Person, except (A) to
prospective and permitted transferees of Lessor's, Owner Participant's or the
Indenture Trustee's interest who agree to hold such information confidential,
(B) to Lessor's, Owner Participant's or the Indenture Trustee's counsel,
independent insurance advisors or other agents who agree to hold such
information confidential or (C) as may be required by any statute, court or
administrative order or decree or governmental ruling or regulation. Any
disclosure as contemplated by clause (A) or (B) of the preceding sentence,
including disclosure to counsel for Lessor, Owner Participant or the Indenture
Trustee, shall include a requirement that the entity to which such information
is disclosed shall make undertakings substantially the same as those contained
herein. For the purposes of this Section 19, disclosure to any counsel or other
agent of Lessor, Owner Participant or the Indenture Trustee by Lessor, Owner
Participant or the Indenture Trustee, or Manufacturer or Lessee, or counsel for
either of them, in connection with the transaction contemplated hereby shall be
deemed to be disclosure by the Manufacturer, Lessee, Lessor, Owner Participant
or the Indenture Trustee, as the case may be.
SECTION 20. Effectiveness. As of the Effective Date, this Agreement
-------------
shall amend and restate the Original Participation Agreement in its entirety,
and the Original Participation Agreement, except as expressly provided herein,
shall be superseded in it entirety by this Agreement.
* * *
49
[First Amended and Restated Participation Agreement (1989 I)]
IN WITNESS WHEREOF, the parties hereto have caused this First Amended
and Restated Participation Agreement to be duly executed by their respective
officers thereunto duly authorized as of the day and year first above written.
UNITED AIR LINES, INC.,
Lessee
By:_________________________________
Name:
Title: Vice President and Treasurer
BANCBOSTON UNITED LEASING LLC,
Owner Participant
By:___________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Manager
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION,
Indenture Trustee
By:_____________________________________
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, not in its individual capacity,
except as expressly provided herein, but
solely as Owner Trustee,
Owner Trustee
By:______________________________________
Name:
50
[First Amended and Restated Participation Agreement (1989 I)]
Title:
51
[First Amended and Restated Participation Agreement (1989 I)]
SCHEDULE I
Names and Addresses
Lessee:
------ Overnight Delivery Service
--------------------------
U.S. Mail United Air Lines, Inc.
--------- ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, Inc. ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Attn: Vice President and Treasurer
Attn: Vice President and Treasurer
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Owner Participant: Payment Address
----------------- ---------------
BancBoston United Leasing LLC BancBoston United Leasing LLC
c/o Fleet Capital Leasing c/o Fleet Capital Leasing
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President Senior Vice President
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Indenture Trustee:
-----------------
State Street Bank and Trust Company
of Connecticut, National Association
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ Square
Hartford, CT 06103
Attention: Corporate Trust Department
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇
Owner Trustee: Overnight Courier
-------------- -----------------
U.S. Mail ▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇
--------- ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇ Attention: Corporate Trust Department
Boston, MA 02102-0778 Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Trust Department Confirmation: (▇▇▇) ▇▇▇-▇▇▇▇