EXHIBIT 4.19
PARTICIPATION AGREEMENT
(1992 757 [__])
Dated as of December [__], 1992
Among
UNITED AIR LINES, INC.,
Lessee,
GENERAL FOODS CREDIT CORPORATION,
Owner Participant,
UAL CORPORATION,
Guarantor,
CERTAIN BANKS AND FINANCIAL INSTITUTIONS,
Loan Participants,
THE CONNECTICUT NATIONAL BANK,
Not in its Individual Capacity,
except as expressly provided
herein, but solely as Owner Trustee,
STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION,
In its Individual Capacity and as Mortgagee,
and
NATIONAL WESTMINSTER BANK PLC,
Paying Agent for the Loan Participants
United Air Lines, Inc.
1992 757 [__] Equipment Trust
One Boeing Model 757-222 Aircraft
M.S.N. [_____],
U.S. Registration No. N[_____]
TABLE OF CONTENTS
SECTION 1. Certain Definitions; Participations in Lessor's
Cost of the Aircraft; Interest Rate ........................ 3
SECTION 2. Lessee's Notice of Closing Date ............................ 7
SECTION 3. Instructions to the Owner Trustee and Paying Agent ......... 9
SECTION 4. Conditions ................................................. 10
(a) Conditions Precedent to the Participations in the
Aircraft ................................................... 10
(b) Conditions Precedent to the Obligations of Lessee .......... 22
SECTION 5. Confidentiality of Purchase Agreement,
Participation Agreement and Tax Indemnity Agreement ........ 24
SECTION 6. Extent of Interest of Certificate Holders .................. 24
SECTION 7. Lessee's Representations, Warranties and
Indemnities ................................................ 25
(a) In General ................................................. 25
(b) General Tax Indemnity ...................................... 30
(c) General Indemnity .......................................... 43
SECTION 8. Guarantor's Representations and Warranties ................. 49
SECTION 9. Representations, Warranties and Covenants .................. 51
SECTION 10. Postponement of Closing Date ............................... 73
SECTION 11. Other Documents; Amendment ................................. 75
SECTION 12. Certain Covenants of Lessee ................................ 75
SECTION 13. Owner for Federal Tax Purposes ............................. 77
SECTION 14. Notices; Consent to Jurisdiction ........................... 77
SECTION 15. Change of Situs of Owner Trust ............................. 78
SECTION 16. Miscellaneous .............................................. 80
SECTION 17. Invoices and Payment of Expenses ........................... 82
SECTION 18. Optional Redemption of Loan Certificates ................... 83
SECTION 19. Optimization ............................................... ▇▇
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▇▇▇▇▇▇▇ ▇▇. Certain Additional Payments ............................. 89
SCHEDULE I - Names, Addresses and Commitments of Loan
Participants
SCHEDULE II - Names and Addresses of Owner Participant,
Lessee, Guarantor, Owner Trustee and
Mortgagee
SCHEDULE III - Legal Opinions
EXHIBITS
EXHIBIT A - Lease Agreement
EXHIBIT B - Trust Agreement
EXHIBIT C - Trust Indenture and Mortgage
EXHIBIT D - Guaranty Agreement
EXHIBIT E - Assignment of Guaranty
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PARTICIPATION AGREEMENT
(1992 757 [__])
THIS PARTICIPATION AGREEMENT (1992 757 [__]) dated as of December [__],
1992, by and among (i) UNITED AIR LINES, INC., a Delaware corporation (the
"Lessee"), (ii) UAL CORPORATION, a Delaware corporation (the "Guarantor"), (iii)
GENERAL FOODS CREDIT CORPORATION, a Delaware corporation (the "Owner
Participant"), (iv) the entities listed on Schedule I hereto (the "Loan
Participants"), (v) THE CONNECTICUT NATIONAL BANK, a national banking
association, not in its individual capacity, except as expressly provided
herein, but solely as Owner Trustee under the Trust Agreement (the "Owner
Trustee"), (vi) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, a national banking association (the "Mortgagee"), in its individual
capacity and as Mortgagee under the Trust Indenture and (vii) NATIONAL
WESTMINSTER BANK PLC, as paying agent for the Loan Participants (the "Paying
Agent");
WITNESSETH:
WHEREAS, pursuant to the Purchase Agreement between Lessee and the
Manufacturer (as hereinafter defined), the Manufacturer has agreed to sell to
Lessee, among other things, certain Boeing Model 757-222 aircraft, one of which
has recently been delivered to Lessee by the Manufacturer and is the subject of
this Agreement;
WHEREAS, pursuant to and in accordance with the terms of this Agreement,
(i) Lessee and the Owner Trustee shall enter into an Owner Trustee's
Purchase Agreement and Assignment (1992 757 [__]) dated as of the date hereof
(the "Owner Trustee's Purchase Agreement"), whereby Lessee will assign to the
Owner Trustee certain rights and interests of Lessee under the Purchase
Agreement with respect thereto;
(ii) the Manufacturer shall execute a Consent and Agreement (1992 757
[__]) dated as of the date hereof (the "Consent and Agreement") with respect to
the Owner Trustee's Purchase Agreement;
(iii) the Owner Participant shall enter into the Trust Agreement (1992
757 [__]) dated as of the date hereof (the "Trust Agreement") pursuant to which
Trust Agreement the Owner Trustee will agree, among other things, to hold the
Trust Estate defined in Section 1.1 thereof (the "Trust Estate") for the use and
benefit of the Owner Participant;
(iv) the Mortgagee and the Owner Trustee shall enter into the Trust
Indenture and Mortgage (1992 757 [__]) dated as of the date hereof (the "Trust
Indenture") pursuant to which the Owner Trustee will issue to the Loan
Participants Loan Certificates (as hereinafter defined) as evidence of the Owner
Trustee's indebtedness to the Loan Participants, which Loan Certificates will be
secured by the mortgage and security interest created by the
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PARTICIPATION AGREEMENT (1992 757 [__])
Owner Trustee in favor of the Mortgagee, and the Owner Trustee shall execute and
deliver the Indenture Supplement covering the Aircraft (as hereinafter defined),
supplementing the Trust Indenture;
(v) the Owner Trustee, pursuant to the terms of the Owner Trustee's
Purchase Agreement and the Owner Trustee's ▇▇▇▇ of Sale, shall purchase the
Aircraft from Lessee;
(vi) the Owner Trustee and Lessee shall enter into a Lease Agreement (1992
757 [__]) dated as of the date hereof (the "Lease Agreement") whereby, subject
to the terms and conditions set forth therein, the Owner Trustee will agree to
lease to Lessee, and Lessee will agree to lease from the Owner Trustee, the
Aircraft on the Closing Date;
(vii) the Guarantor shall execute a Guaranty Agreement (1992 757 [__])
dated as of the date hereof (the "Guaranty Agreement") in favor of the
beneficiaries named therein whereby, subject to the terms and conditions set
forth therein, the Guarantor will guarantee the payment and performance
obligations of Lessee under the Lease Agreement;
WHEREAS, certain terms are used herein as defined in Section 1(a) hereof;
NOW THEREFORE, in consideration of the mutual agreements herein contained,
the parties hereto agree as follows:
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PARTICIPATION AGREEMENT (1992 757 [__])
SECTION 1. Certain Definitions; Participations in Lessor's Cost of the
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Aircraft; Interest Rate.
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(a) "Acceptance Certificate" shall have the meaning set forth in
Section 4(a)(v)(8) hereof.
"Account" shall have the meaning set forth in Section 10(c) (i) hereof.
"Average Life" means, with respect to the Owner Trust Loan, the number of
years obtained by dividing (i) an amount equal to the sum of the products of (A)
each of the scheduled installments of such Owner Trust Loan multiplied by (B)
the number of years between the Closing Date and the scheduled due date of such
installment, by (ii) the principal amount of such Owner Trust Loan.
"basis point" means one one-hundredth of one percent (.01%).
"Capital Lease" as applied to any Person means any lease of any property
(whether real, personal or mixed) to that Person as lessee which, in conformity
with GAAP, is or should be accounted for as a capital lease on the balance sheet
of that Person.
"Commitment" shall have the meaning set forth in Section 1(c) hereof.
"Convention" shall have the meaning set forth in Section 9(z) hereof.
"Debt/Equity Ratio" shall have the meaning set forth in Section 18(a)(i)
hereof.
"Dollars" and the sign "$" mean the lawful currency of the United States of
America.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Facility Agreement" means the Master Standby Credit Facility Agreement,
dated as of December 20, 1988, among the Lessee, the Guarantor, the Loan
Participants and the Agents identified therein.
"Facility Default" and "Facility Event of Default" have the respective
meanings defined in the Facility Agreement.
"GAAP " means generally accepted accounting principles
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PARTICIPATION AGREEMENT (1992 757 [__])
(consistently applied) set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by a significant segment of the accounting profession, which are
applicable to the circumstances as of the date of determination.
"Income Tax" (as used in Section 7 hereof) shall have the meaning set forth
in Section 7(b)(xii) hereof.
"Indebtedness" as applied to any Person, means, without duplication, (i)
all indebtedness for borrowed money, (ii) that portion of obligations with
respect to capital leases which is or should be classified as a liability on a
balance sheet in conformity with GAAP, (iii) notes payable and drafts accepted
representing extensions of credit whether or not representing obligations for
borrowed money, (iv) any obligation owed for all or any part of the deferred
purchase price of property or services which purchase price is (A) due more than
six months from the date of incurrence of the obligation in respect thereof, or
(B) evidenced by a note or similar written instrument, (v) all obligations of
others of the types referred to in clauses (i) through (iv) above secured by any
Lien on any property or asset owned or held by that Person regardless of whether
the Indebtedness secured thereby shall have been assumed by that Person or is
nonrecourse to the credit of that Person, and (vi) all obligations of others of
the types referred to in clauses (i) through (iv) above with respect to which
such Person has a contingent obligation.
"Lessee Credit Rating" means the rating grade at which S&P is rating any
senior unsecured and unenhanced Indebtedness of the Lessee on the Closing Date.
In the event that S&P is not then publishing the rating of any senior unsecured
and unenhanced Indebtedness of the Lessee, the Lessee Credit Rating shall be
conclusively deemed to be the grade notified by S&P to the Mortgagee as the
"implied long-term rating" that would have been applicable to senior unsecured
and unenhanced Indebtedness of the Lessee if any such Indebtedness had been
outstanding on a date not earlier than one month prior to the Closing Date.
"Margin" means, with respect to the Loan Certificates, an interest rate per
annum determined on the Closing Date equal to the greater of (i) three-quarters
of one percent (.75%) or (ii) one percent (1%) minus any Margin Adjustment
described in clause (i) of
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PARTICIPATION AGREEMENT (1992 757 [__])
the definition of "Margin Adjustment" in effect on the Closing Date or plus any
Margin Adjustment described in clause (ii) of the definition of "Margin
Adjustment" in effect on such Closing Date, as the case may be.
"Margin Adjustment" means either (i) the number of basis points (expressed
as a percentage) equal to the product of five basis points per annum (.05%)
multiplied by the number of long-term debt rating grades (if any) of S&P by
which the Lessee Credit Rating exceeds BB (such number to include the Lessee
Credit Rating but not BB) or (ii) the number of basis points (expressed as a
percentage) equal to the sum of (A) the product of ten basis points per annum
(.10%) multiplied by the number of long-term debt rating grades of S&P (if any)
by which BB exceeds the higher of the Lessee Credit Rating or B- (such number to
include BB but not such lower rating grade) plus (B) the product of twenty basis
points per annum (.20%) multiplied by the number of long-term debt rating grades
(if any) of S&P by which B- exceeds the Lessee Credit Rating (such number to
include B- but not such lower rating grade).
"New Debt" shall have the meaning set forth in Section 18 (a) (ii) hereof.
"Operating Lease" means, as applied to any Person, any lease (including,
without limitation, leases which may be terminated by the lessee at any time) of
any property (whether real, personal or mixed) under which that Person is the
lessee and which is not a Capital Lease.
"Operative Documents" shall have the meaning set forth in Section 4(a)(v)
hereof.
"Optimization Certificate" shall have the meaning set forth in Section
19(a) hereof.
"Owner Trust Advance" means with respect to any Loan Participant, at any
time, the amount advanced to the Owner Trustee by such Loan Participant,
pursuant hereto, or, where the context may require, the then outstanding
principal amount of such Owner Trust Advance.
"Owner Trust Loan" means, at any time, the aggregate amount advanced to the
Owner Trustee by the Loan Participants pursuant hereto, or, where the context
may require, the then outstanding principal amount of such Owner Trust Loan.
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PARTICIPATION AGREEMENT (1992 757 [__])
"Refinancing Certificate" shall have the meaning set forth in Section
18(a)(i) hereof.
"Refinancing Date" shall have the meaning set forth in Section 18(a)(i)
hereof.
"Refinancing Information" shall have the meaning set forth in Section
18(a)(i) hereof.
"Requisite Holders" means Loan Participants (or their transferees) holding
Loan Certificates evidencing 66 2/3% or more of the aggregate principal amount
of the Owner Trust Loan, or, if the Closing Date has not occurred, Loan
Participants having 66 2/3% or more of the aggregate commitment percentages of
all Loan Participants.
"S&P" means Standard & Poor's Corporation, and any successor thereof.
"Transferee" shall have the meaning set forth in Section 9(k) hereof.
"Withholding" shall have the meaning set forth in Section 7(b)(xiii)
hereof.
(b) The terms "Lessee," "Manufacturer," "Owner Participant," "Loan
Participants," "Owner Trustee," "Mortgagee," "Relevant Indemnitee" and "Taxes"
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. The terms "Certificate Holder," "Corporate
Trust Office," "Eurodollar Rate," "Funding Costs," "Funding Profits," "Holder,"
"Indenture Estate" or "Trust Indenture Estate," "Interest Payment Date,"
"Interest Period," "Loan Certificate" and "Secured Obligations" shall have the
respective meanings set forth in the Trust Indenture or the Loan Certificates,
as the case may be. 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.
(c) Subject to the terms and conditions of this Agreement, (i) the
Loan Participants agree to finance, in part, the Owner Trustee's payment of
Lessor's Cost for the Aircraft by making
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PARTICIPATION AGREEMENT (1992 757 [__])
an Owner Trust Loan to the Owner Trustee on a date to be designated pursuant to
Section 2 hereof, but in no event later than December [__], 1992, in the amount
in Dollars equal to the percentage of Lessor's Cost set forth opposite each Loan
Participant's name on Schedule I hereto, and to receive, as evidence of such
secured loans, Loan Certificates in an original amount equal to the amount so
financed and (ii) the Owner Participant hereby agrees in connection with its
equity investment in the beneficial ownership of the Aircraft and the sale of
the Aircraft by Lessee to the Owner Trustee pursuant to the Owner Trustee's ▇▇▇▇
of Sale, as contemplated hereby and by the Owner Trustee's Purchase Agreement,
to make its equity investment in the beneficial ownership of the Aircraft on a
date to be designated as set forth above, but in no event later than December
[__], 1992, in an amount in Dollars equal to the percentage of Lessor's Cost set
forth opposite its name on Schedule II hereto. In the case of the Owner
Participant, the amount of its participation to be made as provided above in the
payment of Lessor's Cost and, in the case of the Loan Participants, the original
principal amount of the Loan Certificates to be accepted by them, is hereinafter
called such Participant's "Commitment" for the Aircraft. In case any Participant
shall default in its obligation to make the amount of its Commitment available
pursuant to Section 2 hereof in respect of the Aircraft, the other Participants
shall have no obligation to make available or to increase the amount of their
Commitments and the obligation of the non-defaulting Participant shall remain
subject to the terms and conditions set forth in this Agreement.
SECTION 2. Lessee's Notice of Closing Date. In addition to the Notice of
Lease provided by Lessee pursuant to Section 2.4 of the Facility Agreement (the
"Notice of Lease"), Lessee agrees to give the Participants, the Owner Trustee
and the Mortgagee at least two Business Days' written notice of the closing date
for the Aircraft (the "Closing Date"), which Closing Date shall be a Business
Day, which notice shall specify the amount of Lessor's Cost and the amount of
each Participant's Commitment for the Aircraft. As to each Participant, the
making of its Commitment for such Aircraft available in the manner required by
this Section 2 shall constitute a waiver of such notice. The Owner Trustee and
the Mortgagee shall be deemed to have waived such notice if the Mortgagee shall
have received from the Participants funds in the full amount of such
Participants' respective Commitments. The Closing shall occur at the offices of
Vedder, Price, ▇▇▇▇▇▇▇ & Kammholz, in Chicago, Illinois.
Subject to the terms and conditions of this Agreement, and
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PARTICIPATION AGREEMENT (1992 757 [__])
simultaneously with receipt by the parties hereto of all amounts to be paid to
them on or before the Closing Date pursuant to this Section 2, Lessee shall
transfer title to and deliver the Aircraft to the Owner Trustee, and the Owner
Trustee shall purchase and take title to, and accept delivery of, the Aircraft,
and Lessee shall lease the Aircraft from the Owner Trustee pursuant to the Lease
Agreement, it being understood that the transactions described in this Section 2
are simultaneous and mutually dependent. Subject to the terms and conditions of
this Agreement, and in consideration for the transfer of title to the Aircraft
to the Owner Trustee, the following payments shall be made, in each case in
Dollars and in same day funds to the recipient (A) by the Owner Participant to
the Mortgagee (for the account of the Owner Trustee) an amount in Dollars equal
to such Owner Participant's Commitment to be held in trust for the benefit of
the Owner Participant until used to purchase the Aircraft or returned to the
Owner Participant, (B) by the Loan Participants to the Paying Agent (for the
account of the Owner Trustee) an amount in Dollars equal to each Loan
Participant's Commitment, (C) by the Paying Agent (from the amounts paid to it
pursuant to clause (B) immediately above) to the Mortgagee (on behalf of the
Owner Trustee), and (D) on behalf of the Owner Trustee and by the Mortgagee
(from the amounts paid to them pursuant to clauses (A) and (C) immediately
above) to Lessee (on behalf of the Owner Trustee) an amount equal to Lessor's
Cost. The payment in (A) shall be made on the Business Day immediately preceding
the Closing Date to the Mortgagee's account no. ▇▇▇▇▇▇▇▇ at State Street Bank
and Trust Company (Boston, Massachusetts), the payment in (B) shall be made on
the Business Day immediately preceding the Closing Date to the Paying Agent's
account no. ▇▇▇▇▇▇▇▇ (Group Treasury Account) at National Westminster Bank PLC,
New York Branch, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, the payments in (C) shall
be made on the Business Day immediately preceding the Closing Date to the
Mortgagee's account no. ▇▇▇▇▇▇▇▇ at State Street Bank and Trust Company (Boston,
Massachusetts) and the payments in (D) shall be made on the Closing Date to
Lessee's account no. ▇▇▇▇▇▇▇▇ at State Street Bank and Trust Company (Boston,
Massachusetts). In addition, the Owner Trustee shall, on the Closing Date, issue
to the Loan Participants the Loan Certificates described in Section 1(c)(i)
hereof.
SECTION 3. Instructions to the Owner Trustee and Paying Agent. Subject to
the terms and conditions of this Agreement, the Mortgagee upon receipt in full
of each Participant's Commitment for the Aircraft, as provided in Section 2
hereof, shall transfer such funds to the Lessee and the Owner Trustee shall
purchase the Aircraft from Lessee and lease the Aircraft to Lessee and such
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PARTICIPATION AGREEMENT (1992 757 [__])
action shall constitute, without further act, authorization and direction by the
Owner Participant to the Owner Trustee and the Mortgagee acting on behalf of the
Owner Trustee (in regard to (a) below) and to the Owner Trustee (in regard to
(b)-(f) below):
(a) to pay to the Lessee the Lessor's Cost in the manner set forth in
Section 2 hereof;
(b) to the extent not previously accomplished by a prior
authorization, to authorize a representative or representatives of the Owner
Trustee (who shall be an employee or employees, or an agent or agents, of Lessee
designated by Lessee) to accept delivery of the Aircraft from Lessee on the
Closing Date pursuant to the Owner Trustee's ▇▇▇▇ of Sale;
(c) to accept from Lessee the Owner Trustee's ▇▇▇▇ of Sale and the
Owner Trustee's FAA ▇▇▇▇ of Sale;
(d) to execute an Aircraft Registration Application, a Lease
Supplement and an Indenture Supplement, in each case covering the Aircraft;
(e) to borrow from the Loan Participants to finance a portion of
Lessor's Cost and to issue to the Loan Participants Loan Certificates in a
principal amount equal to the amount borrowed pursuant hereto and pursuant to
the Trust Indenture; and
(f) to take such other action as may be required to be taken by the
Owner Trustee on the Closing Date by the terms of any Operative Document.
SECTION 4. Conditions. Conditions Precedent to the Participations in
the Aircraft. It is agreed that the respective obligations of each Participant
to participate in the payments of Lessor's Cost are subject to the satisfaction
prior to or on the Closing Date of the following conditions precedent, except
that paragraphs (iii), (xviii), (xxii) (insofar as it relates to the Loan
Participants), (xxiii) and (xxiv) shall not be a condition precedent to the
obligation of the Loan Participants, and paragraphs (iv), (vi) (except insofar
as it relates to Lessee), (x) (insofar as it relates to the Owner Participant),
(xiii), (xvii), (xxvi), (xxvii), (xxviii) and (xxix) shall not be a condition
precedent to the obligation of the Owner Participant:
(i) The Participants shall have received due notice with respect
to such participation pursuant to Section 2
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PARTICIPATION AGREEMENT (1992 757 [__])
hereof (or shall have waived such notice either in writing or as provided
in Section 2).
(ii) No change shall have occurred after the date of the
execution and delivery of this Agreement in applicable law or regulations
thereunder or interpretations thereof by appropriate regulatory authorities
which, in the opinion of the Owner Participant or the Loan Participants, as
the case may be, would make it a violation of law or regulations for (x)
the Lessee, the Mortgagee, the Owner Participant or the Owner Trustee to
execute, deliver and perform the Operative Documents to which any of them
is a party or (y) the Loan Participants or the Owner Participant to make
their respective Commitments available or, in the case of any Loan
Participant, to acquire a Loan Certificate or to realize the benefits of
the security afforded by the Trust Indenture.
(ii) In the case of the Owner Participant, each Loan Participant
shall have made available the amount of its Commitment for the Aircraft in
accordance with Section 1 hereof.
(iv) In the case of the Loan Participants, the Owner Participant
shall have made available the amount of its Commitment for the Aircraft in
accordance with Section 1 hereof.
(v) The following documents shall have been duly authorized,
executed and delivered by the respective party or parties thereto, shall
each be satisfactory in form and substance to the Participants and shall be
in full force and effect and executed counterparts shall have been
delivered to the Participants, and their respective counsel, provided that
only the Loan Participants shall receive executed originals of their
respective Loan Certificate, only the Mortgagee, acting on behalf of the
Loan Participants, shall receive the original chattel paper counterpart of
the Lease Agreement, only the Owner Participant shall receive a copy of the
Purchase Agreement which shall be delivered to and retained by the Owner
Trustee (the Owner Trustee, the Owner Participant and the Loan
Participants, and their respective counsel, may inspect the Purchase
Agreement prior to the Closing Date but thereafter shall not have access to
the same unless a Default or an Event of Default shall under the Lease
Agreement have occurred and be continuing), and provided further that only
the Lessee and the Owner Participant shall receive copies
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PARTICIPATION AGREEMENT (1992 757 [__])
of the Tax Indemnity Agreement:
(1) the Lease Agreement;
(2) a Lease Supplement covering the Aircraft and dated the
Closing Date;
(3) the Tax Indemnity Agreement;
(4) the Trust Agreement;
(5) [intentionally omitted];
(6) the Owner Trustee's ▇▇▇▇ of Sale and the Owner Trustee's
FAA ▇▇▇▇ of Sale;
(7) the Owner Trustee's Purchase Agreement;
(8) an acceptance certificate covering the Aircraft in the
form agreed to by the Participants and Lessee (the "Acceptance
Certificate") duly completed and executed by the Owner Trustee's
agent, which shall be a representative of Lessee, and by such
representative on behalf of Lessee;
(9) the Trust Indenture and an Indenture Supplement covering
the Aircraft and dated the Closing Date;
(10) the Loan Certificates (specifying as the "Margin" therein
the Margin calculated in accordance with Section 4(a)(xxviii) hereof
and as the "Interest Period" therein the Interest Period set forth in
the above-described Notice of Lease delivered pursuant to the Facility
Agreement);
(11) the Consent and Agreement;
(12) the Purchase Agreement;
(13) the Guaranty Agreement; and
(14) the Assignment of Guaranty.
All of the foregoing documents, together with this Agreement, are sometimes
referred to herein, collectively, as the "Operative
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PARTICIPATION AGREEMENT (1992 757 [__])
Documents" and, individually, as an "Operative Document." Of the Operative
Documents, the forms of the Lease Agreement, the Trust Agreement, the Trust
Indenture, the Guaranty Agreement and the Assignment of Guaranty are hereby
attached hereto as Exhibits A through E, respectively.
(vi) A Uniform Commercial Code financing statement or statements
covering all the security interests created by or pursuant to the Granting
Clause of the Trust Indenture and the Assignment of Guaranty shall have
been executed and delivered by the Owner Trustee, and such financing
statement or statements (including precautionary lease financing
statements) shall have been duly filed in all places necessary or
advisable, and any additional Uniform Commercial Code financing statements
deemed advisable by the Owner Participant or the Mortgagee shall have been
executed and delivered by the Lessee or the Owner Trustee and duly filed.
(vi) The Participants and the Owner Trustee shall have received
the following, in each case in form and substance satisfactory to it,
provided that only the Owner Participant shall receive a copy of the
Purchase Agreement which shall be delivered to and retained by the Owner
Trustee (the Owner Trustee, the Owner Participant and the Loan
Participants, and their respective counsel, may inspect the Purchase
Agreement prior to the Closing Date but thereafter shall not have access to
the same unless a Default or an Event of Default under the Lease Agreement
shall have occurred and be continuing):
(1) a certified copy of the Certificate of Incorporation
and By-Laws of Lessee and a copy of resolutions of the board of
directors of Lessee or the executive committee thereof, certified by
the Secretary or an Assistant Secretary of Lessee, duly authorizing
the execution, delivery and performance by Lessee of this Agreement,
the other Lessee Documents and each other document required to be
executed and delivered by Lessee on the Closing Date in accordance
with the provisions hereof and thereof;
(2) a certified copy of the Certificate of Incorporation
and By-Laws of the Guarantor and a copy of resolutions of the board of
directors of the Guarantor or the executive committee thereof,
certified by the
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Secretary or an Assistant Secretary of the Guarantor, duly authorizing
the execution, delivery and performance by Guarantor of this
Agreement, the Guaranty Agreement and each other document required to
be executed and delivered by the Guarantor in accordance with the
provisions hereof and thereof;
(3) such other documents and evidence with respect to
Lessee, the Manufacturer, the Owner Trustee, the Mortgagee, the
Guarantor and the Participants as the Loan Participants or the Owner
Participant, or their respective counsel, may reasonably request in
order to establish the authority of such parties to consummate the
transactions contemplated by this Agreement, the taking of all
corporate proceedings in connection therewith and the compliance with
the conditions herein set forth;
(4) a certificate of Lessee as to the Person or Persons
authorized to execute and deliver this Agreement, the other Lessee
Documents, and any other documents to be executed on behalf of Lessee
in connection with the transactions contemplated hereby and as to the
signature of such Person or Persons;
(5) a certificate of the Guarantor as to the Person or
Persons authorized to execute and deliver this Agreement, the Guaranty
Agreement and any other documents to be executed on behalf of the
Guarantor in connection with the transactions contemplated hereby and
as to the signature of such Person or Persons;
(6) a copy of the Purchase Agreement certified by the
Secretary or an Assistant Secretary of Lessee as being a true and
accurate copy of the same with all amendments attached thereto that
relate to the Manufacturer's warranties or related obligations or any
right in such Agreement assigned by the Lessee to the Owner Trustee
pursuant to the Owner Trustee's Purchase Agreement; and
(7) a copy of the general authorizing resolutions of the
boards of directors (or executive committees) or other satisfactory
evidence of authorization of the Mortgagee, the Owner Trustee and the
Owner Participant, certified as of the Closing Date by the Secretary
or an Assistant Secretary of the Mortgagee, the Owner Trustee and the
Owner Participant, respectively, which authorize the execution,
delivery and performance by the Mortgagee,
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PARTICIPATION AGREEMENT (1992 757 [__])
the Owner Trustee and the Owner Participant of all of the Operative
Documents to which it is a party, together with such other documents
and evidence with respect to the Mortgagee, the Owner Trustee and the
Owner Participant as either the Loan Participants (or their counsel)
or the Owner Participant (or its counsel) may reasonably request in
order to establish the consummation of the transactions contemplated
by this Agreement, the taking of all corporate proceedings in
connection therewith and compliance with the conditions herein set
forth; provided, this clause shall not be a condition precedent as to
any Participant as to documents to be provided by that Participant.
(viii) All appropriate action required to have been taken by the
FAA, or any other governmental or political agency, subdivision or
instrumentality of the United States, on or prior to the Closing Date in
connection with the transactions contemplated by this Agreement and the
other Operative Documents shall have been taken, and all orders, permits,
waivers, authorizations, exemptions and approvals of such entities required
to be in effect on the Closing Date in connection with the transactions
contemplated by this Agreement and the other Operative Documents shall have
been issued, and all such orders, permits, waivers, authorizations,
exemptions and approvals shall be in full force and effect on the Closing
Date.
(ix) On the Closing Date, the following statements shall be
true, and the Participants shall have received evidence satisfactory to
each of them to the effect that:
(1) the Owner Trustee has good and marketable title
(subject to filing and recording of the Owner Trustee's FAA ▇▇▇▇ of
Sale with the FAA) to the Aircraft, free and clear of Liens other than
the rights of Lessee under the Lease Agreement and Lease Supplement
covering the Aircraft, the mortgage and security interest created by
the Trust Indenture and Indenture Supplement, the rights of the Owner
Participant under the Trust Agreement and Liens permitted by clause
(iii) (solely for Taxes not yet due) of Section 6 of the Lease;
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PARTICIPATION AGREEMENT (1992 757 [__])
(2) application for registration of the Aircraft in the
name of the Owner Trustee (together with any required affidavits) and
the Owner Trustee's FAA ▇▇▇▇ of Sale have been duly filed with the
FAA;
(3) the Trust Agreement, the Trust Indenture and the
Indenture Supplement and the Lease Agreement and the Lease Supplement
have been duly filed with the FAA for recordation;
(4) the Aircraft has been duly certified by the FAA as to
type and airworthiness in accordance with the terms of the Lease
Agreement and has a current, valid U.S. standard certificate of
airworthiness issued by the FAA;
(5) the Owner Trustee, as lessor under the Lease Agreement,
and the Mortgagee, as assignee thereof, are entitled to the protection
of Section 1110 of the United States Bankruptcy Code in connection
with the right to take possession of the Airframe and Engines in the
event of a case under Chapter 11 of the United States Bankruptcy Code
in which the Lessee is a debtor; and
(6) Lessee acquired good and marketable title to the
Aircraft from the Manufacturer not earlier than 90 days prior to the
Closing Date and at all times from and including the date on which
Lessee acquired such title to and including the Closing Date the
Aircraft has been free and clear of all Liens other than Permitted
Liens.
(x) On the Closing Date, (A) the respective representations and
warranties of Lessee, the Guarantor, the Owner Participant and the Owner
Trustee contained in Sections 7, 8 and 9 of this Agreement and in the Tax
Indemnity Agreement shall have been true and accurate as though made on and
as of such date except to the extent that such representations and
warranties relate solely to an earlier date (in which case such
representations and warranties shall have been true and accurate on and as
of such earlier date), (B) the Lessee shall not have failed to pay when due
any principal, interest or rent payable in respect of any Indebtedness of
the Lessee or any rent under any Operating Lease with a then-remaining term
in excess of one year if (i) the aggregate outstanding principal amount of,
or the
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PARTICIPATION AGREEMENT (1992 757 [__])
capitalized lease payment obligation in respect of, such Indebtedness
exceeds $25,000,000, or (ii) the aggregate amount of rent then and
thereafter scheduled to be payable during the remaining term of such
Operating Lease exceeds $25,000,000, (C) No event shall have occurred and
be continuing, or would result from the purchase, sale, lease or mortgage
of the Aircraft, which constitutes a Facility Default or a Facility Event
of Default, and (D) (i) No Person or two or more Persons acting in concert
shall have acquired beneficial ownership (within the meaning of Rule 13d-3
of the Securities and Exchange Commission under the Securities and Exchange
Act) of 25% or more of the outstanding shares of voting stock of the
Guarantor or the Lessee, unless (x) such Person or Persons become
beneficial owners of 25% or more of the outstanding shares of voting stock
of the Guarantor solely as a result of a repurchase of shares of common
stock by the Guarantor, (y) such Person or Persons have entered into an
agreement with the Guarantor prior to the time such Person or Persons
become beneficial owners of 25% of the Guarantor's voting stock which
provides that if they become beneficial owners of 25% or more of the
outstanding shares of voting stock of the Guarantor as a result of such
repurchase they will dispose of such number of shares of the Guarantor's
stock such that they will no longer beneficially own 25% or more of such
stock and they do so dispose of such number of shares within 30 days after
the expiration date of such tender offer and (z) such Person or Persons
have entered into an agreement with the Guarantor (prior to the time such
Person or Persons become beneficial owners of 25% of the Guarantor's voting
stock) providing that during the period such Person or Persons beneficially
own 25% or more of the outstanding shares of voting stock of the Guarantor
such Person or Persons will not attempt to exercise control in any manner
over the Guarantor during such period; or (ii) during any 12 consecutive
months, individuals who at the beginning of such 12-month period were
directors of the Guarantor continue to constitute a majority of the Board
of Directors of the Guarantor.
(xi) The Participants shall have received an opinion addressed to
the Participants, the Mortgagee, Lessee and the Owner Trustee from (a)
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Executive Vice President - Corporate Affairs and General
Counsel for Lessee and Guarantor in substantially the form of Schedule III-
1(a) hereto and (b) Vedder, Price, ▇▇▇▇▇▇▇ & Kammholz, special counsel to
Lessee and Guarantor in substantially the form of Schedule III-1(b) hereto.
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PARTICIPATION AGREEMENT (1992 757 [__])
(xii) The Participants shall have received an opinion addressed
to the Participants, the Mortgagee, the Owner Trustee and Lessee, from
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Owner Trustee, in substantially the form
of Schedule III-2 hereto.
(xiii) The Loan Participants shall have received an opinion
addressed to the Loan Participants, the Mortgagee, the Owner Trustee and
Lessee from Hunton & ▇▇▇▇▇▇▇▇, special counsel to the Owner Participant in
substantially the form of Schedule III-3 hereto.
(xiv) The Participants shall have received an opinion addressed
to the Participants, the Mortgagee, the Owner Trustee and Lessee, from (a)
▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., special counsel in Oklahoma City, Oklahoma, in
substantially the form of Schedule III-4(a) hereto and (b) counsel to the
Manufacturer, in substantially the form of Schedule III-4(b) hereto.
(xv) The Participants shall have received an opinion addressed
to the Participants, the Owner Trustee and Lessee from Day, ▇▇▇▇▇ & ▇▇▇▇▇▇,
special counsel for the Mortgagee, in substantially the form of Schedule
III-5 hereto.
(xvi) The Participants, the Mortgagee and the Owner Trustee
shall have received a certificate signed by the President or any Vice
President of Lessee, dated the Closing Date, addressed to the Participants,
the Mortgagee and the Owner Trustee and certifying as to the fulfillment of
all conditions in this Section 4(a) insofar as they relate to Lessee and as
to the matters stated in paragraphs (viii), (x) (insofar as it relates to
Lessee), (xx) and (xxi) (to the knowledge of Lessee in regard to threatened
actions or proposed orders, decrees or judgments, and in regard to matters
relating to the Participants, Mortgagee or the Owner Trustee, to the
knowledge of Lessee without any investigation whatsoever) of this Section
4(a).
(xvii) (a) The Owner Participant shall, by making its Commitment
available as provided in Section 1(c) (ii) of this Agreement, (b) the
Mortgagee shall by authenticating the Loan Certificates issued on the
Closing Date and (c) the Owner Trustee shall, by accepting the Owner
Trustee's ▇▇▇▇ of Sale, be respectively deemed to have reaffirmed the
representations
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PARTICIPATION AGREEMENT (1992 757 [__])
and warranties made by it in Section 9 of this Agreement.
(xviii) The Owner Participant shall have received an appraisal,
in form and substance reasonably satisfactory to the Owner Participant,
from Avmark Services, Ltd., independent aircraft appraisers, or such other
recognized aircraft appraiser selected by the Owner Participant, to the
effect that on the Closing Date (A) the Aircraft is reasonably expected to
have (i) an economic useful life of at least 125% of the aggregate of the
Interim Term, the Basic Term and the maximum Fixed Renewal Term permitted
under Section 19(a) of the Lease Agreement, and (ii) a fair market value at
the end of the Basic Term and at the end of such Fixed Renewal Term of at
least 20% of Lessor's Cost (without taking into account any increase or
decrease for inflation or deflation during the Interim Term or Basic Term)
; (B) the fair market value of the Aircraft on the Closing Date is equal to
Lessor's Cost; (C) on the Closing Date, the Aircraft is reasonably expected
to have a fair market value on December [__], 2014 not greater than the FPO
Percentage times Lessor's Cost; and (D) the Aircraft is not "limited use
property."
(xix) The Participants, the Mortgagee and the Owner Trustee
shall have received an independent insurance broker's report, and
certificates of insurance, in form and substance reasonably satisfactory to
the Participants as to the due compliance with the terms of Section 11 of
the Lease Agreement relating to insurance with respect to the Aircraft.
(xx) On the Closing Date, there has not occurred any event
which constitutes a Default or an Event of Default under the Lease
Agreement which is continuing and no Event of Loss (or event which with the
passage of time would become an Event of Loss) with respect to the Airframe
or any Engine has occurred.
(xxi) No action or proceeding shall have been instituted nor
shall any governmental action be threatened before any court or
governmental agency, nor shall any order, judgment or decree have been
issued or proposed to be issued by any court or governmental agency at the
time of the Closing Date to set aside, restrain, enjoin or prevent the
completion and consummation of this Agreement or any other Operative
Documents or the transactions contemplated hereby or thereby.
(xxii) On the Closing Date, the respective
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PARTICIPATION AGREEMENT (1992 757 [__])
representations and warranties of the Mortgagee and the Loan Participants
contained in Section 9 of this Agreement shall be true and accurate as
though made on and as of such date except to the extent that such
representations and warranties relate solely to an earlier date (in which
event such representations and warranties shall have been true and accurate
on and as of such earlier date) and each Participant and the Owner Trustee
shall have received a certificate signed by the Chairman of the Board, the
President, any Vice President or any Assistant Vice President of the
Mortgagee, dated the Closing Date, certifying as to the foregoing matters
with respect to the Mortgagee; in addition, each Participant and the Owner
Trustee shall receive from the parent of the Mortgagee a guaranty, in form
and substance reasonably satisfactory to such parties, by such parent of
the Mortgagee's obligations under the Operative Documents; and further by
making available its Commitment, the Loan Participants shall be deemed to
have reaffirmed the representations and warranties made by them in such
Section 9.
(xxiii) The Owner Participant shall have received from Hunton &
▇▇▇▇▇▇▇▇, special counsel to the Owner Participant, a favorable opinion, in
form and substance reasonably satisfactory to the Owner Participant, with
respect to certain federal income tax aspects of the transactions
contemplated by the Operative Documents.
(xxiv) In the opinion of the Owner Participant and its special
counsel, there shall have been, since December [__], 1992, no amendment,
modification, addition, or change in or to the provisions of the Code
enacted or proposed (including for this purpose, any non-Code provisions of
legislation affecting the Code such as transition rules or effective date
provisions) and the regulations promulgated under the Code (including
temporary or proposed regulations), Internal Revenue Service Revenue
Procedures or Revenue Rulings, or other administrative interpretations,
applicable judicial precedents or Executive Orders of the President of the
United States, as in effect on the date hereof, the effect of which might
preclude the Owner Participant from obtaining any of the income tax
benefits and consequences assumed to be available to the Owner Participant
as set forth in the Tax Indemnity Agreement.
(xxv) Lessor's Cost is no greater than $46,000,000.
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PARTICIPATION AGREEMENT (1992 757 [__])
(xxvi) The amount of the Owner Trust Loan does not exceed 85%
of the Lessor's Cost, the Average Life of the Owner Trust Loan does not
exceed 14 years and the term of the Owner Trust Loan does not exceed 18
years and six months.
(xxvii) The Aircraft shall be one of the following makes: (i)
Boeing B737-300; (ii) Boeing B737-400; (iii) Boeing B737-500; (iv) Boeing
B757-200; (v) Boeing B747-400; (vi) Boeing B767 series; (vii) Airbus A300
series; (viii) Airbus A310 series; (ix) Airbus A320 series; (x) ▇▇▇▇▇▇▇▇▇-
▇▇▇▇▇▇▇ MD-80 series; (xi) ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ MD-11 series; (xii) Fokker F-
100 series (provided that the aggregate amount of loans made under the
Facility Agreement plus owner trust loans made hereunder and under other
participation agreements between the Lessee and the Loan Participants that
have financed Aircraft of such make shall not exceed $200,000,000 without
the prior written consent of all the Loan Participants); or (xiii) such
other make as may be approved in writing by Loan Participants having at
least 80% of the aggregate Commitments.
(xxviii) The Mortgagee, the Owner Trustee, Lessee and the
Participants shall have agreed on the Margin applicable to the Loan
Certificates, which Margin shall be calculated in accordance with the
procedures described in the definitions of "Margin" and "Margin Adjustment"
in Section 1(a) hereof.
(xxix) The amount of each Loan Participant's Owner Trust
Advance shall not exceed the amount which would have been such Loan
Participant's Advance (as defined in the Facility Agreement) if the
Aircraft had been financed by the extension of a loan to the Lessee under
the Facility Agreement.
(a) Conditions Precedent to the Obligations of Lessee. It is agreed
that the obligations of Lessee (A) to accept delivery of the Aircraft under the
Lease Agreement and (B) to enter into the Lessee Documents are all subject to
the fulfillment to the satisfaction of Lessee prior to or on the Closing Date of
the following conditions precedent:
(i) The conditions specified in Section 4(a)(iii), 4(a)(iv),
4(a)(viii), 4(a)(xx) and 4(a)(xxi) hereof shall have been satisfied.
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PARTICIPATION AGREEMENT (1992 757 [__])
(ii) Those documents described in Section 4 (a) (v) shall have
been duly authorized, executed and delivered by the respective party or
parties thereto (other than Lessee) in the manner specified in Section 4
(a) (v), shall each be satisfactory in form and substance to Lessee, shall
be in full force and effect on the Closing Date, and an executed
counterpart of each thereof (other than the Loan Certificates) shall have
been delivered to Lessee or its counsel.
(iii) Lessee shall have received a copy of the general
authorizing resolutions of the boards of directors (or executive
committees) or other satisfactory evidence of authorization of the
Mortgagee, the Owner Trustee and the Owner Participant, certified as of the
Closing Date by the Secretary or an Assistant Secretary of the Mortgagee,
the Owner Trustee and the Owner Participant, respectively, which authorize
the execution, delivery and performance by the Mortgagee, the Owner Trustee
and the Owner Participant of all the Operative Documents to which they are
a party, together with such other documents and evidence with respect to
the Mortgagee, the Owner Trustee and the Owner Participant as Lessee or its
counsel may reasonably request in order to establish the consummation of
the transactions contemplated by this Agreement, the taking of all
corporate proceedings in connection therewith and compliance with the
conditions herein set forth.
(iv) On the Closing Date, the representations and warranties of
the Participants, the Mortgagee, and the Owner Trustee contained in Section
9 hereof shall be true and accurate as though made on and as of such date
except to the extent that such representations and warranties relate solely
to an earlier date (in which event such representations and warranties
shall have been true and accurate on and as of such earlier date) and
Lessee shall have received a certificate, dated the Closing Date, signed by
the Chairman of the Board, the President, any Vice President or any
Assistant Vice President or other authorized representative of the
Mortgagee, the Owner Participant and the Owner Trustee, respectively,
certifying as to the foregoing matters with respect to the Mortgagee, the
Owner Participant and the Owner Trustee, respectively; in addition, Lessee
shall have received from the parent of the Mortgagee a guaranty, in form
and substance reasonably satisfactory to the Lessee, by such parent of the
Mortgagee's obligations under the Operative Documents.
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PARTICIPATION AGREEMENT (1992 757 [__])
(v) Lessee shall have received the opinions set forth in
Sections 4(a)(xi), 4(a)(xii), 4(a)(xiii), 4 (a) (xiv) and 4 (a) (xv), in
each case addressed to Lessee and dated the Closing Date.
(vi) No change shall have occurred after the date of the
execution and delivery of this Agreement in applicable law or regulations
thereunder or interpretations thereof by appropriate regulatory authorities
which, in the opinion of Lessee, would make it a violation of law or
regulations for Lessee to enter into any transaction contemplated by the
Operative Documents.
(vii) In the opinion of Lessee and its counsel, there shall have
been, since December [__], 1992, no amendment, modification, addition or
change in or to the Code enacted or proposed (including for this purpose,
any non-Code provisions of legislation affecting the Code such as
transition rules or effective date provisions) and the regulations
promulgated under the Code (including temporary or proposed regulations),
Internal Revenue Service Revenue Procedures or Revenue Rulings, or other
administrative interpretations, applicable judicial precedents or Executive
Orders of the President of the United States which might give rise to an
indemnity obligation under any of the Operative Documents, or as a result
of which any adjustments to the payments under the Lease Agreement are
requested by the Owner Participant which, in the Lessee's opinion, make the
Lease Agreement become uneconomic to the Lessee.
(viii) Lessor's Cost is $46,000,000.
SECTION 5. Confidentiality of Purchase Agreement, Participation Agreement
and Tax Indemnity Agreement. Lessor, the Participants, the Certificate Holders
and the Mortgagee shall keep the Purchase Agreement, Participation Agreement
and, in the case of the Owner Participant, the Tax Indemnity Agreement,
confidential and shall not disclose, or cause to be disclosed, the same to any
Person, except, with regard to agreements to which the disclosing Person is a
party, (A) to prospective and permitted transferees of (or, in the case of
Certificate Holders only, participants in) Lessor's, a Loan Participant's, a
Certificate Holder's, the Owner Participant's or the Mortgagee's interest or
their respective counsel or accountants who agree to hold such information
confidential, (B) to Lessor's, a Loan Participant's, a Certificate Holder's, the
Owner Participant's or the Mortgagee's counsel or
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PARTICIPATION AGREEMENT (1992 757 [__])
special counsel, independent insurance brokers 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, including
Federal or state banking examiners or Internal Revenue Service auditors;
provided, however, that (x) the prohibitions set forth in this Section 5 shall
not apply to the disclosure of documents which both have been filed with any
governmental authority and are available to the general public whether as a
matter of public record or upon submission of appropriate requests by a member
of the general public to such governmental authority, (y) the Purchase Agreement
shall not be disclosed to transferees, participants, independent insurance
brokers or other agents unless and until an Event of Default under the Lease
Agreement shall have occurred and be continuing and (z) any and all disclosures
of all or any part of the Purchase Agreement, Participation Agreement and Tax
Indemnity Agreement which are permitted by (C) above shall be made only to the
extent necessary to meet the specific requirements or needs of the Persons to
whom such disclosures are hereby permitted.
SECTION 6. Extent of Interest of Certificate Holders. 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 and interest on all Loan Certificates held by such
Certificate Holder under the Trust Indenture and under such Loan Certificates
shall have been paid in full. Each of the Certificate Holders, by its acceptance
of a Loan Certificate, agrees that it will look solely to the income and
proceeds from the Indenture Estate to the extent available for distribution to
such Certificate Holder as provided in Article III 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 Loan
Certificates, the Trust Indenture, hereunder (including, without limitation,
amounts payable as Funding Costs or Increased Cost) or under any other Operative
Documents, 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. Lessee represents and warrants to the Owner Trustee, the Mortgagee and
the Participants that as of the Closing Date:
(i) Lessee is a corporation duly organized and validly existing
in good standing pursuant to the laws of the
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PARTICIPATION AGREEMENT (1992 757 [__])
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; has the
corporate power and authority to conduct its business as presently
conducted and to own or hold under lease its properties; is an "air
carrier" within the meaning of the Federal Aviation Act operating under
certificates issued under Section 401 of such Act; holds all material
licenses, certificates, permits and franchises from the appropriate
agencies of the United States of America and/or all other governmental
authorities having the jurisdiction necessary to authorize Lessee to engage
in air transportation and to carry on scheduled passenger service, in each
case as presently conducted; has its chief executive office (as such term
is defined in Article 9 of the Uniform Commercial Code) in Elk Grove
Township, Illinois; and has the corporate power and authority 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 will, on the Closing Date, 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 or by the Closing Date will have been duly obtained, and have been
duly executed and delivered by Lessee, and neither the execution and
delivery thereof by Lessee, nor the consummation of the transactions
contemplated thereby by Lessee, nor the compliance by Lessee with any of
the terms and provisions thereof contravenes any United States federal or
state law, judgment, governmental rule, regulation or order applicable to
or binding on Lessee or the certificate of incorporation or by-laws of
Lessee or contravenes the provisions of, or results in any breach of or
constitutes a default under, or results in the creation of any Lien upon
the property of Lessee under, any indenture, mortgage, contract, chattel
mortgage, deed of trust, conditional sales contract, bank loan or credit
agreement, or other instrument or 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
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PARTICIPATION AGREEMENT (1992 757 [__])
obligations thereunder require the consent or approval of, the giving of
notice to, or the registration with, the recording or filing of any
document 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 or will on or prior to
the Closing Date be duly obtained, and will on the Closing Date be in full
force and effect, (B) the registration of the Aircraft referred to in
Section 4 (a) (ix) (2), 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 Closing Date;
(iv) the Lessee Documents will each constitute 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, governmental authority, arbitration board, tribunal or
administrative agency which individually (or in the aggregate in the case
of any group of related lawsuits) affects the Aircraft or 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) (A) except for (p) the registration of the Aircraft
pursuant to the Federal Aviation Act, (q) the filing for recording pursuant
to said Act of the Trust Agreement, the Lease Agreement with the Lease
Supplement covering the Aircraft attached thereto and made a part thereof
and the Owner Trustee's FAA ▇▇▇▇ of Sale, and (r) the filing of a
precautionary financing statement (and continuation statements at periodic
intervals) with respect to the interests created by the Lease Agreement in
the State of Illinois, no further action, including any filing or recording
of any document, is necessary or advisable in order to establish the Owner
Trustee's title to and interest in the Aircraft as against third parties
(other than creditors of the Owner Trustee) and (B) except for (w) the
registration of the Aircraft pursuant to the Federal Aviation Act, (x) the
filing for recording
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PARTICIPATION AGREEMENT (1992 757 [__])
pursuant to said Act of the Trust Agreement, the Lease Agreement with the
Lease Supplement covering the Aircraft, the Trust Indenture and the
Indenture Supplement attached thereto and made a part thereof, and the
Owner Trustee's FAA ▇▇▇▇ of Sale, (y) the 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) hereof and (z) the
taking of possession by the Mortgagee of the original counterparts of the
Lease Agreement 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 the Mortgagee's first priority security
interest in the Aircraft as against the Owner Trustee, and as against any
third parties in any applicable jurisdictions in the United States;
(vii) there has not occurred any event which constitutes a
Facility Default or a Facility Event of Default or a Default or Event of
Default under the Lease Agreement which is presently continuing and no
Event of Loss with respect to the Airframe or any Engine has occurred;
(viii) the statements of financial position of Lessee as of
December 31, 1991 and the related statements of earnings and cash flow of
Lessee for the year then ended, copies of which have been furnished to the
Participants, fairly present the financial condition of Lessee as at such
date and the results of operations and cash flow of Lessee for the period
ended on such date, in accordance with generally accepted accounting
principles consistently applied (except as may be stated in the notes
thereto), and since December 31, 1991, there has been no material adverse
change in such condition or operations, except for such matters timely
disclosed in public filings, effective as of the date hereof, with the
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, by the Guarantor or Lessee or as disclosed in press
releases issued by the Guarantor or Lessee;
(ix) the Owner Trustee will receive good and marketable title
to the Aircraft from the Lessee free and
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PARTICIPATION AGREEMENT (1992 757 [__])
clear of all Liens, except the rights of Lessee under the Lease Agreement
and the Lease Supplement covering the Aircraft, the Lien of the Trust
Indenture, the beneficial interest of the Owner Participant in the
Aircraft, and Liens permitted by clause (iii) (solely for Taxes not yet
due) of Section 6 of the Lease;
(x) none of the proceeds from the issuance of the Loan
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 G 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 five (5) institutions
believed capable of evaluating and bearing the risks of investment in the
transactions contemplated hereby, (B) directly or indirectly offered any
Loan Certificates or any similar security for sale to, or solicited any
offer to acquire any of the same from, anyone other than the Loan
Participants, each of which is believed capable of evaluating and bearing
the risks of investment in the transactions contemplated hereby, or (C)
filed or published, or caused to be filed or published, any financing
statement or similar statement or notice under the Uniform Commercial Code
in effect in any jurisdiction or any state or local fraudulent conveyance
or analogous statute or ordinance describing any portion of the Trust
Indenture Estate, other than the filings referred to in Section 4(a)(vi)
hereof and such other filings, notices or publications as shall have been
approved by counsel to the Owner Participant and the Loan Participants,
prior to the filing or publication thereof.
(xii) Lessee is not in default in the performance of any term or
condition of the Owner Trustee's Purchase Agreement, and is not in default
in the performance of any term or condition of the Purchase Agreement which
materially adversely impairs the transactions contemplated hereby;
(xiii) all sales or use tax then due shall have been paid, other
than such taxes which are being contested by Lessee in good faith and by
appropriate proceedings which
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PARTICIPATION AGREEMENT (1992 757 [__])
proceedings do not involve any material risk of the sale, forfeiture or
loss of the Aircraft;
(xiv) the Owner Trustee, as lessor under the Lease Agreement,
and the Mortgagee, as assignee thereof, are entitled to the protection of
Section 1110 of the Bankruptcy Code in connection with its right to take
possession of the Airframe and Engines in the event of a case under Chapter
11 of the Bankruptcy Code in which the Lessee is a debtor;
(xv) no governmental approval of any kind is required by the
Participants or the Owner Trustee for their respective execution of or
performance under this Agreement, any Operative Document or any agreement
contemplated hereby or thereby solely by reason of any fact or circumstance
peculiar to the Lessee, the nature of the Aircraft, any Lessee property or
the operation or use of the Aircraft; and
(xvi) the execution and delivery of this Participation Agreement
and the issue and sale of the Loan Certificates under the Operative
Documents will not involve any transaction which is subject to the
prohibitions of Section 406 of ERISA or in connection with which a tax
could be imposed pursuant to Section 4975 of the Code (such representation
being made in reliance upon and subject to the accuracy of the
representations contained in Section 9(n)).
(a) General Tax Indemnity. (i) Indemnity. Except as provided in
Section 7(b) (ii) hereof, Lessee shall pay, protect, save and on written demand
shall indemnify and hold harmless each Indemnitee (on an After-Tax Basis, in the
case of a Relevant Indemnitee), from and against (x) any and all Taxes howsoever
imposed against any Indemnitee, Lessee or all or any part of the Aircraft, the
Airframe, the Engines, the Parts or any part thereof or otherwise by any
federal, state or local government or other taxing authority in the United
States or by any foreign government or any political subdivision or taxing
authority thereof or by any territory or possession of the United States or by
any international authority upon or in connection with, relating to, or measured
by (A) the assembly, improvement, location, conditioning, installation,
financing, refinancing, purchase, acquisition, acceptance, delivery, transport,
ownership, registration, re-registration, possession, repossession, operation,
use, maintenance, repair, sale, return, abandonment, storage, redelivery,
leasing, subleasing, modification, rebuilding of, transfer of title to, transfer
of registration of, exportation or
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PARTICIPATION AGREEMENT (1992 757 [__])
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, the
Aircraft, the Airframe, the Engines, the Parts or any part thereof, (B) the
rentals, 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 or any document related thereto or the property or the
income or other proceeds with respect to any of the property held in the Trust
Estate or the Trust Indenture Estate, (D) the Aircraft, the Airframe, the
Engines, the Parts or any part thereof, (E) any or all of the Operative
Documents, or the issuance of the Loan Certificates (or the refunding,
refinancing or optimization thereof) and 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) the
payment of the original amount of, or interest or premium on, or other amounts
payable with respect to, the Loan Certificates, (G) otherwise with respect to or
in connection with the transactions contemplated by the Operative Documents
(whether or not such transactions are consummated, and including amounts imposed
on, incurred by, or asserted against, the Owner Participant or any of its
Affiliates, as the case may be, as the result of any prohibited transaction,
within the meaning of Section 4975(c) (1) of the Code, arising out of the
transactions contemplated hereby or by any other Operative Document), or (H) any
change in the Owner Trustee or the situs of the Trust Estate made pursuant to
Section 15 hereof; and (y) any reasonable out-of-pocket costs and expenses
fairly attributed to any of the foregoing incurred by any Indemnitee.
(i) Exclusions from General Tax Indemnity. The provisions of
Section 7(b)(i) shall not apply:
(1) in the case of an Indemnitee which is the Owner
Participant, the Owner Trustee, the Trust Estate, or a successor or
assign of any thereof, to any Income Tax (as defined in Section
7(b)(xii) hereof) imposed by (A) the United States Federal government,
(9) any state or local taxing jurisdictions or authorities in the
United States provided, however, that this clause (B) shall not apply
to Income Taxes (other than those imposed on net income) for the state
and local jurisdictions in which the Lessee or any sublessee, assignee
or other user of the Aircraft or any Engine maintains its principal
place of business, or (C) any foreign government or any
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PARTICIPATION AGREEMENT (1992 757 [__])
political subdivision or taxing authority thereof or any territory or
possession of the United States or by any international authority,
other than to the extent imposed by such jurisdiction described in
this clause (C) by reason of the use, operation, location or
registration of the Aircraft to or in such jurisdiction;
(2) in the case of an Indemnitee which is a Loan
Participant or any Certificate Holder or any successor or assign of
either thereof, to Income Taxes or transfer taxes relating to any
payments of principal, interest or premium, if any, on the Loan
Certificates, or to a Certificate Holder, imposed by any government or
taxing authority;
(3) to any Tax imposed on an Indemnitee which is the Owner
Participant, the Owner Trustee, or the Trust Estate, or any successor
or assign of any thereof, as a result of (A) a voluntary transfer or
disposition by such Indemnitee of all or any portion of its interest
in the Aircraft, Airframe, Engines or any Part or part thereof, the
Trust Estate or the Operative Documents including, without limitation,
the voluntary revocation of the trust created by the Trust Agreement,
or (B) 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, by reason of a bankruptcy or other
similar proceedings involving such Indemnitee, provided, however, that
this Section 7 (b) (ii) (3) shall not apply if such transfer or
disposition shall occur, (x) as a result of a Default or an Event of
Default, or (y) in connection with the termination of the Lease
Agreement or action or direction of the Lessee pursuant to Sections 8,
9, 10 or 19 thereof;
(4) to any Tax imposed on any Indemnitee which is a Loan
Participant, any Certificate Holder, the Mortgagee or the Trust
Indenture Estate or any successor or assign 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 Estate or the Trust Indenture Estate or the Operative
Documents unless, in each case, such transfer or disposition shall
occur (A) upon 30 days prior notice
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PARTICIPATION AGREEMENT (1992 757 [__])
during a period when an Event of Default has occurred and is
continuing under the Lease Agreement at the time of transfer or
disposition, or (B) in connection with the termination of the Lease
Agreement or action or direction of the Lessee pursuant to Sections 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 such Indemnitee;
(6) to any Tax imposed on an Indemnitee which is a Loan
Participant, a Certificate Holder, Mortgagee or Trust Indenture Estate
which results from the willful misconduct or gross negligence of such
Indemnitee;
(7) to any Tax based on or measured by any fees received by
the Owner Trustee or the Mortgagee in connection with any transaction
contemplated by the Operative Documents;
(8) so long as no Default or Event of Default shall be
continuing, to any Tax imposed with respect to any time period
commencing after the expiration of the Term and (A) return of the
Aircraft, (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 Agreement or (C) placement in storage of
the Aircraft pursuant to Section 5(d) of the Lease Agreement; unless
such Tax relates to events or matters occurring prior to or
simultaneously with the earliest of such times;
(9) in the case of an Indemnitee which is a Loan
Participant or any Certificate Holder, or any successor or assign of
either thereof, to any Tax in the nature of an intangible or similar
tax upon or with respect to the value of the interest of such Loan
Participant or any Certificate Holder in any of the Loan 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 Indemnitee to the extent
such Tax would not have been required to be withheld or imposed on or
with respect to such original Indemnitee; provided, that the exception
in
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PARTICIPATION AGREEMENT (1992 757 [__])
this Section 7 (b) (ii) (10) shall not apply to any transferee (or
subsequent transferee) where such transfer shall have occurred at any
time after a declaration of Default in accordance with Section 15 of
the Lease Agreement and while an Event of Default shall be continuing
under the Lease Agreement at the time of transfer;
(11) to any Tax imposed on the Owner Trustee or an 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, if any, which has been included in the
Lessor's Cost; and
(13) to any Tax imposed on the Owner Participant by any
jurisdiction to the extent such Tax would have been imposed on the
Owner Participant for activities in such jurisdiction unrelated to the
transactions contemplated by the Operative Documents;
(14) to any Tax, if any, for which Lessee is obligated to
pay the Owner Participant under the Tax Indemnity Agreement.
Notwithstanding any other provision of this Section 7(b) to the contrary,
the Lessee will indemnify the Owner Trustee and the Owner Participant (and any
Affiliate of either thereof) for any obligation with respect to United States
federal withholding taxes imposed on the Owner Trustee or the Owner Participant
(or any Affiliate of either thereof) with respect to the Loan Certificates (or
any debt issued to refinance or refund such Loan Certificates) or as a result of
a claim by the Internal Revenue Service asserted against the Trust Estate, the
Owner Trustee or the Owner Participant (or any Affiliate of the foregoing). The
Lessee shall be subrogated to the rights and defenses of the Owner Trustee and
the Owner Participant (and any Affiliate of either thereof) in respect of such
withholding taxes, including the rights and defenses in Section 9(z) of this
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
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PARTICIPATION AGREEMENT (1992 757 [__])
result in any duplication of any amounts of any gross-up payable under Section
7(b), Section 7(c) hereof or for making payments to a Relevant Indemnitee on an
After-Tax Basis.
(ii) Calculation of General Tax Indemnity Payments. Any payment
which Lessee shall be required to make to or for the account of any
Indemnitee with respect to any Tax which is subject to indemnification
under this Section 7(b) shall be (x) calculated on an After-Tax Basis, in
the case of a Relevant Indemnitee, and (y) in the case of each other
Indemnitee, in an amount which, after reduction by the amount of all Taxes
required to be paid by such Indemnitee in respect of the receipt or accrual
of such amount and after consideration of any current savings of such
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 Indemnitee pursuant
to Section 7(b) hereof, shall be equal to the payment otherwise required
hereunder.
If, by reason of any Tax payment made to or for the account of an
Indemnitee by Lessee pursuant to this Section 7(b), such Indemnitee subsequently
realizes a tax deduction or credit (including foreign tax credit and any
reduction in Taxes) against any Taxes not indemnified by Lessee hereunder or
under the Tax Indemnity Agreement, which deduction or credit was not previously
taken into account in computing such payment, such Indemnitee (x) if it is a
Relevant Indemnitee, shall promptly pay on an After-Tax Basis, to Lessee,
provided an Event of Default shall not have occurred and be continuing, an
amount equal to the actual reduction in Taxes, if any, realized by such
Indemnitee which is attributable to such deduction or credit; provided, however,
that in the case of any Relevant Indemnitee, the amount payable to the Lessee
pursuant to this paragraph (net of any amount necessary to make such payment on
an After-Tax Basis) shall not exceed the excess of all corresponding indemnity
payments made by the Lessee to such Relevant Indemnitee under this Section 7(b)
(net of any amount that was necessary to make such payment on an After-Tax
Basis) over all amounts previously paid by such Relevant Indemnitee to the
Lessee under this paragraph (net of any amount necessary to make such payment on
an After-Tax Basis) and (y) if it is not a Relevant 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 Indemnitee which is attributable to such deduction or
credit and (II) the actual reduction in Taxes realized by such
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PARTICIPATION AGREEMENT (1992 757 [__])
Indemnitee as a result of any payment made by such Indemnitee pursuant to this
sentence.
For purposes of this Section 7(b)(iii) items of foreign Tax of any
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 for which such Indemnitee was
not indemnified or held harmless by anyone;
Second, all available foreign Taxes for which such Indemnitee was
indemnified or held harmless by persons other than the Lessee;
Third, all available foreign Taxes arising out of this
transaction for which such Indemnitee has been indemnified or held
harmless by the Lessee and all other available foreign Taxes (other
than those arising from any transaction in which there is an express
agreement that such Taxes shall be utilized last) on a pari passu
basis; and
Fourth, any remaining foreign Taxes arising from any transaction
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 Indemnitee was indemnified by Lessee is
deemed to be utilized pursuant to the ordering rules contained in this
paragraph, it shall not subsequently be re-characterized as not having been
utilized as a result of a foreign tax liability arising in a subsequent year.
The disallowance or reduction of any tax benefit as to which such
Indemnitee has made in full the payment to Lessee required hereby (or as to
which such Indemnitee would have made its payment but for Section 7(b)(vii)
hereof), in a taxable year subsequent to the utilization by such Indemnitee
(including the expiration of any tax credit carryovers or carrybacks of such
Indemnitee that would not otherwise have expired) shall be treated as a Tax for
which Lessee is obligated to indemnify such Indemnitee pursuant to the
provisions of this Section 7(b), without regard to the exceptions set forth in
Section 7(b)(ii) hereof (other than Section 7(b)(ii)(5) or (6)).
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PARTICIPATION AGREEMENT (1992 757 [__])
(iii) General Tax Indemnity - Contests. If a written claim shall
be made against any Indemnitee for any Tax for which Lessee is obligated to
indemnify any Indemnitee pursuant to this Section 7(b), such Indemnitee
shall notify Lessee in writing promptly of such claim 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 (x) in
the case of a Relevant Indemnitee, precludes Lessee from (A) requiring such
Relevant Indemnitee to contest the Tax or (B) contesting the Tax itself or
(y) in the case of any other Indemnitee, materially and adversely affects
Lessee's ability to (A) require such Indemnitee to contest the Tax or (B)
contest the Tax itself.
If requested by Lessee in writing within 30 days of Lessee's receipt of
notice from an Indemnitee under the first paragraph of this Section 7 (b) (iv),
such Indemnitee shall in good faith at Lessee's expense contest the imposition
of any such Tax; provided, however, that if (A) Lessee has requested in its
written notice that Lessee be permitted to conduct such contest (if permitted by
law), in Indemnitee's name or in Lessee's name, and Indemnitee, in its sole
discretion, has consented to such contest, or (B) Indemnitee has requested
Lessee to conduct such contest (if permitted by law), then Lessee shall, at its
own expense and in good faith, conduct such contest. Indemnitee and Lessee
shall consult in good faith with each other concerning the method of any contest
controlled by either, including the forum in which the adjustment is most likely
to be favorably resolved, provided, however, that the party controlling such
contest (in the case of a contest involving a Relevant Indemnitee) or such
Indemnitee (in the case of a contest involving any other 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.
Notwithstanding anything to the contrary herein contained, in no event
shall such Indemnitee be required to contest, nor shall Lessee be permitted to
contest, the imposition of any Tax for which Lessee is liable under this Section
7(b) unless (I) Lessee shall have agreed, in writing, to pay such Indemnitee on
demand (and shall pay on demand) all reasonable costs, expenses and losses that
such Indemnitee actually incurs in connection with contesting such claim
(including, without limitation, all reasonable costs,
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PARTICIPATION AGREEMENT (1992 757 [__])
expenses, losses, 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,
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, (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 Indemnitee on an interest-free basis and agreed to indemnify
(and shall in fact indemnify on demand) the Indemnitee against any additional
net after-tax cost to such Indemnitee with respect to such advance, (IV) with
regard to a Tax on a Relevant Indemnitee, independent tax counsel selected by
the Owner Participant and reasonably satisfactory to Lessee shall furnish an
opinion, prepared at the Lessee's expense, (x) to the effect that there is a
reasonable basis to contest such claim, (y) in the case of any appeal of an
adverse trial court decision, to the effect that it is more likely than not that
such appeal will be successful; provided, further that no appeal shall be
required to the United States Supreme Court, and (V) in the case of a Relevant
Indemnitee, Lessee shall have delivered to such Relevant Indemnitee a written
acknowledgment of Lessee's obligation to indemnify fully such Relevant
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 is ultimately resolved on an articulated basis which
demonstrates that Lessee is not otherwise liable under this Section 7(b) with
respect to such Tax, and (VI) if an Event of Default shall have occurred and be
continuing, the Lessee shall have provided security for its obligations
hereunder satisfactory to the Owner Participant.
If any Indemnitee shall obtain a refund of all or any part of any Tax paid
by Lessee, such Indemnitee shall pay (x) in the case of a Relevant Indemnitee,
on an After-Tax Basis, Lessee, provided no Event of Default shall have occurred
and be continuing, an amount equal to the amount of such refund, including
interest actually received and fairly attributable to any Taxes paid by Lessee
prior to the receipt of such refund; provided, however, that in the case of any
Relevant Indemnitee, the amount payable to the
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PARTICIPATION AGREEMENT (1992 757 [__])
Lessee under this paragraph (net of any interest fairly attributable to such
Taxes paid by the Lessee and any amount necessary to make any payment under this
paragraph on an After-Tax Basis) shall not exceed the amount of the indemnity
payment in respect to such refunded Taxes that was made by the Lessee (net of
any amount necessary to make such payment on an After-Tax Basis), and (y) in the
case of any other Indemnitee, Lessee, provided no Event of Default shall have
occurred and be continuing, an amount equal to the sum of (I) the amount of such
refund, including interest received attributable thereto and (II) any tax
benefit realized by such Indemnitee as a result of any payment by such
Indemnitee made pursuant to this sentence. If it is subsequently determined that
an Indemnitee was not entitled to such refund, the portion of such refund that
is repaid or recaptured shall be treated as a Tax for which Lessee must
indemnify such Indemnitee without regard to Section 7(b)(ii) (other than clauses
(5) and (6) thereof).
Nothing contained in this Section 7(b) (iv) shall require any Indemnitee to
contest, or permit Lessee to contest, a claim with respect to the imposition of
any Tax if such Indemnitee shall waive its right to indemnification under this
Section 7 with respect to such claim.
Notwithstanding anything to the contrary contained in Section 7(b), the
provisions of Section 7(b)(i) shall not apply to any Tax which the Lessee is
contesting in good faith under the provisions of this Section 7(b)(iv) until the
conclusion of such contest.
(iv) General Tax Indemnity -- Reports. Lessee will provide such
information as may be reasonably requested by an Indemnitee or required to
enable an Indemnitee to fulfill its tax filing, audit or contest
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 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 Indemnitee with a copy of such return, statement or
report; provided, however, that Lessee shall have no obligation under
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PARTICIPATION AGREEMENT (1992 757 [__])
this clause (i) (A) to the extent such Indemnitee after receipt of Lessee's
written request shall have failed to furnish Lessee with such information
as is peculiarly within such Indemnitee's control and is necessary to file
such returns, statements or reports, or (B) if the Indemnitee notifies the
Lessee in writing that it will prepare and file such return, statement or
report (ii) in the case of a return, statement or report required to be in
the name of or filed by such Indemnitee, Lessee shall prepare and furnish
such return, statement or report for filing by such Indemnitee in such
manner as shall be reasonably satisfactory to such Indemnitee and send the
same to such Indemnitee for filing no later than 10 Business Days prior to
the due date; provided, however, that Lessee shall have no obligation under
this clause (ii) to the extent such Indemnitee after receipt of Lessee's
written request shall have failed to furnish Lessee with such information
as is peculiarly within such Indemnitee's control and is necessary to
prepare such return, statement or report, and (iii) in the case of a
return, statement or report either required to reflect items in addition to
Taxes imposed on or indemnified against by the Lessee under this Section
7(b) or which the Indemnitee has notified Lessee in writing that it will
prepare and file, Lessee shall, upon the written request of such
Indemnitee, provide such Indemnitee with such information as is within
Lessee's reasonable control or access. Lessee shall hold each 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.
(v) 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 an
Indemnitee shall pay such Tax and any other amounts due hereunder to such
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 an
Indemnitee shall specify in reasonable detail the payment and the facts
upon which the right to payment is based. Each
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PARTICIPATION AGREEMENT (1992 757 [__])
Indemnitee shall promptly forward to Lessee any notice, ▇▇▇▇ or advice
received 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 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 Indemnitee.
Lessee shall also furnish promptly upon request such data as any Indemnitee
may reasonably require to enable such Indemnitee to comply with the
requirements of any taxing jurisdiction.
(vi) 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 Agreement. 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 Agreement in default pursuant to Section 15
thereof.
(vii) Reimbursements by Indemnitees Generally. If, upon request
of, or on demand for payment by, the Indemnitee, 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 Indemnitee shall pay to Lessee an amount which equals the amount paid
by Lessee with respect to such Taxes plus interest thereon computed from
the date of payment of such Taxes at an annual interest rate equal to the
Base Rate or in the case of a Loan Participant or any Certificate Holder
the rate on the Loan Certificates plus two percent.
(viii) Forms, etc. Each Indemnitee agrees to furnish to Lessee
from time to time, at the Lessee's 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
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PARTICIPATION AGREEMENT (1992 757 [__])
Documents, which reduction or exemption may be available to such
Indemnitee.
(ix) Non-Parties. If an Indemnitee is not a party to this
Agreement, Lessee may require the Indemnitee to agree to the terms of this
Section 7(b) prior to making any payment to such Indemnitee under this
Section 7(b).
(x) Owner Participant. For purposes of this Section 7(b), the
term "Owner Participant" shall mean and include General Foods Credit
Corporation (and its permitted successors and assigns) and where
appropriate the affiliated group of corporations (and each member thereof)
making a consolidated or combined return of which General Foods Credit
Corporation (and its permitted successors and assigns) is a member.
(xi) 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 imposed in the nature of an Income
Tax (provided, however, that notwithstanding the foregoing, an Income Tax
shall not include sales Taxes, use Taxes, rental Taxes, value added Taxes
(in the case of a Relevant Indemnitee), ad valorem Taxes or property Taxes
or, in the case of a Relevant Indemnitee, any Taxes in the nature of any of
the foregoing) and interest, additions to tax, penalties, or other charges
in respect thereof.
(xii) Decision to Withhold. If Lessee advises the Mortgagee and
the Certificate Holders in writing that interest on any Loan Certificate is
(or might be) subject to United States withholding tax ("Withholding"),
then the Mortgagee shall in due course pay such Withholding to the Internal
Revenue Service.
(b) General Indemnity. Lessee hereby agrees to indemnify each
Indemnitee against, and agrees to protect, save and keep harmless, on an after-
tax basis (which shall mean, for a Relevant Indemnitee, on an After-Tax Basis),
each of them from (whether or not the transactions contemplated herein or in any
of the other Operative Documents are consummated), any and all Expenses imposed
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PARTICIPATION AGREEMENT (1992 757 [__])
on, incurred by or asserted against any Indemnitee, in any way relating to or
arising out of (A) the Operative Documents, including any breach by Lessee of
its covenants contained therein, or any Sublease under the Lease Agreement, or
the performance of any of the transactions contemplated thereby or the
enforcement of any of the terms thereof; (B) the manufacture, purchase,
acceptance or rejection of the Airframe or any Engine; (C) the Aircraft (or any
portion thereof) whether or not arising out of the ownership, delivery,
nondelivery, lease, sublease, possession, use, operation, maintenance,
registration, modification, alteration, condition, sale, return or other
disposition of the Aircraft including, without limitation, latent or other
defects, whether or not discoverable, strict tort liability and any claim for
patent, trademark or copyright infringement; (D) the offer, sale, delivery or
transfer of the Loan Certificates, or any other certificates issued pursuant to
Sections 18 and 19 hereof whether before or after the Closing 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 Trust Estate or the Trust Agreement or any
similar interest on or prior to the Closing Date; or (F) the transactions
contemplated hereby or by any other Operative Document, in respect of the
application of Parts 4 and 5 of Subtitle B of Title I of ERISA; 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 being materially incorrect, or (2) the failure by such
Indemnitee to perform or observe in any material respect any agreement, covenant
or condition in any of the Operative Documents 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 a Loan Participant Lien, 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 by the Owner Trustee of all or any part of its interest in the
Airframe or any Engine (other than pursuant to (i) in the case of each
Indemnitee, Section 9 or 19 of the Lease Agreement or as a consequence of an
Event of Loss and (ii) in the case of an Indemnitee which is the Owner
Participant, Section 8, 10 or 15 of the Lease Agreement), a disposition
(voluntary or involuntary) by such Certificate Holder of all or any part of its
interest in any Loan Certificate (other than as contemplated by the Trust
Indenture) or by such Indemnitee
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PARTICIPATION AGREEMENT (1992 757 [__])
of all or any part of such Indemnitee's interest in the Airframe, any Engine or
in the Operative Documents, in each case other than during the continuance of an
Event of Default under the Lease Agreement, or (5) any Tax 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 and the Tax Indemnity Agreement exclusively
provide for Lessee's liability with respect to Taxes), other than amounts
necessary to make any payment hereunder on an After-Tax Basis or (6) the offer
or sale by the Owner Participant after the Closing Date of any interest in the
Trust Estate or the Trust Agreement or any similar interest, or (7) in the case
of the Owner Trustee and the Mortgagee, in their individual and trust
capacities, and the Affiliates, successors and assigns thereof, a failure on the
part of the Owner Trustee to distribute in accordance with the Trust Agreement
any amounts received and distributable by it thereunder or a failure (except
where and to the extent such failure arises by virtue of any legal restriction
or restraint) on the part of the Mortgagee to distribute in accordance with the
Trust Indenture any amounts received and distributable by it thereunder, or (8)
the authorization or giving or withholding of any future amendments,
supplements, waivers or consents with respect to any of the Operative Documents
which amendments, supplements, waivers or consents are not requested by Lessee
or are not required by the terms of the Operative Documents (provided that
Lessee shall have no liability for any indemnity hereunder in respect of any
amendment, waiver, supplement or consent required by the terms of the Operative
Documents which results from an action of any Indemnitee that is not required
under the terms of the Operative Documents unless the same is requested by the
Lessee) 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 and the Tax Indemnity Agreement exclusively provide for Lessee's
liability with respect to Taxes) other than amounts necessary to make any
payment hereunder on an After-Tax Basis, or (10) the offer, sale or delivery of
a Loan Certificate or any interest in the Trust Estate or Trust Agreement by an
Indemnitee in violation of the Securities Act of 1933, as amended; or (11)
except to the extent fairly attributable to acts or events occurring prior
thereto, acts or events which occur after the earliest of: (I) the return of
possession of the Airframe or any Engine or any Part to the Owner Trustee or its
designee pursuant to the terms of the Lease Agreement (other than pursuant to
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PARTICIPATION AGREEMENT (1992 757 [__])
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 Sections
5, 9, 10 or 19 of the Lease Agreement, (III) the end of the Term if Lessor shall
have furnished the notice referred to in Section 10(d) of the Lease Agreement
and Lessee shall have failed to return possession to Lessor on such day, (IV)
the payment by Lessee of all amounts required to be paid under the Lease
Agreement following an Event of Loss or (V) termination of the Lease Agreement
and payment by Lessee of all amounts required to be paid by Lessee pursuant to
the terms 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 (x) in the case of a Relevant
Indemnitee, made on an After-Tax Basis, and (y) in the case of any other
Indemnitee, in an amount which, after deduction of all Taxes required to be paid
by such recipient with respect to such payment or indemnity 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 recipient resulting from the accrual or payment of such Expense.
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
and provided no Event of Default shall have occurred and be continuing, an
amount equal (i) in the case of a Relevant Indemnitee, on an After-Tax Basis, to
the actual reduction in Taxes' if any, realized by such Indemnitee which is
attributable to such deduction or credit, and (ii) in the case of any other
Indemnitee, 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 in
the case of any Relevant Indemnitee, the amount payable to the Lessee pursuant
to this paragraph (net of any amount necessary to make such payment on an After-
Tax Basis) shall not exceed the excess of all corresponding Expense payments
made by the Lessee to such Relevant Indemnitee under this Section 7(c) (net of
any amount
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PARTICIPATION AGREEMENT (1992 757 [__])
that was necessary to make such payment on an After-Tax Basis) over all amounts
previously paid by such Relevant Indemnitee to the Lessee under this paragraph
(net of any amount necessary to make such payment on an After-Tax Basis).
Nothing in this Section 7(c) shall be construed as a guaranty by Lessee of
payments due pursuant to the Loan Certificates 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 after
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
prompt notice. Lessee shall be entitled, at its sole cost and expense, 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 foregoing to the contrary, Lessee shall not be entitled to assume
responsibility for and control of any such judicial or administrative
proceedings if any 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,
the Trust Indenture Estate or the Trust Estate or any part thereof unless Lessee
shall have posted a bond or other security satisfactory to the relevant
Indemnitees in respect to such risk, or if such proceedings involve any risk of
criminal liability or any material risk of civil liability to any Indemnitee.
The Indemnitee may participate at its own expense and with its own counsel in
any judicial proceeding controlled by Lessee pursuant to
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PARTICIPATION AGREEMENT (1992 757 [__])
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).
The 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. 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 and provided no Event of
Default shall have occurred and be continuing, an amount equal to (x) in the
case of a Relevant Indemnitee, on an After-Tax Basis, the amount of such
reimbursement, including interest received attributable thereto; and (y) in the
case of any other Indemnitee, 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 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 in the case
of any Relevant Indemnitee, the amount payable to the Lessee under this
paragraph (net of any interest fairly attributable to such indemnified amount
paid by the Lessee and any amount necessary to make any payment under this
paragraph on an After-Tax Basis) shall not exceed the amount of the indemnity
payment in respect of such indemnified
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PARTICIPATION AGREEMENT (1992 757 [__])
amount that was made by the Lessee (net of any amount necessary to make such
payment on an After-Tax Basis).
Lessee agrees to pay the reasonable fees and expenses of the Mortgagee and,
as provided in the Trust Agreement, the Owner Trustee (including, but not
limited to, the reasonable fees and expenses of its counsel) for acting as such,
other than such fees and expenses which constitute Transaction Expenses. 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.
SECTION 8. Guarantor's Representations and Warranties. In General.
Guarantor represents and warrants to the Owner Trustee, the Mortgagee, and the
Participants that as of the Closing Date:
(a) Guarantor 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 Guarantor or its
business; has the corporate power and authority to conduct its business as
presently conducted; and has the corporate power and authority to enter into and
perform its obligations under the Operative Documents to which the Guarantor is
a party.
(b) the execution, delivery and performance by Guarantor of the
Operative Documents to which the Guarantor is a party will, on the Closing Date,
have been duly authorized by all necessary corporate action on the part of
Guarantor, do not require any stockholder approval, or approval or consent of
any trustee or holders of any indebtedness or obligations of Guarantor except
such as have been duly obtained or by the Closing Date will have been duly
obtained, and have been duly executed and delivered by the Guarantor, and none
of such Operative Documents to which the Guarantor is a party contravenes any
law, judgment, government rule, regulation or order binding on Guarantor or the
certificate of incorporation or by-laws of Guarantor or contravenes the
provisions of, or constitutes a default under, or results in the creation of any
Lien upon the property of Guarantor under, any indenture, mortgage, contract or
other agreement to which Guarantor is a party or by which it or its properties
may be bound or affected;
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PARTICIPATION AGREEMENT (1992 757 [__])
(c) neither the execution and delivery by Guarantor of the Operative
Documents to which the Guarantor is a party nor the performance by Guarantor 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;
(d) the Operative Documents to which the Guarantor is a party will
each constitute legal, valid and binding obligations of Guarantor enforceable
against Guarantor in accordance with the terms thereof;
(e) 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 Guarantor or the ability of
Guarantor to perform its obligations under the Operative Documents to which the
Guarantor is a party;
(f) there has not occurred any event which constitutes a Facility
Default or a Facility Event of Default and is presently continuing;
(g) the statements of financial position of Guarantor as of December
31, 1991 and the related statements of earnings and cash flow of Guarantor for
the year then ended, copies of which have been furnished to the Participants,
fairly present the financial condition of Guarantor as at such date and the
results of operations and cash flow of Guarantor for the period ended on such
date, in accordance with generally accepted accounting principles consistently
applied (except as may be stated in the notes thereto), and since December 31,
1991, there has been no material adverse change in such condition or operations,
except for such matters timely disclosed in public filings, effective as of the
date hereof, with the Securities and Exchange Act of 1934, as amended, by the
Guarantor or Lessee or as disclosed in press releases issued by Guarantor or
Lessee;
(h) none of the proceeds from the issuance of the Loan Certificates
or from the acquisition by the Owner Participant of its beneficial interest in
the Trust Estate will be used directly or indirectly by Guarantor to purchase or
carry any "margin stock" as such term is defined in Regulation G of the Board of
Governors of the Federal Reserve System;
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PARTICIPATION AGREEMENT (1992 757 [__])
(i) neither Guarantor nor anyone acting on behalf of Guarantor 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 five (5) institutions believed capable of
evaluating and bearing the risks of investment in the transactions contemplated
hereby, (B) directly or indirectly offered any Loan Certificates or any similar
security for sale to, or solicited any offer to acquire any of the same from,
anyone other than the Loan Participants, each of which institutions is believed
capable of evaluating and bearing the risks of investment in the transactions
contemplated hereby or (C) filed or published, or caused to be filed or
published, any financing or similar statement or notice under the Uniform
Commercial Code in effect in any jurisdiction or any state or local fraudulent
conveyance or analogous statute or ordinance describing any portion of the Trust
Indenture Estate, other than the filings referred to in Section 4(a)(vi) hereof
and such other filings, notices or publications as shall have been approved by
counsel to the Owner Participant and the Loan Participants prior to the filing
or publication thereof; and
(j) the execution and delivery of this Participation Agreement and
the issue and sale of the Loan Certificates under the Operative Documents will
not involve any transaction which is subject to the prohibitions of Section 406
of ERISA or in connection with which a tax could be imposed pursuant to Section
4975 of the Code (such representations being made in reliance upon and subject
to the accuracy of the representations contained in Section 9(n)).
SECTION 9. Representations, Warranties and Covenants. (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 (it being
understood that Capstar Partners, Inc. is not acting on behalf of the Owner
Participant) has directly or indirectly offered any interest in the Trust Estate
or any Loan 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 the Securities Act of 1933, as amended, or the securities laws,
rules and regulations of any state. The Owner Participant agrees not to take any
action to cause the Owner
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PARTICIPATION AGREEMENT (1992 757 [__])
Trustee to take any action which the Owner Trustee is not permitted to take
pursuant to the terms of the Operative Documents.
(a) Each of the Owner Participant and The Connecticut National Bank,
in its individual capacity, represents and warrants to the other parties to this
Agreement that it is, and on the Closing Date will be, a "citizen of the United
States" as defined in Section 101(16) of the Federal Aviation Act. The Owner
Participant 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) (i)
it shall not be a "citizen of the United States" within the meaning of Section
101(16) of the Federal Aviation Act and (ii) the Aircraft shall be, or would
therefore become, 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 30 days after obtaining actual knowledge 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 de-
registration or to maintain the United States registration of the Aircraft, or
(B) transfer its beneficial interest in the Trust Estate in accordance with
Section 9(k) hereof. It is understood that: (1) the Owner Participant shall be
liable to each of the other parties hereto for any damages suffered by such
other party as the result of the representation and warranty of the Owner
Participant in the first sentence of this Section 9(b) proving to be untrue as
of the Closing Date; and (2) the Owner Participant shall be liable to Lessee,
any Sublessee and any Certificate Holder for any damages which may be incurred
by Lessee, any Sublessee or any Certificate Holder as a result of the Owner
Participant's failure to comply with its obligations pursuant to the second
sentence of this Section 9(b) (including any damages suffered by any such party
during such 30-day period). Each party hereto agrees, upon the request and at
the sole expense of the Owner Participant, to reasonably cooperate with the
Owner Participant (such reasonable cooperation not to include a restriction on
the use of the Aircraft) in complying with its obligations under the provisions
of the second sentence of this Section 9(b) and such request shall not be
subject to the indemnity contained in Section 7 hereof. The Connecticut
National Bank, in its individual capacity, agrees that if at any time a
responsible trust officer of the corporate trust department of The Connecticut
National Bank shall obtain actual
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PARTICIPATION AGREEMENT (1992 757 [__])
knowledge that The Connecticut National Bank has ceased to be a "citizen of the
United States" within the meaning of Section 101(16) of the Federal Aviation
Act, 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 the Certificate Holders, 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 The Connecticut National Bank, in its individual capacity, does
not comply with the requirements of this Section 9(b), the Owner Trustee, the
Mortgagee, the Owner Participant and the Certificate Holders hereby agree that a
Default or an Event of Default shall not have occurred and be continuing under
the Lease Agreement due to noncompliance by Lessee with the registration
requirements in the Lease Agreement.
(b) The Connecticut National Bank in its individual capacity
represents and warrants that both the principal place of business of the Owner
Trustee and the place where its 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 Hartford, Hartford County, Connecticut (other than such as may
be maintained or held by the Mortgagee pursuant to the Trust Indenture) and has
its chief executive office (as such term is used in Article 9 of the Uniform
Commercial Code) in Hartford, Hartford County, Connecticut. The Connecticut
National Bank in its individual capacity agrees that it will not change the
location of such chief executive office to a location outside of Hartford,
Hartford County, Connecticut, without prior written notice to all parties.
(c) Each Loan Participant represents and warrants with respect to it
that neither it nor anyone acting on its behalf has offered any Loan
Certificates or any similar securities relating to the Aircraft for sale to, or
solicited any offer to buy any Loan Certificates or any similar securities
relating to the Aircraft from, any person or entity.
(d) The Owner Participant and each of the Certificate Holders agree
that, if, at any time after the close of the calendar year in which occurs the
seventh anniversary of the Closing Date and so long as no Default or Event of
Default under the Lease Agreement shall have occurred and is continuing, Lessee
has, upon 15 days prior notice, requested their consent to the registration
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PARTICIPATION AGREEMENT (1992 757 [__])
of the Aircraft, in the name of the Owner Trustee (or, if appropriate in the
name of Lessee or a Sublessee as a "lessee" or a "sublessee"), at Lessee's
expense, (i) in a country listed on Exhibit G to the Lease Agreement with which
the United States maintains normal diplomatic relations (which for purposes of
this Section 9(e) shall include Taiwan and any other country that is similarly
situated) or (ii) in any other country and they have not determined, acting
reasonably, that such other country would not provide substantially equivalent
protection for the rights of owner participants, lessors or lenders in similar
transactions as provided under United States law, the Owner Participant and the
Certificate Holders will not in the case of either (i) or (ii) unreasonably
withhold their consent to such change of registration. The Owner Participant and
each Certificate Holder further agree that the inability to deliver an opinion
(reasonably satisfactory in form and substance to the Owner Participant and the
Mortgagee) of counsel reasonably acceptable to the Owner Participant and the
Mortgagee in such country listed on Exhibit G to the Lease Agreement to the
effect that the courts of such country would give effect to the Owner Trustee's
title to the Aircraft, to the registry of the Aircraft in the name of the Owner
Trustee (or, if appropriate, in the name of Lessee or a Sublessee as a "lessee"
or a "sublessee"), and to the priority of the lien under the Trust Indenture
substantially to the same extent as provided under United States law, shall
constitute the sole reasonable grounds to withhold such consent in regard to a
country listed on Exhibit G to the Lease Agreement, and if said opinion is
delivered, the Owner Participant and the Certificate Holders will instruct,
respectively, the Owner Trustee and the Mortgagee to make such change of
registration.
It is further agreed, however, that prior to any such change in the country
of registry of the Aircraft to a country not listed on Exhibit G to the Lease
Agreement, the Owner Participant, the Owner Trustee in its individual capacity
and the Mortgagee shall have received:
(i) assurances reasonably satisfactory to them (A) to the effect
that the insurance or self-insurance provisions of the Lease Agreement have
been complied with after giving effect to such change of registry, (B) of
the payment by Lessee of any expenses of the Owner Participant, the Owner
Trustee, the Mortgagee and the Certificate Holders in connection with such
change of registry, (C) to the effect that the original indemnities (and
any additional indemnities for which Lessee is then willing to enter into a
binding
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PARTICIPATION AGREEMENT (1992 757 [__])
agreement to indemnify) in favor of the Owner Participant, the Owner
Trustee (in its individual capacity and as trustee under the Trust
Agreement), the Mortgagee and the Certificate Holders, 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, (D) as to the continuation of the ownership interest of
the Lessor and the Trust Indenture as a first priority lien on the
Aircraft, (E) 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, the Owner Participant, the Certificate Holders, the Mortgagee,
the Owner Trustee (in its individual capacity and as trustee under the
Trust Agreement) (or any successor or assign thereof) or the Trust Estate
pursuant to Section 7(b) hereof, (F) that such new country of registry
imposes aircraft maintenance standards not materially less stringent than
those of the FAA or the civil aviation authority of the United Kingdom,
France, Germany, Canada or Japan and (G) that the Lessor's right to
exercise remedies under the Lease Agreement (including the right to
repossess the Aircraft) will be substantially the same as provided under
the laws of the United States; and
(ii) a favorable opinion of counsel (reasonably satisfactory to
the Owner Trustee and the Mortgagee, in their individual capacities, the
Owner Participant and the Mortgagee) in the new jurisdiction of registry to
the effect (A) that the terms (including, without limitation, the governing
law, service of process and jurisdictional submission provisions thereof)
of the Lease Agreement and the Trust Indenture are legal, valid, binding
and enforceable in such jurisdiction, (B) that it is not necessary for the
Owner Participant, the Owner Trustee, the Mortgagee, or the Certificate
Holders to register or qualify to do business in such jurisdiction, and
there are no requirements that the Owner Participant or the Owner Trustee
in its individual capacity or as trustee under the Trust Agreement must
meet to maintain the registration of the Aircraft and the validity and
perfection of the Lien of the Trust Indenture under the laws of such
jurisdiction that, in the reasonable opinion of the Owner Participant,
would place an undue burden on the Owner Trustee in its individual capacity
or as trustee under the Trust Agreement or the Owner Participant, as the
case may be, (C) that there is no tort liability of the owner of an
aircraft not in possession thereof under the laws of such
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PARTICIPATION AGREEMENT (1992 757 [__])
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 the Owner Participant, such opinion shall be waived
if insurance reasonably satisfactory to the Owner Participant and the Owner
Trustee, in its individual capacity, is provided, at Lessee's 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 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 respect to such other matters as the Owner Trustee and
the Mortgagee, in their individual capacities, the Owner Participant or the
Mortgagee may reasonably request.
Upon receipt of the foregoing opinion of counsel by the Owner Participant
and Mortgagee, Exhibit G to the Lease Agreement shall be amended to add such
country.
At any time and from time to time during the Term (the Owner Participant
and the Mortgagee being responsible for their own expenses incurred pursuant to
this paragraph in the event of a request made by either of such Persons for a
deletion referred to below (except for any such expenses incurred if such
request is made in connection with a proposed re-registration), in which case,
at the expense of Lessee), including prior to any proposed re registration, the
Mortgagee or the Owner Participant may request in writing to Lessee, or Lessee
may request in writing to the Owner Participant and the Mortgagee, that Exhibit
G to the Lease Agreement be amended to delete, or in the case of a request from
Lessee be amended to add, one or more countries on such Exhibit and specified in
such request, such request to be based upon reasonable evidence, in the form of
a legal opinion or other substantive evidence (which opinion or other evidence
shall be reasonably satisfactory to the Lessee with respect to any requested
deletion and to the Owner Participant and the Mortgagee with respect to any
requested addition), to the effect that (x) with respect to any requested
deletion, any one or more of the criteria set forth in subparagraphs (i) and
(ii) above (or any other criteria that would, in the reasonable opinion of the
Owner Participant or the Mortgagee, significantly adversely impact a significant
interest of
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PARTICIPATION AGREEMENT (1992 757 [__])
the Owner Participant or the Mortgagee in a manner that is substantially similar
to such criteria including clause (ii)(E) above) are not then applicable to the
country proposed to be deleted from Exhibit G (and with respect to clauses
(i)(C), (i)(E), (ii)(C) or (ii)(D) could not otherwise be complied with in
accordance with the terms of such criteria), or (y) with respect to any
requested addition, each of the criteria set forth in subparagraphs (i) and (ii)
above are then applicable to the country proposed to be added to Exhibit G (or
with respect to clauses (i)(C), (i)(E), (ii)(C) or (ii)(D) could otherwise be
complied with in accordance with the terms of such criteria). Upon receipt of
such opinion or other substantive evidence supporting any such request, Exhibit
G to the Lease Agreement shall be deemed amended to reflect such agreement (such
agreement to be so evidenced by a writing signed by Lessee, the Owner
Participant, the Mortgagee and the Lessor, and promptly distributed to the Owner
Trustee, the Mortgagee and the Certificate Holders and duly filed for
recordation with the FAA); otherwise, such Exhibit shall not be so amended.
Upon any addition to or deletion from Exhibit G as set forth in either of
the two preceding paragraphs, Exhibit F to the Lease Agreement shall be amended
(if necessary) to reflect such change.
Except as provided in the second preceding paragraph, Lessee shall pay all
reasonable expenses of the Owner Participant, the Owner Trustee, the Mortgagee
and the Certificate Holders in connection with any (x) change of registry of the
Aircraft or (y) addition to the countries listed on Exhibit G to the Lease
Agreement.
(e) The Owner Participant represents and warrants to Lessee, the
Mortgagee, the Certificate Holders and the Owner Trustee, in its capacity as
such and in its individual capacity, as follows:
(i) it is a corporation duly organized and validly existing in
good standing under the laws of the State of Delaware and the state in
which its principal business operations are located, and has the corporate
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 Operative Documents to which the Owner Participant is
a party;
(ii) the execution, delivery and performance by
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PARTICIPATION AGREEMENT (1992 757 [__])
the Owner Participant of the Operative Documents to which the Owner
Participant is a party will, on the Closing Date, have been duly authorized
by all necessary corporate action on the part of the Owner Participant, do
not require any approval not already obtained of stockholders 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 contravenes 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 or
otherwise permitted in the Operative Documents) upon the Trust Estate
under, any indenture, mortgage, chattel mortgage, contract, deed of trust,
conditional sales contract, bank loan or credit agreement, corporate
charter, by-law 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;
(iii) each of the Operative Documents to which it is a party
constitutes a legal, valid and binding obligation of the Owner Participant
enforceable against the Owner Participant in accordance with the terms
thereof;
(iv) there are no pending or, to the knowledge of the Owner
Participant, threatened actions or proceedings against the Owner
Participant before any court, governmental authority, arbitration board,
tribunal or administrative agency which, if determined adversely to the
Owner Participant, would materially adversely affect the financial
condition of the Owner Participant or the ability of the Owner Participant
to perform its obligations under the Operative Documents to which it is a
party; and
(v) neither the execution and delivery by the
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PARTICIPATION AGREEMENT (1992 757 [__])
Owner Participant of this Agreement or any other Operative Documents to
which it is a party, nor the performance by it of its obligations hereunder
or thereunder, 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, state or other
governmental authority or agency, except those contemplated by the
Operative Documents; and
(vi) on the Closing Date, there will be no 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.
(f) Each of The Connecticut National Bank, in its individual capacity,
and the Owner Participant severally covenants and agrees (i) that it shall not
cause or permit to exist a Lessor Lien attributable to or caused by it with
respect to the Aircraft or any other portion of the Trust 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 or caused by it and (iii) to make
restitution to the Trust Estate for any actual diminution of the assets of the
Trust Estate resulting from such Lessor Liens attributable to or caused by it.
The Owner Participant agrees to make restitution to the Trust Estate for any
actual diminution of the assets of the Trust Estate resulting from any Taxes
imposed on the Trust Estate against which Lessee is not required to indemnify
the Trust Estate pursuant to Section 7 hereof, but excluding Taxes (x) referred
to in Sections 7(b)(ii)(5) or 7(b)(ii)(6) hereof to the extent attributable to
the willful misconduct or gross negligence of the Owner Trustee, the Mortgagee,
the Loan Participants or Certificate Holders or (y) attributable to Loan
Participant Liens.
(g) 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
Mortgagee not related to its interest in the Aircraft or the administration of
the Trust Estate pursuant to the Trust Indenture, (ii) acts of the Mortgagee not
permitted by, or failure of the Mortgagee 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
Mortgagee relating to Taxes (as such term is defined in Section 7 hereof) or
Expenses which are excluded from the indemnification provided by Section 7
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PARTICIPATION AGREEMENT (1992 757 [__])
pursuant to said Section 7, or (iv) claims against the Mortgagee arising out of
the transfer by the Mortgagee of all or any portion of its 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 9, 10 or 19 of the
Lease Agreement or Article IV or V of the Trust Indenture, and (B) a transfer of
the Aircraft pursuant to Section 15 of the Lease Agreement while an Event of
Default is continuing and prior to the time that the Mortgagee has received all
amounts due pursuant to the Trust Indenture.
(h) Each Loan Participant represents, warrants and covenants (and each
other Certificate Holder by virtue of its acceptance of a Loan Certificate shall
be deemed to have represented, warranted and covenanted) with respect to itself
that:
(i) it is a corporation or bank duly organized and validly
existing in good standing under the laws of its jurisdiction of
organization and the place in which its principal business operations are
located and has full power, authority and legal right to execute, deliver
and carry out the terms of this Agreement;
(ii) this Agreement has been duly authorized, executed and
delivered by it and constitutes the legal, valid and binding obligation of
such Loan Participant (or Certificate Holder) enforceable against it in
accordance with its terms; and
(iii) the Loan Certificate to be issued to it pursuant to the
Trust Indenture is being acquired by it for investment purposes only with
no present intent to make any resale or distribution thereof which would
require registration under the Securities Act of 1933, as amended, and it
will not offer or sell any Loan Certificate in violation of the Securities
Act of 1933, as amended.
(i) The Mortgagee represents, in its individual capacity, to Lessee,
the Owner Trustee and each Participant as follows:
(i) it is a "citizen of the United States" as defined in Section
101(16) of the Federal Aviation Act, that it will notify promptly all
parties to this Agreement if in its reasonable opinion its status as a
"citizen of the United States" is likely to change and that it will resign
as
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PARTICIPATION AGREEMENT (1992 757 [__])
Mortgagee as provided in Section 8.2 of the Trust Indenture if it should
cease to be a "citizen of the United States";
(ii) it is a national banking association organized under the
laws of the United States of America and has the corporate power and
authority to enter into and perform its obligations under the Trust
Indenture and this Agreement and to authenticate the Loan Certificates to
be delivered on the Closing Date;
(iii) the Operative Documents to which it is a party, and the
authentication of the Loan Certificates to be delivered on the Closing Date
have 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 Connecticut
state 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; and
(iv) each of the Operative Documents to which it is a party has
been duly executed and delivered by it and, assuming that each such
agreement is the legal, valid and binding obligation of each other party
thereto, is the legal, valid and binding obligation of the Mortgagee,
enforceable against it in accordance with its terms.
(j) So long as the Aircraft shall be leased to Lessee under the Lease
Agreement and so long as the Loan Certificates are outstanding, the 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 the Trust
Agreement to any person or entity, prior to December 31, 1992 and thereafter
only if (i) the proposed transferee is a "Transferee" (as defined below), and
(ii) the Owner Participant shall have delivered to the Owner Trustee, the
Lessee, the Mortgagee and the Certificate Holders an opinion (in form, scope and
substance reasonably satisfactory to the Mortgagee and Lessee) of counsel
reasonably satisfactory to the Mortgagee and Lessee to the effect that the
agreement referred to in clause (O) below and any guaranty required by clause
(B) or (C) below, are the legal, valid, binding and enforceable obligations of
the Transferee and the guarantor, if any, as the case may be (subject to the
normal bankruptcy and equitable remedies exceptions
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PARTICIPATION AGREEMENT (1992 757 [__])
contained in an opinion on such matters). A "Transferee" shall mean either (A) a
bank or other financial institution with a combined capital, surplus and
undivided profits of at least $75,000,000 or a corporation whose tangible net
worth is at least $75,000,000, (B) any subsidiary of such a bank, financial
institution or corporation, provided that such bank, financial institution or
corporation furnishes to the Owner Trustee, the Mortgagee and Lessee a guaranty
satisfactory to them with respect to the Owner Participant's obligations, in the
case of the Owner Trustee, under the Trust Agreement and, in the case of the
Certificate Holders and Lessee, the Owner Participant's obligations hereunder,
or (C) any corporation, provided such obligations are guaranteed by the
transferor 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 without the consent of Lessee. Each such transfer to a Transferee shall
be subject to the conditions that (M) upon giving effect to such transfer, the
Transferee is, if the same is required to maintain or obtain U.S. registration
of the Aircraft, a "citizen of the United States" within the meaning of Section
101(16) of the Federal Aviation Act, and has full power and authority to enter
into the transactions contemplated hereby, (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 the Owner Trustee, Lessee and
the Mortgagee, whereby Transferee confirms that it shall be deemed a party to
this Agreement and a party to the Trust Agreement and agrees to be bound by all
the terms of, and to undertake all of the obligations of the transferor Owner
Participant contained in the Owner Participant's Documents and makes
representations of the scope provided for as to the Owner Participant in each of
the Operative Documents, (P) such transfer does not violate any applicable law
including, without limitation, the Federal Aviation Act, the Securities Act of
1933, the Trust Indenture Act of 1939 or ERISA, or any rules or regulations
promulgated thereunder, (Q) after giving effect to such transfer, there shall be
no more than one Owner Participant of record at that time and (R) such transfer
will not give rise to a Default or Event of Default under the Trust Indenture;
and Lessee may request such Transferee to provide an opinion of counsel (who
shall be reasonably satisfactory to Lessee) in form and substance reasonably
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PARTICIPATION AGREEMENT (1992 757 [__])
satisfactory to Lessee as to any matter set forth in clauses (M), (N) or (P) and
as to such other matters as Lessee may reasonably request. Upon any such
transfer by the Owner Participant as above provided, the Transferee shall be
deemed the Owner Participant for all purposes hereof and of the other Operative
Documents and each reference herein to the transferor Owner Participant shall
thereafter be deemed for all purposes to be to the Transferee and the transferor
Owner Participant shall be relieved of all obligations of the transferring Owner
Participant under the Operative Documents to which it is a party 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 Owner
Participant. If the Owner Participant intends to transfer any of its interests
hereunder, it shall give prior written notice thereof as soon as practicable,
but in no event less than 10 Business Days prior thereto, to the Mortgagee, the
Owner Trustee and Lessee, specifying the name and address of the proposed
Transferee. The Owner Participant or Transferee shall pay all of the costs of
any such transfer and shall reimburse Lessee (on an After-Tax Basis) and the
Certificate Holders and Mortgagee for all costs and Expenses (including Taxes)
of any such transfer. For purposes of this paragraph, "net worth" shall mean
the excess of total tangible assets over total liabilities, each to be
determined in accordance with generally accepted accounting principles
consistently applied.
(k) Notwithstanding the provisions of Section 9(s), unless waived by
the Mortgagee, Lessee shall not be entitled to terminate the Lease Agreement or
assume the Loan Certificates on a Purchase Option Date if on such Purchase
Option Date an Event of Default under the Lease Agreement shall have occurred
and be continuing.
(l) The Connecticut National Bank 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
which it is required to comply with in its individual capacity.
(m) Each Loan Participant and the Owner Participant represents and
warrants, and each Certificate Holder (by virtue of its acceptance of a Loan
Certificate) shall be deemed to represent and warrant, that it is not acquiring
any of its interest in the Trust Estate, any Loan Certificate or any interest
represented thereby with "plan assets" as defined in Regulation Section 2510.3-
101 of ERISA of any "Employee Benefit Plan" as defined in Section
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PARTICIPATION AGREEMENT (1992 757 [__])
3(3) of ERISA or with assets of any "plan" as defined in Section 4975(e)(1) of
the Code.
(n) The Lessee represents and warrants that none of the funds provided
by the Loan Participants pursuant to Sections 1 and 2 hereof will be used for
any purposes which might cause the transaction contemplated by this Agreement to
constitute a "purpose credit" within the meaning of Regulation X of the Board of
Governors of the Federal Reserve System, assuming that the proceeds are applied
as contemplated by the provisions of this Agreement.
(o) Each Loan Participant covenants and agrees (and each Certificate
Holder by its acceptance of a Loan Certificate shall be deemed to have
covenanted and agreed) that it shall not cause or permit to exist a Loan
Participant Lien attributable to it with respect to the Aircraft or any other
portion of the Trust Estate. Each such Person agrees that it will promptly, at
its own expense, take such action as may be necessary duly to discharge such
Loan Participant Lien attributable to it, and to make restitution to the Trust
Estate for any actual diminution of the assets of the Trust Estate resulting
from such Loan Participant Lien attributable to it. Each such Person further
agrees not to take any action to cause the Mortgagee to take any action which
the Mortgagee is not permitted to take pursuant to the terms of the Operative
Documents.
(p) The Connecticut National Bank, in its individual capacity (except
as to subsection (ix), in its capacity as Owner Trustee), 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 Operative Documents to which it is a party 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 The Connecticut National Bank, in its individual capacity,
and there are no Liens attributable to The Connecticut National Bank, in
its individual capacity affecting the title of the Owner Trustee to the
Aircraft or resulting from any act or claim against The Connecticut
National Bank, in its individual capacity arising out of any event or
condition not related to the ownership, leasing, use or operation of the
Aircraft or to any other transaction
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PARTICIPATION AGREEMENT (1992 757 [__])
contemplated by this Agreement or any of the other Operative Documents,
including any Lien resulting from the nonpayment by The Connecticut
National Bank, in its individual capacity of any Taxes (as defined in
Section 7(b)(i) hereof) 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 The Connecticut National
Bank, in its individual capacity and which is presently continuing;
(iv) it is a national banking association duly organized and
validly existing in good standing under the federal laws of the United
States of America and (assuming due authorization, execution and delivery
of the Trust Agreement by the Owner Participant) has the corporate and
trust power and authority to enter into and perform its obligations under
the Trust Agreement, and 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 Operative Documents to which it is a
party;
(v) each of the Operative Documents to which it is a party 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 Connecticut
state 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;
(vi) assuming due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, each of the Operative Documents
to which it is a party has been duly executed and delivered by it and, the
Trust Agreement is a legal, valid and binding obligation of The Connecticut
National Bank, in its individual capacity and as Owner Trustee, as the case
may be, enforceable against such party in accordance with the respective
terms thereof;
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PARTICIPATION AGREEMENT (1992 757 [__])
(vii) on the Closing Date, the Owner Trustee shall have received
whatever title to the Aircraft was conveyed to it by the Lessee;
(viii) it has not offered any interest in the Trust Estate or any
Loan Certificates or any similar securities for sale to, or solicited any
offer to acquire the sane from, anyone, and no responsible officer of the
corporate trust department of The Connecticut National Bank has knowledge
of any such offer or solicitation, except as set forth in Section 7(a)(xi);
(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;
(x) there are no proceedings pending or, to the best knowledge
of The Connecticut National Bank, threatened, against The Connecticut
National Bank in any court or before any governmental authority or
arbitration board or tribunal which, if adversely determined, would
materially and adversely affect the right, power and authority of The
Connecticut National Bank to enter into or perform its obligations under
the Owner Trustee Documents; and
(xi) neither the due execution and delivery of the Owner Trustee
Documents by The Connecticut National Bank, 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 Connecticut governmental authority or agency pursuant
to any federal or Connecticut law governing the banking or trust powers of
The Connecticut National Bank.
(q) The Owner Participant agrees, solely for the benefit of Lessee,
that it will comply with any undertaking delivered by it as contemplated in the
Lease Agreement including, without limitation, Section 9(c) thereof and shall
indemnify Lessee for any losses, damages, costs or expenses of any kind incurred
as a consequence of such failure to comply with such undertaking. The Owner
Participant further covenants and agrees to pay or cause the
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PARTICIPATION AGREEMENT (1992 757 [__])
Owner Trustee to pay those costs and expenses specified to be paid by the Owner
Participant pursuant to the Lease Agreement, including without limitation those
specified in Exhibit E thereto, and all obligations, costs and expenses, if any,
that are for the account of the Owner Trustee pursuant to Sections 5(d), 5(e),
9(c), 12 and 19(c) of the Lease Agreement. In addition, the Owner Participant
shall (i) comply with its obligation to use commercially reasonable efforts to
obtain the highest price for a sale of the Aircraft as set forth in Section 9(c)
of the Lease Agreement and (ii) cause the Owner Trustee to perform its
obligations under Section 3(g) of the Lease Agreement. The Owner Participant
agrees that it will not transfer or assign its interest in this Agreement, or
solicit any interest in this Agreement, on or prior to December 31, 1992.
(r) Subject to compliance by Lessee with all of its obligations under
the Operative Documents to which it is a party, each of the Owner Participant,
the Owner Trustee and the Mortgagee covenants and agrees, and each Certificate
Holder, by virtue of the acceptance of its Loan Certificate, shall be deemed to
have covenanted and agreed, that if Lessee elects to terminate the Lease
Agreement pursuant to Section 9(a) of the Lease Agreement and to purchase such
Aircraft pursuant to Section 9(b) of the Lease Agreement, or to purchase the
Aircraft pursuant to Section 19(b) of the Lease Agreement, then each of the
parties will execute and deliver appropriate documentation transferring all
right, title and interest in the Aircraft to Lessee (without recourse or
warranty except as to the absence of 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 the Owner Participant and except as to Loan Participant
Liens with respect to the Certificate Holders) (including without limitation,
such bills of sale and other instruments and documents as Lessee shall
reasonably request to evidence (on the public record or otherwise) such transfer
and the vesting of all right, title and interest in and to the Aircraft in
Lessee), and if Lessee, in connection with such purchase, elects to assume the
obligations of the Owner Trustee pursuant to the Trust Indenture and the Loan
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 the Owner Participant and the Owner Trustee from
all obligations in respect of the Loan Certificates, the Trust Indenture and all
other Operative Documents (other than Section 7(b) hereof or the Tax Indemnity
Agreement) and all such other actions as are reasonably necessary to permit such
assumption by Lessee.
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PARTICIPATION AGREEMENT (1992 757 [__])
(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" as defined in Section 101(16) of the Federal
Aviation Act 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 Mortgagee and each
Participant a duly authorized, valid, binding and enforceable agreement in
form and substance reasonably satisfactory to the Owner Participant and
Mortgagee 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 to be performed or observed by Lessee;
(iii) immediately after giving effect to such transaction, no
Default or Event of Default under the Lease Agreement shall have occurred
and be continuing; and
(iv) Lessee shall have delivered to the Owner Trustee, the
Mortgagee and the 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 and Mortgagee, each
stating that such consolidation, merger, conveyance, transfer or lease and
the assumption agreement mentioned in clause (ii) above comply with this
Subsection (t) and that all conditions precedent herein provided for
relating to such transaction have been complied with.
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
Subsection (t) 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
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every right and power of, Lessee under this Agreement with the same effect as if
such successor corporation or Person had been named as Lessee herein. 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 Subsection (t) from its liability in respect of any Operative Document to
which it is a party.
(t) Lessee, at its expense, will, at the request of any party hereto,
cooperate with the Owner Participant, the Owner Trustee, the Mortgagee and the
Certificate Holders in taking such action with respect to the recording, filing,
rerecording and refiling of the Trust Agreement, the Lease Agreement, the Lease
Supplement, the Trust Indenture, the Indenture Supplement and any financing
statements or other instruments as are necessary to maintain, so long as the
Trust Indenture or the Lease Agreement 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 Agreement and the ownership
interest of the Owner Trustee in the Aircraft or will furnish to the Owner
Trustee and the Mortgagee 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.
(u) Section 3(c) of the Lease Agreement contemplates that, under
certain circumstances, the Owner Participant will make certain recalculations of
Basic Rent, Excess Amount, Stipulated Loss Value percentages, Termination Value
percentages and Special Termination Value percentages, and the Owner Participant
hereby agrees to make such recalculations as and when contemplated by the Lease
Agreement and subject to all the terms and conditions of the Lease Agreement 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(c) of the Lease Agreement.
(v) The Owner Participant hereby agrees with Lessee, and only with
Lessee, and not for the benefit of any other party to this Participation
Agreement, that it promptly will pay the Owner Trustee any funds necessary to
enable the Owner Trustee to pay to Lessee the full amount of any Reimbursement
Amount owed to Lessee; provided that the Owner Participant shall have no
obligation to pay to the Owner Trustee the Reimbursement Amount if an Event of
Default or a Section 14(a), (b), (f) or (g) Default under the Lease Agreement
shall have occurred and is continuing on the date such
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amount is due and payable; provided further that, if such Event of Default or
Default shall subsequently be cured by the Lessee or waived by the Owner
Participant, then the obligation of the Owner Participant to fund the
Reimbursement Amount shall be reinstated and shall be effective on and after the
date such Event of Default or Default shall no longer be continuing or has been
so waived.
(w) The Owner Participant shall notify Lessee or cause Lessee to be
notified by telecopier, telex or telegram not later than 11:00 a.m., New York
time, on the third Business Day prior to the date for which an Excess Amount is
payable, stating whether or not the Owner Participant intends to pay such amount
in full by 11:00 a.m., New York time, on the due date; provided that the Owner
Participant shall have no obligation to fund the Excess Amount if an Event of
Default or a Section 14(a), (b), (f) or (g) Default under the Lease Agreement
shall have occurred and is continuing on the date such amount is due and
payable; provided further that, if such Event of Default or Default shall
subsequently be cured by the Lessee or waived by the Owner Participant, then the
obligation of the Owner Participant to fund the Excess Amount shall be
reinstated and shall be effective on and after the date such Event of Default or
Default shall no longer be continuing or has been so waived.
(x) 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 Agreement shall remain in effect and no
Event of Default under the Lease Agreement shall have occurred and be continuing
and (ii) the Mortgagee so long as the Trust Indenture shall be in effect. Each
successor Owner Trustee selected by the Owner Participant pursuant to the terms
of the Trust Agreement shall be subject to the approval of Lessee (which
approval shall not be unreasonably withheld) so long as no Event of Default
under the Lease Agreement shall have occurred and be continuing.
(y) Each Loan Participant which is not organized under the laws of the
United States, any State thereof or the District of Columbia represents,
warrants and covenants (and each Certificate Holder, by virtue of its acceptance
of a Loan Certificate, shall be deemed to represent, warrant and covenant) that
(A) the income from its Owner Trust Advance will be "effectively connected with
the conduct of a trade or business with the United States" as defined in Section
864(c) of the Code or (B) the income from the Owner Trustee Loans is exempt from
withholding under the convention between the United States of America and the
jurisdiction in which it is organized with respect to taxes on income and
certain other taxes (the "Convention") as in effect on the Closing Date (in the
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case of a Loan Participant) or the date it acquired its Loan Certificate (in the
case of any other Certificate Holder). Each such Loan Participant further
represents, warrants and covenants, and any Certificate Holder, by virtue of its
acceptance of its Loan Certificate, shall be deemed to have represented,
warranted and covenanted, that, so long as it is the holder of a Loan
Certificate, it will promptly notify the Owner Trustee, the Mortgagee and Lessee
in writing if the income from the Loans ceases to be exempt under the Convention
or the income from the Loan ceases to be "effectively connected with the conduct
of a trade or business within the United States." Each such Loan Participant and
each Certificate Holder represents, warrants and covenants that it will properly
prepare and promptly furnish to the Owner Trustee, the Mortgagee or Lessee, to
the extent it has not already done so, such forms, reports, certificates or
other documents as may, from time to time, be reasonably requested by the Owner
Trustee, the Mortgagee or Lessee to evidence any entitlement to, or which may
qualify such Loan Participant or Certificate Holder for, any exemption from, or
reduced rate of, United States Federal income tax under United States Federal
income tax law or treaty, as now or hereafter in effect, including without
limitation, Internal Revenue Service Form 1001, Form 4224 and/or Form W-8. Each
Loan Participant and each Certificate Holder represents, warrants and covenants
that it will promptly notify the Owner Trustee, the Mortgagee and Lessee if it
transfers any interest in a Loan Certificate to any person.
Each Certificate Holder shall indemnify (on an after-tax basis) and hold
harmless the Owner Trustee, the Mortgagee and the Owner Participant against any
United States withholding taxes (and related interest and penalties) which the
Mortgagee improperly fails to withhold on payments to such Certificate Holder as
a result of the failure to such Certificate Holder to provide the required
certificate or form or the invalidity of any certificate or form provided by
such Certificate Holder pursuant to this Section 9. Any amount payable hereunder
shall be paid within 30 days after receipt by a Certificate Holder of a written
demand therefor.
SECTION 10. Postponement of Closing Date. (a) In the event that the Owner
Participant or a Loan Participant shall for any reason fail or refuse to make
the full amount of its Commitment for the Aircraft available to the Owner
Trustee in accordance with the terms of Section 2 hereof (other than because of
the failure to satisfy the conditions precedent set forth in Section 4 (a)
hereof), the Mortgagee will forthwith give each party hereto written notice of
such default and the Closing Date for the
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Aircraft will be postponed to the fifth succeeding Business Day (and the term
"Closing Date" as used in this Agreement shall include any such postponed
"Closing Date"). During such five-Business Day period:
(i) if such default is on the part of the Owner Participant, the
Lessee shall have the right, subject to the next sentence of this Section
10, to find another entity to be substituted for such Owner Participant,
and
(ii) if such default is on the part of a Loan Participant, the
Lessee shall have the right to find another entity (which may be another
Loan Participant) to be substituted for the defaulting Loan Participant,
subject to the next sentence of this Section 10.
Any entity substituted for the defaulting Owner Participant or the defaulting
Loan Participant pursuant to subdivision (i) or (ii) of the immediately
preceding sentence shall sign and deliver an agreement, in form and substance
satisfactory to the other parties to this Agreement, by which it will assume the
Commitment of such defaulting party. Upon the execution and delivery of such
agreement, such entity so substituted shall become the Owner Participant or the
relevant Loan Participant, as the case may be, and shall be deemed substituted
for the defaulting Owner Participant or the defaulting Loan Participant, for all
purposes of each Operative Document. No action by a non-defaulting party under
this Section 10 shall be deemed to constitute a waiver or release of any right
which any such party may have against the defaulting Owner Participant or the
defaulting Loan Participant.
(a) A scheduled Closing Date may be postponed by Lessee from time to
time for any reason, other than pursuant to Section 10(a), but not beyond
December [__], 1992 if the Lessee gives the Owner Participant, the Mortgagee,
the Loan Participants and the Owner Trustee written notice of such postponement.
If with such notice of postponement, the Lessee shall also give notice of the
date to which such Closing Date has been postponed, the Lessee need not comply
with the two Business Days' notice provision of Section 2 The term "Closing
Date" as used in this Agreement shall include any such postponed "Closing Date."
(b) In the event of any postponement of a Closing Date pursuant to
Section 10(a) or 10(b):
(i) Lessee will reimburse the Participants (except any
Participant who breached its obligation to fund) by paying
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to the Participants interest (at the Debt Rate, in the case of a Loan
Participant, and at the rate set forth in clause (ii) of Section 3(c) (iii)
of the Lease, in the case of the Owner Participant) (less any interest
earned on such funds in respect of such period) on the amount of the
Participants' funds in the Mortgagee's account to which such funds were
transferred pursuant to Section 2 hereof (the "Account") for each calendar
day from and including the scheduled Closing Date to but excluding the
earlier of (A) the Business Day on which the Participants' funds are
returned to the Participants by 12:00 noon New York time from the Account
or (B) the date on which the Aircraft is accepted; and
(ii) the Mortgagee shall return to each Participant any of such
Participant's funds then remaining in the Account, plus interest earned on
the funds deposited in the Account applicable to the Participant's funds,
on the date six Business Days after the scheduled Closing Date (but not
before), unless the Aircraft shall have been delivered and accepted
pursuant to the Operative Documents. At the risk and expense of Lessee,
all funds shall be invested overnight upon the best terms and conditions
reasonably obtainable by the Mortgagee. If the funds are returned to the
Participants, this Agreement shall remain in full force and effect and
Lessee may give notice of a new Closing Date pursuant to Section 2 hereof.
SECTION 11. Other Documents; Amendment. Each of the Owner Participant and
the Owner Trustee hereby (A) agrees with Lessee, the Mortgagee and the
Certificate Holders to comply with all of the terms of the Trust Agreement (as
the same may hereafter be amended or supplemented from time to time in
accordance with the terms thereof) applicable to it; and (B) agrees with Lessee,
the Certificate Holders and the Mortgagee not to terminate, 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. In
addition, so long as the Lease Agreement has not been terminated, the Mortgagee
and the Owner Trustee hereby agree for the benefit of Lessee that without the
consent of Lessee they will not (and the Owner Participant and Certificate
Holders agree they will not cause the Owner Trustee or Mortgagee, respectively,
to) terminate, amend, supplement or otherwise modify any provision of the Trust
Indenture in a manner adversely affecting Lessee. The Mortgagee 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. Each Certificate Holder agrees
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that it will not take any action in respect of the Indenture Estate except
through the Mortgagee pursuant to the Trust Indenture or as otherwise permitted
by the Trust Indenture.
SECTION 12. Certain Covenants of Lessee. Lessee covenants and agrees with
the Participants, the Mortgagee and the Owner Trustee, in its capacity as such
and in its individual capacity as follows:
(a) Promptly upon the registration of the Aircraft and the recording
of the Lease Agreement, the Trust Indenture, the Trust Agreement, the Lease
Supplement and the Indenture Supplement covering the Aircraft pursuant to the
Federal Aviation Act, Lessee will cause ▇▇▇▇▇ & ▇▇▇▇▇▇▇ in Oklahoma City,
Oklahoma, to deliver to the Participants, the Mortgagee, the Owner Trustee and
Lessee an opinion as to the due and valid registration of the Aircraft in the
name of the Owner Trustee, the due recording of the Owner Trustee's FAA ▇▇▇▇ of
Sale, the Trust Indenture, the Lease Supplement, the Indenture Supplement, the
Lease Agreement and the Trust Agreement and the lack of filing of any
intervening documents with respect to the Aircraft.
(b) Lessee will cause to be done, executed, acknowledged and delivered
all and every such further acts, conveyances and assurances as the Owner
Trustee, the Mortgagee, the Owner Participant or any Certificate Holder shall
reasonably require for accomplishing the purposes of this Agreement and the
other Operative Documents; 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 delivery of the Aircraft under the Lease Agreement, 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 Agreement, under the Federal Aviation Act
or other 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, 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
Agreement or as the owner of the Aircraft with any governmental authority
(including tax authorities).
(c) Lessee, at its expense, will cause the Trust
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Agreement, the Lease Agreement, all Lease Supplements, all amendments to the
Lease Agreement, the Trust Indenture, all Indenture Supplements and all
supplements and amendments to the Trust Indenture to be promptly filed and
recorded, or filed for recording, to the extent required under the Federal
Aviation Act, or required under any other applicable law. Upon the execution and
delivery of the Owner Trustee's FAA ▇▇▇▇ of Sale, the Lease Supplement covering
the Aircraft and the Indenture Supplement, the Lease Agreement and the Trust
Indenture shall be filed for recording with the Federal Aviation Administration
in the following order of priority; first, the Owner Trustee's FAA ▇▇▇▇ of Sale
and the FAA registration application, second, the Lease Agreement, with the
Lease Supplement covering the Aircraft, attached, and third, the Trust
Indenture, with the Indenture Supplement attached. Lessee agrees to furnish the
Owner Participant, the Owner Trustee and the Mortgagee with copies of the
foregoing documents with recording data as promptly as practicable following the
issuance of same by the FAA.
SECTION 13. Owner for Federal Tax Purposes. It is hereby agreed among
Lessee, the Owner Participant and the Owner Trustee that for federal income tax
purposes the Owner Participant will be the owner of the Aircraft to be delivered
under the Lease Agreement and Lessee will be the lessee thereof, and each party
hereto agrees to characterize the Lease Agreement as a lease for federal income
tax purposes.
SECTION 14. 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 prepaid telex,
TWX or telegram (with messenger delivery specified in the case of a telegram),
or by telecopier, or by prepaid courier service, and shall be deemed to be given
for purposes of this Agreement on the day that such writing is sent or if given
by certified mail, three Business Days after being deposited in the mails, in
accordance with the provisions of this Section 14. Unless otherwise specified in
a notice sent or delivered in accordance with the foregoing provisions of this
Section 14, 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 telex, TWX or telecopier numbers) as follows:
(A) if to Lessee, the Owner Trustee, the Loan Participants, the Mortgagee or the
Owner Participant, to the respective addresses set forth on Schedules I and II
hereto, (and in the case of Owner Trustee a copy shall be sent to the Owner
Participant) or (B) if to
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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 Holder at its address set forth in the Loan
Certificate register maintained pursuant to Section 2.7 of the Trust Indenture.
(b) Each party to this Agreement (individually a "Party" and
collectively "Parties") irrevocably agrees that any legal suit, action or
proceeding brought by any other Party, which arises out of or relates 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 any court of
the State of New York or any Federal court of the United States of America
located in the City and State of New York 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 14 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 15. Change of Situs of Owner Trust. The Owner Participant agrees
that if, at any time, the Trust Estate or the Owner Trustee becomes subject to
any Taxes (as defined in Section 7(b) hereof) for which it is indemnified
pursuant to Section 7(b) hereof and if, as a consequence thereof, Lessee should
request that the situs of the trust be moved to another state in the United
States from the state in which it is then located, the situs of the trust may be
moved with the written consent of 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 and
the Certificate Holders may reasonably request, (B) the rights and obligations
under the Operative Documents of the Owner Participant and the Certificate
Holders shall not be adversely 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 reasonably be requested by the Mortgagee to continue the
perfection of the lien on the Trust Indenture Estate, (D) there is no Event of
Default or Section
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PARTICIPATION AGREEMENT (1992 757 [__])
14(a), (b), (f) or (g) Default under the Lease Agreement which has occurred and
is continuing, (E) the Owner Participant and Mortgagee shall have received an
opinion or opinions of counsel (reasonably satisfactory to the Owner Participant
and Mortgagee) in scope, form and substance reasonably satisfactory to the Owner
Participant and Mortgagee to the effect that (I) the trust, as thus removed,
shall remain a validly established trust, (II) any amendments to the Trust
Agreement necessitated by such removal shall have been duly authorized, executed
and delivered by the parties thereto and shall constitute the valid and binding
obligations of such parties, enforceable in accordance with their terms, (III)
such removal will not result in the imposition of, or increase in the amount of,
any Tax for which Lessee is not required to fully indemnify the Owner
Participant, Certificate Holders, the Owner Trustee or the Trust Estate 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 result in any adverse tax consequences with respect to which Lessee is
not required to indemnify the Owner Participant pursuant to the Tax Indemnity
Agreement (taking into account any additional indemnification provided by Lessee
pursuant to clause (A) of this sentence), provided, that, the opinions in
clauses (III) and (IV), in the case of the Owner Participant, shall be delivered
by Owner Participant's counsel (as defined in the Tax Indemnity Agreement) and
(V) covering such other matters as the Owner Participant or Mortgagee may
reasonably request, (F) if such removal involves the replacement of the Owner
Trustee, the Owner Participant and Mortgagee shall have received an opinion of
counsel to such successor Owner Trustee in form and substance reasonably
satisfactory to the Owner Participant and Mortgagee covering the matters
described in Section 4 (a) (xii) hereof and (G) Lessee shall indemnify and hold
harmless the Owner Participant and Certificate Holders 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, and the Certificate Holders,
in connection with such change of situs. The Owner Participant agrees with
Lessee that it will not consent to or direct a change in the situs or the Trust
Estate without the prior written consent of Lessee.
SECTION 16. Miscellaneous. (a) Each of the Participants covenants and
agrees (and each other Certificate Holder by its acceptance of a Loan
Certificate shall be deemed to have covenanted and agreed) that it shall not
unreasonably withhold its consent to any consent requested of the Owner Trustee,
as Lessor, or the Mortgagee under the terms hereof or of the Lease Agreement,
which
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PARTICIPATION AGREEMENT (1992 757 [__])
by its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor,
or by the Mortgagee.
(a) Except as set forth herein, the representations, warranties,
indemnities and agreements of Lessee, the Owner Trustee, the Mortgagee, the
Participants and Certificate Holders provided for in this Agreement and the Tax
Indemnity Agreement, and Lessee's, the Owner Trustee's, Mortgagee's,
Participants' and 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 the Loan Participants in any Loan
Certificate or the Trust Indenture Estate and the expiration or other
termination of this Agreement or any other Operative Document.
(b) 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
Mortgagee, and the Owner Trustee. The terms of this Agreement shall be binding
upon, and inure to the benefit of, Lessee, the Participants, the Certificate
Holders, the Mortgagee and the Owner Trustee. This Agreement shall in all
respects be governed by, and construed in accordance with, the internal laws of
the State of New York including all matters of construction, validity and
performance.
(c) 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, unless expressly otherwise stated, 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
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PARTICIPATION AGREEMENT (1992 757 [__])
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 16(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 16(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 16(d) shall survive
the termination of this Agreement and the other Operative Documents.
(d) So long as no Default or Event of Default under the Lease
Agreement shall have occurred and be continuing, the Owner Trustee hereby
authorizes Lessee to act as its agent for the purpose of obtaining any required
replacement operating certificates from the FAA. This authority includes, but
is not limited to, obtaining Registration Certificates, Airworthiness
Certificates, Certificates of Sanitary Construction, Ferry Permits and
Experimental Operating Permits. In particular, this authority includes the
ability to make use of Exemption No. 5315 issued by the FAA. This authority
will allow duly authorized personnel of Lessee to sign any application forms
required in the process of obtaining such operating certificates, and this
authority will also allow such personnel, where necessary and appropriate, to
sign certificates as the attorney-in-fact for the Owner Trustee. Lessee hereby
agrees that it will notify the Owner Trustee of any action that it has taken in
accordance with this Section 16(e) as agent for the Owner Trustee. The Owner
Participant, by its execution hereof, shall be deemed to have consented to the
above-described grant of authority from the Owner Trustee to Lessee.
SECTION 17. Invoices and Payment of Expenses. Each of the Owner Trustee,
the Mortgagee, Lessee and the Participants shall promptly (and in any event
within 90 days after the Closing Date) submit to the Owner Participant and
Lessee for their prompt approval (which shall not be unreasonably withheld)
copies of invoices of the Transaction Expenses as they are received. The Owner
Participant agrees to transfer to the Owner Trustee from time to time within a
reasonable period of time after receipt and such approval of invoices of
Transaction Expenses such amount as shall be necessary in order to enable the
Owner Trustee to pay such Transaction Expenses or to pay such amounts directly.
To the extent of funds received by it, the Owner Trustee agrees to pay all
invoices of Transaction Expenses that have been approved by the
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Owner Participant and Lessee promptly upon receipt thereof. Notwithstanding the
foregoing, in the event that the transactions contemplated hereby shall not be
consummated, Lessee shall pay all Transaction Expenses, except each of the
Participants shall be responsible for their own Expenses (including, without
limitation, the fees, expenses and disbursements of counsel to the Participants
and the fee of any appraiser of the Aircraft) if such failure to consummate the
transactions result from the failure of such Participant to fund in accordance
with the terms hereof or, in the case of the Owner Participant, to negotiate in
good faith (which failure to negotiate in good faith, in the case of the Owner
Participant, shall be based on the Owner Participant's ▇▇▇▇-up of the Summary of
Terms and Conditions delivered to Capstan Partners, Inc. on February 6, 1992).
In addition, Lessee or the Loan Participant, as the case may be, shall pay to
the other Funding Costs or Funding Profits (provided Lessee shall have no
obligation to pay Funding Costs to any Loan Participant which breaches its
obligation to fund). To the extent Transaction Expenses exceed 1.25% of Lessor's
Cost, the Lessee may, in lieu of electing an optimization pursuant to Section 19
hereof, promptly reimburse the Owner Trustee or Owner Participant, as
appropriate, for all or a portion of the Transaction Expenses described in
clause (i)(5) and/or clause (vii) of the definition of Transaction Expenses.
SECTION 18. Optional Redemption of Loan Certificates. (a) Subject to
subparagraph (d) below, in the event that at any time Lessee shall have given
written notice to the Owner Trustee, the Mortgagee, the Owner Participant and
the Certificate Holders that Lessee is requesting a voluntary redemption of the
Loan Certificates, the Owner Participant agrees to negotiate promptly in good
faith to conclude an agreement 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 the Owner Participant shall have concluded an agreement
with respect to such terms:
(i) within ten Business Days after the reaching of such
agreement, the Owner Participant will deliver to Lessee a certificate of an
authorized representative of the Owner Participant (the "Refinancing
Certificate") setting forth (i) the proposed date on which the outstanding
Loan Certificates will be redeemed, which shall be an Interest Payment
Date, and describing the new debt to be issued and the other aspects of
such refunding or refinancing transaction to be consummated (such date, the
"Refinancing Date") and (ii) the following
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PARTICIPATION AGREEMENT (1992 757 [__])
information: (A) subject to the limitations set forth in this Section 18,
the proposed adjusted ratio of the debt evidenced by the Loan Certificates
to the Owner Participant's investment in the beneficial ownership of the
Aircraft (such ratio, the "Debt/Equity Ratio"), (B) the principal amount of
debt to be issued by the Owner Trustee on the Refinancing Date, (C) the
amount, if any, by which the Owner Participant's aggregate investment in
the beneficial interest (which for purposes of this Section 18(a)(i) shall
mean Owner Participant's initial equity investment on the Delivery Date in
the transactions contemplated hereby, any Transaction Expenses which Owner
Participant has funded or reasonably expects to fund in the future plus the
Excess Amount) in the Aircraft is to be decreased and (D) the proposed
revised schedules of Basic Rent, Excess Amount, debt amortization,
Stipulated Loss Value percentages, Termination Value percentages and
Special Termination Value percentages. Within ten Business Days of its
receipt of the Refinancing Certificate, Lessee may demand a verification
pursuant to Exhibit E to the Lease Agreement 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,
Termination Value percentages, Special 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 (vii) below:
(ii) the appropriate parties will enter into a financing or loan
agreement (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 the sale of the Owner Trustee's interest in
the Trust Estate and/or the Aircraft and its resale to the Owner Trustee)
with the institution or institutions to be named therein providing for (i)
the issuance and sale by the Owner Trustee 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 not exceed the aggregate principal amount of all Loan 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 Loan Certificates on the Refinancing Date and (iii)
the payment of the excess, if any, of such proceeds over the
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PARTICIPATION AGREEMENT (1992 757 [__])
amounts necessary to effect such redemption to the Owner Trustee;
(ii) Lessee and the Owner Trustee will amend the Lease Agreement
to provide that (i) Basic Rent and the Excess Amount 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, Termination Value and Special Termination Value from and after
the Refinancing Date shall be as provided in the Refinancing Information;
(iv) the Owner Trustee will enter into an agreement to provide
for the securing thereunder of the New Debt in like manner as the Loan
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;
(v) unless otherwise agreed or required by the Owner
Participant, and whether or not such refunding or refinancing transaction
is consummated, Lessee shall pay or reimburse 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
any related loan or commitment fees; and
(vi) subject to compliance by the Owner Trustee with all
applicable terms and conditions for voluntary prepayment under the Trust
Indenture and this Agreement, each Certificate Holder will transfer to the
Owner Trustee the Loan Certificates held by it immediately prior to such
refunding or refinancing for cancellation (and the Owner Trustee shall
cancel the same), against receipt by such Certificate Holder of the then
outstanding principal amount of such Loan Certificates, accrued and unpaid
interest thereon, together with payment in full of all other amounts then
payable to such Certificate Holder and the Mortgagee hereunder or under the
Trust Indenture.
(a) In the case of a refunding or refinancing involving a public
offering of the New Debt, (1) the Owner Participant shall have the right to
review and approve (which approval shall not be unreasonably withheld) any
prospectus filed with the Securities and Exchange Commission and Lessee shall
indemnify the Owner Participant (on terms reasonably satisfactory to the Owner
Participant) for any liabilities under federal or state or foreign
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PARTICIPATION AGREEMENT (1992 757 [__])
securities laws resulting from such offering, provided that the Owner
Participant shall have no obligation to approve any prospectus or other offering
material which names the Owner Participant, and (2) Lessee shall have the right
to purchase such debt securities and apply such securities as a credit against
its obligations to pay Rent, provided that in connection with such refunding or
refinancing Lessee shall have agreed to indemnify the Owner Participant with
respect to such right in a manner reasonably satisfactory to the Owner
Participant. 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, Chicago, Illinois, Hartford, Connecticut or Boston, Massachusetts and
having, or its corporate parent 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,
and otherwise be mutually acceptable to the Owner Participant and Lessee.
(b) The Lessee, acting on behalf of the Owner Trustee, shall give the
Mortgagee at least thirty days revocable written notice of the proposed date of
the optional refunding or refinancing. No more than two refundings or
refinancings shall be permitted during the Term.
(c) Notwithstanding the foregoing, the Owner Participant and Owner
Trustee shall have no obligation to proceed with any refunding or refinancing
transaction as contemplated by this Section 18:
(i) if within 20 days after receipt of a written request from
Lessee to effect a refunding or refinancing pursuant to this Section 18
describing the material terms of such refunding or refinancing, the Owner
Participant provides the Lessee with a written opinion of independent tax
counsel selected by the Owner Participant and reasonably acceptable to the
Lessee to the effect that there will be a material risk of adverse tax
consequences with respect to the Owner Participant's Tax Assumptions (as
defined in the Tax Indemnity Agreement) resulting from the refunding or
refinancing, then the Owner Trustee and the Owner Participant shall be
required to effect such refunding or refinancing only if the Lessee shall
have agreed to indemnify the Owner Participant against such identified
adverse tax consequences; provided, however, the parties agree that in the
absence of a change in applicable laws, regulations, revenue rulings,
revenue procedures or judicial precedents enacted, adopted or decided after
the Closing Date, the mere fact of a refinancing or
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refunding (as opposed to the particular terms thereof) will not be deemed
for this purpose to result in a material risk of the Owner Participant not
being considered the owner of the Aircraft, the Airframe, any Engine or any
Part for Federal or other income tax purposes;
(ii) if, in the Owner Participant's reasonable, good faith
judgment, such refunding or refinancing transaction would adversely affect
any material rights of the Owner Participant contained in the Trust
Indenture;
(iii) an Event of Default under the Lease Agreement then exists
and is continuing;
(iv) the weighted average life to maturity or the final maturity
date of the Loan Certificates is increased by more than six months;
(v) if the principal amount of the New Debt is greater than the
principal amount of the Loan Certificates;
(vi) if any additional equity is required to be contributed or
if any equity is required to be returned to the Owner Participant;
(vii) if the New Debt is not denominated in U.S. Dollars;
(viii) if the Owner Participant or Owner Trustee is required to
pay swap breakage (other than 6-month interperiod LIBOR breakage as agreed
to in the original Trust Indenture); or
(ix) if the Owner Participant's Net Economic Return is not
maintained.
SECTION 19. Optimization. (a) In the event that (i) the Closing Date occurs
other than on December [__], 1992, or (ii) Transaction Expenses paid by Lessor
are determined to be other than 1.25% of Lessor's Cost, then the Lessee may,
provided that the conditions in Section 18(d)(i) shall be satisfied as if such
optimization were a refinancing under Section 18, pursuant to this Section 19
and in accordance with the requirements of Section 3 of the Lease Agreement
request optimization of the debt payment structures by notice to the Owner
Participant and Owner Trustee. After receipt of such notice, the Owner
Participant shall deliver to Lessee and the Mortgagee a certificate of an
authorized
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PARTICIPATION AGREEMENT (1992 757 [__])
representative of the Owner Participant (the "Optimization Certificate") setting
forth the proposed revised schedules of debt amortization and Basic Rent, Excess
Amount, Stipulated Loss Value percentages, Termination Value percentages and
Special Termination Value percentages. Within fifteen days of its receipt of the
Optimization Certificate, Lessee may demand a verification, pursuant to Exhibit
E of the Lease Agreement, of the information set forth in the Optimization
Certificate. Upon the acceptance by Lessee of the accuracy of the information
set forth in the Optimization Certificate or the determination pursuant to such
verification procedures of such information, the Owner Participant will cause
the Owner Trustee (M) to execute an amendment to the Lease Agreement setting
forth the optimized Basic Rent, Excess Amount, Stipulated Loss Value
percentages, Termination Value percentages and Special Termination Value
percentages, and (N) to exchange new Loan Certificates containing optimized
amortization schedules for the Loan Certificates outstanding immediately prior
to such optimization and the Lessee will execute such amended Lease Agreement
and the Certificate Holders will cause the Mortgagee to execute any amendments
to the Trust Indenture necessary to effectuate the foregoing.
(a) In connection with optimization adjustments of Basic Rent, Excess
Amount, Stipulated Loss Value percentages, Termination Value percentages and
Special Termination Value percentages pursuant to this Section 19 and Section
3(c) of the Lease Agreement, (M) the Certificate Holders will agree to changes
in the amortization schedule of the Loan Certificates, and (N) each Certificate
Holder will exchange the Loan Certificates held by it immediately prior to such
optimization for new Loan Certificates containing optimized amortization
schedules; provided, that such changes do not (U) require the contribution of
additional equity, (V) require the refund or return of any equity to the Owner
Participant, (W) fail to maintain the Owner Participant's Net Economic Return,
(X) increase the principal amount of the Loan Certificates outstanding as of the
time of such exchange, (Y) extend the final maturity date of any Loan
Certificate, or (Z) increase by more than six months the weighted average lives
of the Loan Certificates.
(b) Upon the consummation of any such optimization (and as
indemnification for the loss resulting therefrom) the Owner Trustee or the
Certificate Holders, as the case may be, shall pay to the other any Funding
Costs incurred by the Certificate Holder as a result of any payment to them upon
such optimization. Lessee shall pay all of the reasonable Expenses of all
parties to such optimization, including without limitation the reasonable fees
and
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PARTICIPATION AGREEMENT (1992 757 [__])
expenses of such parties' counsel.
SECTION 20. Certain Additional Payments. (a) If following the occurrence of
an Event of Loss with respect to the Aircraft there shall be a termination of
the Lease Agreement pursuant to Section 10 thereof, or if there shall be a
termination of the Lease Agreement pursuant to Section 9 or Section 15 thereof,
then the Owner Trustee shall pay to the Certificate Holders Funding Costs
incurred by such Certificate Holders as a result thereof or the Certificate
Holders shall pay to the Owner Trustee Funding Profits realized by such
Certificate Holders as a result thereof, as the case may be (without duplication
for other amounts, if any, payable pursuant to any other provision of the
Operative Documents).
(a) In the event of any Increased Cost with respect to any Certificate
Holder, such Certificate Holder shall promptly inform the Owner Trustee and
Lessee in writing of such Increased Cost and the Owner Trustee shall promptly
(but in any event within thirty days after incurring such Increased Cost) on
demand pay to such Certificate Holder as indemnification for the Increased Cost
such additional amounts as such Certificate Holder shall certify to the Owner
Trustee and Lessee as will compensate such Certificate Holder, on an after-tax
basis, for such Increased Cost (including reasonable detail of the calculation
thereof). Each Certificate Holder agrees that, at the request of the Lessee,
which is hereby authorized to act as the agent of the Owner Trustee for such
purpose, it will:
(i) if such Increased Cost can be reduced by transferring such
Certificate Holder's Loan Certificate to any branch or lending office of
such Certificate Holder without resulting in an Illegality Event or
incurring any material adverse regulatory consequences or costs which
Lessee is not willing to indemnify such Certificate Holder, effect such
transfer; and
(ii) if such transfer cannot be effected, to transfer its Loan
Certificates to such transferee as Lessee, acting as such agent, may
nominate for an amount equal to the principal amount thereof plus accrued
interest, in which event the Owner Trustee shall pay to the Certificate
Holder the Funding Costs of such Certificate Holder incurred as a result of
such transfer or the Certificate Holder shall pay the Owner Trustee the
Funding Profits realized by such Certificate Holder as a result of such
transfer, as the case may be (without duplication for other amounts, if
any, payable pursuant to any other provision of the Operative Documents);
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PARTICIPATION AGREEMENT (1992 757 [__])
provided that, subject to the foregoing, such Certificate Holder shall remain
entitled to compensation for Increased Costs incurred prior to the date of any
such transfer. A certificate of such Certificate Holder as to any such
additional amount or amounts, in the absence of manifest error, shall be final
and conclusive. In determining such amount, such Certificate Holder may use any
reasonable averaging and attribution methods. A Certificate Holder will not
seek payment of Increased Cost from Owner Trustee if the Certificate Holder
shall not generally be seeking payment of increased costs to the same extent
from its borrowers (pursuant to comparable contractual provisions) on account of
the applicable change in law, treaty, regulation, interpretation or application.
In addition, anything in this Section 20(b) to the contrary notwithstanding,
Owner Trustee shall be obligated to pay Increased Cost to a Certificate Holder
that is not an original Loan Participant if and only to the extent that Owner
Trustee would have been obligated to pay Increased Cost to the original Loan
Participant to whom the Certificate Holder's Loan Certificate can be traced
(assuming for this purpose that the original Loan Participant was still the
owner of such Loan Certificate).
(b) In the event of any Illegality Event with respect to any
Certificate Holder, such Certificate Holder shall promptly inform the Owner
Trustee and Lessee in writing, and
(i) if such Illegality Event can be eliminated by transferring
such Certificate Holder's Loan Certificate to any branch or lending office
of such Certificate Holder (provided such transfer can be effected without
incurring any material adverse regulatory consequences or costs which
Lessee is not willing to indemnify such Certificate Holder) then such
Certificate Holder shall effect such a transfer;
(ii) if such transfer cannot be so effected, during the period
commencing on the date on which such Certificate Holder so notifies the
Owner Trustee and the Lessee and ending on the next succeeding Payment Date
(as defined in the Trust Indenture) which occurs 90 days or more thereafter
(or on such earlier date as may be required by such law, treaty,
regulation, interpretation or application), such Certificate Holder and
Lessee, which is hereby authorized to act as the agent of the Owner Trustee
for such purpose, shall attempt in good faith to enter into an arrangement
satisfactory to Lessee, acting as such agent (which may include the sale of
the Loan Certificate then held by such Certificate Holder), which will not
require the Certificate Holder's Loan Certificate to be prepaid; and
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PARTICIPATION AGREEMENT (1992 757 [__])
(iii) if neither a transfer nor an arrangement is effected during
the period referred to in clause (ii) above, Lessee, the Certificate
Holder, Mortgagee, Owner Trustee, and the Owner Participant agree to take
such action (including executing necessary agreements or amendments to the
Operative Documents, but without affecting the non-recourse nature of the
Secured Obligations to the Owner Trustee and Owner Participant) to cause
such Certificate Holder's Loan Certificate to be prepaid without premium,
but with accrued interest to the date of prepayment. Upon such prepayment,
Lessee shall receive a credit against future payment of Basic Rent to the
extent the same would otherwise be payable to the Certificate Holder whose
Loan Certificate has been prepaid. In addition, the Owner Trustee shall pay
to the Certificate Holder the Funding Costs, if any, incurred by such
Certificate Holder as a result of such prepayment or such Certificate
Holder shall pay to the Owner Trustee the Funding Profits, if any, realized
by such Certificate Holder as a result of such prepayment, as the case may
be (without duplication for other amounts, if any, payable pursuant to any
other provisions of the Operative Documents).
(c) For all purposes of this Agreement, the Owner Trustee shall only
be required to pay Funding Costs to the relevant Certificate Holder to the
extent that Funding Costs is a positive number.
(d) Notwithstanding anything in Sections 20(b) or 20(c) to the
contrary, (i) an Increased Cost or an Illegality Event shall be deemed not to
have occurred if the same is applicable or attributable to or has arisen or
occurred as a result of any hedging contract entered into by a Certificate
Holder to hedge its interest rate exposure on its Loan Certificate and (ii) an
Increased Cost or an Illegality Event with respect to the funding of a Loan
Certificate shall be deemed not to have occurred if such funding is other than
Dollar-denominated Eurodollar Rate funding.
(e) Notwithstanding anything herein to the contrary, no Certificate
Holder shall be required to pay any Funding Profits to the Owner Trustee or
Lessee during the continuance of an Event of Default (as defined in the Lease
Agreement).
* * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers
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PARTICIPATION AGREEMENT (1992 757 [__])
thereunto duly authorized as of the day and year first above written.
UNITED AIR LINES, INC., Lessee
By:
------------------------------------------
Title:
UAL CORPORATION, Guarantor
By:
------------------------------------------
Title:
GENERAL FOODS CREDIT CORPORATION,
Owner Participant
By:
------------------------------------------
Title:
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, Mortgagee
By:
------------------------------------------
Title:
THE CONNECTICUT NATIONAL BANK, not in its
individual capacity, except as expressly
provided herein, but solely as Owner Trustee,
Owner Trustee
By:
------------------------------------------
Title:
[Paying Agent]
By:
------------------------------------------
Title: Attorney-in-fact
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PARTICIPATION AGREEMENT (1992 757 [__])
[Loan Participants]
By:
------------------------------------------
Title:
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