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| CONFIDENTIAL: SUBJECT TO RESTRICTIONS ON DISSEMINATION |
| SET FORTH IN SECTION 8 OF THIS AGREEMENT |
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PARTICIPATION AGREEMENT ___
Dated as of September 25, 1997
Among
CONTINENTAL AIRLINES, INC.,
Lessee,
PACIFIC CENTURY LEASING, INC.,
Owner Participant,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Not in its individual capacity
except as expressly provided herein,
but solely as Owner Trustee,
Owner Trustee,
WILMINGTON TRUST COMPANY,
Not in its individual capacity
except as expressly provided herein,
but solely as Mortgagee, Subordination Agent
under the Intercreditor Agreement, and Pass Through
Trustee under each of the Pass Through Agreements,
Mortgagee and Loan Participant,
CORCIM, INC.
Existing Lessor,
ROLLS-ROYCE PLC,
Existing Mortgagee
and
EMBRAER-EMPRESA BRASILEIRA DE AERONAUTICA S.A.
Airframe Manufacturer
----------------------------
One Embraer Model EMB-145 Aircraft
Bearing Manufacturer's Serial No.
and U.S. Registration No. N
with Two ▇▇▇▇▇▇▇ Model AE3007A Engines
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CONTENTS
SECTION 1. DEFINITIONS AND CONSTRUCTION......................................2
SECTION 2. PARTICIPATION IN LESSOR'S COST; ISSUANCE OF EQUIPMENT NOTES;
TERMINATION OF OBLIGATION TO PARTICIPATE..........................2
2.1 Participation in Lessor's Cost....................................2
2.2 Nature of Obligations of Participants.............................3
2.3 Termination of Obligation to Participate..........................3
SECTION 3. SALE OF AIRCRAFT; COMMITMENT TO LEASE AIRCRAFT....................3
3.1 Sale of Aircraft..................................................3
3.2 Commitment to Lease...............................................6
SECTION 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST;
POSTPONEMENT OF SCHEDULED CLOSING DATE............................6
4.1 Notices of Scheduled Closing Date.................................6
4.2 Payment of Lessor's Cost..........................................6
4.3 Postponement of Scheduled Closing Date............................7
4.4 Closing...........................................................8
SECTION 5. CONDITIONS PRECEDENT..............................................9
5.1 Conditions Precedent to Obligations of Participants...............9
5.2 Conditions Precedent to Obligations of Owner Trustee.............16
5.3 Conditions Precedent to Obligations of Mortgagee.................16
5.4 Conditions Precedent to Obligations of Lessee....................17
5.5 Conditions Precedent to Obligations of Existing Lessor
and Existing Mortgagee...........................................18
5.6 Post-Registration Opinion........................................18
SECTION 6. REPRESENTATIONS AND WARRANTIES...................................19
6.1 Lessee's Representations and Warranties..........................19
6.2 Owner Participant's Representations and Warranties...............23
6.3 First Security's Representations and Warranties..................25
6.4 WTC's Representations and Warranties.............................28
6.5 Existing Lessor's Representations and Warranties.................32
6.6 Existing Mortgagee's Representations and Warranties..............34
6.7 Airframe Manufacturer's Representations and Warranties...........36
SECTION 7. COVENANTS, UNDERTAKINGS AND AGREEMENTS...........................39
7.1 Covenants of Lessee..............................................39
7.2 Covenants of Owner Participant...................................41
7.3 Covenants of First Security and Owner Trustee....................44
7.4 Covenants of WTC.................................................46
7.5 Covenants of Note Holders........................................47
7.6 Agreements.......................................................49
SECTION 8. CONFIDENTIALITY..................................................56
SECTION 9. INDEMNIFICATION AND EXPENSES.....................................57
9.1 General Indemnity................................................57
9.2 Expenses.........................................................64
9.3 General Tax Indemnity............................................64
9.4 Payments.........................................................76
9.5 Interest.........................................................77
9.6 Benefit of Indemnities...........................................77
SECTION 10. ASSIGNMENT OR TRANSFER OF INTERESTS..............................77
10.1 Participants, Owner Trustee and Note Holders.....................77
10.2 Effect of Transfer...............................................80
SECTION 11. [RESERVED].......................................................80
SECTION 12. SECTION 1110.....................................................80
SECTION 13. CHANGE OF CITIZENSHIP............................................81
13.1 Generally........................................................81
13.2 Owner Participant................................................81
13.3 Owner Trustee....................................................82
13.4 Mortgagee........................................................82
SECTION 14. CONCERNING OWNER TRUSTEE.........................................82
SECTION 15. MISCELLANEOUS....................................................83
15.1 Amendments.......................................................83
15.2 Severability.....................................................83
15.3 Survival.........................................................83
15.4 Reproduction of Documents........................................84
15.5 Counterparts.....................................................84
15.6 No Waiver........................................................84
15.7 Notices..........................................................85
15.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.................85
15.9 Third-Party Beneficiary..........................................86
15.10 Entire Agreement.................................................87
15.11 Further Assurances...............................................87
ANNEX, SCHEDULES AND EXHIBITS
ANNEX A - Definitions
SCHEDULE 1 - Accounts; Addresses
SCHEDULE 2 - Commitments
SCHEDULE 3 - Certain Terms
SCHEDULE 4 - Lessor Rent
EXHIBIT A - Opinion of special counsel to Lessee
EXHIBIT B - Opinion of corporate counsel to Lessee
EXHIBIT C-1 - Opinion of corporate counsel to Airframe Manufacturer
EXHIBIT C-2 - Opinion of special counsel to Airframe Manufacturer
EXHIBIT D - Opinion of special counsel to Owner Trustee
EXHIBIT E - Opinion of special counsel to Mortgagee
EXHIBIT F-1 - Opinion of special counsel to Owner Participant
EXHIBIT F-2 - Opinion of local counsel to Owner Participant
EXHIBIT G - Opinion of special counsel to Existing Lessor
EXHIBIT H - Opinion of special counsel to Existing Mortgagee
EXHIBIT I - Opinion of special counsel in Oklahoma City, Oklahoma
EXHIBIT J - Delivery Receipt
PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT ____, dated as of September 25, 1997 (this
"Agreement"), among (a) CONTINENTAL AIRLINES, INC., a Delaware corporation
("Lessee"), (b) PACIFIC CENTURY LEASING, INC., a Hawaiian corporation ("Owner
Participant"), (c) FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity, except as expressly provided
herein, but solely as Owner Trustee (this and all other capitalized terms used
but not defined herein shall have the respective meanings ascribed thereto in
Section 1) (in its capacity as Owner Trustee, "Owner Trustee" or "Lessor," and
in its individual capacity, "First Security"), (d) WILMINGTON TRUST COMPANY, a
Delaware banking corporation, not in its individual capacity, except as
expressly provided herein, but solely as Mortgagee (in its capacity as
Mortgagee, "Mortgagee" and in its individual capacity, "WTC"), (e) WILMINGTON
TRUST COMPANY, not in its individual capacity, except as expressly provided
herein, but solely as Pass Through Trustee under each of the Pass Through Trust
Agreements, (each, a "Pass Through Trustee"), (f) WILMINGTON TRUST COMPANY, not
in its individual capacity, except as expressly provided herein, but solely as
Subordination Agent under the Intercreditor Agreement ("Subordination Agent"),
(g) CORCIM, INC., a Delaware corporation (the "Existing Lessor"), (h)
ROLLS-ROYCE PLC, a corporation organized under the laws of England (the
"Existing Mortgagee"), and (i) EMBRAER-EMPRESA BRASILEIRA DE AERONAUTICA S.A., a
company organized under the laws of Brazil ("Airframe Manufacturer").
RECITALS
A. Express and Airframe Manufacturer have entered into the Purchase
Agreement, pursuant to which, among other things, Airframe Manufacturer has
agreed to manufacture and sell to Express and Express has agreed to purchase
from Airframe Manufacturer certain aircraft, including the Aircraft.
B. Prior to the date hereof, in connection with the interim financing of
the Aircraft, (i) certain of Express' rights under the Purchase Agreement with
respect to the Aircraft were assigned to Existing Lessor, (ii) the Aircraft was
purchased by Existing Lessor, leased to Lessee pursuant to the Existing Lease
and subleased to Express pursuant to the Existing Sublease and (iii) the
Existing Lessor granted to Existing Mortgagee a security interest in, among
other things, the Aircraft and the Existing Lease pursuant to the Existing
Mortgage.
C. In order to effectuate the long-term financing of the Aircraft, the
parties hereto intend that (i) the Owner Trustee purchase the Aircraft from the
Existing Lessor utilizing the proceeds of the sale of the Equipment Notes to the
Pass Through Trustees and the investment by Owner Participant, (ii) the Aircraft
be leased to Lessee and subleased to Express, (iii) Owner Trustee grant a
security interest to Mortgagee in the Aircraft and the Lease for the benefit of
the Note Holders and (iv) the Existing Lease be terminated and the Aircraft
released from the Lien of the Existing Mortgagee.
D. The parties hereto wish to set forth in this Agreement the terms and
conditions upon and subject to which the aforesaid transactions shall be
effected.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS AND CONSTRUCTION
Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference, and shall be construed and
interpreted in the manner described, in Annex A.
SECTION 2. PARTICIPATION IN LESSOR'S COST; ISSUANCE OF EQUIPMENT NOTES;
TERMINATION OF OBLIGATION TO PARTICIPATE
2.1 PARTICIPATION IN LESSOR'S COST
Subject to the terms and conditions of this Agreement, on the Closing Date,
Owner Participant and each Pass Through Trustee shall participate in the payment
of Lessor's Cost as follows:
(a) Owner Participant shall participate in the payment of Lessor's Cost
for the Aircraft by making an equity investment in the beneficial
ownership of the Aircraft in the amount in Dollars equal to Owner
Participant's Percentage multiplied by Lessor's Cost; and
(b) Each Pass Through Trustee shall make a non-recourse secured loan to
Owner Trustee to finance, in part, the Owner Trustee's payment of
Lessor's Cost in the amount in Dollars equal to such Pass Through
Trustee's PTT Percentage multiplied by Lessor's Cost, such loan to be
evidenced by one or more Equipment Notes, dated the Closing Date,
issued to the Subordination Agent as the registered holder on behalf
of each such Pass Through Trustee for the related Pass Through Trust
by Owner Trustee in accordance with this Agreement and the Trust
Indenture, in an aggregate principal amount equal to the Commitment of
each such Pass Through Trustee.
2.2 NATURE OF OBLIGATIONS OF PARTICIPANTS
The obligations hereunder of each Participant are several, and not joint,
and a Participant shall have no obligation to make available to Owner Trustee
any portion of any amount not paid hereunder by any other Participant. The
failure by any Participant to perform its obligations hereunder shall not affect
the obligations of Lessee toward the other Participants, except to the extent
provided in Section 5.4.
2.3 TERMINATION OF OBLIGATION TO PARTICIPATE
Notwithstanding any other provision of this Agreement, if the Closing does
not occur on or before the Commitment Termination Date, the Commitment of each
Participant and its obligation to participate in the payment of Lessor's Cost
shall expire and be of no further force and effect; PROVIDED, that the liability
of any Participant that has defaulted in the payment of its Commitment shall not
be released.
SECTION 3. SALE OF AIRCRAFT; COMMITMENT TO LEASE AIRCRAFT
3.1 SALE OF AIRCRAFT
Subject to the terms and conditions hereof, at the Closing, Existing Lessor
hereby agrees to sell to Owner Trustee and Owner Trustee hereby agrees to
purchase from Existing Lessor the Aircraft, on the following terms:
3.1.1 DELIVERY
The Aircraft shall be delivered by Existing Lessor to Owner Trustee at such
place as may be designated by Lessee and approved by Existing Lessor (which
approval shall not be unreasonably withheld). Upon Existing Lessor's delivery of
the Aircraft to Owner Trustee, Owner Trustee shall execute and deliver to
Existing Lessor a Delivery Receipt therefor in the form annexed hereto as
Exhibit J. This purchase and sale shall not be effective as to the Aircraft
unless and until the Aircraft is concurrently delivered under the Lease.
3.1.2 PURCHASE PRICE
The full purchase price for the Aircraft in the amount of Lessor's Cost
shall be paid to Existing Lessor in immediately available funds on delivery of
the Aircraft.
3.1.3 DISCLAIMER
Existing Lessor does not make, has not made and shall not be deemed to have
made, and expressly disclaims, any representation or warranty, express or
implied, as to:
(v) THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, ANY
IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR USE OR FOR ANY
PARTICULAR PURPOSE OF THE AIRFRAME, ANY ENGINE OR ANY PART
THEREOF;
(w) THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH
RESPECT TO THE AIRFRAME, ANY ENGINE OR ANY PART THEREOF;
(x) THE ABSENCE OF LATENT OR ANY OTHER DEFECT IN THE
AIRFRAME, ANY ENGINE OR ANY PART THEREOF, WHETHER OR NOT
DISCOVERABLE;
(y) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT,
TRADEMARK OR COPYRIGHT OR THE LIKE; OR
(z) THE ABSENCE OF OBLIGATIONS BASED ON STRICT
LIABILITY IN TORT, OR ANY OTHER REPRESENTATION OR WARRANTY
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRFRAME, ANY
ENGINE OR ANY PART THEREOF.
The foregoing disclaimer shall in no way affect or limit (i) Existing
Lessor's obligations under the Operative Agreements, or (ii) Existing Lessor's
representations and warranties in Section 6.5 of this Agreement, in the Aircraft
▇▇▇▇ of Sale, including without limitation the warranty of good title, or any
other express representation or warranty in any Operative Agreement.
3.1.4 TERMINATION OF EXISTING FINANCING AGREEMENTS
(a) The Existing Lease and Existing Sublease for the Aircraft shall be
terminated, and each of the Existing Lessor and Lessee shall take such action to
evidence such termination as Owner Trustee or Mortgagee shall reasonably
request, including execution and delivery of a termination agreement for the
Existing Lease and Existing Sublease in form and substance reasonably acceptable
to Owner Trustee and satisfactory for filing with the FAA, and UCC-3 termination
statements with respect to the termination of the Existing Lease and Existing
Sublease.
(b) The Aircraft, Aircraft Documents and other collateral shall be released
from the Lien of the Existing Mortgage, and the Existing Lessor and Existing
Mortgagee shall take such action to evidence such release as Owner Trustee,
Mortgagee or Lessee shall reasonably request, including the execution and
delivery of a Lien release with respect to the Existing Mortgage in form and
substance reasonably acceptable to Owner Trustee, Mortgagee and Lessee and
satisfactory for filing with the FAA, and UCC-3 termination statements with
respect to the release of the Aircraft from the Lien of the Existing Mortgage.
(c) The Existing Participation Agreement shall be terminated, effective as
of the Closing, and the parties thereto shall have no further obligation
thereunder except for Sections 7, 10, 11 and 12 thereof and for any breach of
such Agreement arising prior to the Closing.
(d) Existing Lessor shall refund to Lessee "Basic Rent" (as defined in the
Existing Lease) paid in advance by Lessee attributable to periods on and after
the Closing Date determined by multiplying such Basic Rent by a fraction, the
numerator of which shall be the number of days remaining in the month in which
the Closing Date occurs (from and including the Closing Date) and the
denominator of which shall be the total number of days in such month.
3.1.5 TAXES
Existing Lessor shall pay and discharge all applicable sales, use or
similar Taxes, duties or fees assessed or levied by any federal, state,
provincial or local taxing authority as a result of the sale and delivery of the
Aircraft to Owner Trustee contemplated by this Agreement. Existing Lessor, Owner
Trustee and Lessee will cooperate in order to minimize Taxes applicable to the
sale and delivery of the Aircraft to Owner Trustee contemplated by this
Agreement.
3.2 COMMITMENT TO LEASE
Subject to the terms and conditions of this Agreement, concurrently with
the issuance of the Equipment Notes and the purchase of the Aircraft by the
Owner Trustee on the Closing Date, Owner Trustee shall lease the Aircraft to
Lessee, and Lessee shall lease the Aircraft from Owner Trustee, under the Lease.
SECTION 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST;
POSTPONEMENT OF SCHEDULED CLOSING DATE
4.1 NOTICES OF SCHEDULED CLOSING DATE
Existing Mortgagee agrees to give Lessee, Existing Lessor, Participants,
Owner Trustee, and Mortgagee at least five Business Days' written notice of the
Scheduled Closing Date. Each Participant agrees that making available its
respective Commitment shall constitute a waiver of such notice. Owner Trustee
and Mortgagee shall be deemed to have waived such notice if Mortgagee shall have
received from each Participant funds in the full amount of its respective
Commitment.
4.2 PAYMENT OF LESSOR'S COST
(a) Each Participant agrees, subject to the terms and conditions of this
Agreement, to make the Dollar amount of its respective Commitment available, by
wire transfer of immediately available funds to WTC's account no. 0016-1728 at
Citibank, NA, New York, New York ABA# ▇▇▇-▇▇▇-▇▇▇, reference Continental Lease
___, at or before 12:00 Noon, New York City time, on the Scheduled Closing Date.
All such funds made available by each Participant to WTC shall, until payment
thereof to Existing Lessor as provided in Section 4.2(b)(ii) or return thereof
to the respective Participant as provided in Section 4.3.2, be held by WTC in
trust for the benefit of the respective Participant, as the sole and exclusive
property of the respective Participant and not as part of the Trust Estate or
the Trust Indenture Estate.
(b) Subject to the satisfaction or waiver by the applicable party of the
conditions precedent set forth in Section 5, and simultaneously with the receipt
by the parties hereto of all amounts to be paid to them on the Closing Date
pursuant to this Section 4.2, Owner Trustee shall:
(i) purchase, take title to, and accept delivery of the Aircraft, and
in connection therewith execute the Delivery Receipt in the form of Exhibit
J hereto;
(ii) in consideration of the transfer of title to the Aircraft to
Owner Trustee, direct WTC to pay, from the funds made available to WTC
hereunder by the Participants, Lessor's Cost to Existing Lessor by wire
transfer of immediately available funds to Existing Lessor's account set
forth in Schedule 1 or as otherwise directed by Existing Lessor;
(iii) execute an application for registration of the Aircraft with the
FAA and Lease Supplement No. 1, in each case with respect to the Aircraft;
(iv) execute the Trust Indenture and the initial Trust Indenture
Supplement and issue the Equipment Notes to the Subordination Agent in
accordance with Section 2.1(b);
(v) lease the Aircraft to Lessee pursuant to the Lease; and
(vi) take such other action as may be required to be taken by the
Owner Trustee on the Closing Date by the terms of any Operative Agreement.
4.3 POSTPONEMENT OF SCHEDULED CLOSING DATE
4.3.1 POSTPONEMENT
If for any reason whatsoever the Closing is not consummated on the
Scheduled Closing Date, Existing Mortgagee may by telephonic notice, given by
5:00 p.m., New York City time (such telephonic notice to be promptly confirmed
in writing by personal delivery or facsimile), on the Scheduled Closing Date to
Lessee, Existing Lessor, each Participant, Owner Trustee and Mortgagee,
designate a Delayed Closing Date.
4.3.2 RETURN OF FUNDS
If the Closing fails to occur on the Scheduled Closing Date, WTC shall
promptly return to each Participant that makes funds available to it in
accordance with Section 4.2(a) such funds, together with interest or income
earned thereon.
4.3.3 INVESTMENT OF FUNDS; INTEREST
(a) If the Closing fails to occur on the Scheduled Closing Date, WTC shall,
if so instructed in the notice from Existing Mortgagee, use reasonable efforts
to invest, at the risk of Existing Mortgagee, the funds received by it from
Participants in Cash Equivalents. Any such obligations purchased by WTC, whether
directly or through a repurchase agreement, shall be held in trust by WTC for
the benefit of the respective Participants that provided such funds, and not as
part of the Trust Estate or the Trust Indenture Estate.
(b) If the Closing fails to occur on the Scheduled Closing Date, unless WTC
returns all funds to the Participants by 2:00 p.m., New York City time, on the
Scheduled Closing Date, Existing Mortgagee shall, on the Scheduled Closing Date
or on the date funds are required to be returned to Participants pursuant to
Section 4.3.2, reimburse each Participant that has made funds available pursuant
to Section 4.2 for the loss of the use of its funds, by paying to such
Participant in immediately available funds an amount equal to the excess, if
any, of (i) interest at the Debt Rate on the amount of such funds for the period
from and including the Scheduled Closing Date to but excluding the Closing Date
or, if earlier, the day on which such Participant's funds are returned if such
return is made by 2:00 p.m., New York City time (or to but excluding the next
following Business Day if such return is not made by such time) over (ii) any
amount paid to such Participant in respect of interest or income earned by WTC
pursuant to Section 4.3.3(a).
(c) On the Closing Date or on the date funds are required to be returned to
Participants pursuant to Section 4.3.2, Existing Mortgagee shall reimburse WTC,
for the benefit of Participants that provided funds which are invested by WTC
hereunder, for any losses incurred on such investments. All income and profits
on the investment of such funds shall be for the respective accounts of such
Participants, and WTC shall not be liable for failure to invest such funds or
for any losses incurred on such investments, except for its own negligence or
willful misconduct.
4.4 CLOSING
The Closing shall occur at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other place as the parties
shall agree.
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTICIPANTS
The obligation of each Participant to make the Dollar amount of its
respective Commitment available for payment as directed by the Owner Trustee on
the Closing Date is subject to satisfaction or waiver by each such Participant,
at or prior to the Closing, of the conditions precedent set forth below in this
Section 5.1; provided, that it shall not be a condition precedent to the
obligation of any Participant that any document be produced or action taken that
is to be produced or taken by such Participant or by a Person within such
Participant's control; PROVIDED, FURTHER, that Sections 5.1.2(iii), (xv) and
(xxv) (G) and 5.1.15 shall not be conditions precedent to the obligation of Loan
Participant and Section 5.1.5 shall not be a condition precedent to the
obligation of Owner Participant.
5.1.1 NOTICE
Such Participant shall have received the notice described in Section 4.1
or, in the case of a Delayed Closing Date, 4.3, when and as required thereby, or
shall have waived such notice.
5.1.2 DELIVERY OF DOCUMENTS
Such Participant shall, except as noted below, have received executed
counterparts of the following agreements, instruments, certificates or
documents, and each of such counterparts (a) shall have been duly authorized,
executed and delivered by the respective party or parties thereto, (b) shall be
reasonably satisfactory in form and substance to such Participant and (c) shall
be in full force and effect:
(i) the Lease; PROVIDED, that only Mortgagee shall receive the sole
executed chattel paper original thereof;
(ii) Lease Supplement No. 1; PROVIDED, that only Mortgagee shall
receive the sole executed chattel paper original thereof;
(iii) the Tax Indemnity Agreement; PROVIDED, that only Owner
Participant and Lessee shall receive copies of the Tax Indemnity Agreement;
(iv) the Trust Agreement;
(v) the Trust Indenture;
(vi) the initial Trust Indenture Supplement;
(vii) the Purchase Agreement Assignment;
(viii) the Consent and Agreement;
(ix) the Equipment Notes dated the Closing Date; PROVIDED, that only
the Subordination Agent shall receive the authenticated Equipment Notes;
(x) an excerpted copy of the Purchase Agreement to the extent relating
to Airframe Manufacturer's warranties or related obligations or any right
in the Purchase Agreement assigned to Owner Trustee pursuant to the
Purchase Agreement Assignment; PROVIDED, that only Owner Trustee and
Mortgagee shall receive copies of such agreements (copies of which may be
inspected by Participants and their respective special counsel on the
Closing Date, but after the Closing Date such copies shall be retained by
Owner Trustee and Mortgagee and may be inspected and reviewed by Owner
Participant or Loan Participant or their respective counsel if and only if
there shall have occurred and be continuing a Lease Default or Lease Event
of Default);
(xi) the Bills of Sale;
(xii) the Express Sublease;
(xiii) termination agreements with respect to the Existing Lease and
the Existing Sublease and a release of the Aircraft, Aircraft Documents and
other collateral from the Lien of the Existing Mortgage, as contemplated by
Section 3.1.4;
(xiv) the broker's report and insurance certificates required by
Section 11 of the Lease;
(xv) an appraisal or appraisals from an Appraiser, which appraisal or
appraisals shall be reasonably satisfactory in form and substance to Owner
Participant; PROVIDED, that only Owner Participant shall receive a copy of
its appraisal (the "Appraisal");
(xvi) (A) a copy of the Certificate of Incorporation and By-Laws of
Lessee and resolutions of the board of directors of Lessee and/or the
executive committee thereof, in each case certified as of the Closing Date,
by the Secretary or an Assistant Secretary of Lessee, duly authorizing the
execution, delivery and performance by Lessee of the Lessee Operative
Agreements required to be executed and delivered by Lessee on or prior to
the Closing Date in accordance with the provisions hereof and thereof; (B)
an incumbency certificate of Lessee, Existing Lessor, Existing Mortgagee,
Airframe Manufacturer, Owner Participant, First Security and WTC as to the
person or persons authorized to execute and deliver the relevant Operative
Agreements on behalf of such party; and (C) a copy of the Certificate of
Incorporation or Articles of Incorporation and By-Laws and general
authorizing resolutions of the boards of directors (or executive
committees) or other satisfactory evidence of authorization of Existing
Lessor, Existing Mortgagee, Airframe Manufacturer, Owner Participant, First
Security and WTC, certified as of the Closing Date by the Secretary or an
Assistant or Attesting Secretary of Existing Lessor, Existing Mortgagee,
Airframe Manufacturer, Owner Participant, First Security and WTC,
respectively, which authorize the execution, delivery and performance by
Existing Lessor, Existing Mortgagee, Airframe Manufacturer, Owner
Participant, First Security and WTC, respectively, of each of the Operative
Agreements to which it is a party, together with such other documents and
evidence with respect to it as Lessee or any Participant may reasonably
request in order to establish the consummation of the transactions
contemplated by this Agreement and the taking of all corporate proceedings
in connection therewith;
(xvii) an Officer's Certificate of Lessee, dated as of the Closing
Date, stating that its representations and warranties set forth in this
Agreement are true and correct as of the Closing Date (or, to the extent
that any such representation and warranty expressly relates to an earlier
date, true and correct as of such earlier date);
(xviii) an Officer's Certificate of First Security, dated as of the
Closing Date, stating that its representations and warranties, in its
individual capacity and as Owner Trustee, set forth in this Agreement are
true and correct as of the Closing Date (or, to the extent that any such
representation and warranty expressly relates to an earlier date, true and
correct as of such earlier date);
(xix) an Officer's Certificate of Owner Participant, dated as of the
Closing Date, stating that its representations and warranties set forth in
this Agreement are true and correct as of the Closing Date (or, to the
extent that any such representation and warranty expressly relates to an
earlier date, true and correct as of such earlier date);
(xx) an Officer's Certificate of WTC, dated as of the Closing Date,
stating that its representations and warranties in its individual capacity
or as Mortgagee, a Pass Through Trustee or Subordination Agent, as the case
may be, set forth in this Agreement are true and correct as of the Closing
Date (or, to the extent that any such representation and warranty expressly
relates to an earlier date, true and correct as of such earlier date);
(xxi) an Officer's Certificate of Existing Lessor, dated as of the
Closing Date, stating that its representations and warranties set forth in
this Agreement are true and correct as of the Closing Date (or, to the
extent that any such representation and warranty expressly relates to an
earlier date, true and correct as of such earlier date);
(xxii) an Officer's Certificate of Existing Mortgagee, dated as of the
Closing Date, stating that its representations and warranties set forth in
this Agreement are true and correct as of the Closing Date (or, to the
extent that any such representation and warranty expressly relates to an
earlier date, true and correct as of such earlier date);
(xxiii) an application for registration of the Aircraft with the FAA
in the name of Owner Trustee; PROVIDED, that only special counsel in
Oklahoma City, Oklahoma shall receive the sole executed copy thereof for
filing with the FAA;
(xxiv) the Financing Statements;
(xxv) the following opinions of counsel, in each case dated the
Closing Date:
(A) an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, special counsel to
Lessee, substantially in the form of Exhibit A;
(B) an opinion of Lessee's Legal Department, substantially in the
form of Exhibit B;
(C) an opinion of (x) corporate counsel to Airframe Manufacturer,
substantially in the form of Exhibit C-1, and (y) ▇▇▇▇▇▇ & Forsyth,
special counsel to Airframe Manufacturer, substantially in the form of
Exhibit C-2;
(D) an opinion of Ray, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special counsel to
Owner Trustee, substantially in the form of Exhibit D;
(E) an opinion of Morris, James, Hitchens & ▇▇▇▇▇▇▇▇, special
counsel to Mortgagee and Loan Participant, substantially in the form
of Exhibit E;
(F) an opinion of Special Counsel to Owner Participant and Local
Counsel to Owner Participant (each as defined in Schedule 3 to this
Agreement), substantially in the form of Exhibit F-1 and F-2,
respectively;
(G) an opinion of Special Tax Counsel to Owner Participant (as
defined in Schedule 3 to this Agreement), with respect to certain tax
consequences of the transactions contemplated hereby; PROVIDED, that
only Owner Participant shall receive such opinion;
(H) an opinion of ▇▇▇▇▇▇ & Forsyth, special counsel to Existing
Lessor, substantially in the form of Exhibit G;
(I) an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, special
counsel to Existing Mortgagee, substantially in the form of Exhibit H;
and
(J) an opinion of ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇▇, special counsel in
Oklahoma City, Oklahoma, substantially in the form of Exhibit I;
(xxvi) a copy of a current, valid Standard Certificate of
Airworthiness for the Aircraft duly issued by the FAA;
(xxvii) an Officer's Certificate of Airframe Manufacturer, dated as of
the Closing Date, stating that its representations and warranties set forth
in this Agreement are true and correct as of the Closing Date (or, to the
extent that any such representation and warranty expressly relates to an
earlier date, true and correct as of such earlier date); and
(xxviii) the Participants and their respective counsel shall have
received copies of such documents and papers as such Participants may
reasonably request, other than (A) in the case of Loan Participant, copies
of the Purchase Agreement, provided that special counsel for Loan
Participant may inspect the Purchase Agreement in connection with the
transactions contemplated hereby or as a basis for such counsel's closing
opinion, and (B) in the case of parties other than Owner Participant and
its special counsel, the Tax Indemnity Agreement.
5.1.3 OTHER COMMITMENTS
Each other Participant shall have made available the Dollar amount of its
Commitment in accordance with Section 4.
5.1.4 VIOLATION OF LAW
No change shall have occurred after the date of this Agreement in any
applicable Law that makes it a violation of Law for (a) Lessee, Existing Lessor,
Existing Mortgagee, any Participant, Subordination Agent, Owner Trustee or
Mortgagee to execute, deliver and perform the Operative Agreements to which any
of them is a party or (b) any Participant to make the Dollar amount of its
Commitment available or, in the case of any Loan Participant, to acquire an
Equipment Note or to realize the benefits of the security afforded by the Trust
Indenture.
5.1.5 PERFECTED SECURITY INTEREST
On the Closing Date, after giving effect to the filing of the FAA Filed
Documents and the Financing Statements, Mortgagee shall have received a duly
perfected first priority security interest in all of Owner Trustee's right,
title and interest in the Aircraft and the Lease, subject only to Permitted
Liens.
5.1.6 REPRESENTATIONS, WARRANTIES AND COVENANTS
The representations and warranties of each other party to this Agreement
made, in each case, in this Agreement and in any other Operative Agreement to
which it is a party, shall be true and accurate in all material respects as of
the Closing Date (unless any such representation and warranty shall have been
made with reference to a specified date, in which case such representation and
warranty shall be true and accurate as of such specified date) and each other
party to this Agreement shall have performed and observed, in all material
respects, all of its covenants, obligations and agreements in this Agreement and
in any other Operative Agreement to which it is a party to be observed or
performed by it as of the Closing Date.
5.1.7 NO EVENT OF DEFAULT
On the Closing Date, no event shall have occurred and be continuing, or
would result from the sale, mortgage or lease of the Aircraft, which constitutes
a Lease Default or Lease Event of Default, or an Indenture Default or Indenture
Event of Default.
5.1.8 NO EVENT OF LOSS
On the Closing Date, no Event of Loss with respect to the Airframe or any
Engine shall have occurred and no circumstance, condition, act or event that,
with the giving of notice or lapse of time or both, would give rise to or
constitute an Event of Loss with respect to the Airframe or any Engine shall
have occurred.
5.1.9 TITLE
Owner Trustee shall have good title (subject to filing and recordation of
the FAA ▇▇▇▇ of Sale with the FAA) to the Aircraft, free and clear of Liens,
except (a) the rights of Lessee under the Lease and Lease Supplement No. 1, (b)
the Lien created by the Trust Indenture and the initial Trust Indenture
Supplement and (c) other Permitted Liens.
5.1.10 CERTIFICATION
The Aircraft shall have been duly certificated by the FAA as to type and
airworthiness.
5.1.11 SECTION 1110
Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee of
Owner Trustee under the Trust Indenture), shall be entitled to the benefits of
Section 1110 (as currently in effect) with respect to the right to take
possession of the Airframe and Engines as provided in the Lease in the event of
a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor.
5.1.12 FILING
On the Closing Date (a) the FAA Filed Documents shall have been duly filed
for recordation (or shall be in the process of being so duly filed for
recordation) with the FAA in accordance with the Act and (b) each Financing
Statement shall have been duly filed (or shall be in the process of being so
duly filed) in the appropriate jurisdiction.
5.1.13 NO PROCEEDINGS
No action or proceeding shall have been instituted, nor shall any action be
threatened in writing, before any Government Entity, nor shall any order,
judgment or decree have been issued or proposed to be issued by any Government
Entity, to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or any other Operative Agreement or the
transactions contemplated hereby or thereby.
5.1.14 GOVERNMENTAL ACTION
All appropriate action required to have been taken prior to the Closing
Date by the FAA, or any governmental or political agency, subdivision or
instrumentality of the United States, in connection with the transactions
contemplated by this Agreement shall have been taken, and all orders, permits,
waivers, authorizations, exemptions and approvals of such entities required to
be in effect on the Closing Date in connection with the transactions
contemplated by this Agreement shall have been issued.
5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF OWNER TRUSTEE
The obligation of Owner Trustee to apply the Commitments of the
Participants to pay Lessor's Cost on the Closing Date is subject to satisfaction
or waiver by Owner Trustee, at or prior to the Closing, of the conditions
precedent set forth below in this Section 5.2.
5.2.1 NOTICE
Owner Trustee shall have received the notice described in Section 4.1 or,
in the case of a Delayed Closing Date, 4.3, when and as required thereby, or
shall have waived such notice.
5.2.2 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Owner Trustee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Owner Trustee.
5.2.3 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 5.1.4, 5.1.6, 5.1.7 and 5.1.11
shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Owner Trustee.
5.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF MORTGAGEE
The obligation of Mortgagee to authenticate the Equipment Notes on the
Closing Date is subject to the satisfaction or waiver by Mortgagee, at or prior
to the Closing, of the conditions precedent set forth below in this Section 5.3.
5.3.1 NOTICE
Mortgagee shall have received the notice described in Section 4.1 or, in
the case of a Delayed Closing Date, 4.3, when and as required thereby, or shall
have waived such notice.
5.3.2 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Mortgagee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Mortgagee.
5.3.3 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 5.1.4, 5.1.6, 5.1.7 and 5.1.11
shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Mortgagee.
5.4 CONDITIONS PRECEDENT TO OBLIGATIONS OF LESSEE
The obligation of Lessee to lease the Aircraft on the Closing Date and to
take the other actions required by this Agreement to be taken by it at the
Closing is subject to the satisfaction or waiver by Lessee, at or prior to the
Closing, of the conditions precedent set forth below in this Section 5.4.
5.4.1 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Lessee, except
as specifically provided therein, and shall be satisfactory to Lessee, unless
the failure to receive any such agreement, instrument, certificate or document
is the result of any action or inaction by Lessee.
5.4.2 SALES TAX
Lessee shall be satisfied that no sales, use, value added, goods and
services or like tax, and no stamp tax duty, is payable with respect to the
delivery of the Aircraft on the Closing Date to the extent that Lessee has
liability therefor under Section 9.3.
5.4.3 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 5.1.3 (as to all
Participants), 5.1.4, 5.1.6, 5.1.7 (as to Indenture Defaults or Indenture Events
of Default not constituting Lease Defaults or Lease Events of Default,
respectively), 5.1.8, 5.1.9, 5.1.10, 5.1.11, 5.1.12, 5.1.13 and 5.1.14 shall
have been satisfied or waived by Lessee, unless the failure of any such
condition to be satisfied is the result of any action or inaction by Lessee.
5.5 CONDITIONS PRECEDENT TO OBLIGATIONS OF EXISTING LESSOR AND EXISTING
MORTGAGEE
The obligation of Existing Lessor to sell and transfer the Aircraft to
Owner Trustee at the time of the Closing and the respective obligations of each
of Existing Lessor and Existing Mortgagee to take the other actions required by
this Agreement to be taken by it at the Closing is subject to the satisfaction
or waiver by it, at or prior to the Closing, of the conditions precedent set
forth below in this Section 5.5.
5.5.1 TENDER OF LESSOR'S COST
Owner Trustee shall have tendered to Existing Lessor Lessor's Cost pursuant
to Section 4.2, subject to performance by Existing Lessor and Existing Mortgagee
of their respective obligations under this Agreement.
5.5.2 OTHER CONDITIONS PRECEDENT
The condition set forth in Section 5.1.4(a) shall have been satisfied with
respect to it.
5.6 POST-REGISTRATION OPINION
Promptly upon the registration of the Aircraft and the recordation of the
FAA Filed Documents pursuant to the Act, Airframe Manufacturer will cause ▇▇▇▇▇
▇▇▇▇▇ & ▇▇▇▇▇▇, special counsel in Oklahoma City, Oklahoma, to deliver to
Lessee, Existing Lessor, Existing Mortgagee, each Participant, Owner Trustee and
Mortgagee a favorable opinion or opinions addressed to each of them with respect
to such registration and recordation.
SECTION 6. REPRESENTATIONS AND WARRANTIES
6.1 LESSEE'S REPRESENTATIONS AND WARRANTIES
Lessee represents and warrants to each Participant, Existing Mortgagee,
Existing Lessor, Airframe Manufacturer, Subordination Agent, Owner Trustee and
Mortgagee that:
6.1.1 ORGANIZATION; QUALIFICATION
Lessee is a corporation duly incorporated, validly existing and in good
standing under the Laws of the State of Delaware and has the corporate power and
authority to conduct the business in which it is currently engaged and to own or
hold under lease its properties and to enter into and perform its obligations
under the Lessee Operative Agreements. Lessee is duly qualified to do business
as a foreign corporation in good standing in each jurisdiction in which the
nature and extent of the business conducted by it, or the ownership of its
properties, requires such qualification, except where the failure to be so
qualified would not give rise to a Material Adverse Change to Lessee.
6.1.2 CORPORATE AUTHORIZATION
Lessee has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by its Certificate of Incorporation or By-Laws) to
authorize the execution and delivery of each of the Lessee Operative Agreements,
and the performance of its obligations thereunder.
6.1.3 NO VIOLATION
The execution and delivery by Lessee of the Lessee Operative Agreements,
the performance by Lessee of its obligations thereunder and the consummation by
Lessee on the Closing Date of the transactions contemplated thereby, do not and
will not (a) violate any provision of the Certificate of Incorporation or
By-Laws of Lessee, (b) violate any Law applicable to or binding on Lessee or (c)
violate or constitute any default under (other than any violation or default
that would not result in a Material Adverse Change to Lessee), or result in the
creation of any Lien (other than as permitted under the Lease) upon the Aircraft
under, any indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, lease, loan or other material agreement, instrument or document
to which Lessee is a party or by which Lessee or any of its properties is bound.
6.1.4 APPROVALS
The execution and delivery by Lessee of the Lessee Operative Agreements,
the performance by Lessee of its obligations thereunder and the consummation by
Lessee on the Closing Date of the transactions contemplated thereby do not and
will not require the consent or approval of, or the giving of notice to, or the
registration with, or the recording or filing of any documents with, or the
taking of any other action in respect of, (a) any trustee or other holder of any
Debt of Lessee and (b) any Government Entity, other than the filing of (x) the
FAA Filed Documents and the Financing Statements (and continuation statements
periodically) and (y) filings, recordings, notices or other ministerial actions
pursuant to any routine recording, contractual or regulatory requirements
applicable to it.
6.1.5 VALID AND BINDING AGREEMENTS
The Lessee Operative Agreements have been duly authorized, executed and
delivered by Lessee and, assuming the due authorization, execution and delivery
thereof by the other party or parties thereto, constitute the legal, valid and
binding obligations of Lessee and are enforceable against Lessee in accordance
with the respective terms thereof, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, receivership, moratorium and other
similar Laws affecting the rights of creditors generally and general principles
of equity, whether considered in a proceeding at law or in equity.
6.1.6 LITIGATION
Except as set forth in Lessee's most recent Annual Report on Form 10-K, as
amended, filed by Lessee with the SEC on or prior to the Closing Date, or in any
Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by Lessee with
the SEC subsequent to such Form 10-K and on or prior to the Closing Date, no
action, claim or proceeding is now pending or, to the Actual Knowledge of
Lessee, threatened, against Lessee, before any court, governmental body,
arbitration board, tribunal or administrative agency, which is reasonably likely
to be determined adversely to Lessee and if determined adversely to Lessee would
result in a Material Adverse Change.
6.1.7 FINANCIAL CONDITION
The audited consolidated balance sheet of Lessee with respect to Lessee's
most recent fiscal year included in Lessee's most recent Annual Report on Form
10-K, as amended, filed by Lessee with the SEC, and the related consolidated
statements of operations and cash flows for the period then ended have been
prepared in accordance with GAAP and fairly present in all material respects the
financial condition of Lessee and its consolidated subsidiaries as of such date
and the results of its operations and cash flows for such period, and since the
date of such balance sheet, there has been no material adverse change in such
financial condition or operations of Lessee, except for matters disclosed in (a)
the financial statements referred to above, (b) any subsequent Quarterly Report
on Form 10-Q or Current Report on Form 8-K filed by Lessee with the SEC on or
prior to the date hereof, or (c) any prospectus or prospectus supplement filed
by Lessee with the SEC in connection with the offering of the Pass Through
Certificates.
6.1.8 REGISTRATION AND RECORDATION
Except for (a) the registration of the Aircraft with the FAA pursuant to
the Act in the name of Owner Trustee, (b) the filing for recordation (and
recordation) of the FAA Filed Documents, (c) the filing of the Financing
Statements (and continuation statements relating thereto at periodic intervals),
(d) the taking of possession and retention by Mortgagee of the original
counterparts of the Lease and Lease Supplement No. 1 and (e) the affixation of
the nameplates referred to in Section 7.1.3 of the Lease, no further action,
including any filing or recording of any document (including any financing
statement in respect thereof under Article 9 of the UCC) is necessary in order
to establish and perfect the right, title or interest of Owner Trustee, and the
Mortgagee's security interest, in the Aircraft and the Lease, as against Lessee
and any other Person, in each case, in any applicable jurisdiction in the United
States.
6.1.9 CHIEF EXECUTIVE OFFICE
The chief executive office (as such term is defined in Article 9 of the
UCC) of Lessee is located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
6.1.10 NO DEFAULT
No event which, if the Aircraft were subject to the Lease, constitutes a
Lease Event of Default has occurred and is continuing.
6.1.11 NO EVENT OF LOSS
No Event of Loss has occurred with respect to the Airframe or any Engine,
and, to the Actual Knowledge of Lessee, no circumstance, condition, act or event
has occurred that, with the giving of notice or lapse of time or both gives rise
to or constitutes an Event of Loss with respect to the Airframe or any Engine.
6.1.12 COMPLIANCE WITH LAWS
(a) Lessee is a Citizen of the United States and a U.S. Air Carrier.
(b) Lessee holds all licenses, permits and franchises from the appropriate
Government Entities necessary to authorize Lessee to lawfully engage in air
transportation and to carry on scheduled commercial passenger service as
currently conducted, except where the failure to so hold any such license,
permit or franchise would not give rise to a Material Adverse Change to Lessee.
(c) Lessee is not an "investment company" or a company controlled by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
6.1.13 SECURITIES LAWS
Neither Lessee nor any person authorized to act on its behalf has directly
or indirectly offered any beneficial interest or Security relating to the
ownership of the Aircraft or the Lease or any interest in the Trust Estate and
Trust Agreement, or any of the Equipment Notes or any other interest in or
security under the Trust Indenture, for sale to, or solicited any offer to
acquire any such interest or security from, or has sold any such interest or
security to, any person in violation of the Securities Act.
6.1.14 BROKER'S FEES
No Person acting on behalf of Lessee is or will be entitled to any broker's
fee, commission or finder's fee in connection with the Transactions.
6.1.15 SECTION 1110
Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee under
the Trust Indenture), is entitled to the benefits of Section 1110 (as currently
in effect) with respect to the right to take possession of the Airframe and
Engines as provided in the Lease in the event of a case under Chapter 11 of the
Bankruptcy Code in which Lessee is a debtor.
6.2 OWNER PARTICIPANT'S REPRESENTATIONS AND WARRANTIES
Owner Participant represents and warrants to Lessee, Loan Participant,
Existing Mortgagee, Existing Lessor, Airframe Manufacturer, Subordination Agent,
Owner Trustee and Mortgagee that:
6.2.1 ORGANIZATION, ETC.
Owner Participant is a corporation duly incorporated, validly existing and
in good standing under the Laws of the OP Jurisdiction, has the corporate power
and authority to conduct the business in which it is currently engaged and to
own or hold under lease its properties and to enter into, and perform its
obligations under the Owner Participant Agreements, and has a tangible net worth
(exclusive of goodwill) greater than $25,000,000.
6.2.2 CORPORATE AUTHORIZATION
Owner Participant has taken, or caused to be taken, all necessary corporate
action (including, without limitation, the obtaining of any consent or approval
of stockholders required by its Certificate of Incorporation or By-Laws) to
authorize the execution and delivery of each of the Owner Participant
Agreements, and the performance of its obligations thereunder.
6.2.3 NO VIOLATION
The execution and delivery by Owner Participant of the Owner Participant
Agreements, the performance by Owner Participant of its obligations thereunder
and the consummation by Owner Participant on the Closing Date of the
transactions contemplated thereby, do not and will not (a) violate any provision
of the Certificate of Incorporation or By-Laws of Owner Participant, (b) violate
any Law applicable to or binding on Owner Participant or (c) violate or
constitute any default under (other than any violation or default that would not
result in a Material Adverse Change to Owner Participant), or result in the
creation of any Lien (other than as provided for or otherwise permitted in the
Operative Agreements) upon the Trust Estate under, any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract, lease, loan or
other material agreement, instrument or document to which Owner Participant is a
party or by which Owner Participant or any of its properties is bound.
6.2.4 APPROVALS
The execution and delivery by Owner Participant of the Owner Participant
Agreements, the performance by Owner Participant of its obligations thereunder
and the consummation by Owner Participant on the Closing Date of the
transactions contemplated thereby do not and will not require the consent or
approval of, or the giving of notice to, or the registration with, or the
recording or filing of any documents with, or the taking of any other action in
respect of, (a) any trustee or other holder of any Debt of Owner Participant and
(b) any Government Entity, other than the filing of the FAA Filed Documents and
the Financing Statements.
6.2.5 VALID AND BINDING AGREEMENTS
The Owner Participant Agreements have been duly authorized, executed and
delivered by Owner Participant and, assuming the due authorization, execution
and delivery by the other party or parties thereto, constitute the legal, valid
and binding obligations of Owner Participant and are enforceable against Owner
Participant in accordance with the respective terms thereof, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar Laws affecting the rights of
creditors generally and general principles of equity, whether considered in a
proceeding at law or in equity.
6.2.6 CITIZENSHIP
On the Closing Date, Owner Participant is a Citizen of the United States,
without making use of any voting trust or similar arrangement permitted under 14
C.F.R ss. 47.8.
6.2.7 NO LIENS
On the Closing Date, there are no Lessor Liens attributable to Owner
Participant in respect of all or any part of the Trust Estate.
6.2.8 INVESTMENT BY OWNER PARTICIPANT
Owner Participant's beneficial interest in the Trust Estate is being
acquired by it for its own account, for investment and not with a view to any
resale or distribution thereof, except that, subject to the restrictions on
transfer set forth in Section 10, the disposition by Owner Participant of its
beneficial interest in the Trust Estate shall at all times be within its
control.
6.2.9 ERISA
No part of the funds to be used by Owner Participant to acquire or hold its
interests in the Trust Estate to be acquired by it under this Agreement directly
or indirectly constitutes assets of a Plan.
6.2.10 LITIGATION
There are no pending or, to the Actual Knowledge of Owner Participant,
threatened actions or proceedings against Owner Participant before any court,
governmental body, arbitration board, administrative agency or tribunal which,
if determined adversely to Owner Participant, would materially adversely affect
the ability of Owner Participant to perform its obligations under the Owner
Participant Agreements.
6.2.11 SECURITIES LAWS
Neither Owner Participant nor any person Owner Participant has authorized
to act on its behalf has directly or indirectly offered any beneficial interest
in or Security relating to the ownership of the Aircraft or any interest in the
Trust Estate, or any of the Equipment Notes or any other interest in or Security
under the Trust Indenture for sale to, or solicited any offer to acquire any of
the same from, any Person in violation of the registration provisions of the
Securities Act or applicable state securities Laws.
6.2.12 BROKER'S FEES
No Person acting on behalf of Owner Participant is or will be entitled to
any broker's fee, commission or finder's fee in connection with the
Transactions.
6.3 FIRST SECURITY'S REPRESENTATIONS AND WARRANTIES
First Security represents and warrants to Lessee, Owner Participant,
Existing Mortgagee, Existing Lessor, Airframe Manufacturer, Loan Participants,
Subordination Agent and Mortgagee that:
6.3.1 ORGANIZATION, ETC.
First Security is a national banking association duly organized, validly
existing and in good standing under the Laws of the United States, holding a
valid certificate to do business as a national banking association with banking
authority to execute and deliver, and perform its obligations under, the Owner
Trustee Agreements.
6.3.2 CORPORATE AUTHORIZATION
First Security has taken, or caused to be taken, all necessary corporate
action (including, without limitation, the obtaining of any consent or approval
of stockholders required by Law or by its Articles of Association or By-Laws) to
authorize the execution and delivery by First Security, in its individual
capacity and as Owner Trustee, of each of the Owner Trustee Agreements, and the
performance of its obligations thereunder.
6.3.3 NO VIOLATION
The execution and delivery by First Security, in its individual capacity
and as Owner Trustee of the Owner Trustee Agreements, the performance by First
Security, in its individual capacity and as Owner Trustee, of its obligations
thereunder and the consummation by First Security in its individual capacity and
as Owner Trustee on the Closing Date of the transactions contemplated thereby,
do not and will not (a) violate any provision of the Articles of Association or
By-Laws of First Security, (b) violate any Law applicable to or binding on Owner
Trustee or First Security or (c) violate or constitute any default under(other
than any violation or default that would not result in a Material Adverse Change
to First Security, in its individual capacity or as Owner Trustee), or result in
the creation of any Lien (other than the lien of the Trust Indenture) upon any
property of First Security, in its individual capacity and as Owner Trustee, or
any of its subsidiaries under, any indenture, mortgage, chattel mortgage, deed
of trust, conditional sales contract, lease, loan or other material agreement,
instrument or document to which First Security, in its individual capacity and
as Owner Trustee, is a party or by which First Security, in its individual
capacity and as Owner Trustee, or any of its properties is or may be bound or
affected.
6.3.4 APPROVALS
The execution and delivery by First Security, in its individual capacity
and as Owner Trustee, of the Owner Trustee Agreements, the performance by First
Security, in its individual capacity and as Owner Trustee, of its obligations
thereunder and the consummation by First Security, in its individual capacity
and as Owner Trustee, on the Closing Date of the transactions contemplated
thereby do not and will not require the consent, approval or authorization of,
or the giving of notice to, or the registration with, or the recording or filing
of any documents with, or the taking of any other action in respect of, (a) any
trustee or other holder of any Debt of First Security or (b) any Government
Entity, other than the filing of the FAA Filed Documents and the Financing
Statements.
6.3.5 VALID AND BINDING AGREEMENTS
The Owner Trustee Agreements have been duly authorized, executed and
delivered by First Security, in its individual capacity or as Owner Trustee, as
the case may be, and constitute the legal, valid and binding obligations of
First Security, in its individual capacity and as Owner Trustee, and, assuming
the due authorization, execution and delivery thereof by the other party or
parties thereto, are enforceable against First Security, in its individual
capacity and as Owner Trustee, in accordance with the respective terms thereof,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar Laws affecting the
rights of creditors generally and general principles of equity, whether
considered in a proceeding at law or in equity.
6.3.6 CITIZENSHIP
On the Closing Date, First Security is a Citizen of the United States.
6.3.7 CHIEF EXECUTIVE OFFICE
The chief executive office (as such term is defined in Article 9 of the
UCC) of Owner Trustee is located at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇.
6.3.8 TITLE
On the Closing Date, Owner Trustee shall have received whatever title to
the Aircraft as was conveyed to it by Existing Lessor.
6.3.9 NO LIENS; FINANCING STATEMENTS
On the Closing Date, there are no Lessor Liens attributable to First
Security or Owner Trustee in respect of all or any part of the Aircraft, Trust
Estate or the Trust Indenture Estate. Except for the Financing Statements, it
has not, either in its individual capacity or as Owner Trustee, executed any UCC
financing statements relating to the Aircraft or the Lease.
6.3.10 LITIGATION
There are no pending or, to the Actual Knowledge of First Security,
threatened actions or proceedings against First Security or Owner Trustee before
any court, governmental body, arbitration board, administrative agency or
tribunal which, if determined adversely to First Security, would materially
adversely affect the ability of First Security or Owner Trustee to perform its
obligations under the Owner Trustee Agreements.
6.3.11 SECURITIES LAWS
Neither First Security, nor any person authorized to act on its behalf, has
directly or indirectly offered any beneficial interest or Security relating to
the ownership of the Aircraft or any interest in the Trust Estate or any of the
Equipment Notes or any other interest in or security under the Trust Indenture
for sale to, or solicited any offer to acquire any such interest or security
from, or has sold any such interest or security to, any person other than the
Participants, except for the offering and sale of the Pass Through Certificates.
6.3.12 EXPENSES AND TAXES
There are no Expenses or Taxes that may be imposed on or asserted against
the Trust, the Trust Estate or any part thereof or any interest therein, the
Trust Indenture Estate, Lessee, Owner Participant, any Pass Through Trustee,
Subordination Agent, Owner Trustee or Mortgagee (except as to Owner Trustee,
Taxes imposed on the fees payable to Owner Trustee) under the laws of Utah in
connection with the execution, delivery or performance of any Operative
Agreement by Owner Trustee or in connection with the issuance of the Equipment
Notes, which Expenses or Taxes would not have been imposed if Owner Trustee had
not (x) had its principal place of business in, (y) performed (in its individual
capacity or as Owner Trustee) any or all of its duties under the Operative
Agreements in or (z) engaged in any activities unrelated to the transactions
contemplated by the Operative Agreements in, the State of Utah.
6.4 WTC'S REPRESENTATIONS AND WARRANTIES
WTC represents and warrants (with respect to Section 6.4.10, solely in its
capacity as Subordination Agent) to Lessee, Owner Participant, Existing
Mortgagee, Existing Lessor, Airframe Manufacturer, and Owner Trustee that:
6.4.1 ORGANIZATION, ETC.
WTC is a Delaware banking corporation duly organized, validly existing and
in good standing under the Laws of the State of Delaware, holding a valid
certificate to do business as a Delaware banking corporation with banking
authority to execute and deliver, and perform its obligations under, the
Mortgagee Agreements, the Pass Through Trustee Agreements and the Subordination
Agent Agreements.
6.4.2 CORPORATE AUTHORIZATION
WTC has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by Law or by its Certificate of Incorporation or By-Laws)
to authorize the execution and delivery by WTC, in its individual capacity or as
Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may be, of
the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements and the performance of its obligations
thereunder.
6.4.3 NO VIOLATION
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may be, of
the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements, the performance by WTC, in its individual
capacity or as Mortgagee, a Pass Through Trustee or Subordination Agent, as the
case may be, of its obligations thereunder and the consummation on the Closing
Date of the transactions contemplated thereby, do not and will not (a) violate
any provision of the Certificate of Incorporation or By-Laws of WTC, (b) violate
any Law applicable to or binding on WTC, in its individual capacity or (except
in the case of any Law relating to any Plan) as Mortgagee, a Pass Through
Trustee or Subordination Agent, or (c) violate or constitute any default under
(other than any violation or default that would not result in a Material Adverse
Change to WTC, in its individual capacity or Mortgagee, a Pass Through Trustee
or Subordination Agent), or result in the creation of any Lien (other than the
lien of the Trust Indenture) upon any property of WTC, in its individual
capacity or as Mortgagee, a Pass Through Trustee or Subordination Agent, or any
of WTC's subsidiaries under, any indenture, mortgage, chattel mortgage, deed of
trust, conditional sales contract, lease, loan or other agreement, instrument or
document to which WTC, in its individual capacity or as Mortgagee, a Pass
Through Trustee or Subordination Agent, is a party or by which WTC, in its
individual capacity or as Mortgagee, a Pass Through Trustee or Subordination
Agent, or any of their respective properties is bound.
6.4.4 APPROVALS
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may be, of
the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements, the performance by WTC, in its individual
capacity or as Mortgagee, a Pass Through Trustee or Subordination Agent, as the
case may be, of its obligations thereunder and the consummation on the Closing
Date by WTC, in its individual capacity or as Mortgagee, a Pass Through Trustee
or Subordination Agent, as the case may be, of the transactions contemplated
thereby do not and will not require the consent, approval or authorization of,
or the giving of notice to, or the registration with, or the recording or filing
of any documents with, or the taking of any other action in respect of, (a) any
trustee or other holder of any Debt of WTC or (b) any Government Entity, other
than the filing of the FAA Filed Documents and the Financing Statements.
6.4.5 VALID AND BINDING AGREEMENTS
The Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements have been duly authorized, executed and delivered
by WTC and, assuming the due authorization, execution and delivery by the other
party or parties thereto, constitute the legal, valid and binding obligations of
WTC, in its individual capacity or as Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, and are enforceable against WTC, in its
individual capacity or as Mortgagee, a Pass Through Trustee or Subordination
Agent, as the case may be, in accordance with the respective terms thereof,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar Laws affecting the
rights of creditors generally and general principles of equity, whether
considered in a proceeding at law or in equity.
6.4.6 CITIZENSHIP
WTC is a Citizen of the United States.
6.4.7 NO LIENS
On the Closing Date, there are no Lessor Liens attributable to WTC in
respect of all or any part of the Trust Estate or the Trust Indenture Estate.
6.4.8 LITIGATION
There are no pending or, to the Actual Knowledge of WTC, threatened actions
or proceedings against WTC, in its individual capacity or as Mortgagee, a Pass
Through Trustee or Subordination Agent, before any court, administrative agency
or tribunal which, if determined adversely to WTC, in its individual capacity or
as Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may be,
would materially adversely affect the ability of WTC, in its individual capacity
or as Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may
be, to perform its obligations under any of the Mortgagee Agreements, the Pass
Through Trustee Agreements or the Subordination Agent Agreements.
6.4.9 SECURITIES LAWS
Neither WTC nor any person authorized to act on its behalf has directly or
indirectly offered any beneficial interest or Security relating to the ownership
of the Aircraft or any interest in the Trust Indenture Estate or any of the
Equipment Notes or any other interest in or security under the Trust Indenture
for sale to, or solicited any offer to acquire any such interest or security
from, or has sold any such interest or security to, any Person other than the
Participants, except for the offering and sale of the Pass Through Certificates.
6.4.10 INVESTMENT
The Equipment Notes to be acquired by the Subordination Agent are being
acquired by it for the account of the Pass Through Trustees, for investment and
not with a view to any resale or distribution thereof, except that, subject to
the restrictions on transfer set forth in Section 10.1.3, the disposition by it
of its Equipment Notes shall at all times be within its control.
6.4.11 TAXES
There are no Taxes payable by any Pass Through Trustee or WTC, as the case
may be, imposed by the State of Delaware or any political subdivision or taxing
authority thereof in connection with the execution, delivery and performance by
such Pass Through Trustee or WTC, as the case may be, of this Agreement or any
of the Pass Through Trustee Agreements (other than franchise or other taxes
based on or measured by any fees or compensation received by any such Pass
Through Trustee or WTC, as the case may be, for services rendered in connection
with the transactions contemplated by any of the Pass Through Trust Agreements),
and there are no Taxes payable by any Pass Through Trustee or WTC, as the case
may be, imposed by the State of Delaware or any political subdivision thereof in
connection with the acquisition, possession or ownership by any such Pass
Through Trustee of any of the Equipment Notes (other than franchise or other
taxes based on or measured by any fees or compensation received by any such Pass
Through Trustee or WTC, as the case may be, for services rendered in connection
with the transactions contemplated by any of the Pass Through Trust Agreements),
and, assuming that the trusts created by the Pass Through Trust Agreements will
not be taxable as corporations, but, rather, each will be characterized as a
grantor trust under subpart E, Part I of Subchapter J of the Code or as a
partnership under Subchapter K of the Code, such trusts will not be subject to
any Taxes imposed by the State of Delaware or any political subdivision thereof.
6.4.12 CONTROL
WTC is not an Affiliate of the Owner Participant or the Owner Trustee.
6.4.13 BROKER'S FEES
No Person acting on behalf of WTC, in its individual capacity or as
Mortgagee, any Pass Through Trustee or Subordination Agent, is or will be
entitled to any broker's fee, commission or finder's fee in connection with the
Transactions.
6.5 EXISTING LESSOR'S REPRESENTATIONS AND WARRANTIES
Existing Lessor represents and warrants to Lessee, each Participant,
Existing Mortgagee, Subordination Agent, Owner Trustee and Mortgagee that:
6.5.1 ORGANIZATION, ETC.
Existing Lessor is a corporation duly incorporated, validly existing and in
good standing under the Laws of the State of Delaware, and has the corporate
power and authority to conduct the business in which it is currently engaged and
to own or hold under lease its properties and to enter into, and perform its
obligations under the Existing Lessor Agreements.
6.5.2 CORPORATE AUTHORIZATION
Existing Lessor has taken, or caused to be taken, all necessary corporate
action (including, without limitation, the obtaining of any consent or approval
of stockholders required by its Certificate of Incorporation or By-Laws) to
authorize the execution and delivery of each of the Existing Lessor Agreements,
and the performance of its obligations thereunder.
6.5.3 NO VIOLATION
The execution and delivery by Existing Lessor of the Existing Lessor
Agreements, the performance by Existing Lessor of its obligations thereunder and
the consummation by Existing Lessor on the Closing Date of the transactions
contemplated thereby, do not and will not (a) violate any provision of the
Certificate of Incorporation or By-Laws of Existing Lessor, (b) violate any Law
applicable to or binding on Existing Lessor or (c) violate or constitute any
default under (other than any violation or default that would not result in a
Material Adverse Change to Existing Lessor), or result in the creation of any
Lien (other than as provided for or otherwise permitted in the Operative
Agreements) upon the Trust Estate under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, lease, loan or other
material agreement, instrument or document to which Existing Lessor is a party
or by which Existing Lessor or any of its properties is bound.
6.5.4 APPROVALS
The execution and delivery by Existing Lessor of the Existing Lessor
Agreements, the performance by Existing Lessor of its obligations thereunder and
the consummation by Existing Lessor on the Closing Date of the transactions
contemplated thereby do not and will not require the consent or approval of, or
the giving of notice to, or the registration with, or the recording or filing of
any documents with, or the taking of any other action in respect of, (a) any
trustee or other holder of any Debt of Existing Lessor and (b) any Government
Entity, other than the filing of the FAA Filed Documents and the Financing
Statements.
6.5.5 VALID AND BINDING AGREEMENTS
The Existing Lessor Agreements have been duly authorized, executed and
delivered by Existing Lessor and, assuming the due authorization, execution and
delivery by the other party or parties thereto, constitute the legal, valid and
binding obligations of Existing Lessor and are enforceable against Existing
Lessor in accordance with the respective terms thereof, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar Laws affecting the rights of
creditors generally and general principles of equity, whether considered in a
proceeding at law or in equity.
6.5.6 TITLE
On the Closing Date, Existing Lessor shall have and the Bills of Sale shall
convey to Owner Trustee good marketable title to the Aircraft, free and clear of
all claims, Liens and encumbrances of any nature, except Permitted Liens.
6.5.7 LITIGATION
There are no pending or, to the Actual Knowledge of Existing Lessor,
threatened actions or proceedings against Existing Lessor before any court,
governmental body, arbitration board, administrative agency or tribunal which,
if determined adversely to Existing Lessor, would materially adversely affect
the ability of Existing Lessor to perform its obligations under the Existing
Lessor Agreements.
6.5.8 SECURITIES LAWS
Neither Existing Lessor nor any person Existing Lessor has authorized to
act on its behalf has directly or indirectly offered any beneficial interest in
or Security relating to the ownership of the Aircraft or any interest in the
Trust Estate, or any of the Equipment Notes or any other interest in or Security
under the Trust Indenture for sale to, or solicited any offer to acquire any of
the same from, any Person in violation of the Securities Act or applicable state
securities Laws.
6.5.9 BROKER'S FEES
No Person acting on behalf of Existing Lessor is or will be entitled to any
broker's fee, commission or finder's fee in connection with the Transactions.
6.6 EXISTING MORTGAGEE'S REPRESENTATIONS AND WARRANTIES
Existing Mortgagee represents and warrants to Lessee, each Participant,
Subordination Agent, Owner Trustee, Existing Lessor, Airframe Manufacturer and
Mortgagee that:
6.6.1 ORGANIZATION, ETC.
Existing Mortgagee is a corporation duly incorporated, validly existing
under the Laws of England and has the corporate power and authority to conduct
the business in which it is currently engaged and to own or hold under lease its
properties and to enter into, and perform its obligations under the Existing
Mortgagee Agreements.
6.6.2 CORPORATE AUTHORIZATION
Existing Mortgagee has taken, or caused to be taken, all necessary
corporate action (including, without limitation, the obtaining of any consent or
approval of stockholders required by its constitutional documents) to authorize
the execution and delivery of each of the Existing Mortgagee Agreements, and the
performance of its obligations thereunder.
6.6.3 NO VIOLATION
The execution and delivery by Existing Mortgagee of the Existing Mortgagee
Agreements, the performance by Existing Mortgagee of its obligations thereunder
and the consummation by Existing Mortgagee on the Closing Date of the
transactions contemplated thereby, do not and will not (a) violate any provision
of the constitutional documents of Existing Mortgagee, (b) violate any Law
applicable to or binding on Existing Mortgagee or (c) violate or constitute any
default under (other than any violation or default that would not result in a
Material Adverse Change to Existing Mortgagee), or result in the creation of any
Lien (other than as provided for or otherwise permitted in the Operative
Agreements) upon the Trust Estate under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, lease, loan or other
material agreement, instrument or document to which Existing Mortgagee is a
party or by which Existing Mortgagee or any of its properties is bound.
6.6.4 APPROVALS
The execution and delivery by Existing Mortgagee of the Existing Mortgagee
Agreements, the performance by Existing Mortgagee of its obligations thereunder
and the consummation by Existing Mortgagee on the Closing Date of the
transactions contemplated thereby do not and will not require the consent or
approval of, or the giving of notice to, or the registration with, or the
recording or filing of any documents with, or the taking of any other action in
respect of, (a) any trustee or other holder of any Debt of Existing Mortgagee
and (b) any Government Entity, other than the filing of the FAA Filed Documents
and the Financing Statements.
6.6.5 VALID AND BINDING AGREEMENTS
The Existing Mortgagee Agreements have been duly authorized, executed and
delivered by Existing Mortgagee and, assuming the due authorization, execution
and delivery by the other party or parties thereto, constitute the legal, valid
and binding obligations of Existing Mortgagee and are enforceable against
Existing Mortgagee in accordance with the respective terms thereof, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar Laws affecting the rights of
creditors generally and general principles of equity, whether considered in a
proceeding at law or in equity.
6.6.6 LITIGATION
There are no pending or, to the Actual Knowledge of Existing Mortgagee,
threatened actions or proceedings against Existing Mortgagee before any court,
governmental body, arbitration board, administrative agency or tribunal which,
if determined adversely to Existing Mortgagee, would materially adversely affect
the ability of Existing Mortgagee to perform its obligations under the Existing
Mortgagee Agreements.
6.6.7 SECURITIES LAWS
Neither Existing Mortgagee nor any person Existing Mortgagee has authorized
to act on its behalf has directly or indirectly offered any beneficial interest
in or Security relating to the ownership of the Aircraft or any interest in the
Trust Estate, or any of the Equipment Notes or any other interest in or Security
under the Trust Indenture for sale to, or solicited any offer to acquire any of
the same from, any Person in violation of the Securities Act or applicable state
securities Laws.
6.6.8 BROKER'S FEES
No Person acting on behalf of Existing Mortgagee is or will be entitled to
any broker's fee, commission or finder's fee in connection with the
Transactions, except for the underwriters' fees and commissions payable with
respect to the public offering of the Pass Through Certificates and the fees and
expenses of Equity Advisor.
6.7 AIRFRAME MANUFACTURER'S REPRESENTATIONS AND WARRANTIES
Airframe Manufacturer represents and warrants to Lessee, each Participant,
Existing Mortgagee, Subordination Agent, Owner Trustee and Mortgagee that:
6.7.1 ORGANIZATION, ETC.
Airframe Manufacturer is a corporation duly incorporated, validly existing
and in good standing under the Laws of Brazil, and has the corporate power and
authority to conduct the business in which it is currently engaged and to own or
hold under lease its properties and to enter into, and perform its obligations
under the Airframe Manufacturer Agreements.
6.7.2 CORPORATE AUTHORIZATION
Airframe Manufacturer has taken, or caused to be taken, all necessary
corporate action (including, without limitation, the obtaining of any consent or
approval of stockholders required by its constitutional documents) to authorize
the execution and delivery of each of the Airframe Manufacturer Agreements, and
the performance of its obligations thereunder.
6.7.3 NO VIOLATION
The execution and delivery by Airframe Manufacturer of the Airframe
Manufacturer Agreements, the performance by Airframe Manufacturer of its
obligations thereunder and the consummation by Airframe Manufacturer on the
Closing Date of the transactions contemplated thereby, do not and will not (a)
violate any provision of the constitutional documents of Airframe Manufacturer,
(b) violate any Law applicable to or binding on Airframe Manufacturer or (c)
violate or constitute any default under (other than any violation or default
that would not result in a Material Adverse Change to Airframe Manufacturer), or
result in the creation of any Lien (other than as provided for or otherwise
permitted in the Operative Agreements) upon the Trust Estate under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, lease, loan or other material agreement, instrument or document to
which Airframe Manufacturer is a party or by which Airframe Manufacturer or any
of its properties is bound.
6.7.4 APPROVALS
The execution and delivery by Airframe Manufacturer of the Airframe
Manufacturer Agreements, the performance by Airframe Manufacturer of its
obligations thereunder and the consummation by Airframe Manufacturer on the
Closing Date of the transactions contemplated thereby do not and will not
require the consent or approval of, or the giving of notice to, or the
registration with, or the recording or filing of any documents with, or the
taking of any other action in respect of, (a) any trustee or other holder of any
Debt of Airframe Manufacturer and (b) any Government Entity, other than the
filing of the FAA Filed Documents and the Financing Statements.
6.7.5 VALID AND BINDING AGREEMENTS
The Airframe Manufacturer Agreements have been duly authorized, executed
and delivered by Airframe Manufacturer and, assuming the due authorization,
execution and delivery by the other party or parties thereto, constitute the
legal, valid and binding obligations of Airframe Manufacturer and are
enforceable against Airframe Manufacturer in accordance with the respective
terms thereof, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium and other similar Laws
affecting the rights of creditors generally and general principles of equity,
whether considered in a proceeding at law or in equity.
6.7.6 TITLE
On the Closing Date, Existing Lessor shall have, and the Bills of Sale
shall convey to the Owner Trustee, good and marketable title to, the Aircraft,
free and clear of all claims, Liens and encumbrances of any nature, except
Permitted Liens.
6.7.7 TAXES
The Existing Lessor has filed or will cause to be filed all Federal and all
material state, local and foreign tax returns which are required to be filed by
it and have paid or will cause to be paid all Taxes which are due and payable in
connection with the Aircraft.
6.7.8 LITIGATION
There are no pending or, to the Actual Knowledge of Airframe Manufacturer,
threatened actions or proceedings against Airframe Manufacturer before any
court, governmental body, arbitration board, administrative agency or tribunal
which, if determined adversely to Airframe Manufacturer, would materially
adversely affect the ability of Airframe Manufacturer to perform its obligations
under the Airframe Manufacturer Agreements.
6.7.9 SECURITIES LAWS
Neither Airframe Manufacturer nor any person Airframe Manufacturer has
authorized to act on its behalf has directly or indirectly offered any
beneficial interest in or Security relating to the ownership of the Aircraft or
any interest in the Trust Estate, or any of the Equipment Notes or any other
interest in or Security under the Trust Indenture for sale to, or solicited any
offer to acquire any of the same from, any Person in violation of the Securities
Act or applicable state securities Laws.
6.7.10 BROKER'S FEES
No Person acting on behalf of Airframe Manufacturer is or will be entitled
to any broker's fee, commission or finder's fee in connection with the
Transactions, except for the underwriters' fees and commissions payable with
respect to the public offering of the Pass Through Certificates and the fees and
expenses of Equity Advisor.
SECTION 7. COVENANTS, UNDERTAKINGS AND AGREEMENTS
7.1 COVENANTS OF LESSEE
Lessee covenants and agrees with Owner Participant, Loan Participant, Owner
Trustee, and Mortgagee as follows:
7.1.1 CORPORATE EXISTENCE; U.S. AIR CARRIER
Lessee shall at all times maintain its corporate existence, except as
permitted by Section 13.2 of the Lease, and shall at all times remain a U.S. Air
Carrier.
7.1.2 NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE
Lessee will give Owner Participant, Owner Trustee and Mortgagee timely
written notice (but in any event within 30 days prior to the expiration of the
period of time specified under applicable Law to prevent lapse of perfection) of
any relocation of its chief executive office (as such term is defined in Article
9 of the UCC) from its then present location and will promptly take any action
required by Section 7.1.3(c) as a result of such relocation.
7.1.3 CERTAIN ASSURANCES
(a) Lessee shall duly execute, acknowledge and deliver, or shall cause to
be executed, acknowledged and delivered, all such further agreements,
instruments, certificates or documents, and shall do and cause to be done such
further acts and things, in any case, as Owner Participant, Owner Trustee,
Mortgagee shall reasonably request for accomplishing the purposes of this
Agreement and the other Operative Agreements, PROVIDED THAT any instrument or
other document so executed by Lessee will not expand any obligations or limit
any rights of Lessee in respect of the transactions contemplated by any
Operative Agreement.
(b) Lessee shall promptly take such action with respect to the recording,
filing, re-recording and re-filing of the Lease, the Trust Agreement and the
Trust Indenture and the respective supplements thereto, including, without
limitation, Lease Supplement No. 1 and the initial Trust Indenture Supplement,
as shall be necessary to establish, perfect and protect the interests and rights
of Owner Trustee in and to the Aircraft and under the Lease and the perfection
and priority of the Lien created by the Trust Indenture, and Lessee shall pay
all out-of-pocket costs and expenses thereof to the extent not paid by another
party as Transaction Expenses. Lessee shall furnish to Owner Participant or
Owner Trustee such information (other than with respect to the citizenship of
Owner Participant and Owner Trustee) in Lessee's possession or otherwise
reasonably available to Lessee as may be required to enable Owner Participant or
Owner Trustee to make application for registration of the Aircraft under the Act
(subject to Lessee's rights under Section 7.1.2 of the Lease).
(c) Lessee will cause the FAA Filed Documents, the Financing Statements and
all continuation statements (and any amendments necessitated by any combination,
consolidation or merger pursuant to Section 13.2 of the Lease, or any relocation
of its chief executive office) in respect of the Financing Statements to be
prepared and, subject only to the execution and delivery thereof by Owner
Trustee and Mortgagee, as applicable, duly and timely filed and recorded, or
filed for recordation, to the extent permitted under the Act (with respect to
the FAA Filed Documents) or the UCC or similar law of any other applicable
jurisdiction (with respect to such other documents).
(d) If the Aircraft has been registered in a country other than the United
States pursuant to Section 7.1.2 of the Lease, Lessee will furnish to Owner
Trustee, Mortgagee and each Participant annually after such registration,
commencing with the calendar year after such registration is effected, an
opinion of special counsel reasonably satisfactory to Owner Trustee and
Mortgagee stating that, in the opinion of such counsel, either that (i) such
action has been taken with respect to the recording, filing, re-recording and
re-filing of the Operative Agreements and any supplements and amendments thereto
as is necessary to establish, perfect and protect Owner Trustee's and
Mortgagee's respective right, title and interest in and to the Aircraft and the
Operative Agreements, reciting the details of such actions, or (ii) no such
action is necessary to maintain the perfection of such right, title and
interest.
7.1.4 SECURITIES LAWS
Neither Lessee nor any person authorized to act on its behalf will directly
or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or the Lease or any interest in the Trust Estate and
Trust Agreement or any of the Equipment Notes or any other interest in or
security under the Trust Indenture, for sale to, or solicit any offer to acquire
any such interest or security from, or sell any such interest or security to,
any person in violation of the Securities Act or applicable state or foreign
securities Laws.
7.2 COVENANTS OF OWNER PARTICIPANT
Owner Participant covenants and agrees with Lessee, and except with respect
to Section 7.2.4, Loan Participant, Owner Trustee and Mortgagee as follows:
7.2.1 LIENS
Owner Participant (a) will not directly or indirectly create, incur, assume
or suffer to exist any Lessor Lien attributable to it on or with respect to all
or any part of the Trust Estate, the Trust Indenture Estate or the Aircraft, (b)
will, at its own cost and expense, take such action as may be necessary to
discharge any Lessor Lien attributable to Owner Participant on all or any part
of the Trust Estate, the Trust Indenture Estate or the Aircraft, PROVIDED that
Owner Participant shall not be in breach of its obligations under this sentence
so long as (i) Owner Participant shall, at its own cost and expense, be
diligently contesting such Lessor Lien in good faith by appropriate proceedings
and (ii) such Lessor Lien and such proceedings do not involve (x) any material
danger of the sale, forfeiture, or loss of the Aircraft, the Airframe, any
Engine or any Part thereof or (y) any restriction on the use or operation of the
Aircraft or title thereto. Owner Participant will hold harmless and indemnify
Lessee, Owner Trustee, each Note Holder, Mortgagee, each of their respective
Affiliates, successors and permitted assigns, the Trust Estate and the Trust
Indenture Estate from and against (i) any and all Expenses, (ii) any reduction
in the amount payable out of the Trust Estate or the Trust Indenture Estate and
(iii) any interference with the possession, operation or other use of all or any
part of the Aircraft, in each case imposed on, incurred by or asserted against
any of the foregoing as a consequence of any such Lessor Lien.
7.2.2 REVOCATION OF TRUST AGREEMENT
(a) Owner Participant will comply with the provisions of the Trust
Agreement applicable to it, and will not terminate or revoke the Trust Agreement
or the trusts created thereunder without the prior written consent of Lessee and
Mortgagee and will not amend, modify or supplement the Trust Agreement, or waive
any of the provisions thereof, if such amendment, modification, supplement or
waiver would have a material adverse effect on Lessee, without the consent of
Lessee, or on Mortgagee or any Note Holder, without the consent of Mortgagee.
(b) Notwithstanding Section 7.2.2(a), Owner Participant may at any time
remove Owner Trustee pursuant to Section 9.1 of the Trust Agreement or terminate
the Trust Agreement pursuant to Section 11.2 of the Trust Agreement.
7.2.3 CHANGE OF SITUS OF OWNER TRUST
If, at any time, any Tax Indemnitee or the Trust Estate becomes subject to
any Taxes for which it is indemnified pursuant to Section 9.3 of this Agreement
and if, as a consequence thereof, Lessee should request that the situs of the
Trust be moved to another state in the United States from the state in which it
is then located, the situs of the Trust may be moved with the written consent of
Owner Participant (which consent shall not be unreasonably withheld) and Owner
Participant will take whatever action may be reasonably necessary to accomplish
such removal; PROVIDED, that, in any event, (a) Lessee shall provide such
additional tax indemnification as Owner Participant and the Note Holders or the
Pass Through Trustees may reasonably request to cover any additional
unindemnified Taxes or loss of Tax benefits described in the assumptions in the
Tax Indemnity Agreement resulting from such change in the situs of the Trust (it
being agreed that if a Lease Event of Default shall have occurred and is then
continuing, it shall not be unreasonable for Owner Participant to withhold its
consent to moving the situs of the Trust, notwithstanding the provision by
Lessee of such additional tax indemnification, unless a Section 1110 Event shall
have occurred and is then continuing), (b) the rights and obligations under the
Operative Agreements of Owner Participant, the Note Holders, Pass Through
Trustees and Mortgagee shall not be adversely affected as a result of the taking
of such action, (c) the Lien of the Trust Indenture on the Trust Indenture
Estate shall not be adversely affected by such action, and Lessee and Owner
Trustee shall execute and deliver such documents as may be necessary or as may
reasonably be requested by Mortgagee to protect and maintain the perfection and
priority of such Lien, (d) Owner Participant, Pass Through Trustees and
Mortgagee shall have received an opinion or opinions of counsel (which counsel
is reasonably satisfactory to Owner Participant, Pass Through Trustees and
Mortgagee) in scope, form and substance reasonably satisfactory to Owner
Participant, Pass Through Trustees and Mortgagee to the effect that (i) the
Trust, as thus removed, shall remain a validly established trust, (ii) any
amendments to the Trust Agreement necessitated by such removal shall have been
duly authorized, executed and delivered by the parties thereto and shall
constitute the valid and binding obligations of such parties, enforceable in
accordance with their terms, (iii) covering such other matters as Owner
Participant, Pass Through Trustees or Mortgagee may reasonably request, (e) if
such removal involves the replacement of Owner Trustee, then Owner Participant,
Pass Through Trustees and Mortgagee shall have received an opinion of counsel to
such successor Owner Trustee in form and substance reasonably satisfactory to
Owner Participant, Pass Through Trustees and Mortgagee covering the matters
described in the opinion delivered pursuant to Section 5.1.2(xxv)(D) and (f)
Lessee shall indemnify and hold harmless Owner Participant, Note Holders, Pass
Through Trustees and First Security, in its individual capacity and as Owner
Trustee, on a net after-tax basis against any and all reasonable out-of-pocket
costs and expenses including attorneys' fees and disbursements, fees and
expenses of any new owner trustee, registration, recording or filing fees and
taxes incurred by Owner Participant, Note Holders, Pass Through Trustees or
Owner Trustee in connection with such change of situs. Owner Participant agrees
with Lessee that it will not consent to or direct a change in the situs of the
Trust Estate without the prior written consent of Lessee, except that if a Lease
Event of Default shall have occurred and is then continuing, except during a
Section 1110 Period, such consent shall not be required.
7.2.4 COMPLIANCE WITH LEASE PROVISIONS
Owner Participant will, solely for the benefit of Lessee, comply with the
express provisions applicable to it contained in the Lease.
7.2.5 SECURITIES ACT
Owner Participant will not directly or indirectly offer any beneficial
interest or security relating to the ownership of the Aircraft or any interest
in the Trust Estate or any of the Equipment Notes or any other interest in or
security under the Trust Indenture for sale to, or solicit any offer to acquire
any such interest or security from, or sell any such interest or security to,
any Person in violation of the registration provisions of the Securities Act or
applicable state or foreign securities Laws, provided that the foregoing shall
not be deemed to impose on Owner Participant any responsibility with respect to
any such offer, sale or solicitation by any other party hereto.
7.2.6 REGARDING THE OWNER TRUSTEE
Owner Participant will instruct Owner Trustee to perform its obligations
under each Owner Trustee Agreement.
7.3 COVENANTS OF FIRST SECURITY AND OWNER TRUSTEE
First Security, in its individual capacity and/or as Owner Trustee, as
provided below, covenants and agrees with Lessee, Owner Participant, each Note
Holder and Mortgagee as follows:
7.3.1 LIENS
First Security (a) will not directly or indirectly create, incur, assume or
suffer to exist any Lessor Lien attributable to it or Owner Trustee with respect
to all or any part of the Trust Estate, the Trust Indenture Estate or the
Aircraft, (b) will, at its own cost and expense, take such action as may be
necessary to discharge any Lessor Lien attributable to First Security or Owner
Trustee on all or any part of the Trust Estate, the Trust Indenture Estate or
the Aircraft, PROVIDED that First Security shall not be in breach of its
obligations under this sentence so long as (i) First Security shall, at its own
cost and expense, be diligently contesting such Lessor Lien in good faith by
appropriate proceedings and (ii) such Lessor Lien and such proceedings do not
involve (x) any material danger of the sale, forfeiture, or loss of the
Aircraft, the Airframe, any Engine or any Part thereof or (y) any restriction on
the use or operation of the Aircraft or title thereto, First Security will in
its individual capacity hold harmless and indemnify Lessee, Owner Participant,
each Note Holder, Mortgagee, each of their respective Affiliates, successors and
permitted assigns, the Trust Estate and the Trust Indenture Estate from and
against (i) any and all Expenses, (ii) any reduction in the amount payable out
of the Trust Estate or the Trust Indenture Estate and (iii) any interference
with the possession, operation or other use of all or any part of the Aircraft,
in each case imposed on, incurred by or asserted against any of the foregoing as
a consequence of any such Lessor Lien.
7.3.2 OTHER BUSINESS
Owner Trustee will not enter into any business or other activity except as
contemplated by the Operative Agreements.
7.3.3 NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE
First Security, in its individual capacity and as Owner Trustee, will give
Lessee, each Participant and Mortgagee 30 days' prior written notice of any
relocation of its chief executive office (as such term is defined in Article 9
of the UCC) from its then present location and will promptly take any action
required by Section 7.3.8 as a result of such relocation.
7.3.4 SECURITIES ACT
First Security, in its individual capacity and as Owner Trustee, will not
directly or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or any interest in the Trust Estate or any of the
Equipment Notes or any other interest in or security under the Trust Indenture
for sale to, or solicit any offer to acquire any such interest or security from,
or sell any such interest or security to, any Person in violation of the
registration provisions of the Securities Act or applicable state or foreign
securities Laws, provided that the foregoing shall not be deemed to impose on
First Security in its individual capacity or as Owner Trustee, any
responsibility with respect to any such offer, sale or solicitation by any other
party hereto.
7.3.5 PERFORMANCE OF AGREEMENTS
Owner Trustee shall perform its obligations under the Owner Trustee
Agreements in accordance with the terms thereof.
7.3.6 RELEASE OF LIEN OF TRUST INDENTURE
Owner Trustee, in each instance referred to in the Lease in which a
transfer of any property is required to be made by Owner Trustee to Lessee or
any other Person (other than Mortgagee or Owner Participant), shall, at Lessee's
request and expense, use its reasonable efforts to procure from Mortgagee the
prompt release of the Lien of the Trust Indenture with respect to such property.
7.3.7 NOTICES; DOCUMENTS
In the event any claim with respect to any liabilities is filed against the
Owner Trustee in its capacity as such and Owner Trustee shall have Actual
Knowledge thereof, the Owner Trustee shall promptly notify Lessee and Mortgagee
in writing thereof. Owner Trustee further agrees to provide to Lessee promptly
any documents (including the certificate of aircraft registration) that it
receives from the FAA with respect to the Aircraft.
7.3.8 FILINGS
After the Closing Date, Owner Trustee shall duly execute and deliver to
Lessee all filings and recordings (including, without limitation, all filings
and UCC financing statements under the Act and the UCC and any amendments to UCC
financing statements necessitated by any relocation of its chief executive
office), prepared and delivered to it by Lessee required to perfect Owner
Trustee's title to the Aircraft and the liens of and security interests granted
by the Trust Indenture (or to maintain such perfection) and to make such title,
liens and security interests valid and enforceable.
7.3.9 TRUST AGREEMENT
Each of First Security and Owner Trustee hereby agrees with Lessee, Loan
Participant and Mortgagee not to revoke the trust created by the Trust Agreement
so long as the Trust Indenture remains undischarged or if such revocation would
have an adverse effect on the Lessee. Nothing contained in this Agreement shall
impair any right under the Trust Agreement of First Security to resign as Owner
Trustee in accordance with the provisions of the Trust Agreement.
7.4 COVENANTS OF WTC
WTC in its individual capacity or as Mortgagee, each Applicable Pass
Through Trustee or Subordination Agent, as the case may be, covenants and agrees
with Lessee, Owner Participant and Owner Trustee as follows:
7.4.1 LIENS
WTC (a) will not directly or indirectly create, incur, assume or suffer to
exist any Lessor Lien attributable to it on or with respect to all or any part
of the Trust Estate, the Trust Indenture Estate or the Aircraft, (b) will, at
its own cost and expense, promptly take such action as may be necessary to
discharge any Lessor Lien attributable to WTC on all or any part of the Trust
Estate, the Trust Indenture Estate or the Aircraft and (c) will in its
individual capacity hold harmless and indemnify Lessee, Owner Participant, each
Note Holder, Owner Trustee, each of their respective Affiliates, successors and
permitted assigns, the Trust Estate and the Trust Indenture Estate from and
against (i) any and all Expenses, (ii) any reduction in the amount payable out
of the Trust Estate or the Trust Indenture Estate and (iii) any interference
with the possession, operation or other use of all or any part of the Aircraft,
in each case imposed on, incurred by or asserted against any of the foregoing as
a consequence of any such Lessor Lien.
7.4.2 SECURITIES ACT
WTC in its individual capacity or as Mortgagee, a Pass Through Trustee or
Subordination Agent, will not offer any beneficial interest or Security relating
to the ownership of the Aircraft or any interest in the Trust Indenture Estate,
or any of the Equipment Notes or any other interest in or security under the
Trust Indenture for sale to, or solicit any offer to acquire any such interest
or security from, or sell any such interest or security to, any Person in
violation of the Securities Act or applicable state or foreign securities Laws,
provided that the foregoing shall not be deemed to impose on WTC any
responsibility with respect to any such offer, sale or solicitation by any other
party hereto.
7.4.3 PERFORMANCE OF AGREEMENTS
WTC, in its individual capacity and as Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, shall perform its obligations under the
Indenture Agreements, the Pass Through Trustee Agreements and the Subordination
Agent Agreements in accordance with the terms thereof.
7.4.4 WITHHOLDING TAXES
WTC shall indemnify (on an after-tax basis) and hold harmless Lessee,
Lessor and Owner Participant against any United States withholding taxes (and
related interest, penalties and additions to tax) as a result of the failure by
WTC to withhold on payments to any Note Holder if such Note Holder failed to
provide to Mortgagee necessary certificates or forms to substantiate the right
to exemption from such withholding tax.
7.5 COVENANTS OF NOTE HOLDERS
Each Note Holder (including Subordination Agent) as to itself only
covenants and agrees with Lessee, Owner Participant, Owner Trustee and Mortgagee
as follows:
7.5.1 WITHHOLDING TAXES
Such Note Holder (if it is a Non-U.S. Person) agrees to indemnify (on an
after-tax basis) and hold harmless Lessee, Lessor, Owner Participant and
Mortgagee against any United States withholding taxes (and related interest,
penalties and additions to tax) as a result of the inaccuracy or invalidity of
any certificate or form provided by such Note Holder to Mortgagee in connection
with such withholding taxes. Any amount payable hereunder shall be paid within
30 days after receipt by a Note Holder of a written demand therefor.
7.5.2 TRANSFER; COMPLIANCE
(a) Such Note Holder will (i) not transfer any Equipment Note or interest
therein in violation of the Securities Act or applicable state or foreign
securities Law; PROVIDED, that the foregoing provisions of this section shall
not be deemed to impose on such Note Holder any responsibility with respect to
any such offer, sale or solicitation by any other party hereto, and (ii) perform
and comply with the obligations specified to be imposed on it (as a Note Holder)
under each of the Trust Indenture and the form of Equipment Note set forth in
the Trust Indenture.
(b) Except as otherwise required by the terms of Section 2.13 of the Trust
Indenture, each Note Holder will not sell, assign, convey, exchange or otherwise
transfer any Equipment Note or any interest in, or represented by, any Equipment
Note (it being understood that this provision is not applicable to the Pass
Through Certificates) unless the proposed transferee thereof first provides
Lessee and Owner Participant with both of the following:
(i) a written representation and covenant that either (a) no
portion of the funds it uses to purchase, acquire and hold such Equipment
Note or interest directly or indirectly constitutes, or may be deemed under
the Code or ERISA or any rulings, regulations or court decisions thereunder
to constitute, the assets of any Plan or (b) the transfer, and subsequent
holding, of such Equipment Note or interest shall not involve or give rise
to a transaction that constitutes a prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975(c)(1) of the Code involving
Lessee, Owner Participant, a Pass Through Trustee, the Subordination Agent
or the proposed transferee (other than a transaction that is exempted from
the prohibitions of such sections by applicable provisions of ERISA or the
Code or administrative exemptions or regulations issued thereunder); and
(ii) a written covenant that it will not transfer any
Equipment Note or any interest in, or represented by, any Equipment Note
unless the subsequent transferee also makes the representation described in
clause (i) above and agrees to comply with this clause (ii) and the other
covenants of the Note Holders contained in the Operative Agreements.
7.6 AGREEMENTS
7.6.1 OWNER TRUSTEE IS OWNER FOR ALL PURPOSES
Lessee, the Owner Participant and Owner Trustee agree that for all
purposes, after the Closing, Owner Trustee will be the owner of the Aircraft
(except that Owner Participant will be the owner for income tax purposes) and
Lessee will be the lessee thereof. No transfer, by operation of Law or
otherwise, of the beneficial interest of Owner Participant in and to the Trust
Estate shall operate to transfer legal title to any part of the Trust Estate to
any transferee thereof.
7.6.2 COMMENCEMENT OF BANKRUPTCY PROCEEDINGS
Lessee, each Participant, each Note Holder, First Security, Owner Trustee,
WTC and Mortgagee agree for the benefit of each of the others that it will not
commence or join in any proceeding under the Bankruptcy Code to commence a case
under Section 303 of the Bankruptcy Code against the Trust Estate. Nothing
contained herein shall be deemed to preclude any Participant, any Note Holder,
First Security, Owner Trustee, WTC or Mortgagee from filing any claim against
the Trust Estate in any case commenced against the Trust Estate.
7.6.3 CERTAIN BANKRUPTCY MATTERS
If (a) all or any part of the Trust Estate becomes the property of, or
Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (b) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code,
First Security or Owner Participant is required, by reason of First Security or
Owner Participant being held to have recourse liability to any Note Holder or
Mortgagee directly or indirectly (other than the recourse liability of First
Security or Owner Participant under this Agreement, the Trust Indenture or by
separate agreement), to make payment on account of any amount payable as
principal, Make-Whole Amount, if any, interest or other amounts on the Equipment
Notes, and (c) any Note Holder or Mortgagee actually receives any Excess Amount,
as defined below, which reflects any payment by First Security or Owner
Participant on account of (b) above, then such Note Holder or Mortgagee, as the
case may be, shall promptly refund to First Security or Owner Participant
(whichever shall have made such payment) such Excess Amount.
For purposes of this Section 7.6.3, "Excess Amount" means the amount by
which such payment exceeds the amount that would have been received by a Note
Holder or Mortgagee if First Security or Owner Participant had not become
subject to the recourse liability referred to in clause (b) above, and such Note
Holder or Mortgagee receives written notice that such amount is an Excess Amount
prior to its distribution thereof. Nothing contained in this Section 7.6.3 shall
prevent a Note Holder or Mortgagee from enforcing any personal recourse
obligation (and retaining the proceeds thereof) of First Security or Owner
Participant under this Agreement (other than as referred to in clause (b) above)
or the Trust Indenture (and any exhibits or annexes thereto) or from retaining
any amount paid by Owner Participant under Sections 2.13 or 4.03 of the Trust
Indenture.
7.6.4 QUIET ENJOYMENT; SALE BY OWNER TRUSTEE BINDING
(a) Owner Participant, each Pass Through Trustee, Subordination Agent, each
Note Holder, Owner Trustee and Mortgagee agrees as to itself with Lessee that,
so long as no Lease Event of Default shall have occurred and be continuing, such
Person shall not (and shall not permit any Affiliate or other Person claiming
by, through or under it to) interfere with Lessee's rights in accordance with
the Lease to the quiet enjoyment, possession and use of the Aircraft during the
Term.
(b) Any assignment, sale, transfer or other conveyance of the Aircraft by
Owner Trustee made pursuant to the terms of this Agreement or the Lease shall
bind Owner Participant and shall be effective to transfer or convey all right,
title and interest of Owner Trustee and Owner Participant in and to the
Aircraft. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such assignment, sale,
transfer or conveyance, or as to the application of any sale or other proceeds
with respect thereto by Owner Trustee, as regards Owner Participant.
7.6.5 RELEASE OF LIEN TRUST INDENTURE
Each of Lessee, Lessor and Mortgagee agrees that in each instance referred
to in the Lease in which a transfer of any property is required to be made by
Lessor to Lessee or any other Person (other than Mortgagee), Mortgagee shall,
upon request of Lessor and compliance with the applicable provisions of the
Lease and Trust Indenture, promptly execute (at Lessee's cost and expense) such
instruments as Lessor or Lessee may reasonably request to evidence the release
of the Lien of the Trust Indenture with respect to such property.
7.6.6 NON-RECOURSE
Loan Participant and Mortgagee agree that (a) obligations of Owner Trustee
under the Trust Indenture or any other Operative Agreement and with respect to
the Equipment Notes shall be non-recourse to Owner Participant and to First
Security and (b) they will look solely to the income and proceeds from the Trust
Estate and the Trust Indenture Estate to the extent available for distribution
to Note Holder or Mortgagee as provided in the Trust Indenture and that neither
Owner Participant nor First Security will be personally liable to Loan
Participant or Mortgagee for any amounts payable by Owner Trustee under the
Trust Indenture or any other Operative Agreement; PROVIDED, HOWEVER, that the
foregoing is not intended nor shall it be construed to limit any recourse
liability of Owner Participant or First Security to the extent that such
liability is expressly set forth in this Agreement or in any of the Operative
Agreements or arises by reason of the breach of any representation or warranty
or covenant given by such Person (in the case of First Security, in its
individual capacity).
7.6.7 OTHER DOCUMENTS; AMENDMENT
(a) Each of the Owner Participant and the Owner Trustee hereby agrees with
Lessee, the Loan Participant, and the Mortgagee not to amend, supplement or
otherwise modify any provision of the Trust Agreement in a manner that could
materially adversely affect such party without the prior written consent of such
party. Notwithstanding the foregoing, so long as the Lease has not been
terminated or expired, each Participant, the Mortgagee and the Owner Trustee
hereby agree for the benefit of Lessee that without the consent of Lessee they
will not amend, supplement or otherwise modify (i) Article III, Article IX or
Sections 2.05 or 2.15 of the Trust Indenture, (ii) any provision of any
Operative Agreement that will affect the stated principal amount of or premium
or interest on the Equipment Notes or (iii) any other provision of the Trust
Indenture or Equipment Notes in a manner that could materially adversely affect
Lessee. Mortgagee and Owner Trustee agree promptly to furnish to Lessee copies
of any supplement, amendment, waiver or modification of any of the Operative
Agreements to which Lessee is not a party. Loan Participant agrees that it will
not take any action in respect of the Trust Indenture Estate except through the
Mortgagee pursuant to the Trust Indenture or as otherwise permitted by Trust
Indenture.
(b) Owner Trustee agrees to join with Lessee to the extent that action on
its part is necessary or appropriate (i) to cause the following to be duly
accomplished in accordance with applicable United States federal Law by the time
the Aircraft is delivered under this Agreement and the Lease: (A) the
application for registration of the Aircraft in the name of Owner Trustee and
(B) all related action necessary in order for Lessee to have temporary or
permanent authority to operate the Aircraft as contemplated by the Lease and
(ii) forthwith upon delivery of the Aircraft under this Agreement and the Lease,
to cause all necessary documents to be duly filed for recording in accordance
with applicable United States federal Law.
7.6.8 CONSENTS
Owner Participant and Owner Trustee each covenants and agrees, for the
benefit of Lessee, that it shall not unreasonably withhold its consent to any
consent or approval requested of it or of Owner Trustee or Mortgagee under the
terms of any of the Operative Agreements which by its terms is not to be
unreasonably withheld.
7.6.9 INSURANCE
Each of Owner Participant, the Pass Through Trustees, the Subordination
Agent and the Owner Trustee agrees not to obtain or maintain insurance for its
own account as permitted by Section 11.2 of the Lease if such insurance would
limit or otherwise materially adversely affect the coverage of any insurance
required to be obtained or maintained by Lessee pursuant to Section 11 and Annex
D of the Lease.
7.6.10 EXTENT OF INTEREST OF NOTE HOLDERS
A Note Holder shall not, as such, have any further interest in, or other
right with respect to, the Trust Estate or the Trust Indenture Estate when and
if the principal and Make-Whole Amount, if any, of and interest on the Equipment
Note held by such Holder, and all other sums, then due and payable to such
Holder hereunder and under any other Operative Agreement, shall have been paid
in full.
7.6.11 FOREIGN REGISTRATION
Each Participant, Owner Trustee and Mortgagee hereby agree, for the benefit
of Lessee but subject to the provisions of Section 7.1.2 of the Lease:
(a) that Lessee shall be entitled to register the Aircraft or cause the
Aircraft to be registered in a country other than the United States subject to
compliance with the following:
(i) each of the following requirements is satisfied:
(A) such registration shall be made only after the Tax Attribute
Period, unless Lessee prepays on a lump sum basis calculated
pursuant to Section 5(f) of the Tax Indemnity Agreement any
liability due under the Tax Indemnity Agreement as a result of
such registration based upon the assumption that such
registration would continue for the remainder of the term of the
Permitted Sublease described in clause (C) below, provided, that
notwithstanding the foregoing, such registration may be made
during the taxable year in which the seventh anniversary of the
Closing Date occurs so long as the Aircraft is not "used
predominantly outside the United States" within the meaning of
Section 168(g) of the Code during such taxable years;
(B) no Lease Event of Default shall have occurred and be continuing
at the time of such registration;
(C) such proposed change of registration is made in connection with a
Permitted Sublease to a Permitted Air Carrier;
(D) such country is a Permitted Country with which the United States
then maintains normal diplomatic relations.
(ii) the Owner Trustee, Owner Participant and Mortgagee shall have
received an opinion, in form and substance reasonably satisfactory to the
Owner Participant (subject to customary exceptions) of counsel reasonably
satisfactory to the Owner Participant addressed to each such party to the
effect that:
(A) such country would recognize the Owner Trustee's title to,
ownership interest in and right to possession of, the Aircraft;
(B) the obligations of Lessee, and the rights and remedies of
Owner Trustee, under the Lease are valid, binding and enforceable
under the laws of such country (or the laws of the country to which
the laws of such country would refer as the applicable governing law);
(C) after giving effect to such change in registration, the Lien
of the Trust Indenture on the Owner Trustee's right, title and
interest in and to the Aircraft and the Lease shall continue as a
valid and duly perfected first priority security interest and all
filing, recording or other action necessary to protect the same shall
have been accomplished (or, if such opinion cannot be given at the
time of such proposed change in registration because such change in
registration is not yet effective, (1) the opinion shall detail what
filing, recording or other action is necessary and (2) Owner Trustee
and the Mortgagee shall have received a certificate from Lessee that
all possible preparations to accomplish such filing, recording and
other action shall have been done, and such filing, recording and
other action shall be accomplished and a supplemental opinion to that
effect shall be delivered to Owner Trustee and the Mortgagee on or
prior to the effective date of such change in registration;
(D) it is not necessary, solely as a consequence of such change
in registration and without giving effect to any other activity of
Owner Trustee, the Owner Participant or the Mortgagee (or any
Affiliate thereof), as the case may be, for Owner Trustee, the Owner
Participant or the Mortgagee to qualify to do business in such country
as a result of such reregistration;
(E) there is no tort liability of the owner or lessor of an
aircraft not in possession thereof under the laws of such country (it
being agreed that, in the event such latter opinion cannot be given in
a form satisfactory to the Owner Participant, such opinion shall be
waived if insurance reasonably satisfactory to the Owner Participant
is provided to cover such risk); and
(F) unless Lessee shall have agreed to provide insurance
reasonably satisfactory to Owner Participant covering the risk of
requisition of use of the Aircraft by the government of such country
(so long as the Aircraft is registered under the laws of such
country), the laws of such country require fair compensation by the
government of such country payable in currency freely convertible into
Dollars and freely removable from such country (without license or
permit, unless Lessee prior to such proposed reregistration has
obtained such license or permit) for the taking or requisition by such
government of such use.
(b) In addition, as a condition precedent to any change in registration
Lessee shall have given to Lessor and Mortgagee assurances reasonably
satisfactory to each of them:
(i) to the effect that the provisions of Section 11 of the Lease have
been complied with after giving effect to such change of
registration; and
(ii) of the payment by Lessee of all reasonable out-of-pocket expenses
at no after-tax cost to any Participant of Lessor, each
Participant and Mortgagee in connection with such change of
registry, including, without limitation (1) the reasonable fees
and disbursements of counsel to Lessee, Lessor and Mortgagee, (2)
any filing or recording fees, Taxes or similar payments incurred
in connection with the change of registration of the Aircraft and
the creation and perfection of the security interest therein in
favor of Mortgagee for the benefit of Note Holders, (3) all costs
and expenses incurred in connection with any filings necessary to
continue in the United States the perfection of the security
interest in the Aircraft and the Lease in favor of Mortgagee for
the benefit of Note Holders and (4) costs in connection with the
calculation of the lump sum payment described in clause (i)(A) of
this Section 7.6.11.
7.6.12 OTHER COMMERCIAL RELATIONS UNAFFECTED
Notwithstanding anything to the contrary set forth in any Operative
Agreement:
(a) Except as set forth in the Purchase Agreement Assignment, nothing
contained in the Operative Agreements shall constitute or be deemed to be a
waiver by Lessee of any rights, remedies or claims it may have against Airframe
Manufacturer or Engine Manufacturer or any subcontractor or supplier of either;
and the Operative Agreements do not and shall not be construed or deemed to
create any rights, waivers, immunities or indemnities in favor of Airframe
Manufacturer, Engine Manufacturer or any subcontractor or supplier of either
with respect to any such rights, remedies or claims of Lessee; and
(b) The Airframe Manufacturer, by its execution and delivery of the Consent
and Agreement, shall not be deemed to have waived any rights, remedies or claims
which Airframe Manufacturer (or any subcontractor or supplier of Airframe
Manufacturer) may have against Lessee; and the Operative Agreements do not and
shall not be construed or deemed to create any rights, waivers, immunities or
indemnities in favor of Lessee with respect to any such rights, remedies or
claims of Airframe Manufacturer (or any subcontractor or supplier of Airframe
Manufacturer).
7.6.13 INTEREST IN CERTAIN ENGINES
Each Participant, Owner Trustee, and Mortgagee agree, for the benefit of
each of the lessor, conditional seller, mortgagee or secured party of any
airframe or engine leased to, or purchased by, Lessee or any Permitted Sublessee
subject to a lease, conditional sale, trust indenture or other security
agreement that it will not acquire or claim, as against such lessor, conditional
seller, mortgagee or secured party, any right, title or interest in any engine
as the result of such engine being installed on the Airframe at any time while
such engine is subject to such lease, conditional sale, trust indenture or other
security agreement and owned by such lessor or conditional seller or subject to
a trust indenture or security interest in favor of such mortgagee or secured
party.
SECTION 8. CONFIDENTIALITY
Lessee, Owner Participant, Note Holders, Owner Trustee, Mortgagee, Existing
Lessor, Existing Mortgagee and Airframe Manufacturer shall keep Annexes B, C and
D and Schedules 1, 2, 3 and 4 to the Lease, the Purchase Agreement Assignment
and the Tax Indemnity Agreement confidential and shall not disclose, or cause to
be disclosed, the same to any Person, except (A) to prospective and permitted
transferees of Lessee's, Owner Participant's, a Note Holder's, a Liquidity
Provider's, Owner Trustee's, Mortgagee's or other Indenture Indemnitee's
interest or their respective counsel or special counsel, independent insurance
brokers, auditors, or other agents who agree to hold such information
confidential, (B) to Lessee's, Owner Participant's, a Note Holder's, a Liquidity
Provider's, a Pass Through Trustee's, Owner Trustee's, Mortgagee's or other
Indenture Indemnitee's counsel or special counsel, independent insurance
brokers, auditors, or other agents, Affiliates or investors who agree to hold
such information confidential, (C) as may be required by any statute, court or
administrative order or decree, legal process or governmental ruling or
regulation, including those of any applicable insurance regulatory bodies
(including, without limitation, the National Association of Insurance
Commissioners), federal or state banking examiners, Internal Revenue Service
auditors or any stock exchange, (D) with respect to Lessee and Owner
Participant, by mutual agreement of such parties, (E) with respect to a Note
Holder or any Pass Through Trustee, to a nationally recognized rating agency for
the purpose of obtaining a rating on the Equipment Notes or the Pass Through
Certificates or to support an NAIC rating for the Equipment Notes or (F) such
other Persons as are reasonably deemed necessary by the disclosing party in
order to protect the interests of such party or for the purposes of enforcing
such documents by such party; PROVIDED, that any and all disclosures permitted
by clauses (C), (D), (E) or (F) above shall be made only to the extent necessary
to meet the specific requirements or needs of the Persons making such
disclosures.
SECTION 9. INDEMNIFICATION AND EXPENSES
9.1 GENERAL INDEMNITY
9.1.1 INDEMNITY
If the Closing occurs, Lessee shall indemnify, protect, defend and hold
harmless each Indemnitee from, against and in respect of, and shall pay on a net
after-tax basis, any and all Expenses of any kind or nature whatsoever that may
be imposed on, incurred by or asserted against any Indemnitee, relating to,
resulting from, or arising out of or in connection with, any one or more of the
following:
(a) The Operative Agreements, the Pass Through Agreements, or the
enforcement of any of the terms of any of the Operative Agreements or the Pass
Through Agreements;
(b) The Aircraft, the Airframe, any Engine or any Part, including, without
limitation, with respect thereto, (i) the manufacture, design, purchase,
acceptance, nonacceptance or rejection, ownership, registration, reregistration,
deregistration, delivery, nondelivery, lease, sublease, assignment, possession,
use or non-use, operation, maintenance, testing, repair, overhaul, condition,
alteration, modification, addition, improvement, storage, airworthiness,
replacement, repair, sale, substitution, return, abandonment, redelivery or
other disposition of the Aircraft, any Engine or any Part, (ii) any claim or
penalty arising out of violations of applicable Laws by Lessee (or any Permitted
Sublessee), (iii) tort liability, whether or not arising out of the negligence
of any Indemnitee (whether active, passive or imputed), (iv) death or property
damage of passengers, shippers or others, (v) environmental control, noise or
pollution and (vi) any Liens in respect of the Aircraft, any Engine or any Part;
(c) The offer, sale, or delivery of any Equipment Notes, Pass Through
Certificates or any interest therein or represented thereby; and
(d) Any breach of or failure to perform or observe, or any other
noncompliance with, any covenant or agreement or other obligation to be
performed by Lessee under any Lessee Operative Agreement or any Pass Through
Agreement or the falsity of any representation or warranty of Lessee in any
Lessee Operative Agreement or any Pass Through Agreement other than in the Tax
Indemnity Agreement.
9.1.2 EXCEPTIONS
Notwithstanding anything contained in Section 9.1.1, Lessee shall not be
required to indemnify, protect, defend and hold harmless any Indemnitee pursuant
to Section 9.1.1 in respect of any Expense of such Indemnitee:
(a) For any Taxes or a loss of Tax benefit, whether or not Lessee is
required to indemnify therefor pursuant to Section 9.3 or the Tax Indemnity
Agreement;
(b) Except to the extent attributable to acts or events occurring prior
thereto, acts or events (other than acts or events related to the performance or
failure to perform by Lessee of its obligations pursuant to the terms of the
Lessee Operative Agreements) that occur after the earliest of: (i) with respect
to the Airframe, any Engine or any Part, the return of possession (it being
understood that the date of the placement of the Aircraft in storage as provided
in Section 5 of the Lease constitutes the date of return of the Aircraft under
the Lease) of such Airframe, Engine or Part pursuant to the terms of and in
compliance with the Lease (other than pursuant to Section 15 thereof, in which
case Lessee's liability under this Section 9.1 shall survive for so long as
Lessor or Mortgagee shall be entitled to exercise remedies under such Section
15) or (ii) the termination of the Term in accordance with the Lease;
(c) To the extent attributable to any Transfer (voluntary or involuntary)
by or on behalf of such Indemnitee of any Equipment Note or interest therein,
except (i) for out-of-pocket costs and expenses incurred as a result of any such
Transfer pursuant to the exercise of remedies under any Operative Agreement
resulting from a Lease Event of Default and (ii) as otherwise required by the
terms of Section 2.13 of the Trust Indenture;
(d) To the extent attributable to any Transfer (voluntary or involuntary)
by or on behalf of Owner Participant of any interest in the Aircraft, or the
Trust Estate except for costs and expenses incurred as a result of such
Transfer, if such Transfer arises directly from a Lease Event of Default that
shall have occurred and be continuing;
(e) To the extent attributable to the gross negligence or willful
misconduct of such Indemnitee or any related Indemnitee (as defined below)
(other than gross negligence or willful misconduct imputed to such person by
reason of its interest in the Aircraft or any Operative Agreement);
(f) In the case of First Security, to the extent attributable to matters
enumerated in the proviso to Section 14;
(g) To the extent attributable to the incorrectness or breach of any
representation or warranty of such Indemnitee or any related Indemnitee
contained in or made pursuant to any Operative Agreement or any Pass Through
Agreement;
(h) To the extent attributable to the failure by such Indemnitee or any
related Indemnitee to perform or observe any agreement, covenant or condition on
its part to be performed or observed in any Operative Agreement or any Pass
Through Agreement;
(i) To the extent attributable to the offer or sale by such Indemnitee or
any related Indemnitee of any interest in the Aircraft, the Equipment Notes, the
Pass Through Certificates, the Trust Estate or the Trust Agreement or any
similar interest, in violation of the Securities Act or other applicable
federal, state or foreign securities Laws (other than any offer or sale thereof
caused by the acts or omissions of Lessee);
(j) (i) With respect to any Indemnitee (other than Mortgagee), to the
extent attributable to the failure of the Mortgagee to distribute funds received
and distributable by it in accordance with the Trust Indenture, (ii) with
respect to any Indemnitee (other than the Owner Trustee), to the extent
attributable to the failure of the Owner Trustee to distribute funds received
and distributable by it in accordance with the Trust Agreement, (iii) with
respect to any Indemnitee (other than the Subordination Agent), to the extent
attributable to the failure of the Subordination Agent to distribute funds
received and distributable by it in accordance with the Intercreditor Agreement,
(iv) with respect to any Indemnitee (other than the Pass Through Trustees), to
the extent attributable to the failure of a Pass Through Trustee to distribute
funds received and distributable by it in accordance with the Pass Through Trust
Agreements, (v) with respect to Mortgagee, to the extent attributable to the
negligence or willful misconduct of Mortgagee in the distribution of funds
received and distributable by it in accordance with the Trust Indenture, (vi)
with respect to Owner Trustee, to the extent attributable to the negligence or
willful misconduct of Owner Trustee in the distribution of funds received and
distributable by it in accordance with the Trust Agreement, (vii) with respect
to the Subordination Agent, to the extent attributable to the negligence or
willful misconduct of the Subordination Agent in the distribution of funds
received and distributable by it in accordance with the Intercreditor Agreement,
and (viii) with respect to the Pass Through Trustees, to the extent attributable
to the negligence or willful misconduct of a Pass Through Trustee in the
distribution of funds received and distributable by it in accordance with the
Pass Through Trust Agreements.
(k) Other than during the continuation of a Lease Event of Default, to the
extent attributable to the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any Operative
Agreement or Pass Through Agreement other than such as have been requested by
Lessee or as are required by or made pursuant to the terms of the Operative
Agreements or Pass Through Agreements (unless such requirement results from the
actions of an Indemnitee not required by or made pursuant to the Operative
Agreements or the Pass Through Agreements);
(l) To the extent attributable to any amount which any Indemnitee expressly
agrees to pay or such Indemnitee expressly agrees shall not be paid by or be
reimbursed by Lessee;
(m) To the extent that it is an ordinary and usual operating or overhead
expense;
(n) With respect to the Owner Participant or the Owner Trustee, or any
related Indemnitee, to the extent attributable to the deregistration of the
Aircraft under the Act as a result of Owner Participant's or Owner Trustee's (or
any related Indemnitee of either) not being a Citizen of the United States as a
result of any act (other than reregistration of the Aircraft pursuant to Section
7.1.2 of the Lease) of Owner Participant or Owner Trustee, or any related
Indemnitee of either of the foregoing (not taken at the request of the Lessee);
(o) For any Lessor Lien attributable to such Indemnitee or any related
Indemnitee;
(p) If another provision of an Operative Agreement or a Pass Through
Agreement specifies the extent of Lessee's responsibility or obligation with
respect to such Expense, to the extent arising from other than failure of Lessee
to comply with such specified responsibility or obligation;
(q) To the extent it is a Transaction Expense;
(r) To the extent constituting principal, Make-Whole Amount or interest on
the Equipment Notes attributable solely to an Event of Default not constituting
a Lease Event of Default; or
(s) To the extent incurred by or asserted against an Indemnitee as a result
of any "prohibited transaction", within the meaning of Section 406 of ERISA or
Section 4975(c)(1) of the Code.
For purposes of this Section 9.1, a Person shall be considered a "related"
Indemnitee with respect to an Indemnitee if such Person is an Affiliate or
employer of such Indemnitee, a director, officer, employee, agent, or servant of
such Indemnitee or any such Affiliate or a successor or permitted assignee of
any of the foregoing.
9.1.3 SEPARATE AGREEMENT
This Agreement constitutes a separate agreement with respect to each
Indemnitee and is enforceable directly by each such Indemnitee.
9.1.4 NOTICE
If a claim for any Expense that an Indemnitee shall be indemnified against
under this Section 9.1 is made, such Indemnitee shall give prompt written notice
thereof to Lessee. Notwithstanding the foregoing, the failure of any Indemnitee
to notify Lessee as provided in this Section 9.1.4, or in Section 9.1.5, shall
not release Lessee from any of its obligations to indemnify such Indemnitee
hereunder, except to the extent that such failure results in an additional
Expense to Lessee (in which event Lessee shall not be responsible for such
additional Expense) or materially impairs Lessee's ability to contest such
claim.
9.1.5 NOTICE OF PROCEEDINGS; DEFENSE OF CLAIMS; LIMITATIONS
(a) In case any action, suit or proceeding shall be brought against any
Indemnitee for which Lessee is responsible under this Section 9.1, such
Indemnitee shall notify Lessee of the commencement thereof and Lessee may, at
its expense, participate in and to the extent that it shall wish (subject to the
provisions of the following paragraph), assume and control the defense thereof
and, subject to Section 9.1.5(c), settle or compromise the same.
(b) Lessee or its insurer(s) shall have the right, at its or their expense,
to investigate or, if Lessee or its insurer(s) shall agree in writing not to
dispute liability to the Indemnitee giving notice of such action, suit or
proceeding under this Section 9.1.5 for indemnification hereunder or under any
insurance policies pursuant to which coverage is sought, control the defense of,
any action, suit or proceeding, relating to any Expense for which
indemnification is sought pursuant to this Section 9.1, and each Indemnitee
shall cooperate with Lessee or its insurer(s) with respect thereto; PROVIDED,
that Lessee shall not be entitled to control the defense of any such action,
suit, proceeding or compromise any such Expense (i) during the continuance of
any Lease Event of Default arising under Section 14.1 of the Lease, (ii) if such
proceedings would entail a material risk of the sale, forfeiture or loss of the
Aircraft or (iii) if such proceedings would entail a risk of criminal liability
or greater than de minimis risk of material civil penalties being imposed on
such Indemnitee. In connection with any such action, suit or proceeding being
controlled by Lessee, such Indemnitee shall have the right to participate
therein, at its sole cost and expense, with counsel reasonably satisfactory to
Lessee; PROVIDED, that such Indemnitee's participation does not, in the
reasonable opinion of the independent counsel appointed by the Lessee or its
insurers to conduct such proceedings, interfere with the defense of such case.
(c) In no event shall any Indemnitee enter into a settlement or other
compromise with respect to any Expense without the prior written consent of
Lessee, which consent shall not be unreasonably withheld or delayed, unless such
Indemnitee waives its right to be indemnified with respect to such Expense under
this Section 9.1.
(d) In the case of any Expense indemnified by the Lessee hereunder which is
covered by a policy of insurance maintained by Lessee pursuant to Section 11 of
the Lease, at Lessee's expense, each Indemnitee agrees to cooperate with the
insurers in the exercise of their rights to investigate, defend or compromise
such Expense as may be required to retain the benefits of such insurance with
respect to such Expense.
(e) If an Indemnitee is not a party to this Agreement, Lessee may require
such Indemnitee to agree in writing to the terms of this Section 9 and Section
15.8 prior to making any payment to such Indemnitee under this Section 9.
(f) Nothing herein shall be deemed to be an assumption by Lessee of
obligations of Owner Trustee with respect to, or a guarantee by Lessee of, any
amounts payable by Owner Trustee upon Equipment Notes or a guarantee of any
residual value of the Aircraft.
(g) Nothing contained in this Section 9.1.5 shall be deemed to require an
Indemnitee to contest any Expense or to assume responsibility for or control of
any judicial proceeding with respect thereto.
9.1.6 INFORMATION
Lessee will provide the relevant Indemnitee with such information not
within the control of such Indemnitee, as is in Lessee's control or is
reasonably available to Lessee, which such Indemnitee may reasonably request and
will otherwise cooperate with such Indemnitee so as to enable such Indemnitee to
fulfill its obligations under Section 9.1.5. The Indemnitee shall supply Lessee
with such information not within the control of Lessee, as is in such
Indemnitee's control or is reasonably available to such Indemnitee, which Lessee
may reasonably request to control or participate in any proceeding to the extent
permitted by Section 9.1.5.
9.1.7 EFFECT OF OTHER INDEMNITIES; SUBROGATION; FURTHER ASSURANCES
Upon the payment in full by Lessee of any indemnity provided for under this
Agreement, Lessee, without any further action and to the full extent permitted
by Law, will be subrogated to all rights and remedies of the person indemnified
(other than with respect to any of such Indemnitee's insurance policies or in
connection with any indemnity claim such Indemnitee may have under Section 5.03
or 7.01 of the Trust Indenture or Section 5.3 or 7 of the Trust Agreement) in
respect of the matter as to which such indemnity was paid. Each Indemnitee will
give such further assurances or agreements and cooperate with Lessee to permit
Lessee to pursue such claims, if any, to the extent reasonably requested by
Lessee and at Lessee's expense.
9.1.8 REFUNDS
If an Indemnitee receives any refund, in whole or in part, with respect to
any Expense paid by Lessee hereunder, it will promptly pay the amount refunded
(but not an amount in excess of the amount Lessee or any of its insurers has
paid in respect of such Expense) over to Lessee unless a Lease Event of Default
shall have occurred and be continuing, in which case such amounts shall be paid
over to Owner Trustee (or, so long as the Trust Indenture shall not have been
discharged, to Mortgagee) to hold as security for Lessee's obligations under the
Lessee Operative Agreements or, if requested by Lessee, applied to satisfy such
obligations.
9.2 EXPENSES
9.2.1 TRANSACTION EXPENSES
Owner Participant shall pay all Transaction Expenses (other than the
ongoing fees, disbursements and expenses of Mortgagee and the Owner Trustee), up
to an aggregate amount equal to the Expense Limit (including the ongoing fees,
disbursements and expenses of Mortgagee and the Owner Trustee). Airframe
Manufacturer shall pay all Transaction Expenses in excess of the Expense Limit.
Lessee shall have no liability or obligation with respect to Transaction
Expenses.
9.2.2 PAYMENT OF OTHER EXPENSES
Lessee will be responsible for the fees and charges of its counsel incurred
in connection with the preparation, execution and delivery of the Operating
Agreements. All out-of-pocket costs and expenses of Lessee (including, without
limitation, reasonable attorney's fees and charges) incurred in performance of
Sections 7.1.3(a), (b) and (c) (other than with respect to the first
parenthetical of Section 7.1.3(c)) to the extent constituting Transaction
Expenses, shall be paid pursuant to Section 9.2.1 and, otherwise, shall be paid
by Airframe Manufacturer. Existing Lessor and Airframe Manufacturer shall each
pay all costs and expenses incurred by it in connection with the Operative
Agreements.
9.3 GENERAL TAX INDEMNITY
9.3.1 GENERAL
Except as provided in Section 9.3.2, Lessee agrees that each payment of
Rent paid by Lessee pursuant to the Lease, and any other payment or indemnity
paid by Lessee to a Tax Indemnitee under any Operative Agreement, shall be free
of all withholdings or deductions with respect to Taxes of any nature (other
than U.S. federal withholding taxes on, based on or measured by gross or net
income), and in the event that Lessee shall be required by applicable law to
make any such withholding or deduction for any such payment (x) Lessee shall
make all such withholdings or deductions, (y) the amount payable by Lessee shall
be increased so that after making all required withholdings or deductions such
Tax Indemnitee receives (at no after-Tax cost to the Tax Indemnitee) the same
amount that it would have received had no such withholdings or deductions been
made, and (z) Lessee shall pay the full amount withheld or deducted to the
relevant Taxing Authority in accordance with applicable law. Lessee further
agrees that, in the event it is required to withhold from any payment of Basic
Rent, Termination Value, Stipulated Loss Value (and amounts determined by
reference thereto), and amounts payable upon exercise of Lessee's purchase
option pursuant to Section 17.3 of the Lease, any Tax imposed upon Owner
Participant or Owner Trustee (including any withholding Tax based on income or
receipts of Owner Participant or Owner Trustee) and such Tax is excluded from
indemnification pursuant to Section 9.3.2, Lessee shall pay such additional
amount, if any, required so that the total amount paid by Lessee (after making
all required withholdings) is equal to (assuming timely payment of the Equipment
Notes prior to the relevant Payment Date) the aggregate principal amount of
scheduled installments due on the Equipment Notes outstanding on the relevant
Payment Date, together with accrued and unpaid interest, due on the Equipment
Notes; Owner Participant or Owner Trustee, as the case may be, shall reimburse
Lessee for any such additional amounts within two Business Days after demand
therefor. Except as provided in Section 9.3.2 and whether or not any of the
transactions contemplated hereby are consummated, Lessee shall pay, indemnify,
protect, defend and hold each Tax Indemnitee harmless from all Taxes imposed by
any Taxing Authority that may from time to time be imposed on or asserted
against any Tax Indemnitee or the Aircraft, the Airframe, any Engine or any Part
or any interest in any of the foregoing (whether or not indemnified against by
any other Person), upon or with respect to the Operative Agreements or the
transactions or payments contemplated thereby, including but not limited to any
Tax imposed upon or with respect to (x) the Aircraft, the Airframe, any Engine,
any Part, any Operative Agreement (including without limitation any Equipment
Notes) or any data or any other thing delivered or to be delivered under an
Operative Agreement, (y) the purchase, manufacture, acceptance, rejection, sale,
transfer of title, return, ownership, mortgaging, delivery, transport, charter,
rental, lease, re-lease, sublease, assignment, possession, repossession,
presence, use, condition, storage, preparation, maintenance, modification,
alteration, improvement, operation, registration, transfer or change of
registration, reregistration, repair, replacement, overhaul, location, control,
the imposition of any Lien (other than a Lessor Lien), financing, refinancing
requested by the Lessee, abandonment or other disposition of the Aircraft, the
Airframe, any Engine, any Part, any data or any other thing delivered or to be
delivered under an Operative Agreement, or (z) rent, interest, fees or any other
income, proceeds, receipts or earnings, whether actual or deemed, arising upon,
in connection with, or in respect of, any of the Operative Agreements (including
the property or income or other proceeds with respect to property held as part
of the Trust Estate) or the transactions contemplated thereby.
9.3.2 CERTAIN EXCEPTIONS
The provisions of Section 9.3.1 shall not apply to, and Lessee shall have
no liability hereunder for, Taxes:
(a) imposed on a Tax Indemnitee by the federal government of the United
States or any Taxing Authority of any jurisdiction within the United States in
which such Tax Indemnitee is incorporated or maintains its principal place of
business or is otherwise subject to Taxes of such type as a result of
transactions or activities other than those contemplated by the Operative
Agreements (i) on, based on, or measured by, gross or net income or gross or net
receipts, including capital gains taxes, excess profits taxes, minimum taxes
from tax preferences, alternative minimum taxes, branch profits taxes,
accumulated earnings taxes, personal holding company taxes, succession taxes and
estate taxes, and any withholding taxes on, based on or measured by gross or net
income or receipts or (ii) on, or with respect to, or measured by, capital or
net worth or in the nature of a franchise tax or a tax for the privilege of
doing business (other than, in the case of clause (i) or (ii), sales, use,
license or property Taxes, value added taxes imposed in lieu of any of the
foregoing, airport excise taxes or any excise taxes imposed in the nature of or
in lieu of any of the foregoing or any Hawaii general excise tax and related
county surcharges imposed as a result of the use or location of the Aircraft in
Hawaii by a Lessee Person; and other than, in the case of clause (ii), any doing
business taxes imposed by a taxing authority in any jurisdiction (other than a
jurisdiction within which such Tax Indemnitee is incorporated or maintains its
principal place of business) if such doing business taxes attributable to the
transactions contemplated by the Operative Agreements were subject to indemnity
pursuant to the provisions of this clause 9.3.2(a) (without regard to this
parenthetical) solely as a result of the usage or location of the Aircraft in
such jurisdiction by a Lessee Person when such Tax Indemnitee was not
incorporated or doing business or otherwise subject to Taxes of such type in
such jurisdiction, if in a subsequent taxable period such Tax Indemnitee becomes
subject to Taxes of such type as a result of activities or transactions other
than those contemplated by the Operative Agreements, to the extent that such
Taxes (and in an amount no more than the amount of such Taxes that) would have
continued to be imposed solely as a result of the usage or location of the
Aircraft by a Lessee Person in such jurisdiction in the absence of any
additional nexus between such Tax Indemnitee and such jurisdiction);
(b) any Taxes imposed in connection with the sale or transfer of the
Aircraft from the Existing Lessor to the Owner Trustee or the purchase by Owner
Trustee for the benefit of the Owner Participant of the Aircraft from the
Existing Lessor;
(c) on, or with respect to, or measured by, any trustee fees, commissions
or compensation received by Owner Trustee, Pass Through Trustee, Subordination
Agent or Mortgagee;
(d) on the Trust or the Trust Estate that result from treatment of the
Trust or the Trust Estate as an entity, such as a corporation, separate and
apart from the Owner Participant;
(e) that are being contested as provided in Section 9.3.4 hereof, for so
long as such contest is continuing;
(f) imposed on any Tax Indemnitee to the extent that such Taxes result from
the gross negligence or willful misconduct of such Tax Indemnitee, a related Tax
Indemnitee or any Affiliate thereof;
(g) imposed on or with respect to a Tax Indemnitee (including the
transferee in those cases in which the Tax on transfer is imposed on, or is
collected from, the transferee) as a result of a transfer or other disposition
(including a deemed transfer or disposition) by such Tax Indemnitee or a related
Tax Indemnitee (or, in the case of the Owner Participant, by Owner Trustee
(unless requested by the Lessee), or, in the case of Taxes imposed on a
transferee, by the transferor) of any interest in the Aircraft, the Airframe,
any Engine or any Part, the Rent (other than the assignment of Rent to the Loan
Trustee pursuant to the Trust Indenture), the Trust, the Trust Estate, the Trust
Indenture Estate, the Lease or any interest arising under the Operative
Agreements or any Equipment Note or a transfer or disposition (including a
deemed transfer or disposition) of any interest in a Tax Indemnitee (other than
(A) a substitution or replacement of the Aircraft, the Airframe, any Engine or
any Part by a Lessee Person that is treated for Tax purposes as a transfer or
disposition, (B) a transfer pursuant to an exercise of remedies upon a Lease
Event of Default that shall have occurred and have been continuing, or (C) a
transfer to Lessee pursuant to Section 17.3 of the Lease);
(h) except with respect to gross-ups, imposed subsequent to (and not in
respect of) a transfer or other disposition described in paragraph (g) above and
in excess of those that would have been imposed had there not been a transfer or
other disposition by or to such Tax Indemnitee or a related Tax Indemnitee
described in paragraph (g) above;
(i) imposed on the Owner Participant and indemnified by Lessee pursuant to
the Tax Indemnity Agreement;
(j) imposed with respect to any period after the expiration or earlier
termination of the Term and, if required pursuant to the terms of the Lease, the
return of possession of the Aircraft to Lessor or placement in storage at the
request of Lessor in accordance with the Lease (provided that this exclusion (j)
shall not apply to Taxes imposed after such period arising as a result of events
occurring prior to such expiration or earlier termination);
(k) consisting of any interest, penalties or additions to tax imposed on a
Tax Indemnitee resulting from a failure of such Tax Indemnitee or a related Tax
Indemnitee to file any return properly and timely, unless such failure shall be
caused by the failure of Lessee to fulfill its obligations, if any, under
Section 9.3.6 with respect to such return, PROVIDED that if any such return is
required to be filed in a jurisdiction outside the United States, which return
would not have been required to be filed in the absence of the transactions
contemplated under the Operative Agreements or Lessee's transactions or
activities in such jurisdiction, this exclusion shall not apply if (A) Lessee
has not informed the Tax Indemnitee in writing of the need to file such return
at least 30 days prior to the due date thereof (or such shorter period as would
reasonably allow the Tax Indemnitee to file such return if, under the
circumstances, the Lessee could not have reasonably informed the Tax Indemnitee
of the need to file at least 30 days prior to the due date thereof), or (B) the
Tax Indemnitee had determined in good faith that such filing would subject it or
any Affiliate to adverse consequences in such jurisdiction for which it had not
been (and would not have been) indemnified;
(l) resulting from, or that would not have been imposed but for, any Lessor
Liens arising as a result of claims against, or acts or omissions of, or
otherwise attributable to such Tax Indemnitee or a related Tax Indemnitee;
(m) imposed on any Tax Indemnitee as a result of the breach by such Tax
Indemnitee or a related Tax Indemnitee of any covenant of such Tax Indemnitee or
any Affiliate thereof contained in any Operative Agreement or the inaccuracy of
any representation or warranty by such Tax Indemnitee or any Affiliate thereof
in any Operative Agreement;
(n) in the nature of an intangible or similar Tax (i) upon or with respect
to the value or principal amount of the interest of Loan Participant or any Note
Holder in any Equipment Note or the loan evidenced thereby or (ii) upon or with
respect to the value of the interest of the Owner Participant in the Trust
Estate or the Trust, in each case only if such Taxes are in the nature of
franchise Taxes or result from the Tax Indemnitee doing business in the taxing
jurisdiction and are imposed because of the place of incorporation or the
activities unrelated to the transactions contemplated by the Operative
Agreements in the taxing jurisdiction of such Tax Indemnitee;
(o) that are included in Lessor's Cost and paid to the appropriate Taxing
Authority;
(p) imposed on a Tax Indemnitee by a Taxing Authority of a jurisdiction
outside the United States within which such Tax Indemnitee is incorporated or
maintains its principal place of business or to the extent that such Taxes would
not have been imposed but for a connection between the Tax Indemnitee or a
related Tax Indemnitee and such jurisdiction imposing such Tax unrelated to the
transactions contemplated by the Operative Agreements; or
(q) Taxes relating to ERISA or Section 4975 of the Code.
For purposes hereof, a Tax Indemnitee and any other Tax Indemnitees that
are successors, assigns, agents, servants or Affiliates of such Tax Indemnitee
shall be related Tax Indemnitees.
9.3.3 PAYMENT
(a) Lessee's indemnity obligation to a Tax Indemnitee under this Section
9.3 shall equal the amount which, after taking into account any Tax imposed upon
the receipt or accrual of the amounts payable under this Section 9.3 and any tax
benefits actually recognized by such Tax Indemnitee as a result of the
indemnifiable Tax (including, without limitation, any benefits recognized as a
result of an indemnifiable Tax being utilized by such Tax Indemnitee as a credit
against Taxes not indemnifiable under this Section 9.3), shall equal the amount
of the Tax indemnifiable under this Section 9.3.
(b) At Lessee's request, the computation of the amount of any indemnity
payment owed by Lessee or any amount owed by a Tax Indemnitee to Lessee pursuant
to this Section 9.3 shall be verified and certified by an independent public
accounting firm selected by such Tax Indemnitee and reasonably satisfactory to
Lessee. Such verification shall be binding. The costs of such verification
(including the fee of such public accounting firm) shall be borne by Lessee
unless such verification shall result in an adjustment in Lessee's favor of 5%
or more of the net present value (computed using a discount rate equal to the
Debt Rate, compounded semiannually) of the payment as computed by such Tax
Indemnitee, in which case the costs shall be paid by such Tax Indemnitee.
(c) Each Tax Indemnitee shall provide Lessee with such certifications,
information and documentation as shall be in such Tax Indemnitee's possession
and as shall be reasonably requested by Lessee to minimize any indemnity payment
pursuant to this Section 9.3; provided, that notwithstanding anything to the
contrary contained herein, no Tax Indemnitee shall be required to provide Lessee
with any Tax returns.
(d) Each Tax Indemnitee shall promptly forward to Lessee any written
notice, ▇▇▇▇ or advice received by it from any Taxing Authority concerning any
Tax for which it seeks indemnification under this Section 9.3. Lessee shall pay
any amount for which it is liable pursuant to this Section 9.3 directly to the
appropriate Taxing Authority if legally permissible or upon demand of a Tax
Indemnitee, to such Tax Indemnitee within 30 days of such demand (or, if a
contest occurs in accordance with Section 9.3.4, within 30 days after a Final
Determination (as defined below)), but in no event more than two Business Days
prior to the date the Tax to which such amount payable hereunder relates is due.
If requested by a Tax Indemnitee in writing, Lessee shall furnish to the
appropriate Tax Indemnitee the original or a certified copy of a receipt for
Lessee's payment of any Tax paid by Lessee or such other evidence of payment of
such Tax as is acceptable to such Tax Indemnitee. Lessee shall also furnish
promptly upon written request such data as any Tax Indemnitee may reasonably
require to enable such Tax Indemnitee to comply with the requirements of any
taxing jurisdiction unless such data is not reasonably available to Lessee or,
unless such data is specifically requested by a Taxing Authority, is not
customarily furnished by domestic air carriers under similar circumstances. For
purposes of this Section 9.3, a "Final Determination" shall mean (i) a decision,
judgment, decree or other order by any court of competent jurisdiction that
occurs pursuant to the provisions of Section 9.3.4, which decision, judgment,
decree or other order has become final and unappealable (by law or by Lessee
hereunder), (ii) a closing agreement or settlement agreement entered into in
accordance with Section 9.3.4 that has become binding and is not subject to
further review or appeal (absent fraud, misrepresentation, etc.), or (iii) the
termination of administrative proceedings and the expiration of the time for
instituting a claim in a court proceeding.
(e) If any Tax Indemnitee shall actually realize a tax savings by reason of
any Tax paid or indemnified by Lessee pursuant to this Section 9.3 (whether such
tax savings shall be by means of a foreign tax credit, depreciation or cost
recovery deduction or otherwise) and such savings is not otherwise taken into
account in computing such payment or indemnity, such Tax Indemnitee shall pay to
Lessee (within 30 days after the realization of such tax savings) an amount
equal to the lesser of (i) the amount of such tax savings, plus any additional
tax savings recognized as the result of any payment made pursuant to this
sentence, when, as, if, and to the extent, realized or (ii) the amount of all
payments (other than in respect of contest costs) pursuant to this Section 9.3
by Lessee to such Tax Indemnitee (less any payments previously made by such Tax
Indemnitee to Lessee pursuant to this Section 9.3.3 (e)) (and the excess, if
any, of the amount described in clause (i) over the amount described in clause
(ii) shall be carried forward and applied to reduce pro tanto any subsequent
obligations of Lessee to make payments to such Tax Indemnitee pursuant to this
Section 9.3); provided, that such Tax Indemnitee shall not be required to make
any payment pursuant to this sentence so long as a Lease Event of Default of a
monetary nature has occurred and is continuing. If a tax benefit is later
disallowed or denied, the disallowance or denial shall be treated as a Tax
indemnifiable under Section 9.3.1 without regard to the provisions of Section
9.3.2 (other than Section 9.3.2 (f)). Each such Tax Indemnitee shall in good
faith use reasonable efforts in filing its tax returns and in dealing with
Taxing Authorities to seek and claim any such tax benefit.
(f) For purposes of this Section 9.3, items of foreign Tax of any Tax
Indemnitee shall be deemed to be utilized by such Tax Indemnitee as credits or
deductions for any taxable year in accordance with the following priorities:
(x) First, all utilizable foreign Taxes (taking into account the
limitations of Section 904(d) of the Code) other than those described in clause
(y) below;
(y) Second, all utilizable foreign Taxes (taking into account the
limitations of Section 904(d) of the Code) arising out of the transactions
contemplated by the Operative Agreements and other equipment leasing
transactions to the extent such Tax Indemnitee is indemnified or held harmless
for such Taxes by the Lessee or a lessee on a pari passu basis.
9.3.4 CONTEST
(a) If a written claim is made against a Tax Indemnitee for Taxes with
respect to which Lessee could be liable for payment or indemnity hereunder, or
if a Tax Indemnitee makes a determination that a Tax is due for which Lessee
could have an indemnity obligation hereunder, such Tax Indemnitee shall promptly
give Lessee notice in writing of such claim (provided, that failure to so notify
Lessee shall not relieve Lessee of its indemnity obligations hereunder unless
such failure to notify forecloses Lessee's rights to require a contest of such
claim) and shall take no action with respect to such claim without the prior
written consent of Lessee for 30 days following the receipt of such notice by
Lessee; provided, that, in the case of a claim made against a Tax Indemnitee, if
such Tax Indemnitee shall be required by law to take action prior to the end of
such 30-day period, such Tax Indemnitee shall, in such notice to Lessee, so
inform Lessee, and such Tax Indemnitee shall take no action for as long as it is
legally able to do so (it being understood that a Tax Indemnitee shall be
entitled to pay the Tax claimed and ▇▇▇ for a refund prior to the end of such
30-day period if (i)(A) the failure to so pay the Tax would result in
substantial penalties (unless immediately reimbursed by Lessee) and the act of
paying the Tax would not materially prejudice the right to contest or (B) the
failure to so pay would result in criminal penalties and (ii) such Tax
Indemnitee shall take any action so required in connection with so paying the
Tax in a manner that, in its good faith opinion, is the least prejudicial to the
pursuit of the contest). In addition, such Tax Indemnitee shall (provided, that
Lessee shall have agreed to keep such information confidential other than to the
extent necessary in order to contest the claim) furnish Lessee with copies of
any requests for information from any Taxing Authority relating to such Taxes
with respect to which Lessee may be required to indemnify hereunder. If
requested by Lessee in writing within 30 days after its receipt of such notice,
such Tax Indemnitee shall, at the expense of Lessee (including, without
limitation, all reasonable costs, expenses and reasonable attorneys' and
accountants' fees and disbursements), in good faith contest (or, if permitted by
applicable law to be contested by the Lessee in its own name, allow Lessee to
contest) through appropriate administrative and judicial proceedings the
validity, applicability or amount of such Taxes by (I) resisting payment
thereof, (II) not paying the same except under protest if protest is necessary
and proper or (III) if the payment is made, using reasonable efforts to obtain a
refund thereof in an appropriate administrative and/or judicial proceeding. If
requested to do so by Lessee, the Tax Indemnitee shall appeal any adverse
administrative or judicial decision, except that the Tax Indemnitee shall not be
required to pursue any appeals to the United States Supreme Court. If and to the
extent the Tax Indemnitee is able to separate the contested issue or issues from
other issues arising in the same administrative or judicial proceeding that are
unrelated to the transactions contemplated by the Operative Agreements without,
in the good faith judgment of such Tax Indemnitee, adversely affecting such Tax
Indemnitee, such Tax Indemnitee shall permit Lessee to contest such matter in
its own name, if permitted by applicable law, and shall provide to Lessee (at
Lessee's cost and expense) such information or data that is in such Tax
Indemnitee's control or possession that is reasonably necessary to conduct such
contest (other than such Tax Indemnitee's federal income tax returns). In the
case of a contest controlled by a Tax Indemnitee, such Tax Indemnitee shall
consult with Lessee in good faith regarding the manner of contesting such claim
and shall keep Lessee reasonably informed regarding the progress of such
contest. A Tax Indemnitee shall not fail to take any action expressly required
by this Section 9.3.4 (including, without limitation, any action regarding any
appeal of an adverse determination with respect to any claim) or settle or
compromise any claim without the prior written consent of the Lessee (except as
contemplated by Section 9.3.4(b) or (c)).
(b) Notwithstanding the foregoing, in no event shall a Tax Indemnitee be
required to pursue any contest (or to permit Lessee to pursue any contest)
unless (i) Lessee shall have agreed to pay such Tax Indemnitee on demand all
reasonable costs and expenses incurred by such Tax Indemnitee in connection with
contesting such Taxes, including, without limitation, all reasonable out of
pocket costs and expenses and reasonable attorneys' and accountants' fees and
disbursements, (ii) if such contest shall involve the payment of the claim,
Lessee shall advance the amount thereof (to the extent indemnified hereunder)
plus interest, penalties and additions to tax with respect thereto that are
required to be paid prior to the commencement of such contest on an
interest-free and after-Tax basis to such Tax Indemnitee (and such Tax
Indemnitee shall promptly pay to the Lessee any net realized tax benefits
resulting from such advance including any tax benefits resulting from making
such payment), (iii) such Tax Indemnitee shall have reasonably determined that
the action to be taken will not result in any material risk of forfeiture, sale
or loss of the Aircraft (unless Lessee shall have made provisions to protect the
interests of any such Tax Indemnitee and the Owner Participant in a manner
reasonably satisfactory to such Tax Indemnitee and the Owner Participant)
(provided, that such Tax Indemnitee agrees to notify Lessee in writing promptly
after it becomes aware of any such risk), (iv) no Lease Event of Default shall
have occurred and be continuing unless Lessee has provided adequate security for
its obligations hereunder by advancing to such Tax Indemnitee before proceeding
or continuing with such contest, the amount of the Tax being contested, plus any
interest and penalties and an amount estimated in good faith by such Tax
Indemnitee for expenses, and (v) prior to commencing any judicial action
controlled by Lessee, Lessee shall have acknowledged its liability for such
claim hereunder, provided that Lessee shall not be bound by its acknowledgment
if the Final Determination articulates conclusions of law and fact that
demonstrate that Lessee has no liability for the contested amounts hereunder.
Notwithstanding the foregoing, if any Tax Indemnitee shall release, waive,
compromise or settle any claim which may be indemnifiable by Lessee pursuant to
this Section 9.3 without the written permission of Lessee, Lessee's obligation
to indemnify such Tax Indemnitee with respect to such claim (and all directly
related claims and claims based on the outcome of such claim) shall terminate,
subject to Section 9.3.4(c), and subject to Section 9.3.4(c), such Tax
Indemnitee shall repay to Lessee any amount previously paid or advanced to such
Tax Indemnitee with respect to such claim (other then contest costs), plus
interest at the rate that would have been payable by the relevant Taxing
Authority with respect to a refund of such Tax.
(c) Notwithstanding anything contained in this Section 9.3, a Tax
Indemnitee will not be required to contest the imposition of any Tax and shall
be permitted to settle or compromise any claim without Lessee's consent if such
Tax Indemnitee (i) shall waive its right to indemnity under this Section 9.3
with respect to such Tax (and any directly related claim and any claim the
outcome of which is determined based upon the outcome of such claim), (ii) shall
pay to Lessee any amount previously paid or advanced by Lessee pursuant to this
Section 9.3 (other than contest costs) with respect to such Tax, plus interest
at the rate that would have been payable by the relevant Taxing Authority with
respect to a refund of such Tax, and (iii) shall agree to discuss with Lessee
the views or positions of any relevant Taxing Authority with respect to the
imposition of such Tax.
9.3.5 REFUND
If any Tax Indemnitee shall receive a refund of, or be entitled to a credit
against other liability for, all or any part of any Taxes paid, reimbursed or
advanced by Lessee, such Tax Indemnitee shall pay to Lessee within 30 days of
such receipt an amount equal to the lesser of (a) the amount of such refund or
credit plus any net tax benefit (taking into account any Taxes incurred by such
Tax Indemnitee by reason of the receipt of such refund or realization of such
credit) actually realized by such Tax Indemnitee as a result of any payment by
such Tax Indemnitee made pursuant to this sentence (including this clause (a))
and (b) such tax payment, reimbursement or advance by Lessee to such Tax
Indemnitee theretofore made pursuant to this Section 9.3 (and the excess, if
any, of the amount described in clause (a) over the amount described in clause
(b) shall be carried forward and applied to reduce pro tanto any subsequent
obligation of Lessee to make payments to such Tax Indemnitee pursuant to this
Section 9.3). If, in addition to such refund or credit, such Tax Indemnitee
shall receive (or be credited with) an amount representing interest on the
amount of such refund or credit, such Tax Indemnitee shall pay to Lessee within
30 days of such receipt or realization of such credit that proportion of such
interest that shall be fairly attributable to Taxes paid, reimbursed or advanced
by Lessee prior to the receipt of such refund or realization of such credit.
9.3.6 TAX FILING
If any report, return or statement is required to be filed with respect to
any Tax which is subject to indemnification under this Section 9.3, Lessee shall
timely file the same (except for any such report, return or statement which a
Tax Indemnitee has timely notified the Lessee in writing that such Tax
Indemnitee intends to file or which a Tax Indemnitee is required by law to file
in its own name); provided, that the relevant Tax Indemnitee shall furnish
Lessee with any information in such Tax Indemnitee's possession or control that
is reasonably necessary to file any such return, report or statement and is
reasonably requested in writing by Lessee (it being understood that the Tax
Indemnitee shall not be required to furnish copies of its actual tax returns,
although it may be required to furnish relevant information contained therein).
Lessee shall either file such report, return or statement and send a copy of
such report, return or statement to such Tax Indemnitee, and Owner Trustee if
the Tax Indemnitee is not Owner Trustee, or, where Lessee is not permitted to
file such report, return or statement, or if the same is required by law to be
filed in the Tax Indemnitee's own name, it shall notify such Tax Indemnitee in
writing of such requirement and prepare and deliver such report, return or
statement to such Tax Indemnitee in a manner satisfactory to such Tax Indemnitee
within a reasonable time prior to the time such report, return or statement is
to be filed.
9.3.7 FORMS
Each Tax Indemnitee agrees to furnish from time to time to Lessee or Loan
Trustee or to such other person as Lessee or Loan Trustee may designate, at
Lessee's or Loan Trustee's request, such duly executed and properly completed
forms as may be necessary or appropriate in order to claim any reduction of or
exemption from any withholding or other Tax imposed by any Taxing Authority, if
(x) such reduction or exemption is available to such Tax Indemnitee, (y) Lessee
has provided such Tax Indemnitee with any information necessary to complete such
form not otherwise reasonably available to such Tax Indemnitee, and (z) if such
return is required to be filed in a jurisdiction outside the United States, the
Tax Indemnitee has not made a good faith determination that such filing would
subject it or any Affiliate to any adverse consequences in such jurisdiction for
which it has not been (and would not have been) indemnified.
9.3.8 NON-PARTIES
If a Tax Indemnitee is not a party to this Agreement, Lessee may require
the Tax Indemnitee to agree in writing, in a form reasonably acceptable to
Lessee, to the terms of this Section 9.3 and Section 15.8 prior to making any
payment to such Tax Indemnitee under this Section 9.3.
9.3.9 SUBROGATION
Upon payment of any Tax by Lessee pursuant to this Section 9.3 to or on
behalf of a Tax Indemnitee, Lessee, without any further action, shall be
subrogated to any claims that such Tax Indemnitee may have relating thereto.
Such Tax Indemnitee shall cooperate with Lessee (to the extent such cooperation
does not result in any unreimbursed cost, expense or liability to such Tax
Indemnitee) to permit Lessee to pursue such claims.
9.3.10 FOREIGN TAX ON LOAN PAYMENTS
If an Owner Participant is incorporated or organized, or maintains a place
of business or conducts activities (other than any activities of the Owner
Participant resulting from its participation in the transactions contemplated by
the Operative Agreements or resulting from any activities of Lessee in such
jurisdiction) in a country other than the United States or in a territory,
possession or commonwealth of the United States (within the meaning of the tax
law of that foreign jurisdiction) and if as a result thereof any foreign Taxes
(including withholding Taxes) are imposed on the Pass Through Trustees, Pass
Through Trusts, or Note Holders, then Owner Participant shall reimburse Lessee
for any payments Lessee is required to make to or on behalf of any Pass Through
Trustee, Pass Through Trust, or Note Holder under this Section 9.3 as a result
of the imposition of such Taxes. The amount payable by Owner Participant to
Lessee shall be an amount which, after taking into account any such Taxes, any
Tax imposed upon the receipt or accrual by Lessee of such payment by Owner
Participant and any tax benefits or tax savings realized by Lessee with respect
to the payment of such withholding Tax or the payment hereunder, shall equal the
amount of Lessee's payment to or on behalf of such Pass Through Trustee, or Note
Holder.
9.4 PAYMENTS
Any payments made pursuant to Section 9.1 and Section 9.3 shall be due on
the 60th day after demand is made to the indemnifying party therefor (other than
any payments for which a different time is provided under Section 9.3.3 hereof)
and shall be made directly to the relevant Indemnitee or Tax Indemnitee or to
Lessee, in immediately available funds at such bank or to such account as
specified by such Indemnitee or Tax Indemnitee or Lessee, as the case may be, in
written directives to the payor, or, if no such direction shall have been given,
by check of the payor payable to the order of, and mailed to, such Indemnitee or
Tax Indemnitee or Lessee, as the case may be, by certified mail, postage
prepaid, at its address as set forth in this Agreement.
9.5 INTEREST
If any amount, payable by Lessee, any Indemnitee or any Tax Indemnitee
under Section 9.1 or 9.3 is not paid when due, the person obligated to make such
payment shall pay on demand, to the extent permitted by Law, to the person
entitled thereto, interest on any such amount for the period from and including
the due date for such amount to but excluding the date the same is paid, at the
Payment Due Rate. Such interest shall be paid in the same manner as the unpaid
amount in respect of which such interest is due.
9.6 BENEFIT OF INDEMNITIES
The obligations of Lessee in respect of all indemnities, obligations,
adjustments and payments in Section 9.1 or 9.3 are expressly made for the
benefit of, and shall be enforceable by, the Indemnitee or Tax Indemnitee
entitled thereto, without declaring the Lease to be in default or taking other
action thereunder, and notwithstanding any provision of the Trust Indenture.
SECTION 10. ASSIGNMENT OR TRANSFER OF INTERESTS
10.1 PARTICIPANTS, OWNER TRUSTEE AND NOTE HOLDERS
10.1.1 OWNER PARTICIPANT
(a) Owner Participant shall not Transfer any or all of its right, title or
interest in the Trust Estate or the Trust Agreement and to this Agreement
unless:
(i) The Transferee shall have full power, authority and legal
right to execute and deliver and to perform the obligations of Owner
Participant under this Agreement and the other Owner Participant
Agreements and shall provide reasonably satisfactory evidence of such
power and authority to Lessee, Owner Trustee and Mortgagee;
(ii) The Transferee shall enter into one or more legal, valid,
binding and enforceable agreements effective to confirm that such
Transferee agrees to be bound by all the terms of, and to undertake all
of the obligations arising after such transfer of, the transferring
Owner Participant contained in the Owner Participant Agreements and in
which it makes representations and warranties substantially the same as
those contained in Section 6.2 of this Participation Agreement;
(iii) Lessee shall not be obligated to pay any greater amount
or incur any greater obligation than that which it would have been
obliged to pay or incur under the Lease or other Lessee Operative
Agreement if no transfer or assignment had taken place, and the terms
and conditions of the Lease and the other Lessee Operative Agreements
insofar as they relate to the rights and obligations of Lessee or the
Loan Participants shall not be altered;
(iv) Owner Participant shall deliver to Lessee, Owner Trustee
and Mortgagee an opinion of counsel reasonably satisfactory to each of
them (which, if the Transferee is an Affiliate of the Owner
Participant, may be in-house counsel to such Owner Participant) to the
effect that such agreement or agreements referred to in Section
10.1.1(a)(ii) and, if applicable, 10.1.1(a)(vi) are legal, binding and
enforceable in accordance with its or their terms and that such
transfer will not violate applicable securities laws, the Act or any
other applicable law and is in accordance with this Section 10.1.1;
(v) The Transferee is a Citizen of the United States (it being
understood that the existence of any such requirement is to be
determined without giving consideration to Section 47.9 of the FAA
Regulations or any other provision that would restrict Lessee's use or
operation of the Aircraft), or shall use a voting powers trust or
similar arrangement in order to hold an interest in the Trust Estate
such that the Aircraft can be registered in the United States (without
giving consideration to Section 47.9 of the FAA Regulations or any
other provision that would restrict Lessee's use or operation of the
Aircraft);
(vi) The Transferee shall be one person and shall be either
(A) a Permitted Institution or (B) any other person (other than,
without Lessee's consent, a commercial air carrier, a commercial
aircraft operator, a freight forwarder or an Affiliate of any of the
foregoing) the obligations of which under the Owner Participant
Agreements are guaranteed by a Permitted Institution in any case,
pursuant to a written guaranty, in form and substance reasonably
satisfactory to Lessee, Owner Trustee and Mortgagee; and
(vii) The Transferee shall be a "U.S. Person" as defined in
Section 7701(a)(30) of the Code (or any successor provision thereto).
(b) Owner Participant shall give written notice to Lessee, Mortgagee and
Owner Trustee at least 10 days prior to any such Transfer, specifying the name
and address of the proposed Transferee, and providing financial statements of
the proposed Transferee evidencing satisfaction of the requirements described in
Section 10.1.1(a)(vi)(A) or (B) above.
(c) Any fees, charges and expenses, including the reasonable legal fees,
charges and expenses incurred by Lessee, Owner Participant, Mortgagee, any Note
Holder or Owner Trustee in connection with any Transfer by Owner Participant
permitted by this Section 10.1.1, or by the Transferee in any such case, will be
paid for by Owner Participant.
10.1.2 OWNER TRUSTEE
Owner Trustee may transfer its interests in the Trust Agreement pursuant to
Section 9 thereof.
10.1.3 NOTE HOLDERS
Subject to Section 7.5.2 hereof and Section 2.07 of the Trust Indenture,
any Note Holder may, at any time and from time to time, Transfer or grant
participations in all or any portion of the Equipment Notes and/or all or any
portion of its beneficial interest in its Equipment Notes and the Trust
Indenture Estate to any person (it being understood that the sale or issuance of
Pass Through Certificates by a Pass Through Trustee shall not be considered a
Transfer or participation); provided, that any participant in any such
participations shall not have any direct rights under the Operative Agreements
or any Lien on all or any part of the Aircraft or Trust Indenture Estate and
neither Lessee, Lessor, nor Owner Participant shall have any increased liability
or obligations as a result of any such participation. In the case of any such
Transfer, the Transferee, by acceptance of Equipment Notes in connection with
such Transfer, shall be deemed to be bound by all of the covenants of Note
Holders contained in the Operative Agreements.
10.2 EFFECT OF TRANSFER
Upon any Transfer in accordance with Section 10.1.1, 10.1.2 or 10.1.3
(other than any Transfer by any Note Holder, to the extent it only grants
participations in Equipment Notes or in its beneficial interest therein),
Transferee shall be deemed an "Owner Participant," "Owner Trustee" or a "Note
Holder," respectively, for all purposes of this Agreement and the other
Operative Agreements and, in the case of a Transferee of any Participant or Note
Holder, shall be deemed to have paid its ratable portion of Lessor's Cost
previously made by Owner Participant or Loan Participant, respectively, making
such conveyance and represented by the interest being conveyed, and each
reference herein to Owner Participant, Owner Trustee or Note Holder,
respectively, shall thereafter be deemed a reference to such Transferee for all
purposes, and the transferring Owner Participant, Owner Trustee, Loan
Participant or Note Holder shall be released (except, in the case of Owner
Participant, to the extent of any guaranty provided by it under Section
10.1.1(a)(vi)) from all of its liabilities and obligations under this Agreement
and any other Operative Agreements to the extent such liabilities and
obligations arise after such Transfer and, in each case, to the extent such
liabilities and obligations are assumed by the transferee; PROVIDED, that such
transferring Owner Participant, Owner Trustee or Note Holder (and its respective
Affiliates, successors, assigns, agents, servants, representatives, directors
and officers) will continue to have the benefit of any rights or indemnities
under any Operative Agreement vested or relating to circumstances, conditions,
acts or events prior to such Transfer.
SECTION 11. [RESERVED]
SECTION 12. SECTION 1110
It is the intention of each of Lessee, Owner Participant, Loan Participant,
the Note Holders (such intention being evidenced by each of their acceptance of
an Equipment Note), Owner Trustee and Mortgagee that Owner Trustee, as lessor
under the Lease (and Mortgagee as assignee of Owner Trustee under the Trust
Indenture), shall be entitled to the benefits of Section 1110 in the event of a
case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor. Lessee
shall at all times be certificated and registered to the extent necessary to
entitle Owner Trustee to the rights afforded to lessors of aircraft equipment
under Section 1110 of the United States Bankruptcy Code.
SECTION 13. CHANGE OF CITIZENSHIP
13.1 GENERALLY
Without prejudice to the representations, warranties or covenants regarding
the status of any party hereto as a Citizen of the United States:
(a) Each of Lessee, First Security and WTC agrees that it will, immediately
upon obtaining knowledge of any facts that would cast doubt upon its continuing
status as a Citizen of the United States and promptly upon public disclosure of
negotiations in respect of any transaction which would or might adversely affect
such status, notify in writing all parties hereto of all relevant matters in
connection therewith; and
(b) Owner Participant agrees that, in the event its status is to change or
has changed as a Citizen of the United States, or it makes public disclosure of
circumstances as a result of which it believes that such status is likely to
change, it will notify all the other parties to this Participation Agreement of
(i) such change in status promptly after obtaining Actual Knowledge thereof or
(ii) such belief as soon as practicable after such public disclosure but in any
event within ten Business Days after such public disclosure.
13.2 OWNER PARTICIPANT
Owner Participant agrees, solely for the benefit of Lessee and the Note
Holders that if, during such time as the Aircraft is registered in the United
States, (a) it shall not be a Citizen of the United States and (b) the Aircraft
shall be, or would therefore become, ineligible for registration in the name of
Owner Trustee under the Act and regulations then applicable thereunder (without
giving consideration to Section 47.9 of the FAA Regulations or any other
provision that may restrict Lessee's use or operation of the Aircraft), then
Owner Participant shall as soon as is reasonably practicable, but in any event
within 30 days after obtaining Actual Knowledge of such ineligibility and of
such loss of citizenship, (y) effect voting trust or other similar arrangements
(in which case any provisions contained in the Operative Agreements restricting
Owner Participant's or Owner Trustee's ability to amend the Trust Agreement
shall not apply to the extent necessary to permit the use of such a voting trust
or other similar arrangement) or take any other action as may be necessary to
prevent any deregistration or maintain the United States registration of the
Aircraft or (z) transfer in accordance with the terms of this Agreement all its
right, title and interest in and to this Agreement, the Trust Estate and the
Trust Agreement in accordance with Section 10.1.
13.3 OWNER TRUSTEE
Upon First Security giving any notice in accordance with Section 13.1(a),
Owner Trustee shall, subject to Section 9.1.1 of the Trust Agreement, resign as
Owner Trustee. Upon its receipt of such notice, Owner Participant shall as
promptly as practicable appoint a Citizen of the United States as successor
Owner Trustee pursuant to Section 9.1 of the Trust Agreement.
13.4 MORTGAGEE
Upon WTC giving any notice in accordance with Section 13.1(a), Mortgagee
shall (if and so long as such citizenship is necessary under the Act as in
effect at such time or, if it is not necessary, if and so long as Mortgagee's
citizenship could have any adverse effect on Lessee, any Participant or any Note
Holder), subject to Section 8.02 of the Trust Indenture, resign as Mortgagee
promptly upon its ceasing to be such a citizen.
SECTION 14. CONCERNING OWNER TRUSTEE
It is understood and agreed that, except as otherwise expressly provided
herein or in the Trust Agreement or the Trust Indenture, Owner Trustee is
entering into this Agreement solely in its capacity as trustee as provided in
the Trust Agreement and not in its individual capacity and in no case whatsoever
will it be liable or accountable in its individual capacity for any of the
statements, representations, warranties, agreements or obligations of Owner
Trustee hereunder, or for any loss in respect thereof, as to all of which the
parties agree to look solely to the Trust Estate; PROVIDED, that nothing in this
Section 14 shall be deemed to limit in scope or substance the personal liability
of First Security (a) to Owner Participant as expressly set forth in the Trust
Agreement, (b) in respect of the representations, warranties and agreements of
First Security expressly made as such herein or in any other Operative Agreement
to which it is a party, and (c) for the consequences of its own gross
negligence, willful misconduct, and, in receiving, handling or remitting of
funds only, its willful misconduct or simple negligence as a trustee.
SECTION 15. MISCELLANEOUS
15.1 AMENDMENTS
No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to amend, supplement, waive, modify, discharge,
terminate or otherwise vary and is signed by the party against which the
enforcement of the amendment, supplement, waiver, modification, discharge,
termination or variance is sought. Each such amendment, supplement, waiver,
modification, discharge, termination or variance shall be effective only in the
specific instance and for the specific purpose for which it is given. No
provision of this Agreement shall be varied or contradicted by oral
communication, course of dealing or performance or other manner not set forth in
an agreement, document or instrument in writing and signed by the party against
which enforcement of the same is sought.
15.2 SEVERABILITY
If any provision hereof shall be held invalid, illegal or unenforceable in
any respect in any jurisdiction, then, to the extent permitted by Law, (a) all
other provisions hereof shall remain in full force and effect in such
jurisdiction and (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction. If, however, any Law pursuant to which such provisions are held
invalid, illegal or unenforceable may be waived, such Law is hereby waived by
the parties hereto to the full extent permitted, to the end that this Agreement
shall be deemed to be a valid and binding agreement in all respects, enforceable
in accordance with its terms.
15.3 SURVIVAL
The indemnities set forth herein shall survive the delivery or return of
the Aircraft, the Transfer of any interest of Owner Participant in this
Agreement, the Trust Estate and the Trust Agreement, the Transfer of any
interest by any Note Holder of its Equipment Note and the expiration or other
termination of this Agreement or any other Operative Agreement.
15.4 REPRODUCTION OF DOCUMENTS
This Agreement, all annexes, schedules and exhibits hereto and all
agreements, instruments and documents relating hereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed and (b) financial statements, certificates and other information
previously or hereafter furnished to any party hereto, may be reproduced by such
party by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process, and such party may destroy any original
documents so reproduced. Any such reproduction shall be as admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such party in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction likewise is
admissible in evidence.
15.5 COUNTERPARTS
This Agreement and any amendments, waivers, consents or supplements hereto
may be executed in any number of counterparts (or upon separate signature pages
bound together into one or more counterparts), each of which when so executed
shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.
15.6 NO WAIVER
No failure on the part of any party hereto to exercise, and no delay by any
party hereto in exercising, any of its respective rights, powers, remedies or
privileges under this Agreement or provided at Law, in equity or otherwise shall
impair, prejudice or constitute a waiver of any such right, power, remedy or
privilege or be construed as a waiver of any breach hereof or default hereunder
or as an acquiescence therein nor shall any single or partial exercise of any
such right, power, remedy or privilege preclude any other or further exercise
thereof by it or the exercise of any other right, power, remedy or privilege by
it. No notice to or demand on any party hereto in any case shall, unless
otherwise required under this Agreement, entitle such party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any party hereto to any other or further action in any
circumstances without notice or demand.
15.7 NOTICES
Unless otherwise expressly permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers and other
communications required or permitted to be made, given, furnished or filed
hereunder shall be in writing (it being understood that the specification of a
writing in certain instances and not in others does not imply an intention that
a writing is not required as to the latter), shall refer specifically to this
Agreement or other applicable Operative Agreement, and shall be personally
delivered, sent by facsimile or telecommunication transmission (which in either
case provides written confirmation to the sender of its delivery), sent by
registered mail or certified mail, return receipt requested, postage prepaid, or
sent by overnight courier service, in each case to the respective address, or
facsimile number set forth for such party in Schedule 1, or to such other
address, facsimile or other number as each party hereto may hereafter specify by
notice to the other parties hereto. Each such notice, request, demand,
authorization, direction, consent, waiver or other communication shall be
effective when received or, if made, given, furnished or filed (a) by facsimile
or telecommunication transmission, when confirmed, or (b) by registered or
certified mail, three Business Days after being deposited, properly addressed,
with the U.S. Postal Service.
15.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE
(A) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(B) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS ITSELF
TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN THE
CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN DISTRICT
OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING WITH
RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT.
(C) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES TO THE SERVICE
OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE
ADDRESS SET FORTH PURSUANT TO SECTION 15.7. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 15.8(C), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH
PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS
TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT
IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED
IN ANY ACTION OR PROCEEDING BASED THEREON.
(D) TO THE EXTENT THAT ANY PARTY HERETO HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY OF THE ABOVE-NAMED COURTS OR FROM ANY LEGAL
PROCESS THEREIN, SUCH PARTY HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, SUCH IMMUNITY, AND EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY
WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING
BROUGHT HEREUNDER IN ANY OF THE ABOVE-NAMED COURTS, (I) THE DEFENSE OF SOVEREIGN
IMMUNITY, (II) THAT IT OR ANY OF ITS PROPERTY IS IMMUNE FROM THE ABOVE DESCRIBED
LEGAL PROCESS AND (III) THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT
THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY
SUCH COURTS.
(E) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION BASED UPON OR
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
15.9 THIRD-PARTY BENEFICIARY
This Agreement is not intended to, and shall not, provide any person not a
party hereto (other than the Liquidity Provider, which is an intended third
party beneficiary with respect to the provisions of Section 9.1, and the other
persons referred to in Section 7.6.13, who are intended third party
beneficiaries of such Section) with any rights of any nature whatsoever against
any of the parties hereto and no person not a party hereto (other than the
Liquidity Provider, with respect to the provisions of Section 9.1, and the other
persons referred to in Section 7.6.13, with respect to such Section) shall have
any right, power or privilege in respect of any party hereto, or have any
benefit or interest, arising out of this Agreement.
15.10 ENTIRE AGREEMENT
This Agreement, together with the other Operative Agreements, on and as of
the date hereof, constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof, and all prior or contemporaneous
understandings or agreements, whether written or oral, among any of the parties
hereto with respect to such subject matter are hereby superseded in their
entireties (except that the letter agreement, dated May 14, 1997, among Lessee,
Existing Mortgagee and Airframe Manufacturer shall not be superseded).
15.11 FURTHER ASSURANCES
Each party hereto shall execute, acknowledge and deliver or shall cause to
be executed, acknowledged and delivered, all such further agreements,
instruments, certificates or documents, and shall do and cause to be done such
further acts and things, in any case, as any other party hereto shall reasonably
request in connection with the administration of, or to carry out more
effectively the purposes of, or to better assure and confirm into such other
party the rights and benefits to be provided under this Agreement and the other
Operative Agreements.
[This space intentionally left blank]
IN WITNESS WHEREOF, each of the parties has caused this Participation
Agreement to be duly executed and delivered as of the day and year first above
written.
CONTINENTAL AIRLINES, INC.,
Lessee
By______________________________________
Name:
Title:
_______________________________________
_______________________________________,
PACIFIC CENTURY LEASING, INC., Owner
Participant
By______________________________________
Name:
Title:
By______________________________________
Name:
Title:
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
not in its individual capacity, except
as expressly provided herein, but
solely as Owner Trustee
By______________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except
as expressly provided herein, but
solely as Mortgagee
By______________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except
as expressly provided herein, but
solely as Pass Through Trustee under
the Pass Through Trust Agreement for
the Continental Airlines Pass Through
Trust, 1997-3A
By______________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except
as expressly provided herein, but
solely as Pass Through Trustee under
the Pass Through Trust Agreement for
the Continental Airlines Pass Through
Trust, 1997-3B
By______________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except
as expressly provided herein, but
solely as Pass Through Trustee under
the Pass Through Trust Agreement for
the Continental Airlines Pass Through
Trust, 1997-3C
By______________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except
as expressly provided herein, but
solely as Subordination Agent
By______________________________________
Name:
Title:
CORCIM, INC.,
Existing Lessor
By______________________________________
Name:
Title:
ROLLS-ROYCE PLC,
Existing Mortgagee
By______________________________________
Name:
Title:
EMBRAER-EMPRESA BRASILEIRA DE
AERONAUTICA S.A.,
Airframe Manufacturer
By______________________________________
Name:
Title:
ANNEX A
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Agreement, unless otherwise expressly provided,
a reference to:
(i) each of "Lessee," "Lessor," "Loan Participant," "Owner
Trustee," "Owner Participant," "Mortgagee," "Note Holder" or any other
person includes, without prejudice to the provisions of any Operative
Agreement, any successor in interest to it and any permitted transferee,
permitted purchaser or permitted assignee of it;
(ii) words importing the plural include the singular and words
importing the singular include the plural;
(iii) any agreement, instrument or document, or any annex,
schedule or exhibit thereto, or any other part thereof, includes, without
prejudice to the provisions of any Operative Agreement, that agreement,
instrument or document, or annex, schedule or exhibit, or part,
respectively, as amended, modified or supplemented from time to time in
accordance with its terms and in accordance with the Operative Agreements,
and any agreement, instrument or document entered into in substitution or
replacement therefor;
(iv) any provision of any Law includes any such provision as
amended, modified, supplemented, substituted, reissued or reenacted prior
to the Closing Date, and thereafter from time to time;
(v) the words "Agreement," "this Agreement," "hereby," "herein,"
"hereto," "hereof" and "hereunder" and words of similar import when used in
any Operative Agreement refer to such Operative Agreement as a whole and
not to any particular provision of such Operative Agreement;
(vi) the words "including," "including, without limitation,"
"including, but not limited to," and terms or phrases of similar import
when used in any Operative Agreement, with respect to any matter or thing,
mean including, without limitation, such matter or thing; and
(vii) a "Section," an "Exhibit," an "Annex" or a "Schedule" in
any Operative Agreement, or in any annex thereto, is a reference to a
section of, or an exhibit, an annex or a schedule to, such Operative
Agreement or such annex, respectively.
(b) Each exhibit, annex and schedule to each Operative Agreement is
incorporated in, and shall be deemed to be a part of, such Operative Agreement.
(c) Unless otherwise defined or specified in any Operative Agreement,
all accounting terms therein shall be construed and all accounting
determinations thereunder shall be made in accordance with GAAP.
(d) Headings used in any Operative Agreement are for convenience only
and shall not in any way affect the construction of, or be taken into
consideration in interpreting, such Operative Agreement.
(e) For purposes of each Operative Agreement, the occurrence and
continuance of a Lease Default or Lease Event of Default referred to in Section
14.5 shall not be deemed to prohibit the Lessee from taking any action or
exercising any right that is conditioned on no Lease Event of Default,
Bankruptcy Default or Lease Default having occurred and be continuing if a
Section 1110 Event shall have occurred and is then continuing.
DEFINED TERMS
"ACT" means part A of subtitle VII of title 49, United States Code.
"ACTUAL KNOWLEDGE" means (a) as it applies to Owner Trustee or Mortgagee,
as the case may be, actual knowledge of a responsible officer in the Corporate
Trust Department or the Corporate Trust Office, respectively, and (b) as it
applies to Owner Participant, Lessee, Existing Lessor, Existing Mortgagee and
Airframe Manufacturer, actual knowledge of a Vice President or more senior
officer of Owner Participant or Lessee, respectively, or any other officer of
Owner Participant or Lessee, respectively, having responsibility for the
transactions contemplated by the Operative Agreements; PROVIDED that each of
Lessee, Owner Participant, Owner Trustee, Mortgagee, Existing Lessor, Existing
Mortgagee and Airframe Manufacturer shall be deemed to have "Actual Knowledge"
of any matter as to which it has received notice from Lessee, Owner Participant,
any Note Holder, Owner Trustee or Mortgagee, such notice having been given
pursuant to Section 15.7 of the Participation Agreement.
"ADDITIONAL INSURED" is defined in Section D of Annex D to the Lease.
"AFFILIATE" means, with respect to any person, any other person directly or
indirectly controlling, controlled by or under common control with such person.
For purposes of this definition, "control" means the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such person, whether through the ownership of voting securities or by contract
or otherwise and "controlling," "controlled by" and "under common control with"
have correlative meanings.
"AIRCRAFT" means, collectively, the Airframe and Engines.
"AIRCRAFT ▇▇▇▇ OF SALE" means the full warranty ▇▇▇▇ of sale covering the
Aircraft delivered by Existing Lessor to Owner Trustee on the Closing Date.
"AIRCRAFT DOCUMENTS" means all technical data, manuals and log books, and
all inspection, modification and overhaul records and other service, repair,
maintenance and technical records that are required by the FAA (or the relevant
Aviation Authority) to be maintained with respect to the Aircraft, Airframe,
Engines or Parts; and such term shall include all additions, renewals, revisions
and replacements of any such materials from time to time made, or required to be
made, by the FAA (or other Aviation Authority) regulations, and in each case in
whatever form and by whatever means or medium (including, without limitation,
microfiche, microfilm, paper or computer disk) such materials may be maintained
or retained by or on behalf of Lessee (PROVIDED, that all such materials shall
be maintained in the English language).
"AIRFRAME" means (a) the aircraft (excluding Engines or engines from time
to time installed thereon) manufactured by Airframe Manufacturer and identified
by Airframe Manufacturer's model number, United States registration number and
Airframe Manufacturer's serial number set forth in Lease Supplement No. 1 and
(b) any and all Parts incorporated or installed in or attached or appurtenant to
such airframe, and any and all Parts removed from such airframe, unless title to
such Parts shall not be vested in Lessor in accordance with Section 8.1 and
Annex C of the Lease.
"AIRFRAME MANUFACTURER" means Embraer-Empresa Brasileira de Aeronautica
S.A., a Brazilian corporation.
"AIRFRAME MANUFACTURER AGREEMENTS" means, collectively, the Participation
Agreement, the Purchase Agreement and the Consent and Agreement.
"AMORTIZATION AMOUNT" means, with respect to any Equipment Note, as of any
Payment Date, the amount determined by multiplying the percentage set forth
opposite such Date on the Amortization Schedule by the Original Amount of such
Equipment Note.
"AMORTIZATION SCHEDULE" means, with respect to each Equipment Note, the
amortization schedule for such Equipment Note delivered pursuant to Section 2.02
of the Trust Indenture.
"APPRAISAL" is defined in Section 5.1.2(xv) of the Participation Agreement.
"APPRAISER" means a firm of internationally recognized, independent
aircraft appraisers.
"AVERAGE LIFE DATE" for any Equipment Note shall be the date which follows
the time of determination by a period equal to the Remaining Weighted Average
Life of such Equipment Note. "Remaining Weighted Average Life" on a given date
with respect to any Equipment Note shall be the number of days equal to the
quotient obtained by dividing (a) the sum of each of the products obtained by
multiplying (i) the amount of each then remaining scheduled payment of principal
of such Equipment Note by (ii) the number of days from and including such
determination date to but excluding the date on which such payment of principal
is scheduled to be made, by (b) the then outstanding principal amount of such
Equipment Note.
"AVIATION AUTHORITY" means the FAA or, if the Aircraft is permitted to be,
and is, registered with any other Government Entity under and in accordance with
Section 7.1.2 of the Lease, such other Government Entity.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C. ss.
101 ET SEQ.
"BANKRUPTCY DEFAULT" means a Lease Event of Default under Section 14.5 of
the Lease.
"BASE LEASE TERM" means the period beginning on and including the Closing
Date and ending on the Scheduled Expiration Date, or such earlier date on which
the Term terminates in accordance with the provisions of the Lease.
"BASIC PASS THROUGH TRUST AGREEMENT" means the Pass Through Trust
Agreement, dated the Issuance Date, between Lessee and Pass Through Trustee, as
such agreement may be supplemented, amended or modified, but does not include
any Trust Supplement.
"BASIC RENT" means the rent payable for the Aircraft pursuant to Section
3.2.1 of the Lease.
"BENEFICIAL OWNER" when used in relation to an Equipment Note means a
Person that, by reason of direct ownership, contract, share ownership or
otherwise, has the right to receive or participate in receiving, directly or
indirectly, payments of principal, interest or Make-Whole Amount in respect of
such Equipment Note; provided that a Person shall not be deemed to be a
Beneficial Owner of an Equipment Note solely because another Person in which
such a Person owns common stock or other equity securities is a registered
holder or Beneficial Owner of such Equipment Note unless such Person is an
Affiliate of such other Person.
"BILLS OF SALE" means the FAA ▇▇▇▇ of Sale and the Aircraft ▇▇▇▇ of Sale.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized or required by law to close in New York,
New York, Houston, Texas, Wilmington, Delaware, or Salt Lake City, Utah.
"CASH EQUIVALENTS" means the following securities (which shall mature
within 90 days of the date of purchase thereof): (a) direct obligations of the
U.S. Government; (b) obligations fully guaranteed by the U.S. Government; (c)
certificates of deposit issued by, or bankers' acceptances of, or time deposits
or a deposit account with, Owner Trustee, Mortgagee or any bank, trust company
or national banking association incorporated or doing business under the laws of
the United States or any state thereof having a combined capital and surplus and
retained earnings of at least $500,000,000 and having a rate of "C" or better
from the Thomson BankWatch Service; or (d) commercial paper of any issuer doing
business under the laws of the United States or one of the states thereof and in
each case having a rating assigned to such commercial paper by Standard & Poor's
Rating Services or ▇▇▇▇▇'▇ Investors Service, Inc. equal to A1 or higher.
"CITIZEN OF THE UNITED STATES" is defined in Section 40102(a)(15) of the
Act and in the FAA Regulations.
"CHANGE IN TAX LAW" means any change or proposed change in the Code or the
regulations promulgated thereunder or any change in the interpretation of the
Code or such regulations in a decision by the United States Supreme Court, the
United States Tax Court, the United States Claims Court or any of the United
States Courts of Appeal or District Courts, or any issuance of an Internal
Revenue Ruling, Revenue Procedure or administrative pronouncement by the
Internal Revenue Service or the Department of the Treasury.
"CLOSING" means the occurrence of the following concurrent events: (i) sale
of the Aircraft to the Owner Trustee and the filing of the FAA ▇▇▇▇ of Sale with
the FAA in connection therewith; (ii) payment of Lessor's Cost by Owner Trustee
to Existing Lessor; (iii) lease of the Aircraft by Owner Trustee to Lessee
pursuant to the Lease; and (iv) completion of the other events contemplated by
the Participation Agreement to occur at the Closing.
"CLOSING DATE" means the Business Day specified in Lease Supplement No. 1
as the Closing Date, which shall be the date on which the Closing occurs.
"CODE" means the Internal Revenue Code of 1986, as amended; PROVIDED, that
when used in relation to a Plan, "Code" shall mean the Internal Revenue Code of
1986 and any regulations and rulings issued thereunder, all as amended and in
effect from time to time.
"COMMITMENT" means, for any Participant, the amount of its participation in
the payment of Lessor's Cost.
"COMMITMENT TERMINATION DATE" is defined in Schedule 3 to the Participation
Agreement.
"CONSENT AND AGREEMENT" means the Manufacturer Consent and Agreement ____,
dated as of even date with the Participation Agreement, of Airframe
Manufacturer.
"CONTINUOUS STAY PERIOD" is defined in Section 4.04(a) of the Trust
Indenture.
"CORPORATE TRUST DEPARTMENT" or "TRUST OFFICE" means the principal
corporate trust office of Owner Trustee located from time to time at Owner
Trustee's address for notices under the Participation Agreement or such other
office at which Owner Trustee's corporate trust business shall be administered
which Owner Trustee shall have specified by notice in writing to Lessee,
Mortgagee and each Note Holder.
"CORPORATE TRUST OFFICE" means the principal office of Mortgagee located at
Mortgagee's address for notices under the Participation Agreement or such other
office at which Mortgagee's corporate trust business shall be administered which
Mortgagee shall have specified by notice in writing to Lessee, Owner Trustee and
each Note Holder.
"CRAF" means the Civil Reserve Air Fleet Program established pursuant to 10
U.S.C. ss. 9511-13 or any similar substitute program.
"DEBT" means any liability for borrowed money, or any liability for the
payment of money in connection with any letter of credit transaction or any
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments.
"DEBT RATE" means, with respect to (i) any Series, the rate per annum
specified for such Series under the heading "Interest Rate" in Schedule I to the
Trust Indenture and (ii) any other purpose, with respect to any period, the
weighted average interest rate per annum during such period borne by the
outstanding Equipment Notes, excluding any interest payable at the Payment Due
Rate.
"DEFAULT" means any event or condition that with the giving of notice or
the lapse of time or both would become an Event of Default.
"DELAYED CLOSING DATE" means a delayed Closing Date notified to Lessee,
Existing Lessor, each Participant, Owner Trustee and Mortgagee by Existing
Mortgagee pursuant to Section 4.3 of the Participation Agreement, which delayed
Closing Date shall be a Business Day not later than the Commitment Termination
Date.
"DELIVERY DATE" means the date on which the Aircraft was leased to Lessee
by Corcim, Inc., as lessor, under the Existing Lease.
"DOLLARS," "UNITED STATES DOLLARS" or "$" means the lawful currency of the
United States.
"DOT" means the Department of Transportation of the United States or any
Government Entity succeeding to the functions of such Department of
Transportation.
"ENFORCEMENT DATE" is defined in Section 4.03 of the Trust Indenture.
"ENGINE" means (a) each of the engines manufactured by Engine Manufacturer
and identified by Engine Manufacturer's model number and Engine Manufacturer's
serial number set forth in Lease Supplement No. 1 and originally installed on
the Airframe on delivery thereof pursuant to the Lease, and any Replacement
Engine, in any case whether or not from time to time installed on such Airframe
or installed on any other airframe or aircraft, and (b) any and all Parts
incorporated or installed in or attached or appurtenant to such engine, and any
and all Parts removed from such engine, unless title to such Parts shall not be
vested in Lessor in accordance with Section 8.1 and Annex C of the Lease. Upon
substitution of a Replacement Engine under and in accordance with the Lease,
such Replacement Engine shall become subject to the Lease and shall be an
"Engine" for all purposes of the Lease and the other Operative Agreements and
thereupon the Engine for which the substitution is made shall no longer be
subject to the Lease, and such replaced Engine shall cease to be an "Engine."
"ENGINE MANUFACTURER" means ▇▇▇▇▇▇▇ Engine Company, Inc., a Delaware
corporation.
"EQUIPMENT NOTE REGISTER" is defined in Section 2.07 of the Trust
Indenture.
"EQUIPMENT NOTES" means and includes any equipment notes issued under the
Trust Indenture in the form specified in Section 2.01 thereof (as such form may
be varied pursuant to the terms of the Trust Indenture) and any Equipment Note
issued under the Trust Indenture in exchange for or replacement of any Equipment
Note.
"EQUITY ADVISOR" has the meaning provided in Schedule 3 to the
Participation Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974 and any
regulations and rulings issued thereunder all as amended and in effect from time
to time.
"EVENT OF DEFAULT" is defined in Section 4.02 of the Trust Indenture.
"EVENT OF LOSS" means, with respect to the Aircraft, Airframe or any
Engine, any of the following circumstances, conditions or events with respect to
such property, for any reason whatsoever:
(a) the destruction of such property, damage to such property beyond
economic repair or rendition of such property permanently unfit for
normal use by Lessee;
(b) the actual or constructive total loss of such property or any damage
to such property, or requisition of title or use of such property,
which results in an insurance settlement with respect to such property
on the basis of a total loss or constructive or compromised total
loss;
(c) any theft, hijacking or disappearance of such property for a period of
180 consecutive days or more or, if earlier, the end of the Term;
(d) any seizure, condemnation, confiscation, taking or requisition
(including loss of title) of such property by any Government or
purported Government Entity (other than a requisition of use by the
U.S. Government) for a period exceeding 180 consecutive days or, if
earlier, at the end of the Term;
(e) any seizure, condemnation, confiscation, taking or requisition of use
of such property by the U.S. Government that continues until the last
day of the Term, PROVIDED that no such Event of Loss shall exist if
Lessor shall have elected not to treat such event as an Event of Loss
pursuant to Section 10.6 of the Lease; and
(f) as a result of any law, rule, regulation, order or other action by the
Aviation Authority or by any Government Entity of the government of
registry of the Aircraft or by any Government Entity otherwise having
jurisdiction over the operation or use of the Aircraft, the use of
such property in the normal course of Lessee's business of passenger
air transportation is prohibited for a period of 180 consecutive days,
unless Lessee, prior to the expiration of such 180 day period, shall
have undertaken and shall be diligently carrying forward such steps as
may be necessary or desirable to permit the normal use of such
property by Lessee, but in any event if such use shall have been
prohibited for a period of 720 days, provided that no Event of Loss
shall be deemed to have occurred if such prohibition has been
applicable to Lessee's (or a Permitted Sublessee's) entire U.S. fleet
of such property and Lessee (or a Permitted Sublessee), prior to the
expiration of such 720-day period, shall have conformed at least one
unit of such property in its fleet to the requirements of any such
law, rule, regulation, order or other action and commenced regular
commercial use of the same in such jurisdiction and shall be
diligently carrying forward, in a manner which does not discriminate
against such property in so conforming such property, steps which are
necessary or desirable to permit the normal use of such property by
Lessee, but in any event if such use shall have been prohibited for a
period of three years or such use shall be prohibited at the
expiration of the Term.
"EXCLUDED PAYMENTS" means (i) indemnity payments paid or payable by Lessee
to or in respect of Owner Participant, or Owner Trustee in its individual
capacity, their respective Affiliates, successors and permitted assigns and
their directors, officers, employees, servants and agents pursuant to Section 9
of the Participation Agreement or any corresponding payments under the Lease,
(ii) proceeds of public liability insurance paid or payable as a result of
insurance claims made, or losses suffered, by Owner Trustee in its individual
capacity or by Owner Participant, that are payable directly to Owner Trustee in
its individual capacity, or Owner Participant, respectively, for their own
account, (iii) proceeds of insurance maintained with respect to the Aircraft by
Owner Participant or any Affiliate thereof for its or their own account or
benefit (whether directly or through Owner Trustee) and permitted under Section
11.2 of the Lease, (iv) all payments required to be made under the Tax Indemnity
Agreement by Lessee whether or not denominated as Supplemental Rent, (v) any
amount payable to the Owner Participant by any transferee as the purchase price
of the Owner Participant's interest in the Trust Estate, (vi) any interest that
pursuant to the Operative Agreements may from time to time accrue in respect of
any of the amounts described in clauses (i) through (v) above, (vii) proceeds of
any right to enforce the payment of any amount described in clauses (i) through
(vi) above (PROVIDED, that the rights referred to in this clause (vii) shall not
be deemed to include the exercise of any remedies provided for in the Lease
other than the right to ▇▇▇ for specific performance of any covenant to make
such payment or to ▇▇▇ for damages in respect of the breach of any such
covenant) and (viii) any right to exercise any election or option or make any
decision or determination, or to give or receive any notice, consent, waiver or
approval, or to take any other action in respect of, but in each case, only to
the extent relating to, any Excluded Payments.
"EXISTING LEASE" has the meaning provided in Schedule 3 to the
Participation Agreement.
"EXISTING LESSOR" means Corcim, Inc., a Delaware corporation.
"EXISTING LESSOR AGREEMENTS" means the Participation Agreement, the
Purchase Agreement Assignment, the Bills of Sale and the Termination Agreement
with respect to the Existing Lease.
"EXISTING MORTGAGE" has the meaning provided in Schedule 3 to the
Participation Agreement.
"EXISTING MORTGAGEE" means Rolls-Royce plc, a corporation organized under
the laws of England.
"EXISTING MORTGAGEE AGREEMENTS" means the Participation Agreement and the
Termination Agreement with respect to the Existing Mortgage.
"EXISTING PARTICIPATION AGREEMENT" has the meaning provided in Schedule 3
to the Participation Agreement.
"EXISTING SUBLEASE" means the Aircraft Sublease Agreement, dated the date
of the Existing Participation Agreement, between Lessee and Express relating to
the Aircraft.
"EXPENSE LIMIT" has the meaning provided in Schedule 3 to the Participation
Agreement.
"EXPENSES" means any and all liabilities, obligations, losses, damages,
settlements, penalties, claims, actions, suits, costs, expenses and
disbursements (including, without limitation, reasonable fees and disbursements
of legal counsel, accountants, appraisers, inspectors or other professionals,
and costs of investigation).
"EXPRESS" means Continental Express, Inc., a wholly owned subsidiary of
Lessee.
"EXPRESS SUBLEASE" means the Permitted Sublease, dated as of the date of
the Participation Agreement, between Lessee and Express relating to the
Aircraft.
"FAA" means the Federal Aviation Administration of the United States or any
Government Entity succeeding to the functions of such Federal Aviation
Administration.
"FAA ▇▇▇▇ OF SALE" means a ▇▇▇▇ of sale for the Aircraft on AC Form 8050-2
(or such other form as may be approved by the FAA) delivered to Owner Trustee on
the Closing Date by Existing Lessor.
"FAA FILED DOCUMENTS" means the Lease, Lease Supplement No. 1, the Express
Sublease, the Trust Indenture, the Trust Agreement, the Trust Indenture
Supplement, the FAA ▇▇▇▇ of Sale, an application for registration of the
Aircraft with the FAA in the name of Owner Trustee and the Termination
Agreements.
"FAA REGULATIONS" means the Federal Aviation Regulations issued or
promulgated pursuant to the Act from time to time.
"FAIR MARKET RENTAL VALUE" means the fair market rental value in Dollars
for the Aircraft that would apply in an arm's-length transaction between an
informed and willing lessee under no compulsion to lease, and an informed and
willing lessor under no compulsion to lease, the Aircraft, for the applicable
Renewal Lease Term, assuming that (a) the Aircraft has been maintained in
accordance with, and is in the condition required by, the Lease, (b) payments of
rent would be made quarterly, and (c) the Aircraft would be leased during any
such Renewal Term on the same terms and conditions as are set forth in the Lease
with respect to the Base Lease Term.
"FAIR MARKET SALES VALUE" means the fair market sales value in Dollars for
the Aircraft that would apply in an arm's-length transaction between an informed
and willing buyer under no compulsion to buy, and an informed and willing seller
under no compulsion to sell, the Aircraft, in a transaction that would close on
or about the relevant time of determination, assuming (except as otherwise
provided in Section 15.4 of the Lease) that (a) the Aircraft has been maintained
in accordance with, and is in the condition required by, the Lease and (b) the
Aircraft would be delivered to such informed and willing buyer in the return
condition required by the Lease.
"FINANCING STATEMENTS" means, collectively, (a) UCC-1 financing statements
(i) covering the Trust Indenture Estate, by Owner Trustee, as debtor, showing
Mortgagee as secured party, for filing in Utah and each other jurisdiction that,
in the opinion of Mortgagee, is necessary to perfect its Lien on the Trust
Indenture Estate and (ii) covering the Lease and the Aircraft, as a
precautionary matter, by Lessee, as lessee, showing Owner Trustee as lessor and
Mortgagee as assignee of Owner Trustee, for filing in Texas and each other
jurisdiction that, in the opinion of Owner Trustee and Mortgagee, is reasonably
desirable and (b) UCC-3 financing statements (i) evidencing the termination of
the Existing Lease and the Existing Sublease, for filing in Texas and each other
jurisdiction that, in the opinion of Owner Trustee and Mortgagee, is reasonably
desirable and (ii) evidencing the release of the Aircraft, Aircraft Documents
and other collateral from the Lien of the Existing Mortgage for filing in
Delaware and each other jurisdiction that, in the opinion of Owner Trustee and
Mortgagee, is reasonably desirable.
"FIRST SECURITY" means First Security Bank, National Association, a
national banking association, not in its capacity as Owner Trustee under the
Trust Agreement, but in its individual capacity.
"GAAP" means generally accepted accounting principles as set forth in the
statements of financial accounting standards issued by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants, as
such principles may at any time or from time to time be varied by any applicable
financial accounting rules or regulations issued by the SEC and, with respect to
any person, shall mean such principles applied on a basis consistent with prior
periods except as may be disclosed in such person's financial statements.
"GOVERNMENT ENTITY" means (a) any federal, state, provincial or similar
government, and any body, board, department, commission, court, tribunal,
authority, agency or other instrumentality of any such government or otherwise
exercising any executive, legislative, judicial, administrative or regulatory
functions of such government or (b) any other government entity having
jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"INDEMNITEE" means (i) First Security and Owner Trustee, (ii) WTC and
Mortgagee, (iii) each separate or additional trustee appointed pursuant to the
Trust Agreement or the Trust Indenture, (iv) each Participant, (v) the Trust
Estate and the Trust Indenture Estate, (vi) the Subordination Agent, (vii) the
Liquidity Providers, (viii) the Pass Through Trustees, (ix) each Affiliate of
the persons described in clauses (i) through (iv), inclusive, (x) each Affiliate
of the persons described in clauses (vi), (vii) and (viii), (xi) the respective
directors, officers, employees, agents and servants of each of the persons
described in clauses (i) through (iv) inclusive and in clause (ix), (xii) the
respective directors, officers, employees, agents and servants of each of the
persons described in clauses (vi), (vii), (viii), and (x), (xiii) the successors
and permitted assigns of the persons described in clauses (i) through (iv),
inclusive, and in clauses (ix) and (xi), and (xiv) the successors and permitted
assigns of the persons described in clauses (vi), (vii), (viii), (x) and (xii);
PROVIDED THAT the persons described in clauses (vi), (vii), (viii), (x), (xii)
and (xiv) are Indemnitees only for purposes of Section 9.1 of the Participation
Agreement. If any Indemnitee is Airframe Manufacturer or Engine Manufacturer or
any subcontractor or supplier of either thereof, such Person shall be an
Indemnitee only in its capacity as Owner Participant, Loan Participant or Note
Holder.
"INDENTURE AGREEMENTS" means the Participation Agreement, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Bills of Sale and any other contract, agreement or instrument
from time to time assigned or pledged under the Trust Indenture.
"INDENTURE DEFAULT" means any condition, circumstance, act or event that,
with the giving of notice, the lapse of time or both, would constitute an
Indenture Event of Default.
"INDENTURE EVENT OF DEFAULT" means any one or more of the conditions,
circumstances, acts or events set forth in Section 4.02 of the Trust Indenture.
"INDENTURE INDEMNITEE" means (i) WTC and the Mortgagee, (ii) each separate
or additional trustee appointed pursuant to the Trust Indenture, (iii) the
Subordination Agent, (iv) each Liquidity Provider, (v) each Pass Through Trustee
and (vi) each of the respective directors, officers, employees, agents and
servants of each of the persons described in clauses (i) through (v) inclusive
above.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement among
the Pass Through Trustees, the Liquidity Providers and the Subordination Agent,
dated as of the Issuance Date, PROVIDED that, for purposes of any obligation of
Lessee, no amendment, modification or supplement to, or substitution or
replacement of, such Intercreditor Agreement shall be effective unless consented
to by Lessee.
"IRS" means the Internal Revenue Service of the United States or any
Government Entity succeeding to the functions of such Internal Revenue Service.
"ISSUANCE DATE" means September 25, 1997.
"LAW" means (a) any constitution, treaty, statute, law, decree, regulation,
order, rule or directive of any Government Entity, and (b) any judicial or
administrative interpretation or application of, or decision under, any of the
foregoing.
"LEASE" or "LEASE AGREEMENT" means the Lease Agreement ____, dated as of
even date with the Participation Agreement, between Owner Trustee and Lessee.
"LEASE DEFAULT" means any condition, circumstance, act or event that, with
the giving of notice, the lapse of time or both, would constitute a Lease Event
of Default.
"LEASE EVENT OF DEFAULT" means any one or more of the conditions,
circumstances, acts or events set forth in Section 14 of the Lease.
"LEASE SUPPLEMENT" means a supplement to the Lease, in the form of Exhibit
A to the Lease.
"LEASE SUPPLEMENT NO. 1" means the initial Lease Supplement, dated the
Closing Date.
"LESSEE" means Continental Airlines, Inc., a Delaware corporation.
"LESSEE OPERATIVE AGREEMENTS" means the Participation Agreement, the Lease,
Lease Supplement No. 1, the Express Sublease, the Termination Agreement with
respect to the Existing Sublease and the Tax Indemnity Agreement.
"LESSEE PERSON" means Lessee, any sublessee, assignee, successor or other
user or person in possession of the Aircraft, Airframe or an Engine with or
without color of right, or any Affiliate of any of the foregoing (excluding any
Tax Indemnitee or any related Tax Indemnitee with respect thereto, or any person
using or claiming any rights with respect to the Aircraft, Airframe or an Engine
directly by or through any of the persons in this parenthetical, but not
excluding any Person claiming directly or indirectly through or under the
Lease).
"LESSOR" means Owner Trustee in its capacity as lessor under the Lease.
"LESSOR LIEN" means, with respect to any person and in respect of any
property (including, without limitation, the Trust Estate, the Trust Indenture
Estate, the Aircraft, Airframe, Engines, Parts or Aircraft Documents) or any
payments, any Lien on such property or payments which (a) arises from claims
against such person (if such person is a trustee, whether in its individual
capacity or in its capacity as a trustee) not related to any of the transactions
contemplated by the Operative Agreements, (b) results from acts or omissions of
such person (if such person is a trustee, whether in its individual capacity or
in its capacity as a trustee) in violation of such person's obligations under
any of the terms of the Operative Agreements, or not related to the transactions
contemplated by the Operative Agreements, (c) is imposed as a result of Taxes
against such person (if such person is a trustee, whether in its individual
capacity or in its capacity as a trustee) or any of its Affiliates not required
to be indemnified by Lessee under the Participation Agreement, or (d) claims
against such person arising out of any transfer by such person of its interest
in the Aircraft, the Trust Estate or the Operative Agreements, other than a
Transfer permitted by the terms of the Operative Agreements or pursuant to the
exercise of remedies set forth in Section 15 of the Lease.
"LESSOR RENT" means, with respect to any Payment Date, the amount set forth
in Schedule 4 to the Participation Agreement with respect to such Payment Date.
"LESSOR'S COST" means the amount paid by Owner Trustee to Existing Lessor
to purchase the Aircraft pursuant to the Participation Agreement, and is
designated by Dollar amount in Schedule 3 to the Participation Agreement.
"LETTER AGREEMENT" means the Letter Agreement, dated the date of the
Participation Agreement, between Lessee and Owner Participant, which includes a
statement that it is the Letter Agreement for purposes of this Annex A.
"LIEN" means any mortgage, pledge, lien, charge, claim, encumbrance, lease
or security interest affecting the title to or any interest in property.
"LIQUIDITY FACILITIES" means the three Revolving Credit Agreements
(consisting of a separate Revolving Credit Agreement with the Liquidity Provider
with respect to each Pass Through Trust) between the Subordination Agent, as
borrower, and a Liquidity Provider, each dated as of the Issuance Date, PROVIDED
that, for purposes of any obligation of Lessee, no amendment, modification or
supplement to, or substitution or replacement of, any such Liquidity Facility
shall be effective unless consented to by Lessee.
"LIQUIDITY PROVIDER" means ABN AMRO Bank N.V., Chicago Branch, as a Class A
Liquidity Provider, Class B Liquidity Provider and Class C Liquidity Provider
(as such terms are defined in the Intercreditor Agreement) under the respective
Liquidity Facilities, or any successor thereto.
"LOAN PARTICIPANTS" mean, until the Closing shall have been consummated,
the Pass Through Trustees, and after the Closing shall have been consummated,
each Note Holder.
"LOSS PAYMENT DATE" means the date on which payment is due pursuant to
Section 10.1.2(a)(i) of the Lease.
"MAINTENANCE PROGRAM" is defined in Annex C to the Lease.
"MAJORITY IN INTEREST OF NOTE HOLDERS" means as of a particular date of
determination, the holders of a majority in aggregate unpaid Original Amount of
all Equipment Notes outstanding as of such date (excluding any Equipment Notes
held by Owner Trustee, Lessee, or Owner Participant or any Affiliate of any such
party or any interests of Owner Trustee or Owner Participant therein by reason
of subrogation pursuant to Section 4.03 of the Trust Indenture (unless all
Equipment Notes then outstanding shall be held by Owner Trustee, Lessee, Owner
Participant or any Affiliate of any thereof)); PROVIDED that for the purposes of
directing any action or casting any vote or giving any consent, waiver or
instruction hereunder any Note Holder of an Equipment Note or Equipment Notes
may allocate, in such Note Holder's sole discretion, any fractional portion of
the principal amount of such Equipment Note or Equipment Notes in favor of or in
opposition to any such action, vote, consent, waiver or instruction.
"MAKE-WHOLE AMOUNT" means, with respect to any Equipment Note, an amount
(as determined by an independent investment banker of national standing) equal
to the excess, if any, of (a) the present value of the remaining scheduled
payments of principal and interest to maturity of such Equipment Note computed
by discounting such payments on a quarterly basis on each Payment Date (assuming
a 360-day year of twelve 30-day months) using a discount rate equal to the
Treasury Yield over (b) the outstanding principal amount of such Equipment Note
plus accrued interest to the date of determination. For purposes of determining
the Make-Whole Amount, "Treasury Yield" means, at the date of determination with
respect to any Equipment Note, the interest rate (expressed as a quarterly
equivalent and as a decimal and, in the case of United States Treasury bills,
converted to a bond equivalent yield) determined to be the per annum rate equal
to the semi-annual yield to maturity for United States Treasury securities
maturing on the Average Life Date of such Equipment Note and trading in the
public securities markets either as determined by interpolation between the most
recent weekly average yield to maturity for two series of United States Treasury
securities, trading in the public securities markets, (A) one maturing as close
as possible to, but earlier than, the Average Life Date of such Equipment Note
and (B) the other maturing as close as possible to, but later than, the Average
Life Date of such Equipment Note, in each case as published in the most recent
H.15(519) or, if a weekly average yield to maturity for United States Treasury
securities maturing on the Average Life Date of such Equipment Note is reported
on the most recent H.15(519), such weekly average yield to maturity as published
in such H.15(519) "H.15(519)" means the weekly statistical release designated as
such, or any successor publication, published by the Board of Governors of the
Federal Reserve System. The date of determination of a Make-Whole Amount shall
be the third Business Day prior to the applicable payment or redemption date and
the "most recent H.15(519)" means the H.15(519) published prior to the close of
business on the third Business Day prior to the applicable payment or redemption
date.
"MATERIAL ADVERSE CHANGE" means, with respect to any person, any event,
condition or circumstance that materially and adversely affects such person's
business or consolidated financial condition, or its ability to observe or
perform its obligations, liabilities and agreements under the Operative
Agreements.
"MORTGAGED PROPERTY" is defined in Section 3.03 of the Trust Indenture.
"MORTGAGEE" means Wilmington Trust Company, a Delaware banking corporation,
not in its individual capacity but solely as loan trustee under the Trust
Indenture.
"MORTGAGEE AGREEMENTS" means, collectively, the Participation Agreement and
the Trust Indenture.
"MORTGAGEE EVENT" means (i) in the event of a reorganization proceeding
involving the Lessee under Chapter 11 of the Bankruptcy Code, (A) the trustee in
such proceeding or the Lessee not assuming or agreeing to perform its
obligations under the Lease, as contemplated under Section 1110, during the
60-day period under Section 1110(a)(1)(A) of the Bankruptcy Code (or such longer
period as may apply under Section 1110(b) of the Bankruptcy Code) or (B) at any
time after agreeing to perform or assume such obligations, such trustee or the
Lessee ceasing to perform or assuming such obligations with the result that the
Continuous Stay Period comes to an end or (ii) either the Equipment Notes shall
have become due and payable pursuant to Section 4.04(b) of the Trust Indenture
or Mortgagee has taken action or notified Owner Trustee that it intends to take
action to foreclose the Lien of the Trust Indenture or otherwise commence the
exercise of any significant remedy in accordance with Section 4.04(a) of the
Trust Indenture.
"NET ECONOMIC RETURN" means the Owner Participant's net after-tax yield
utilizing the multiple investment sinking fund method of analysis and aggregate
net after-tax cash flow, computed on the basis of the same methodology and
assumptions as were utilized by the initial Owner Participant in determining
Lessor Rent, Stipulated Loss Value percentages and Termination Value
percentages, as of the Closing Date.
"NET WORTH" means, for any person, the excess of its total assets over its
total liabilities in accordance with GAAP.
"NON-U.S. PERSON" means any Person other than a United States person, as
defined in Section 7701(a)(30) of the Code.
"NOTE HOLDER" means at any time each registered holder of one or more
Equipment Notes.
"OFFICER'S CERTIFICATE" means, in respect of any party to the Participation
Agreement, a certificate signed by the Chairman, the President, any Vice
President (including those with varying ranks such as Executive, Senior,
Assistant or Staff Vice President), the Treasurer or the Secretary of such
party.
"OPERATIVE AGREEMENTS" means, collectively, the Participation Agreement,
the Trust Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Lease, Lease Supplement No. 1, the Trust Indenture, the initial
Trust Indenture Supplement, the Bills of Sale, the Tax Indemnity Agreement, the
Equipment Notes, the Letter Agreement and the Termination Agreements.
"OPERATIVE INDENTURES" means each of the indentures under which notes have
been issued and purchased by the Pass Through Trustees.
"OP JURISDICTION" is defined in Schedule 3 to the Participation Agreement.
"ORIGINAL AMOUNT," with respect to an Equipment Note, means the stated
original principal amount of such Equipment Note and, with respect to all
Equipment Notes, means the aggregate stated original principal amounts of all
Equipment Notes.
"OWNER PARTICIPANT" means the person executing the Participation Agreement
as "Owner Participant" or, if a second person becomes an "Owner Participant"
pursuant to Section 10.1.1 of the Participation Agreement, both of such persons;
PROVIDED that if an Owner Participant Transfers 100% of its interest to a
successor Owner Participant, such transferring Owner Participant shall
thereafter no longer be considered an "Owner Participant."
"OWNER PARTICIPANT AGREEMENTS" means, collectively, the Participation
Agreement, the Tax Indemnity Agreement and the Trust Agreement.
"OWNER PARTICIPANT'S PERCENTAGE" means the percentage of Lessor's Cost
allocated to the Owner Participant in Schedule 2 to the Participation Agreement.
"OWNER TRUSTEE" means First Security Bank, National Association, a national
banking association, not in its individual capacity, except as expressly
provided in any Operative Agreement, but solely as Owner Trustee under the Trust
Agreement.
"OWNER TRUSTEE AGREEMENTS" means, collectively, the Participation
Agreement, the Lease, Lease Supplement No. 1, the Trust Agreement, the Trust
Indenture, the initial Trust Indenture Supplement, the Equipment Notes and the
Purchase Agreement Assignment.
"PARTICIPANTS" means, collectively, Owner Participant and each Loan
Participant and "Participant" means Owner Participant or a Loan Participant,
individually.
"PARTICIPATION AGREEMENT" means the Participation Agreement ____ dated as
of September 25, 1997 among Lessee, Owner Participant, Owner Trustee, the Pass
Through Trustees, Subordination Agent, Mortgagee, the Existing Lessor, the
Existing Mortgagee and Airframe Manufacturer.
"PARTS" means all appliances, parts, components, avionics, landing gear,
instruments, appurtenances, accessories, furnishings, seats and other equipment
of whatever nature (other than (a) Engines or engines, and (b) any items leased
by Lessee from a third party other than Lessor)), that may from time to time be
installed or incorporated in or attached or appurtenant to the Airframe or any
Engine.
"PASS THROUGH AGREEMENTS" means the Pass Through Trust Agreements, the
Intercreditor Agreement, the Liquidity Facilities and the Fee Letter (as defined
in the Intercreditor Agreement), provided, that no amendment, modification or
supplement to, or substitution or replacement of, any such Fee Letter shall be
effective for purposes of any obligation of Lessee, unless consented to by
Lessee.
"PASS THROUGH CERTIFICATES" means the pass through certificates issued by
the Pass Through Trusts (and any other pass through certificates for which such
pass through certificates may be exchanged).
"PASS THROUGH TRUST" means each of the three separate pass through trusts
created under the Pass Through Trust Agreements.
"PASS THROUGH TRUST AGREEMENT" means each of the three separate Trust
Supplements, together in each case with the Basic Pass Through Trust Agreement,
each dated as of the Issuance Date, by and between the Lessee and Pass Through
Trustee.
"PASS THROUGH TRUSTEE" means Wilmington Trust Company, a Delaware banking
corporation, in its capacity as trustee under each Pass Through Trust Agreement.
"PASS THROUGH TRUSTEE AGREEMENTS" means the Participation Agreement, the
Pass Through Trust Agreements, and the Intercreditor Agreement.
"PAYMENT DATE" means the Closing Date and each March 24, June 24, September
24 and December 24 during the Term, commencing with the first such date to occur
after the Closing Date.
"PAYMENT DEFAULT" means the failure by Lessee to pay any amount of Basic
Rent, Renewal Rent, Stipulated Loss Value or Termination Value when due.
"PAYMENT DUE RATE" is defined in Schedule 1 to the Lease.
"PAYMENT PERIOD" means each of the consecutive quarterly periods during the
Term ending on a Payment Date, the first such period commencing on and including
the Closing Date.
"PERMITTED AIR CARRIER" means (i) any Permitted Foreign Air Carrier, (ii)
any person approved in writing by Lessor or (iii) any U.S. Air Carrier.
"PERMITTED COUNTRY" means any country listed on Schedule 5 to the Lease.
"PERMITTED FOREIGN AIR CARRIER" means any air carrier with its principal
executive offices in any Permitted Country and which is authorized to conduct
commercial airline operations and to operate jet aircraft similar to the
Aircraft under the applicable Laws of such Permitted Country.
"PERMITTED GOVERNMENT ENTITY" means (i) the U.S. Government or (ii) any
Government Entity if the Aircraft is then registered under the laws of the
country of such Government Entity.
"PERMITTED INSTITUTION" means any bank, trust company, insurance company,
financial institution or corporation (other than, without Lessee's consent, a
commercial air carrier, a commercial aircraft operator, a freight forwarder or
Affiliate of any of the foregoing), in each case with a combined capital and
surplus or net worth of at least $25,000,000.
"PERMITTED LIEN" means any Lien described in clauses (a) through (f),
inclusive, of Section 6 of the Lease.
"PERMITTED SUBLEASE" means a sublease permitted under Section 7.2.7 of the
Lease.
"PERMITTED SUBLESSEE" means the sublessee under a Permitted Sublease.
"PERSONS" or "PERSONS" means individuals, firms, partnerships, joint
ventures, trusts, trustees, Government Entities, organizations, associations,
corporations, government agencies, committees, departments, authorities and
other bodies, corporate or incorporate, whether having distinct legal status or
not, or any member of any of the same.
"PLAN" means any employee benefit plan within the meaning of Section 3(3)
of ERISA, or any plan within the meaning of Section 4975(e)(1) of the Code.
"PRELIMINARY NOTICE" is defined in Section 17.1 of the Lease.
"PREMIUM TERMINATION DATE" means August 22, 2008 in the case of the Series
A Equipment Notes, April 30, 2004 in the case of the Series B Equipment Notes
and February 16, 2002 in the case of the Series C Equipment Notes.
"PTT PERCENTAGE" means, with respect to each Pass Through Trustee, the
percentage of Lessor's Cost allocated to such Pass Through Trustee in Schedule 2
to the Participation Agreement.
"PURCHASE AGREEMENT" means the Purchase Agreement GPJ-003/96 between
Airframe Manufacturer and Express (including all exhibits thereto, together with
all letter agreements entered into that by their terms constitute part of such
Purchase Agreement), to the extent assigned pursuant to the Purchase Agreement
Assignment.
"PURCHASE AGREEMENT ASSIGNMENT" means the Purchase Agreement Assignment
____, dated as of even date with the Participation Agreement, between Existing
Lessor and Owner Trustee.
"PURCHASE DATE" means the last Business Day of the Base Lease Term or any
Renewal Lease Term, as specified in any Purchase Notice.
"PURCHASE NOTICE" is defined in Section 17.3.1 of the Lease.
"QIB" is defined in Section 2.08 of the Trust Indenture.
"RENEWAL LEASE TERM" means each two year term for which the Lease is
extended by Lessee, if any, pursuant to the first or second such extensions in
accordance with Section 17 of the Lease.
"RENEWAL NOTICE" is defined in Section 17.2.1 of the Lease.
"RENEWAL RENT" for the Aircraft means the rent payable therefor in respect
of a Renewal Lease Term determined pursuant to Section 17.2.2 of the Lease.
"RENT" means, collectively, Basic Rent, Renewal Rent and Supplemental Rent.
"REPLACEMENT ENGINE" means an engine substituted for an Engine pursuant to
the Lease.
"RETURN ACCEPTANCE SUPPLEMENT" means a Return Acceptance Supplement, dated
as of the date the Aircraft is returned to Lessor pursuant to Section 5 of the
Lease, by Lessor and Lessee substantially in the form of Exhibit B to the Lease.
"SCHEDULED CLOSING DATE" means the expected Closing Date notified to
Lessee, Existing Lessor, each Participant, Owner Trustee and Mortgagee by
Existing Mortgagee pursuant to Section 4.1 of the Participation Agreement, which
expected Closing Date shall be a Business Day not later than the Commitment
Termination Date.
"SCHEDULED EXPIRATION DATE" is defined in Schedule 1 to the Lease.
"SCHEDULED RENEWAL TERM EXPIRATION DATE" means, in the case of the first
Renewal Lease Term, the second anniversary of the Scheduled Expiration Date, and
in the case of the second Renewal Lease Term, the fourth anniversary of the
Scheduled Expiration Date.
"SEC" means the Securities and Exchange Commission of the United States, or
any Government Entity succeeding to the functions of such Securities and
Exchange Commission.
"SECTION 1110" means 11 U.S.C. ss. 1110 of the Bankruptcy Code or any
successor or analogous section of the federal bankruptcy Law in effect from time
to time.
"SECTION 1110 EVENT" means the institution of reorganization proceedings
with respect to Lessee under Chapter 11 of the Bankruptcy Code and the trustee
or debtor-in-possession in such proceedings (i) having agreed to perform its
obligations under the Lease with the approval of the applicable court and
thereafter having continued to perform such obligations in accordance with
Section 1110 or (ii) having assumed the Lease with the approval of the relevant
court and thereafter having continued to perform its obligations under the
Lease.
"SECTION 1110 PERIOD" means the continuous period of 60 days, or such other
period as may be specified in Section 1110(a)(1)(A) of the U.S. Bankruptcy Code,
plus an additional period, if any, resulting from the trustee or
debtor-in-possession in such proceeding assuming, or agreeing to perform its
obligations under, the Lease with the approval of the applicable court.
"SECURED OBLIGATIONS" is defined in Section 2.06 of the Trust Indenture.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY" means a "security" as defined in Section 2(1) of the Securities
Act.
"SENIOR HOLDER" is defined in Section 2.14(c) of the Trust Indenture.
"SERIES" means any of Series A, Series B or Series C.
"SERIES A" or "SERIES A EQUIPMENT NOTES" means Equipment Notes issued under
the Trust Indenture and designated as "Series A" thereunder, in the Original
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series A."
"SERIES B" or "SERIES B EQUIPMENT NOTES" means Equipment Notes issued under
the Trust Indenture and designated as "Series B" thereunder, in the Original
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series B."
"SERIES C" or "SERIES C EQUIPMENT NOTES" means Equipment Notes issued under
the Trust Indenture and designated as "Series C" thereunder, in the Original
Amount and maturities and bearing interest as specified in Schedule I to the
Trust Indenture under the heading "Series C."
"SIMILAR AIRCRAFT" is defined in Schedule 1 to the Lease.
"SLV RATE" is defined in Schedule 1 to the Lease.
"STIPULATED LOSS VALUE" means, with respect to the Aircraft, (a) during the
Base Lease Term, the amount determined by multiplying (i) the percentage set
forth in Schedule 3 to the Lease (as adjusted from time to time in accordance
with Section 3.2.3 of the Lease) opposite the Stipulated Loss Value Date by (ii)
Lessor's Cost and (b) during any Renewal Term, the amount determined pursuant to
Section 17.2.3 of the Lease. Notwithstanding anything to the contrary in any
Operative Agreement, Stipulated Loss Value shall always be sufficient to pay in
full, as of the date of payment thereof (assuming timely payment of the
Equipment Notes prior to such date), the aggregate unpaid principal amount of
all Equipment Notes outstanding as of such date, together with accrued and
unpaid interest on all such Equipment Notes as of such date.
"STIPULATED LOSS VALUE DATE" means, for any month, the day in such month
specified in Schedule 3 to the Lease or, if such day is not a Business Day, the
immediately succeeding Business Day.
"SUBORDINATION AGENT" means Wilmington Trust Company, as subordination
agent under the Intercreditor Agreement.
"SUBORDINATION AGENT AGREEMENTS" means the Participation Agreement, the
Liquidity Facilities and the Intercreditor Agreement.
"SUPPLEMENTAL RENT" means, without duplication (a) all amounts,
liabilities, indemnities and obligations (other than Basic Rent or Renewal Rent
but including Make-Whole Amount, if any) that Lessee assumes or becomes
obligated to or agrees to pay under any Lessee Operative Agreement to or on
behalf of Lessor or any other person, including, without limitation, payments of
Stipulated Loss Value, Termination Value and payments of indemnities under
Section 9 of the Participation Agreement, (b) any amount payable by Owner
Trustee pursuant to Section 2.15 of the Trust Indenture, to the extent not paid
when due by the Existing Mortgagee pursuant to the Fee Letter (as defined in the
Intercreditor Agreement), PROVIDED that, in calculating any such amount that is
determined based on interest payable on any "Advance" pursuant to any Liquidity
Facility, the interest rate utilized in determining the amount payable by Lessee
hereunder shall be 0.4% per annum less than the interest rate applicable thereto
pursuant to the terms of such Liquidity Facility, and PROVIDED, FURTHER, that
Lessee shall have no obligation to pay any commitment fee payable under any
Liquidity Facility to extent calculated at a rate of 0.4% per annum or less, (c)
Lessee's pro rata share of all compensation and reimbursement of expenses,
disbursements and advances payable by Lessee under the Pass Through Trust
Agreements, and (d) Lessee's pro rata share of all compensation and
reimbursement of expenses and disbursements payable to the Subordination Agent
under the Intercreditor Agreement except with respect to any income or franchise
taxes incurred by the Subordination Agent in connection with the transactions
contemplated by the Intercreditor Agreement. As used herein, "Lessee's pro rata
share" means as of any time a fraction, the numerator of which is the principal
balance then outstanding of Equipment Notes and the denominator of which is the
aggregate principal balance then outstanding of all "Equipment Notes" (as such
term is defined in each of the Operative Indentures).
"TAX ATTRIBUTE PERIOD" is defined in Section 1(e) of the Tax Indemnity
Agreement.
"TAX INDEMNITEE" means (a) First Security and Owner Trustee, (b) WTC and
Mortgagee, (c) each separate or additional trustee appointed pursuant to the
Trust Agreement or the Trust Indenture, (d) each Participant, (e) the Trust
Estate and the Trust Indenture Estate and (f) the respective successors,
assigns, agents and servants of the foregoing. For purposes of this definition,
the term "Owner Participant" shall include any member of an affiliated group
(within the meaning of Section 1504 of the Code) of which Owner Participant is,
or may become, a member if consolidated, joint or combined returns are filed for
such affiliated group for federal, state or local income tax purposes.
"TAX INDEMNITY AGREEMENT" means the Tax Indemnity Agreement, dated as of
even date with the Participation Agreement, between Lessee and Owner
Participant.
"TAXES" means all license, recording, documentary, registration and other
similar fees and all taxes, levies, imposts, duties, charges, assessments or
withholdings of any nature whatsoever imposed by any Taxing Authority, together
with any penalties, additions to tax, fines or interest thereon or additions
thereto.
"TAXING AUTHORITY" means any federal, state or local government or other
taxing authority in the United States, any foreign government or any political
subdivision or taxing authority thereof, any international taxing authority or
any territory or possession of the United States or any taxing authority
thereof.
"TERM" means the term, commencing on the Closing Date, for which the
Aircraft is leased pursuant to Section 3 of the Lease, and shall include the
Base Lease Term and, if applicable, any Renewal Lease Term; PROVIDED that if at
the scheduled end of the Term the Aircraft or Airframe is being used, or was
within six (6) months prior thereto being used, by the U.S. Government pursuant
to CRAF, the Term shall be deemed extended for the period necessary to
accommodate usage of the Aircraft or Airframe pursuant to CRAF plus six months
thereafter, and Lessee shall be obligated to pay Basic Rent with respect to any
such period of extension at a rate equal to the Basic Rent paid during the Base
Lease Term or the applicable Renewal Lease Term, whichever shall have ended
immediately prior to such extension.
"TERMINATION AGREEMENTS" means, collectively, the termination agreement
with respect to the Existing Lease, the termination agreement with respect to
the Existing Sublease and the release from the Lien of the Existing Mortgage, in
each case delivered pursuant to Section 5.1.2(xiii) of the Participation
Agreement.
"TERMINATION DATE" means any Payment Date occurring after the end of the
Tax Attribute Period on which the Lease shall terminate in accordance with
Section 9 of the Lease.
"TERMINATION VALUE" means, with respect to the Aircraft, the amount
determined by multiplying (a) the percentage set forth in Schedule 4 to the
Lease (as adjusted from time to time in accordance with Section 3.2.3 of the
Lease) opposite the applicable Payment Date by (b) Lessor's Cost.
Notwithstanding anything to the contrary in any Operative Agreement, Termination
Value shall always be sufficient to pay in full, as of the date of payment
thereof (assuming timely payment of the Equipment Notes prior to such date), the
aggregate unpaid principal amount of all Equipment Notes outstanding as of such
date, together with accrued and unpaid interest on all such Equipment Notes as
of such date.
"THRESHOLD AMOUNT" is defined in Schedule 1 to the Lease.
"TRANSACTIONS" means the transactions contemplated by the Participation
Agreement and the other Operative Agreements to occur on the Closing Date.
"TRANSACTION EXPENSES" means (a) all costs and expenses incurred by
Existing Mortgagee, Owner Participant, the Pass Through Trustees, the
Subordination Agent, Owner Trustee and Mortgagee in connection with the
preparation, execution and delivery of the Operative Agreements (including,
without limitation, the reasonable fees and expenses of counsel for such
parties), (b) all costs and expenses for the recording or filing of any
documents, certificates or instruments in accordance with any Operative
Agreement, including, without limitation, the FAA Filed Documents and the
Financing Statements, (c) one ninth of (i) the underwriting fees and expenses
attributable to the offering and sale of the Pass Through Certificates and (ii)
all costs and expenses incurred by Existing Mortgagee, the Pass Through
Trustees, the Subordination Agent, Owner Trustee and Mortgagee in connection
with the preparation, execution and delivery of the Pass Through Agreements
(including, without limitation, the reasonable fees and expenses of counsel for
such parties), (d) the equity placement fee and expenses of Equity Advisor
attributable to the Aircraft, (e) the reasonable fees and disbursements of
special counsel in Oklahoma City, Oklahoma, in connection with the Closing, (f)
all initial and ongoing fees, disbursements and expenses of Owner Trustee and
Mortgagee, and (g) the fees and expenses of the Appraiser contemplated by
Section 5.1.2(xv) of the Participation Agreement.
"TRANSFER" means the transfer, sale, assignment or other conveyance of all
or any interest in any property, right or interest.
"TRANSFEREE" means a person to which any Owner Participant, Owner Trustee
or any Loan Participant or Note Holder purports or intends to Transfer any or
all of its right, title or interest in the Trust Estate or in its Equipment Note
and the Trust Indenture Estate, respectively, as described in Section 10.1.1(a),
10.1.2 or 10.1.3 (but excluding participants in any participation referred to in
Section 10.1.3), respectively, of the Participation Agreement.
"TRUST" means the trust created by the Trust Agreement.
"TRUST AGREEMENT" means the Trust Agreement ____, dated as of even date
with the Participation Agreement, between Owner Participant and Owner Trustee.
"TRUST ESTATE" means all estate, right, title and interest of Owner Trustee
in and to the Aircraft, the Lease, any Lease Supplement and the Purchase
Agreement including, without limitation, all amounts of Basic Rent and
Supplemental Rent including, without limitation, insurance proceeds (other than
insurance proceeds payable to or for the benefit of Owner Participant, Note
Holders or WTC) and requisition, indemnity or other payments of any kind for of
with respect to the Aircraft (except amounts owing to Owner Participant, Note
Holders or WTC, or to any of their respective directors, officers, employees,
servants and agents, pursuant to Section 10 of the Participation Agreement).
Notwithstanding the foregoing, "Trust Estate" shall not include any Excluded
Payment.
"TRUST INDENTURE" means the Trust Indenture and Mortgage ____, dated as of
even date with the Participation Agreement, between Owner Trustee and Mortgagee.
"TRUST INDENTURE ESTATE" is defined in the "Granting Clause" of the Trust
Indenture.
"TRUST INDENTURE SUPPLEMENT" means a Trust Indenture and Mortgage ____
Supplement, substantially in the form of Exhibit A to the Trust Indenture, with
appropriate modifications to reflect the purpose for which it is being used.
"TRUST SUPPLEMENT" means an agreement supplemental to the Basic Pass
Through Trust Agreement pursuant to which (i) a separate trust is created for
the benefit of the holders of the Pass Through Certificates of a series, (ii)
the issuance of the Pass Through Certificates of such series representing
fractional undivided interests in such trust is authorized and (iii) the terms
of the Pass Through Certificates of such series are established.
"UCC" means the Uniform Commercial Code as in effect in any applicable
jurisdiction.
"UNITED STATES" or "U.S." means the United States of America; PROVIDED,
that for geographic purposes, "United States" means, in aggregate, the 50 states
and the District of Columbia of the United States of America.
"U.S. AIR CARRIER" means any United States air carrier that is a Citizen of
the United States holding an air carrier operating certificate issued by the
Secretary of Transportation pursuant to chapter 447 of title 49 of the United
States Code for aircraft capable of carrying 10 or more individuals or 6000
pounds or more of cargo, and as to which there is in force an air carrier
operating certificate issued pursuant to Part 121 of the FAA Regulations, or
which may operate as an air carrier by certification or otherwise under any
successor or substitute provisions therefor or in the absence thereof.
"U.S. PERSON" means any Person described in Section 7701(a)(30) of the
Code.
"U.S. GOVERNMENT" means the federal government of the United States, or any
instrumentality or agency thereof the obligations of which are guaranteed by the
full faith and credit of the federal government of the United States.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, with respect to any specified
Debt, at the time of the determination thereof the number of years obtained by
dividing the then Remaining Dollar-years of such Debt by the then outstanding
principal amount of such Debt. The term "Remaining Dollar-years" shall mean the
amount obtained by (1) multiplying the amount of each then-remaining principal
payment on such Debt by the number of years (calculated at the nearest
one-twelfth) that will elapse between the date of determination of the Weighted
Average Life to Maturity of such Debt and the date of that required payment and
(2) totaling all the products obtained in clause (1) above.
"WET LEASE" means any arrangement whereby Lessee or a Permitted Sublessee
agrees to furnish the Aircraft, Airframe or any Engine to a third party pursuant
to which the Aircraft, Airframe or Engine shall at all times be in the
operational control of Lessee or a Permitted Sublessee, provided that Lessee's
obligations under this Lease shall continue in full force and effect
notwithstanding any such arrangement.
"WTC" means Wilmington Trust Company, a Delaware banking corporation, not
in its capacity as Mortgagee under the Trust Indenture, but in its individual
capacity.
----------------------------------
| SCHEDULE 1 |
| TO |
| Participation Agreement PACIFIC|
----------------------------------
ACCOUNTS; ADDRESSES
-------------------
ACCOUNT FOR PAYMENTS ADDRESS FOR NOTICES
-------------------- -------------------
CONTINENTAL AIRLINES, INC. The Chase Manhattan Bank Continental Airlines, Inc.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Account No.: ▇▇▇-▇-▇▇▇▇▇▇ Suite 2010
ABA#: 021-000021 ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇ Attention: Executive Vice
Voice: ▇▇▇-▇▇▇-▇▇▇▇ President and Chief
Facsimile: 212-552-0107 Financial Officer
Reference: Continental Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Lease _____
PACIFIC CENTURY LEASING, Pacific Century Leasing, Inc.
INC. ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Leasing Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
FIRST SECURITY BANK, First Security Bank, First Security Bank,
NATIONAL ASSOCIATION National Association National Association
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Account No.: 051-▇▇▇▇▇▇▇ Attention: Corporate Trust Department
Corporate Trust Department Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
ABA#: ▇▇▇-▇▇▇▇-▇▇
Reference: Continental Lease____
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS MORTGAGEE ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ One ▇▇▇▇▇▇ Square
Account No.: ▇▇▇-▇-▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
ABA#: 021-000021 ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration Attention: Corporate Trust Administration
Reference: Continental Lease____ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS SUBORDINATION AGENT ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ One ▇▇▇▇▇▇ Square
Account No.: ▇▇▇-▇-▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
ABA#: 021-000021 ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration Attention: Corporate Trust
Reference: Continental Lease___ Administration
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS PASS THROUGH TRUSTEE ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇-▇▇ ▇▇▇▇ Account No.: ▇▇▇-▇-▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
THROUGH TRUST ABA#: 021-000021 ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration Attention: Corporate Trust
Reference: Continental Lease___ Administration
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS PASS THROUGH TRUSTEE ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇-▇▇ ▇▇▇▇ Account No.: ▇▇▇-▇-▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
THROUGH TRUST ABA#: 021-000021 ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration Attention: Corporate Trust
Reference: Continental Lease___ Administration
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
WILMINGTON TRUST COMPANY, The Chase Manhattan Bank Wilmington Trust Company
AS PASS THROUGH TRUSTEE ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇-▇▇ ▇▇▇▇ Account No.: ▇▇▇-▇-▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
THROUGH TRUST ABA#: 021-000021 ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration Attention: Corporate Trust
Reference: Continental Lease___ Administration
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
CORCIM, INC. None CT Corporation System
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With copy to:
EMBRAER-Empresa Brasileira de Aeronautica S.A.
EMBRAER-EMPRESA BRASILEIRA Banco do Brasil S.A. EMBRAER-Empresa Brasileira de Aeronautica S.A.
DE AERONAUTICA S.A. ▇▇. ▇▇▇▇▇▇ ▇'▇▇▇▇▇, ▇▇▇ ▇▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
12245-030, Sao ▇▇▇▇ dos ▇▇▇▇▇-▇▇▇ ▇▇▇ ▇▇▇▇ dos ▇▇▇▇▇▇ -SP Brazil
▇▇▇▇▇▇-SP Brazil Attention: General Counsel
Swift Code: ▇▇▇▇▇▇▇▇▇▇▇ Facsimile: (55-123) 41-1679
Account No.: 9405-6
Reference: COEX Lease
ROLLS-ROYCE PLC Citibank, NA Rolls-Royce plc
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
Account No. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇
For further credit: 794-508 Attn: Company Secretary
ABA#: 021-000089 Facsimile: 011-44-171-233-1733
Reference: Paying Agent
----------------------------------
| SCHEDULE 2 |
| TO |
| PARTICIPATION AGREEMENT PACIFIC|
----------------------------------
COMMITMENTS
PERCENTAGE OF LESSOR'S
PARTICIPANT COST DOLLAR AMOUNT
----------- ---------------------- -------------
OWNER PARTICIPANT OWNER PARTICIPANT'S
PERCENTAGE
PASS THROUGH TRUSTEE LOAN PARTICIPANT'S
PTT PERCENTAGE
TOTAL 100%
----------------------------------
| SCHEDULE 1 |
| TO |
| PARTICIPATION AGREEMENT PACIFIC|
----------------------------------
CERTAIN TERMS
DEFINED TERM DEFINITION
Commitment
Termination Date October 15, 1997
Existing Lease Lease Agreement _________, dated as of __________, 1997
between Existing Lessor and Lessee
Existing Mortgage Aircraft Mortgage and Security Agreement ________, dated as
of _______, 1997 between Existing Lessor, as Debtor and
Existing Mortgagee, as Secured Party
Existing
Participation
Agreement Participation Agreement _______, dated as of _______, 1997,
among Lessee, Existing Lessor, Express, Airframe
Manufacturer and Existing Mortgagee
Equity Advisor ▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc.
Expense Limit
Lessor's Cost $12,600,000
Local Counsel to
the Owner
Participant Carlsmith Ball et al
OP Jurisdiction Hawaii
Special Counsel
to the Owner
Participant ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
Special Tax Counsel
to the Owner
Participant ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP