EXHIBIT C-1 to
Note Purchase Agreement
OWNED AIRCRAFT PARTICIPATION AGREEMENT
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PARTICIPATION AGREEMENT
Dated as of ,
Among
ATLAS AIR, INC.,
Owner,
and
WILMINGTON TRUST COMPANY,
Not in its individual capacity
except as expressly provided herein,
but solely as Mortgagee under the Trust Indenture,
as Subordination Agent under the Intercreditor
Agreement and as a Pass Through Trustee
under each of the Pass Through Trust Agreements
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One Boeing Model 747-47UF Aircraft
Bearing Manufacturer's Serial No.
and U.S. Registration No. N MC
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TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS AND CONSTRUCTION........................................2
SECTION 2. SECURED LOANS; CLOSING..............................................2
2.1. Making of Loans and Issuance of Equipment Notes....2
2.2. Closing 3
SECTION 3. [Intentionally Omitted].............................................3
SECTION 4. CONDITIONS PRECEDENT................................................3
4.1. Conditions Precedent to the Obligations
of the Pass Through Trustees.....................3
4.2. Conditions Precedent to Obligations of Mortgagee...7
4.3. Conditions Precedent to Obligations of Owner.......7
4.4. Post-Registration Opinion..........................8
SECTION 5. REPRESENTATIONS AND WARRANTIES......................................9
5.1. Owner's Representations and Warranties.............9
5.2. WTC's Representations and Warranties..............12
SECTION 6. COVENANTS, UNDERTAKINGS AND AGREEMENTS.............................15
6.1. Covenants of Owner................................15
6.2. Covenants of WTC..................................17
6.3. Covenants of Note Holders.........................18
6.4. Agreements........................................19
SECTION 7. CONFIDENTIALITY....................................................23
SECTION 8. INDEMNIFICATION AND EXPENSES.......................................23
8.1. General Indemnity.................................23
8.2. Expenses..........................................30
8.3. General Tax Indemnity.............................30
8.4. Payments..........................................40
8.5. Interest..........................................41
8.6. Benefit of Indemnities............................41
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SECTION 9. ASSIGNMENT OR TRANSFER OF INTEREST.................................41
9.1. Note Holders......................................41
9.2. Effect of Transfer................................41
SECTION 10. SECTION 1110......................................................42
SECTION 11. CHANGE OF CITIZENSHIP.............................................42
11.1. Generally........................................42
11.2. Mortgagee........................................42
SECTION 12. MISCELLANEOUS.....................................................42
12.1. Amendments.......................................43
12.2. Severability.....................................43
12.3. Survival.........................................43
12.4. Reproduction of Documents........................43
12.5. Counterparts.....................................44
12.6. No Waiver........................................44
12.7. Notices..........................................44
12.8. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.45
12.9. Third-Party Beneficiary..........................46
12.10. Entire Agreement................................46
12.11. Further Assurances..............................46
SECTION 13. SALE/LEASEBACK TRANSACTIONS.......................................47
SCHEDULES AND EXHIBITS
SCHEDULE 1 - Accounts; Addresses
SCHEDULE 2 - Commitments
SCHEDULE 3 - Certain Terms
SCHEDULE 4 - Permitted Countries
EXHIBIT A - Opinion of special counsel to Owner
EXHIBIT B - Opinion of corporate counsel to Owner
EXHIBIT C - Opinion of Boeing
EXHIBIT D - Opinion of special counsel to Mortgagee and to
Pass Through Trustees
EXHIBIT E - Opinions of special counsel in Oklahoma City,
Oklahoma
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PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT, dated as of , (this "Agreement") , among (a) ATLAS
AIR, INC., a Delaware corporation ("Owner"), (b) WILMINGTON TRUST COMPANY, a
Delaware banking corporation, not in its individual capacity, except as
expressly provided herein, but solely as Mortgagee under the Trust Indenture (in
its capacity as Mortgagee, "Mortgagee" and in its individual capacity, "WTC"),
(c) WILMINGTON TRUST COMPANY, not in its individual capacity, except as
expressly provided herein, but solely as Pass Through Trustee under each of the
Pass Through Trust Agreements (each, a "Pass Through Trustee") and (d)
WILMINGTON TRUST COMPANY, not in its individual capacity, except as expressly
provided herein, but solely as Subordination Agent under the Intercreditor
Agreement ("Subordination Agent").
RECITALS
A. Owner and Airframe Manufacturer have entered into the Purchase
Agreement, pursuant to which, among other things, Airframe Manufacturer has
agreed to manufacture and sell to Owner and Owner has agreed to purchase from
Airframe Manufacturer, certain aircraft, including the Aircraft.
B. Pursuant to each of the Pass Through Trust Agreements, the Pass Through
Trusts were created and the Pass Through Certificates were issued and sold.
C. Each Pass Through Trustee has agreed to use all or a portion of the
proceeds from the issuance and sale of the Pass Through Certificates issued by
each Pass Through Trust to purchase from Owner, on behalf of the related Pass
Through Trust, the Equipment Note bearing the same interest rate as the Pass
Through Certificates issued by such Pass Through Trust.
D. Owner and Mortgagee, concurrently with the execution and delivery
hereof, have entered into the Trust Indenture for the benefit of the Note
Holders, pursuant to which, among other things, Owner agrees (1) to issue
Equipment Notes, in the amounts and otherwise as provided in the Trust
Indenture, and (2) to mortgage, pledge and assign to Mortgagee all of Owner's
right, title and interest in the Collateral to secure the Secured Obligations,
including, without limitation, Owner's obligations under the Equipment Notes.
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E. 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 (including in the initial
paragraph and Recitals above) shall have the respective meanings set forth or
incorporated by reference, and shall be construed and interpreted in the manner
described, in Annex A to the Trust Indenture.
SECTION 2. SECURED LOANS; CLOSING
2.1. Making of Loans and Issuance of Equipment Notes
Subject to the terms and conditions of this Agreement, on the date hereof
or on such other date agreed to by the parties hereto (the "Closing Date"):
(a) Each Pass Through Trustee listed on Schedule 2 shall make a
secured loan to the Owner in the amount in Dollars opposite
such Pass Through Trustee's name on Schedule 2; and
(b) The Owner shall issue, pursuant to and in accordance with the
provisions of Article II of the Trust Indenture, to the
Subordination Agent as the registered holder on behalf of each
such Pass Through Trustee, one or more Equipment Notes, dated
the Closing Date, of the Series set forth opposite such Pass
Through Trustee's name on Schedule 2, in an aggregate
principal amount equal to the secured loan made by each such
Pass Through Trustee.
In addition, the Owner shall have the option to issue the Series D
Equipment Notes on or after the Closing Date, subject to the terms of the Note
Purchase Agreement. If Series D Equipment Notes are issued after the Closing
Date, each Note Holder of such Equipment Notes shall be entitled to execute a
counterpart to this Agreement and become a party hereto.
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2.2. Closing
(a) The Closing of the transactions contemplated hereby shall take place at
the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, or at such other place as the parties shall agree.
(b) All payments pursuant to this Section 2 shall be made in immediately
available funds to such accounts set forth in Schedule 1 hereto.
SECTION 3. [Intentionally Omitted]
SECTION 4. CONDITIONS PRECEDENT
4.1. Conditions Precedent to the Obligations of the Pass Through Trustees
The obligation of each Pass Through Trustee listed on Schedule 2 to make
the secured loan described in Section 2.1(a) and to participate in the
transactions contemplated by this Agreement on the Closing Date is subject to
the fulfillment, prior to or on the Closing Date, of the following conditions
precedent:
4.1.1 Equipment Notes
The Owner shall have tendered the Equipment Notes to be issued to such Pass
Through Trustees to the Mortgagee for authentication and the Mortgagee shall
have authenticated such Equipment Notes to be issued to such Pass Through
Trustees and shall have tendered the Equipment Notes to the Subordination Agent
on behalf of such Pass Through Trustees, against receipt of the loan proceeds,
in accordance with Section 2.1.
4.1.2 Delivery of Documents
The Subordination Agent on behalf of each Pass Through Trustee shall have
received executed counterparts or conformed copies of the following documents:
(i) this Agreement;
(ii) the Trust Indenture;
(iii) the initial Trust Indenture Supplement;
(iv) the broker's report and insurance certificates required by
Section 4.06 of the Trust Indenture;
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(v) the Consent and Agreement and the Engine Consent and
Agreement;
(vi) the Bills of Sale;
(vii) (A) a copy of the Certificate of Incorporation and By-Laws
of Owner and resolutions of the board of directors of Owner and/or the
executive committee thereof, in each case certified as of the Closing
Date, by the Secretary or an Assistant Secretary of Owner, duly
authorizing the execution, delivery and performance by owner of the
Operative Agreements to which it is party required to be executed and
delivered by Owner on or prior to the Closing Date in accordance with
the provisions hereof and thereof; and (B) an incumbency certificate
of Owner as to the person or persons authorized to execute and deliver
the Operative Agreements on behalf of Owner;
(viii) an Officer's Certificate of Owner, dated as of the Closing
Date, stating that its representations and warranties set forth in
this Agreement are true and correct as of the Closing Date (or, to the
extent that any such representation and warranty expressly relates to
an earlier date, true and correct as of such earlier date);
(ix) the Financing Statements;
(x) the following opinions of counsel, in each case dated the
Closing Date:
(A) an opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special counsel to Owner,
substantially in the form of Exhibit A;
(B) an opinion of Owner's Legal Department, substantially in the form
of Exhibit B;
(C) an opinion of The Boeing Company, substantially in the form of
Exhibit C;
(D) an opinion of Morris, James, Hitchens & ▇▇▇▇▇▇▇▇, special counsel
to Mortgagee and to the Pass Through Trustees, substantially in the form of
Exhibit D;
(E) an opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇, special counsel in Oklahoma City,
Oklahoma, substantially in the form of Exhibit E-1; and
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(xi) a copy of a current, valid Standard Certificate of
Airworthiness for the Aircraft duly issued by the FAA, together with a
copy of a duly executed application for registration of the Aircraft
with the FAA in the name of the Owner.
4.1.3 Perfected Security interest
On the Closing Date, after giving effect to the filing of the FAA Filed
Documents and the Financing Statements, Mortgagee shall have received a duly
perfected first priority security interest in all of Owner's right, title and
interest in the Aircraft, subject only to Permitted Liens.
4.1.4 Violation of Law
No change shall have occurred after the date of this Agreement in any
applicable Law that makes it a violation of Law for (a) Owner, any Pass Through
Trustee, Subordination Agent or Mortgagee to execute, deliver and perform the
Operative Agreements to which any of them is a party or (b) any Pass Through
Trustee to make the loan contemplated by Section 2.1 to acquire an Equipment
Note or to realize the benefits of the security afforded by the Trust Indenture.
4.1.5 Representations, Warranties and Covenants
The representations and warranties of each party to this Agreement made, in
each case, in this Agreement and in any other Operative Agreement to which it is
a party, shall be true and accurate in all material respects as of the Closing
Date (unless any such representation and warranty shall have been made with
reference to a specified date, in which case such representation and warranty
shall be true and accurate as of such specified date) and each other party to
this Agreement shall have performed and observed, in all material respects, all
of its covenants, obligations and agreements in this Agreement and in any other
Operative Agreement to which it is a party to be observed or performed by it as
of the Closing Date.
4.1.6 No Event of Default
On the Closing Date, no event shall have occurred and be continuing, or
would result from the mortgage of the Aircraft, which would constitute a Default
or an Event of Default.
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4.1.7 No Event of Loss
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.
4.1.8 Title
Owner shall have good title (subject to filing and recordation of the FAA
▇▇▇▇ of Sale with the FAA) to the Aircraft, free and clear of all Liens, except
Permitted Liens.
4.1.9 Certification
The Aircraft shall have been duly certificated by the FAA as to type and
airworthiness in accordance with the terms of the Purchase Agreement.
4.1.10 Section 1110
Mortgagee shall be entitled to the benefits of Section 1110 (as currently
in effect) with respect to the right to take possession of the Airframe and
Engines as provided in the Trust Indenture in the event of a case under Chapter
11 of the Bankruptcy Code in which Owner is a debtor.
4.1.11 Filing
On the Closing Date (a) the FAA Filed Documents shall have been duly filed
for recordation (or shall be in the process of being so duly filed for
recordation) with the FAA in accordance with the Act and (b) each Financing
Statement shall have been duly filed (or shall be in the process of being so
duly filed) in the appropriate jurisdiction.
4.1.12 No Proceedings
No action or proceeding shall have been instituted, nor shall any action be
threatened in writing, before any Government Entity, nor shall any order,
judgment or decree have been issued or proposed to be issued by any Government
Entity, to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or any other Operative Agreement or the
transactions contemplated hereby or thereby.
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4.1.13 Governmental Action
All appropriate action required to have been taken prior to the Closing
Date by the FAA, or any governmental or political agency, subdivision or
instrumentality of the United States, in connection with the transactions
contemplated by this Agreement shall have been taken, and all orders, permits,
waivers, authorizations, exemptions and approvals of such entities required to
be in effect on the Closing Date in connection with the transactions
contemplated by this Agreement shall have been issued.
4.1.14 Note Purchase Agreement
The conditions precedent to the obligations of the Pass Through Trustees
and the other requirements relating to the Aircraft and the Equipment Notes set
forth in the Note Purchase Agreement shall have been satisfied.
4.2. Conditions Precedent to Obligations of Mortgagee
The obligation of Mortgagee to authenticate the Equipment Notes on the
Closing Date is subject to the satisfaction or waiver by Mortgagee, on or prior
to the Closing Date, of the conditions precedent set forth below in this Section
4.2.
4.2.1 Documents
Executed originals of the agreements, instruments, certificates or
documents described in Section 4.1.2 shall have been received by Mortgagee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Mortgagee.
4.2.2 Other Conditions Precedent
Each of the conditions set forth in Sections 4.1.4, 4.1.5, 4.1.6 and 4.1.10
shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Mortgagee.
4.3. Conditions Precedent to Obligations of Owner
The obligation of Owner to participate in the transaction contemplated
hereby on the Closing Date is subject to the satisfaction or waiver by Owner, on
or prior to the Closing Date, of the conditions precedent set forth below in
this Section 4.3.
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4.3.1 Documents
Executed originals of the agreements, instruments, certificates or
documents described in Section 4.1.2 shall have been received by Owner, except
as specifically provided therein, and shall be satisfactory to Owner, unless the
failure to receive any such agreement, instrument, certificate or document is
the result of any action or inaction by Owner. In addition, the Owner shall have
received the following:
(i) (A) an incumbency certificate of WTC as to the person or
persons authorized to execute and deliver the Operative Agreements on
behalf of WTC and (B) a copy of the Certificate of Incorporation and
By-Laws and general authorizing resolution of the board of directors
(or executive committee) or other satisfactory evidence of
authorization of WTC, certified as of the Closing Date by the
Secretary or Assistant or Attesting Secretary of WTC, which authorize
the execution, delivery and performance by WTC of the Operative
Agreements to which it is a party; and
(ii) an Officer's Certificate of WTC, dated as of the Closing
Date, stating that its representations and warranties in its
individual capacity or as Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, set forth in this Agreement
are true and correct as of the Closing Date (or, to the extent that
any such representation and warranty expressly relates to an earlier
date, true and correct as of such earlier date).
4.3.2 Other Conditions Precedent
Each of the conditions set forth in Sections 4.1.4, 4.1.5, 4.1.6, 4.1.7,
4.1.8, 4.1.9, 4.1.10, 4.1.11, 4.1.12 and 4.1.13 shall have been satisfied or
waived by Owner, unless the failure of any such condition to be satisfied is the
result of any action or inaction by Owner.
4.4. Post-Registration Opinion
Promptly upon the registration of the Aircraft and the recordation of the
FAA Filed Documents pursuant to the Act, Owner will cause ▇▇▇▇▇ & ▇▇▇▇▇▇▇,
special counsel in Oklahoma City, Oklahoma, to deliver to Owner, each Pass
Through Trustee and Mortgagee a favorable opinion or opinions addressed to each
of them with respect to such registration and recordation.
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SECTION 5. REPRESENTATIONS AND WARRANTIES
5.1. Owner's Representations and Warranties
Owner represents and warrants to each Pass Through Trustee, Subordination
Agent and Mortgagee that:
5.1.1 Organization; Qualification
Owner is a corporation duly incorporated, validly existing and in good
standing under the Laws of the State of Delaware and has the corporate power and
authority to conduct the business in which it is currently engaged and to own or
hold under lease its properties and to enter into and perform its obligations
under the Operative Agreements to which it is party. Owner is duly qualified to
do business as a foreign corporation in good standing in each jurisdiction in
which the nature and extent of the business conducted by it, or the ownership of
its properties, requires such qualification, except where the failure to be so
qualified would not give rise to a Material Adverse Change to Owner.
5.1.2 Corporate Authorization
Owner has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by its Certificate of Incorporation or By-Laws) to
authorize the execution and delivery of each of the Operative Agreements to
which it is party, and the performance of its obligations thereunder.
5.1.3 No Violation
The execution and delivery by Owner of the Operative Agreements to which it
is party, the performance by Owner of its obligations thereunder and the
consummation by Owner on the Closing Date of the transactions contemplated
thereby, do not and will not (a) violate any provision of the Certificate of
Incorporation or By-Laws of Owner, (b) violate any Law applicable to or binding
on Owner or (c) violate or constitute any default under (other than any
violation or default that would not result in a Material Adverse Change to
Owner), or result in the creation of any Lien (other than as permitted under the
Trust Indenture) upon the Aircraft under, any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, lease, loan or other
material agreement, instrument or document to which Owner is a party or by which
Owner or any of its properties is bound.
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5.1.4 Approvals
The execution and delivery by Owner of the Operative Agreements to which
Owner is a party, the performance by Owner of its obligations thereunder and the
consummation by Owner on the Closing Date of the transactions contemplated
thereby do not and will not require the consent or approval of, or the giving of
notice to, or the registration with, or the recording or filing of any documents
with, or the taking of any other action in respect of, (a) any trustee or other
holder of any Debt of Owner and (b) any Government Entity, other than the filing
of (x) the FAA Filed Documents and the Financing Statements (and continuation
statements periodically) and (y) filings, recordings, notices or other
ministerial actions pursuant to any routine recording, contractual or regulatory
requirements applicable to it.
5.1.5 Valid and Binding Agreements
The Operative Agreements to which Owner is a party have been duly
authorized, executed and delivered by Owner and, assuming the due authorization,
execution and delivery thereof by the other party or parties thereto, constitute
the legal, valid and binding obligations of Owner and are enforceable against
Owner in accordance with the respective terms thereof, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar Laws affecting the rights of
creditors generally and general principles of equity, whether considered in a
proceeding at law or in equity.
5.1.6 Registration and Recordation
Except for (a) the registration of the Aircraft with the FAA pursuant to
the Act in the name of Owner, (b) the filing for recordation (and recordation)
of the FAA Filed Documents, (c) the filing of the Financing Statements (and
continuation statements relating thereto at periodic intervals), and (d) the
affixation of the nameplates referred to in Section 4.02(f) of the Trust
Indenture, no further action, including any filing or recording of any document
(including any financing statement in respect thereof under Article 9 of the
UCC) is necessary in order to establish and perfect Mortgagee's security
interest in the Aircraft as against Owner and any other Person, in each case, in
any applicable jurisdictions in the United States.
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5.1.7 Chief Executive Office
The chief executive office (as such term is defined in Article 9 of the
UCC) of Owner is located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
5.1.8 No Event of Loss
No Event of Loss has occurred with respect to the Airframe or any Engine,
and, to the Actual Knowledge of Owner, no circumstance, condition, act or event
has occurred 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.
5.1.9 Compliance With Laws
(a) Owner is a Citizen of the United States and a U.S. Air Carrier.
(b) Owner holds all licenses, permits and franchises from the appropriate
Government Entities necessary to authorize Owner to lawfully engage in air
transportation and to carry on commercial air cargo 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 Owner.
(c) Owner is not an "investment company" or a company controlled by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
5.1.10 Securities Laws
Neither Owner nor any person authorized to act on its behalf has directly
or indirectly offered any beneficial interest or Security relating to the
ownership of the Aircraft, or any of the Equipment Notes or any other interest
in or security under the Trust Indenture, for sale to, or solicited any offer to
acquire any such interest or security from, or has sold any such interest or
security to, any person in violation of the Securities Act.
5.1.11 Broker's Fees
No Person acting on behalf of Owner is or will be entitled to any broker's
fee, commission or finder's fee in connection with the Transactions, other than
the fees and expenses payable by Owner in connection with the sale of the Pass
Through Certificates.
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5.1.12 Section 1110
Mortgagee is entitled to the benefits of Section 1110 (as currently in
effect) with respect to the right to take possession of the Airframe and Engines
as provided in the Trust Indenture in the event of a case under Chapter 11 of
the Bankruptcy Code in which Owner is a debtor.
5.2. WTC's Representations and Warranties
WTC represents and warrants (with respect to Section 5.2.10, solely in its
capacity as Subordination Agent) to Owner that:
5.2.1 Organization, Etc.
WTC is a Delaware banking corporation duly organized, validly existing and
in good standing under the Laws of the State of Delaware, holding a valid
certificate to do business as a Delaware banking corporation with banking
authority to execute and deliver, and perform its obligations under, the Pass
Through Trustee Agreements and the Operative Agreements to which it is a party.
5.2.2 Corporate Authorization
WTC has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by Law or by its Certificate of Incorporation or By-Laws)
to authorize the execution and delivery by WTC, in its individual capacity or as
Mortgagee, as a Pass Through Trustee or as Subordination Agent, as the case may
be, of the Pass Through Trustee Agreements and the Operative Agreements to which
it is a party and the performance of its obligations thereunder.
5.2.3 No Violation
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, as a Pass Through Trustee or as Subordination Agent, as the case may
be, of the Pass Through Trustee Agreements and the Operative Agreements to which
it is a party, the performance by WTC, in its individual capacity or as
Mortgagee, as a Pass Through Trustee or as 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
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of any Law relating to any Plan) as Mortgagee, as a Pass Through Trustee or as
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, as a Pass Through Trustee or as
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, as a Pass Through Trustee or as 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, as a Pass
Through Trustee or as Subordination Agent, is a party or by which WTC, in its
individual capacity or as Mortgagee, as a Pass Through Trustee or as
Subordination Agent, or any of their respective properties is bound.
5.2.4 Approvals
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, as a Pass Through Trustee or as Subordination Agent, as the case may
be, of the Pass Through Trustee Agreements and the Operative Agreements to which
it is a party, the performance by WTC, in its individual capacity or as
Mortgagee, as a Pass Through Trustee or as 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, as a Pass Through Trustee or as
Subordination Agent, as the case may be, of the transactions contemplated
thereby do not and will not require the consent, approval or authorization of,
or the giving of notice to, or the registration with, or the recording or filing
of any documents with, or the taking of any other action in respect of, (a) any
trustee or other holder of any Debt of WTC or (b) any Government Entity, other
than the filing of the FAA Filed Documents and the Financing Statements.
5.2.5 Valid and Binding Agreements
The Pass Through Trustee Agreements and the Operative Agreements to which
it a party have been duly authorized, executed and delivered by WTC and,
assuming the due authorization, execution and delivery by the other party or
parties thereto, constitute the legal, valid and binding obligations of WTC, in
its individual capacity or as Mortgagee, as a Pass Through Trustee or as
Subordination Agent, as the case may be, and are enforceable against WTC, in its
individual capacity or as Mortgagee, as a Pass Through Trustee or as
Subordination Agent, as the case may be, in accordance with the respective terms
thereof, except as such en-
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forceability 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.
5.2.6 Citizenship
WTC is a Citizen of the United States.
5.2.7 No Liens
On the Closing Date, there are no Liens attributable to WTC in respect of
all or any part of the Collateral.
5.2.8 Litigation
There are no pending or, to the Actual Knowledge of WTC, threatened actions
or proceedings against WTC, in its individual capacity or as Mortgagee, as a
Pass Through Trustee or as Subordination Agent, before any court, administrative
agency or tribunal which, if determined adversely to WTC, in its individual
capacity or as Mortgagee, as a Pass Through Trustee or as Subordination Agent,
as the case may be, would materially adversely affect the ability of WTC, in its
individual capacity or as Mortgagee, as a Pass Through Trustee or as
Subordination Agent, as the case may be, to perform its obligations under any of
the Pass Through Trustee Agreements or the Operative Agreements.
5.2.9 Securities Laws
Neither WTC nor any person authorized to act on its behalf has directly or
indirectly offered any beneficial interest or Security relating to the ownership
of the Aircraft or any interest in the Collateral or any of the Equipment Notes
or any other interest in or security under the Collateral for sale to, or
solicited any offer to acquire any such interest or security from, or has sold
any such interest or security to, any Person other than the Subordination Agent
and the Pass Through Trustees, except for the offering and sale of the Pass
Through Certificates.
5.2.10 Investment
The Equipment Notes to be acquired by the Subordination Agent are being
acquired by it for the account of the 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 9, the disposition by it of
its Equipment Notes shall at all times be within its control.
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5.2.11 Taxes
There are no Taxes payable by any Pass Through Trustee or WTC, as the case
may be, imposed by the State of Delaware or any political subdivision or taxing
authority thereof in connection with the execution, delivery and performance by
such Pass Through Trustee or WTC, as the case may be, of this Agreement or any
of the Pass Through Trustee Agreements (other than franchise or other taxes
based on or measured by any fees or compensation received by any such Pass
Through Trustee or WTC, as the case may be, for services rendered in connection
with the transactions contemplated by any of the Pass Through Trust Agreements),
and there are no Taxes payable by any Pass Through Trustee or WTC, as the case
may be, imposed by the State of Delaware or any political subdivision thereof in
connection with the acquisition, possession or ownership by any such Pass
Through Trustee of any of the Equipment Notes (other than franchise or other
taxes based on or measured by any fees or compensation received by any such Pass
Through Trustee or WTC, as the case may be, for services rendered in connection
with the transactions contemplated by any of the Pass Through Trust Agreements),
and, assuming that the trusts created by the Pass Through Trust Agreements will
not be taxable as corporations, but, rather, each will be characterized as a
grantor trust under subpart E, Part I of Subchapter J of the Code or as a
partnership under Subchapter K of the Code, such trusts will not be subject to
any Taxes imposed by the State of Delaware or any political subdivision thereof.
5.2.12 Broker's Fees
No Person acting on behalf of WTC, in its individual capacity or as
Mortgagee, 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.
SECTION 6. COVENANTS, UNDERTAKINGS AND AGREEMENTS
6.1. Covenants of Owner
Owner covenants and agrees, at its own cost and expense, with each Note
Holder and Mortgagee as follows:
6.1.1 Corporate Existence; U.S. Air Carrier
Owner shall at all times maintain its corporate existence, except as
permitted by Section 4.07 of the Trust Indenture, and shall at all times remain
a U.S. Air Carrier.
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6.1.2 Notice of Change of Chief Executive Office
Owner will give Mortgagee timely written notice (but in any event within 30
days prior to the expiration of the period of time specified under applicable
Law to prevent lapse of perfection) of any relocation of its chief executive
office (as such term is defined in Article 9 of the UCC) from its then present
location and will promptly take any action required by Section 6.1.3(c) as a
result of such relocation.
6.1.3 Certain Assurances
(a) Owner shall duly execute, acknowledge and deliver, or shall cause to be
executed, acknowledged and delivered, all such further agreements, instruments,
certificates or documents, and shall do and cause to be done such further acts
and things, in any case, as Mortgagee shall reasonably request for accomplishing
the purposes of this Agreement and the other Operative Agreements; provided that
any instrument or other document so executed by Owner will not expand any
obligations or limit any rights of Owner in respect of the transactions
contemplated by any Operative Agreement.
(b) Owner shall promptly take such action with respect to the recording,
filing, re-recording and refiling of the Trust Indenture and any supplements
thereto, including, without limitation, the initial Trust Indenture Supplement,
as shall be necessary to continue the perfection and priority of the Lien
created by the Trust Indenture.
(c) Owner, at its sole cost and expense, will cause the FAA Filed
Documents, the Financing Statements and all continuation statements (and any
amendments necessitated by any combination, consolidation or merger of the
Owner, or any relocation of its chief executive office) in respect of the
Financing Statements to be prepared and, subject only to the execution and
delivery thereof by Mortgagee, duly and timely filed and recorded, or filed for
recordation, to the extent permitted under the Act (with respect to the FAA
Filed Documents) or the UCC or similar law of any other applicable jurisdiction
(with respect to such other documents).
(d) If the Aircraft has been registered in a country other than the United
States pursuant to Section 4.02(e) of the Trust Indenture, Owner will furnish to
Mortgagee annually after such registration, commencing with the calendar year
after such registration is effected, an opinion of special counsel reasonably
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satisfactory to Mortgagee stating that, in the opinion of such counsel, either
that (i) such action has been taken with respect to the recording, filing,
rerecording and refiling of the Operative Agreements and any supplements and
amendments thereto as is necessary to establish, perfect and protect the Lien
created by the Trust Indenture, reciting the details of such actions, or (ii) no
such action is necessary to maintain the perfection of such Lien.
6.1.4 Securities Laws
Neither Owner nor any person authorized to act on its behalf will directly
or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or any interest in any of the Equipment Notes or any
other interest in or security under the Trust Indenture, for sale to, or solicit
any offer to acquire any such interest or security from, or sell any such
interest or security to, any person in violation of the Securities Act or
applicable state or foreign securities Laws.
6.2. Covenants of WTC
WTC in its individual capacity or as Mortgagee, each Pass Through Trustee
or Subordination Agent, as the case may be, covenants and agrees with Owner as
follows:
6.2.1 Liens
WTC (a) will not directly or indirectly create, incur, assume or suffer to
exist any Lien attributable to it on or with respect to all or any part of the
Collateral or the Aircraft, (b) will, at its own cost and expense, promptly take
such action as may be necessary to discharge any Lien attributable to WTC on all
or any part of the Collateral or the Aircraft and (c) will personally hold
harmless and indemnify Owner, each Note Holder, each of their respective
Affiliates, successors and permitted assigns, and the Collateral from and
against (i) any and all Expenses, and (ii) any interference with the possession,
operation or other use of all or any part of the Aircraft, imposed on, incurred
by or asserted against any of the foregoing as a consequence of any such Lien.
6.2.2 Securities Act
WTC in its individual capacity or as Mortgagee, as a Pass Through Trustee
or as Subordination Agent, will not offer any beneficial interest or Security
relating to the ownership of the Aircraft or any interest in the Collateral, or
any of the Equip-
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ment 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.
6.2.3 Performance of Agreements
WTC, in its individual capacity and as Mortgagee, as a Pass Through Trustee
or as Subordination Agent, as the case may be, shall perform its obligations
under the Pass Through Trustee Agreements and the Operative Agreements in
accordance with the terms thereof.
6.2.4 Withholding Taxes
WTC shall indemnify (on an after-tax basis) and hold harmless Owner against
any United States withholding taxes (and related interest, penalties and
additions to tax) as a result of the failure by WTC to withhold on payments to
any Note Holder if such Note Holder failed to provide to Mortgagee necessary
certificates or forms to substantiate the right to exemption from such
withholding tax.
6.3. Covenants of Note Holders
Each Note Holder (including Subordination Agent) as to itself only
covenants and agrees with Owner and Mortgagee as follows:
6.3.1 Withholding Taxes
Such Note Holder (if it is a Non-U.S. Person) agrees to indemnify (on an
after-tax basis) and hold harmless Owner 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.
6.3.2 Transfer; Compliance
(a) Such Note Holder will (i) not transfer any Equipment Note or interest
therein in violation of the Securities Act
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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) Such Note Holder will not sell, assign, convey, exchange or otherwise
transfer any Equipment Note or any interest in, or represented by, any Equipment
Note (it being understood that this provision is not applicable to the Pass
Through Certificates) unless the proposed transferee thereof first provides
Owner with both of the following:
(i) a written representation and covenant that either (a) no
portion of the funds it uses to purchase, acquire and hold such
Equipment Note or interest directly or indirectly constitutes, or may
be deemed under the Code or ERISA or any rulings, regulations or court
decisions thereunder to constitute, the assets of any Plan or (b) the
transfer, and subsequent holding, of such Equipment Note or interest
shall not involve or give rise to a transaction that constitutes a
prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975(c)(1) of the Code involving Owner, a Pass Through
Trustee, the Subordination Agent or the proposed transferee (other
than a transaction that is exempted from the prohibitions of such
sections by applicable provisions of ERISA or the Code or
administrative exemptions or regulations issued thereunder); and
(ii) a written covenant that it will not transfer any Equipment
Note or any interest in, or represented by, any Equipment Note unless
the subsequent transferee also makes the representation described in
clause (i) above and agrees to comply with this clause (ii). 6.4.
Agreements
6.4.1 Quiet Enjoyment
Each Pass Through Trustee, Subordination Agent, Mortgagee and each Note
Holder agrees as to itself with Owner that, so long as no Event of Default shall
have occurred and be continuing, such Person shall not (and shall not permit any
Affiliate or other Person claiming by, through or under it to) interfere with
Owner's or any Permitted Lessee's rights in accordance with the Trust In-
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denture to the quiet enjoyment, possession and use of the Aircraft.
6.4.2 Consents
Each Pass Through Trustee, Subordination Agent and Mortgagee covenants and
agrees, for the benefit of Owner, that it shall not unreasonably withhold its
consent to any consent or approval requested of it under the terms of any of the
Operative Agreements which by its terms is not to be unreasonably withheld.
6.4.3 Insurance
Each Pass Through Trustee, Subordination Agent, Mortgagee and each Note
Holder agrees not to obtain or maintain insurance for its own account as
permitted by Section 4.06 of the Trust Indenture if such insurance would limit
or otherwise adversely affect the coverage of any insurance required to be
obtained or maintained by Owner pursuant to Section 4.06 of the Trust Indenture.
6.4.4 Extent of Interest of Note Holders
A Note Holder shall not, as such, have any further interest in, or other
right with respect to, the Collateral when and if the principal and Make-Whole
Amount, if any, of and interest on the Equipment Note held by such Note Holder,
and all other sums, then due and payable to such Note Holder hereunder and under
any other Operative Agreement, shall have been paid in full.
6.4.5 Foreign Registration
Each Note Holder and Mortgagee hereby agrees, for the benefit of Owner but
subject to the provisions of Section 4.02(b) of the Trust Indenture:
(a) that Owner shall be entitled to register the Aircraft or cause the
Aircraft to be registered in a country other than the United States subject to
compliance with the following:
(i) each of the following requirements is satisfied:
(A) no Special Default or Event of Default shall have occurred
and be continuing at the time of such registration;
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(B) such proposed change of registration is made in connection
with a Permitted Lease to a Permitted Air Carrier;
(C) such country is a country with which the United States then
maintains normal diplomatic relations or, if Taiwan, the
United States then maintains diplomatic relations at least
as good as those in effect on the Closing Date;
(ii) the Mortgagee shall have received an opinion of counsel
(subject to customary exceptions) reasonably satisfactory to the
Mortgagee addressed to Mortgagee as to the effect that:
(A) such country would recognize the Owner's ownership interest in the
Aircraft;
(B) after giving effect to such change in registration, the Lien of
the Trust Indenture on the Owner's right, title and interest in and to the
Aircraft 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) the Mortgagee
shall have received a certificate from Owner that all possible preparations
to accomplish such filing, recording and other action shall have been done,
and such filing, recording and other action shall be accomplished and a
supplemental opinion to that effect shall be delivered to the Mortgagee on
or prior to the effective date of such change in registration);
(C) unless Owner or the Permitted Air Carrier shall have agreed to
provide insurance covering the risk of requisition of use of the Aircraft
by the government of such country (so long as the Aircraft is registered
under the laws of such country), the laws of such country require fair
compensation by the government of such country payable in currency freely
convertible into Dollars and freely removable from such country (without
license or permit, unless Owner prior to such proposed reregistration has
obtained such license or permit) for the taking or requisition by such
government of such use; and
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(D) it is not necessary, solely as a consequence of such change in
registration and without giving effect to any other activity of the
Mortgagee (or any Affiliate of the Mortgagee), for the Mortgagee to qualify
to do business in such jurisdiction as a result of such reregistration in
order to exercise any rights or remedies with respect to the Aircraft.
(b) In addition, as a condition precedent to any change in registration
Owner shall have given to Mortgagee assurances reasonably satisfactory to
Mortgagee:
(i) to the effect that the provisions of Section 4.06 of the Trust
Indenture have been complied with after giving effect to such change
of registration;
(ii) of the payment by Owner of all reasonable out-of-pocket expenses of
each Note Holder and Mortgagee in connection with such change of
registry, including, without limitation (1) the reasonable fees and
disbursements of counsel to 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, and (3) all costs and expenses incurred in connection
with any filings necessary to continue in the United States the
perfection of the security interest in the Aircraft in favor of
Mortgagee for the benefit of Note Holders; and
(iii) to the effect that the tax and other indemnities in favor of each
person named as an indemnitee under any other Operative Agreement
afford each such person substantially the same protection as provided
prior to such change of registration (or Owner shall have agreed upon
additional indemnities that, together with such original indemnities,
in the reasonable judgment of Mortgagee, afford such protection).
6.4.6 Interest in Certain Engines
Each Note Holder and Mortgagee agrees, for the benefit of each of the
lessor, conditional seller, mortgagee or secured party of any airframe or engine
leased to, or purchased by, Owner
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or any Permitted Lessee subject to a lease, conditional sale, trust indenture or
other security agreement that it will not acquire or claim, as against such
lessor, conditional seller, mortgagee or secured party, any right, title or
interest in any engine as the result of such engine being installed on the
Airframe at any time while such engine is subject to such lease, conditional
sale, trust indenture or other security agreement and owned by such lessor or
conditional seller or subject to a trust indenture or security interest in favor
of such mortgagee or secured party.
SECTION 7. CONFIDENTIALITY
Owner, Note Holders and Mortgagee shall keep the Participation Agreement
and Annex B to the Trust Indenture confidential and shall not disclose, or cause
to be disclosed, the same to any Person, except (A) to prospective and permitted
transferees of Owner's, a Note Holder's, a Liquidity Provider's, Mortgagee's or
other Indenture Indemnitee's interest or their respective counsel or special
counsel, independent insurance brokers, auditors, or other agents who agree to
hold such information confidential, (B) to Owner's, a Note Holder's, a Liquidity
Provider's, a Pass Through Trustee's, Mortgagee's 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 ("NAIC")), federal or state banking examiners, the SEC, IRS
auditors or any stock exchange, (D) with respect to a Note Holder or any Pass
Through Trustee, to a nationally recognized rating agency for the purpose of
obtaining a rating on the Equipment Notes or the Pass Through Certificates or to
support an NAIC rating for the Equipment Notes or (E) such other Persons as are
reasonably deemed necessary by the disclosing party in order to protect the
interests of such party or for the purposes of enforcing such documents by such
party; provided, that any and all disclosures permitted by clauses (C), (D), or
(E) above shall be made only to the extent necessary to meet the specific
requirements or needs of the Persons making such disclosures.
SECTION 8. INDEMNIFICATION AND EXPENSES
8.1. General Indemnity
8.1.1 Indemnity
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Whether or not any of the transactions contemplated hereby are consummated,
Owner shall indemnify, protect, defend and hold harmless each Indemnitee from,
against and in respect of, and shall pay on a net after-tax basis, any and all
Expenses of any kind or nature whatsoever that may be imposed on, incurred by or
asserted against any Indemnitee, relating to, resulting from, or arising out of
or in connection with, any one or more of the following:
(a) The Operative Agreements, the Pass Through Agreements, or the
enforcement of any of the terms of any of the Operative Agreements or the Pass
Through Agreements;
(b) The Aircraft, the Airframe, any Engine or any Part, including, without
limitation, with respect thereto, (i) the manufacture, design, purchase,
acceptance, nonacceptance or rejection, ownership, registration, reregistration,
deregistration, delivery, nondelivery, lease, sublease, assignment, possession,
use or non-use, operation, maintenance, testing, repair, overhaul, condition,
alteration, modification, addition, improvement, storage, airworthiness,
replacement, repair, sale, substitution, return, abandonment, redelivery or
other disposition of the Aircraft, any Engine or any Part, (ii) any claim or
penalty arising out of violations of applicable Laws by Owner (or any Permitted
Lessee), (iii) tort liability, whether or not arising out of the negligence of
any Indemnitee (whether active, passive or imputed), (iv) death or property
damage of passengers, shippers or others, (v) environmental control, noise or
pollution and (vi) any Liens in respect of the Aircraft, any Engine or any Part;
(c) The offer, sale, or delivery of any Equipment Notes, Pass Through
Certificates or any interest therein or represented thereby; and
(d) Any breach of or failure to perform or observe, or any other
noncompliance with, any covenant or agreement or other obligation to be
performed by Owner under any Operative Agreement to which it is party or any
Pass Through Agreement or the falsity of any representation or warranty of Owner
in any Operative Agreement to which it is party or any Pass Through Agreement.
8.1.2 Exceptions
Notwithstanding anything contained in Section 8.1.1, Owner shall not be
required to indemnify, protect, defend and hold harmless any Indemnitee pursuant
to Section 8.1.1 in respect of any Expense of such Indemnitee:
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(a) For any Taxes or a loss of Tax benefit, whether or not Owner is
required to indemnify therefor pursuant to Section 8.3;
(b) Except to the extent attributable to acts or events occurring prior
thereto, acts or events (other than acts or events related to the performance by
Owner of its obligations pursuant to the terms of the Operative Agreements) that
occur after the Trust Indenture is required to be terminated in accordance with
Section 11.01 of the Trust Indenture; provided, that nothing in this clause (b)
shall be deemed to exclude or limit any claim that any Indemnitee may have under
applicable Law by reason of an Event of Default or for damages from Owner for
breach of Owner's covenants contained in the Operative Agreements or to release
Owner from any of its obligations under the Operative Agreements that expressly
provide for performance after termination of the Trust Indenture;
(c) To the extent attributable to any Transfer (voluntary or involuntary)
by or on behalf of such Indemnitee of any Equipment Note or interest therein,
except for out-of-pocket costs and expenses incurred as a result of any such
Transfer pursuant to the exercise of remedies under any Operative Agreement;
(d) [Intentionally Omitted]
(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) [Intentionally Omitted]
(g) To the extent attributable to the incorrectness or breach of any
representation or warranty of such Indemnitee or any related Indemnitee
contained in or made pursuant to any Operative Agreement or any Pass Through
Agreement;
(h) To the extent attributable to the failure by such Indemnitee or any
related Indemnitee to perform or observe any agreement, covenant or condition on
its part to be performed or observed in any Operative Agreement or any Pass
Through Agreement;
(i) To the extent attributable to the offer or sale by such Indemnitee or
any related Indemnitee of any interest in the Aircraft, the Equipment Notes, the
Pass Through Certificates, or any similar interest, in violation of the
Securities Act or other
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applicable federal, state or foreign securities Laws (other than any thereof
caused by acts or omissions of Owner);
(j) (i) With respect to any Indemnitee (other than Mortgagee), to the
extent attributable to the failure of the Mortgagee to distribute funds received
and distributable by it in accordance with the Trust Indenture, (ii) with
respect to any Indemnitee (other than the 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,
(iii) 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, (iv) with respect to any Indemnitee (other than the Escrow Agent),
to the extent attributable to the failure of the Escrow Agent to pay funds
received and payable by it in accordance with any Escrow Agreement, (v) with
respect to any Indemnitee (other than the Paying Agent), to the extent
attributable to the failure of the Paying Agent to distribute funds received and
distributable by it in accordance with any Escrow Agreement, (vi) to the extent
attributable to the failure of the Depositary to pay funds payable by it in
accordance with any Deposit Agreement, (vii) 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, (viii) 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, (ix) 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, (x) with respect to the
Escrow Agent, to the extent attributable to the negligence or willful misconduct
of the Escrow Agent in the payment of funds received and payable by it in
accordance with any Escrow Agreement, and (xi) with respect to the Paying Agent,
to the extent attributable to the negligence or willful misconduct of the Paying
Agent in the distribution of funds received and distributable by it in
accordance with any Escrow Agreement;
(k) Other than during the continuation of an Event of Default, to the
extent attributable to the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any Operative
Agreement or Pass Through Agreement other than such as have been requested or
consented to
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in writing by Owner or as are required by or made pursuant to the terms of the
Operative Agreements or Pass Through Agreements (unless such requirement results
from the actions of an Indemnitee not required by or made pursuant to the
Operative Agreements or the Pass Through Agreements);
(l) To the extent attributable to any amount which any Indemnitee expressly
agrees to pay or such Indemnitee expressly agrees shall not be paid by or be
reimbursed by Owner;
(m) To the extent that such expense is a loss of future profits of, a cost
or expense unreasonably incurred by, or an ordinary and usual operating or
overhead expense of, such Indemnitee;
(n) [Intentionally Omitted]
(o) For any Lien in violation of the Operative Agreements 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 Owner's responsibility or obligation with
respect to such Expense, to the extent arising from other than failure of Owner
to comply with such specified responsibility or obligation;
(q) 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; or
(r) For any loss attributable to, arising from or in connection with any
inspections or inspection rights arising from or in connection with any of the
Operative Agreements or the Transactions.
For purposes of this Section 8.1, a Person shall be considered a "related"
Indemnitee with respect to an Indemnitee if such Person is an Affiliate or
employer of such Indemnitee, a director, officer, employee, agent, or servant of
such Indemnitee or any such Affiliate or a successor or permitted assignee of
any of the foregoing.
8.1.3 Separate Agreement
This Agreement constitutes a separate agreement with respect to each
Indemnitee and is enforceable directly by each such Indemnitee.
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8.1.4 Notice
If a claim for any Expense that an Indemnitee shall be indemnified against
under this Section 8.1 is made, such Indemnitee shall give prompt written notice
thereof to Owner. Notwithstanding the foregoing, the failure of any Indemnitee
to notify Owner as provided in this Section 8.1.4, or in Section 8.1.5, shall
not release Owner from any of its obligations to indemnify such Indemnitee
hereunder, except to the extent that such failure results in an additional
Expense to Owner (in which event Owner shall not be responsible for such
additional Expense) or materially impairs Owner's ability to contest such claim.
8.1.5 Notice of Proceedings; Defense of Claims; Limitations
(a) In case any action, suit or proceeding shall be brought against any
Indemnitee for which Owner is responsible under this Section 8.1, such
Indemnitee shall notify Owner of the commencement thereof and Owner may, at its
expense, participate in and to the extent that it shall wish (subject to the
provisions of the following paragraph), assume and control the defense thereof
and, subject to Section 8.1.5(c), settle or compromise the same.
(b) Owner or its insurer(s) shall have the right, at its or their expense,
to investigate or, if Owner or its insurer(s) shall agree not to dispute
liability to the Indemnitee giving notice of such action, suit or proceeding
under this Section 8.1.5 for indemnification hereunder or under any insurance
policies pursuant to which coverage is sought, control the defense of, any
action, suit or proceeding, relating to any Expense for which indemnification is
sought pursuant to this Section 8.1, and each Indemnitee shall cooperate with
Owner or its insurer(s) with respect thereto; provided, that Owner shall not be
entitled to control the defense of any such action, suit, proceeding or
compromise any such Expense during the continuance of any Event of Default. In
connection with any such action, suit or proceeding being controlled by Owner,
such Indemnitee shall have the right to participate therein, at its sole cost
and expense, with counsel reasonably satisfactory to Owner; provided, that such
Indemnitee's participation does not, in the reasonable opinion of the
independent counsel appointed by the Owner or its insurers to conduct such
proceedings, interfere with the defense of such case.
(c) In no event shall any Indemnitee enter into a settlement or other
compromise with respect to any Expense without the prior written consent of
Owner, which consent shall not be unreasonably withheld or delayed, unless such
Indemnitee waives its
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right to be indemnified with respect to such Expense under this Section 8.1.
(d) In the case of any Expense indemnified by the Owner hereunder which is
covered by a policy of insurance maintained by Owner pursuant to Section 4.06 of
the Indenture, at Owner's expense, each Indemnitee agrees to cooperate with the
insurers in the exercise of their rights to investigate, defend or compromise
such Expense as may be required to retain the benefits of such insurance with
respect to such Expense.
(e) If an Indemnitee is not a party to this Agreement, Owner may require
such Indemnitee to agree in writing to the terms of this Section 8 and Section
12.8 prior to making any payment to such Indemnitee under this Section 8.
(f) Nothing contained in this Section 8.1.5 shall be deemed to require an
Indemnitee to contest any Expense or to assume responsibility for or control of
any judicial proceeding with respect thereto.
8.1.6 Information
Owner will provide the relevant Indemnitee with such information not within
the control of such Indemnitee, as is in Owner's control or is reasonably
available to Owner, which such Indemnitee may reasonably request and will
otherwise cooperate with such Indemnitee so as to enable such Indemnitee to
fulfill its obligations under Section 8.1.5. The Indemnitee shall supply Owner
with such information not within the control of Owner, as is in such
Indemnitee's control or is reasonably available to such Indemnitee, which Owner
may reasonably request to control or participate in any proceeding to the extent
permitted by Section 8.1.5.
8.1.7 Effect of Other Indemnities; Subrogation; Further Assurances
Upon the payment in full by Owner of any indemnity provided for under this
Agreement, Owner, without any further action and to the full extent permitted by
Law, will be subrogated to all rights and remedies of the person indemnified
(other than with respect to any of such Indemnitee's insurance policies or in
connection with any indemnity claim such Indemnitee may have under Section 6.03
or 8.01 of the Trust Indenture) in respect of the matter as to which such
indemnity was paid. Each Indemnitee will give such further assurances or
agreements and cooperate with Owner to
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permit Owner to pursue such claims, if any, to the extent reasonably requested
by Owner and at Owner's expense.
8.1.8 Refunds
If an Indemnitee receives any refund, in whole or in part, with respect to
any Expense paid by Owner hereunder, it will promptly pay the amount refunded
(but not an amount in excess of the amount Owner or any of its insurers has paid
in respect of such Expense) over to Owner unless an Event of Default shall have
occurred and be continuing, in which case such amounts shall be paid over to
Mortgagee to hold as security for Owner's obligations under the Operative
Agreements or, if requested by Owner, applied to satisfy such obligations.
8.2. Expenses
8.2.1 Invoices and Payment
The Mortgagee, the Pass Through Trustees and the Subordination Agent shall
promptly submit to Owner for its prompt approval (which shall not be
unreasonably withheld) copies of invoices in reasonable detail of the
Transaction Expenses for which it is responsible for providing information as
they are received (but in no event later than the 90th day after the Closing
Date). If so submitted and approved, the Owner agrees promptly, but in any event
no later than the 105th day after the Closing Date, to pay Transaction Expenses.
8.2.2 Payment of Other Expenses
Owner shall pay (i) the ongoing fees and expenses of Mortgagee, and (ii)
all reasonable out-of-pocket costs and expenses (including the reasonable fees
and disbursements of counsel) incurred by Mortgagee or any Note Holder
attributable to any waiver, amendment or modification of any Operative Agreement
to the extent requested or consented to in writing by Owner.
8.3. General Tax Indemnity
8.3.1 General
Except as provided in Section 8.3.2, Owner agrees that each payment paid by
Owner under the Equipment Notes, and any other payment or indemnity paid by
Owner to a Tax Indemnitee under any Operative Agreement, shall be free of all
withholdings or deductions with respect to Taxes of any nature (other than U.S.
federal, state or local withholding taxes on, based on or measured by
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gross or net income), and in the event that Owner shall be required by
applicable law to make any such withholding or deduction for any such payment
(x) Owner shall make all such withholdings or deductions, (y) the amount payable
by Owner shall be increased so that after making all required withholdings or
deductions such Tax Indemnitee receives the same amount that it would have
received had no such withholdings or deductions been made, and (z) Owner shall
pay the full amount withheld or deducted to the relevant Taxing Authority in
accordance with applicable law. Except as provided in Section 8.3.2 and whether
or not any of the transactions contemplated hereby are consummated, Owner shall
pay, indemnify, protect, defend and hold each Tax Indemnitee harmless from all
Taxes imposed by any Taxing Authority that may from time to time be imposed on
or asserted against any Tax Indemnitee or the Aircraft, the Airframe, any Engine
or any Part or any interest in any of the foregoing (whether or not indemnified
against by any other Person), upon or with respect to the Operative Agreements
or the transactions or payments contemplated thereby, including but not limited
to any Tax imposed upon or with respect to (x) the Aircraft, the Airframe, any
Engine, any Part, any Operative Agreement (including without limitation any
Equipment Notes) or any data or any other thing delivered or to be delivered
under an Operative Agreement, (y) the purchase, manufacture, acceptance,
rejection, sale, transfer of title, return, ownership, mortgaging, delivery,
transport, charter, rental, lease, re-lease, sublease, assignment, possession,
repossession, presence, use, condition, storage, preparation, maintenance,
modification, alteration, improvement, operation, registration, transfer or
change of registration, reregistration, repair, replacement, overhaul, location,
control, the imposition of any Lien, financing, refinancing requested by the
Owner, abandonment or other disposition of the Aircraft, the Airframe, any
Engine, any Part, any data or any other thing delivered or to be delivered under
an Operative Agreement or (z) interest, fees or any other income, proceeds,
receipts or earnings, whether actual or deemed, arising upon, in connection
with, or in respect of, any of the Operative Agreements (including the property
or income or other proceeds with respect to property held as part of the
Collateral) or the transactions contemplated thereby.
8.3.2 Certain Exceptions
The provisions of Section 8.3.1 shall not apply to, and Owner shall have no
liability hereunder for, Taxes:
(a) imposed on a Tax Indemnitee by the federal government of the United
States or any Taxing Authority or governmental subdivision of the United States
or therein (including any state
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or local Taxing Authority) (i) on, based on, or measured by, gross or net income
or gross or net receipts, including capital gains taxes, excess profits taxes,
minimum taxes from tax preferences, alternative minimum taxes, branch profits
taxes, accumulated earnings taxes, personal holding company taxes, succession
taxes and estate taxes, and any withholding taxes on, based on or measured by
gross or net income or receipts or (ii) on, or with respect to, or measured by,
capital or net worth or in the nature of a franchise tax or a tax for the
privilege of doing business (other than, in the case of clause (i) or (ii),
sales, use, license or property Taxes);
(b) imposed on a Tax Indemnitee by any Taxing Authority or governmental
subdivision thereof or therein outside of the United States (including any
Taxing Authority in or of a territory, possession or commonwealth of the United
States) (i) on, based on, or measured by, gross or net income or gross or net
receipts, including capital gains taxes, excess profits taxes, minimum taxes
from tax preferences, alternative minimum taxes, branch profits taxes,
accumulated earnings taxes, personal holding company taxes, succession taxes and
estate taxes, and any withholding taxes on, based on or measured by gross or net
income or receipts or (ii) on, or with respect to, or measured by, capital or
net worth or in the nature of a franchise tax or a tax for the privilege of
doing business (other than, in the case of clause (i) or (ii), (A) sales, use,
license or property Taxes, or (B) any Taxes imposed by any Taxing Authority
(other than a Taxing Authority within whose jurisdiction such Tax Indemnitee is
incorporated or organized or maintains its principal place of business) if such
Tax Indemnitee would not have been subject to Taxes of such type by such
jurisdiction but for (I) the location, use or operation of the Aircraft, the
Airframe, any Engine or any Part thereof by an Owner Person within the
jurisdiction of the Taxing Authority imposing such Tax, or (II) the activities
of any Owner Person in such jurisdiction, including, but not limited to, use of
any other aircraft by Owner in such jurisdiction, (III) the status of any Owner
Person as a foreign entity or as an entity owned in whole or in part by foreign
persons, (IV) Owner having made (or having been deemed to have made) payments to
such Tax Indemnitee from the relevant jurisdiction or (V) in the case of the
Pass Through Trustees, the Note Holders or any related Tax Indemnitee, the Owner
being incorporated or organized or maintaining a place of business or conducting
activities in such jurisdiction);
(c) on, or with respect to, or measured by, any trustee fees, commissions
or compensation received by the Pass Through Trustee, Subordination Agent or
Mortgagee;
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(d) that are being contested as provided in Section 8.3.4 hereof;
(e) imposed on any Tax Indemnitee to the extent that such Taxes result from
the gross negligence or willful misconduct of such Tax Indemnitee or any
Affiliate thereof;
(f) imposed on or with respect to a Tax Indemnitee (including the
transferee in those cases in which the Tax on transfer is imposed on, or is
collected from, the transferee) as a result of a transfer or other disposition
(including a deemed transfer or disposition) by such Tax Indemnitee or a related
Tax Indemnitee of any interest in the Aircraft, the Airframe, any Engine or any
Part, any interest arising under the Operative Agreements or any Equipment Note
or as a result of a transfer or disposition (including a deemed transfer or
disposition) of any interest in a Tax Indemnitee (other than (A) a substitution
or replacement of the Aircraft, the Airframe, any Engine or any Part by an Owner
Person that is treated for Tax purposes as a transfer or disposition, or (B) a
transfer pursuant to an exercise of remedies upon an Event of Default that shall
have occurred and have been continuing);
(g) Taxes in excess of those that would have been imposed had there not
been a transfer or other disposition by or to such Tax Indemnitee or a related
Tax Indemnitee described in paragraph (f) above; (h) consisting of any interest,
penalties or additions to tax imposed on a Tax Indemnitee as a result of (in
whole or in part) failure of such Tax Indemnitee or a related Tax Indemnitee to
file any return properly and timely, unless such failure shall be caused by the
failure of Owner to fulfill its obligations, if any, under Section 8.3.6 with
respect to such return;
(i) resulting from, or that would not have been imposed but for, any Liens
arising as a result of claims against, or acts or omissions of, or otherwise
attributable to such Tax Indemnitee or a related Tax Indemnitee that the owner
is not obligated to discharge under the Operative Agreements;
(j) imposed on any Tax Indemnitee as a result of the breach by such Tax
Indemnitee or a related Tax Indemnitee of any covenant of such Tax Indemnitee or
any Affiliate thereof contained in any Operative Agreement or the inaccuracy of
any representation or warranty by such Tax Indemnitee or any Affiliate thereof
in any Operative Agreement;
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(k) in the nature of an intangible or similar Tax (i) upon or with respect
to the value or principal amount of the interest of any Note Holder in any
Equipment Note or the loan evidenced thereby but only if such Taxes are in the
nature of franchise Taxes or result from the Tax Indemnitee doing business in
the taxing jurisdiction and are imposed because of the place of incorporation or
the activities unrelated to the transactions contemplated by the Operative
Agreements in the taxing jurisdiction of such Tax Indemnitee;
(l) imposed on a Tax Indemnitee by a Taxing Authority of a jurisdiction
outside the United States to the extent that such Taxes would not have been
imposed but for a connection between the Tax Indemnitee or a related Tax
Indemnitee and such jurisdiction imposing such Tax unrelated to the transactions
contemplated by the Operative Agreements; or
(m) Taxes relating to ERISA or Section 4975 of the Code.
For purposes hereof, a Tax Indemnitee and any other Tax Indemnitees that
are successors, assigns, agents, servants or Affiliates of such Tax Indemnitee
shall be related Tax Indemnitees.
8.3.3 Payment
(a) Owner's indemnity obligation to a Tax Indemnitee under this Section 8.3
shall equal the amount which, after taking into account any Tax imposed upon the
receipt or accrual of the amounts payable under this Section 8.3 and any tax
benefits actually recognized by such Tax Indemnitee as a result of the
indemnifiable Tax (including, without limitation, any benefits recognized as a
result of an indemnifiable Tax being utilized by such Tax Indemnitee as a credit
against Taxes not indemnifiable under this Section 8.3), shall equal the amount
of the Tax indemnifiable under this Section 8.3.
(b) At Owner's request, the computation of the amount of any indemnity
payment owed by Owner or any amount owed by a Tax Indemnitee to Owner pursuant
to this Section 8.3 shall be verified and certified by an independent public
accounting firm selected by such Tax Indemnitee and reasonably satisfactory to
Owner. Such verification shall be binding. The costs of such verification
(including the fee of such public accounting firm) shall be borne by Owner
unless such verification shall result in an adjustment in Owner's favor of 5% or
more of the net present value of the payment as computed by such Tax Indemnitee,
in which case the costs shall be paid by such Tax Indemnitee.
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(c) Each Tax Indemnitee shall provide Owner with such certifications,
information and documentation as shall be in such Tax Indemnitee's possession
and as shall be reasonably requested by Owner to minimize any indemnity payment
pursuant to this Section 8.3; provided, that notwithstanding anything to the
contrary contained herein, no Tax Indemnitee shall be required to provide Owner
with any Tax returns.
(d) Each Tax Indemnitee shall promptly forward to Owner any written notice,
▇▇▇▇ or advice received by it from any Taxing Authority concerning any Tax for
which it seeks indemnification under this Section 8.3. Owner shall pay any
amount for which it is liable pursuant to this Section 8.3 directly to the
appropriate Taxing Authority if legally permissible or upon demand of a Tax
Indemnitee, to such Tax Indemnitee within 30 days of such demand (or, if a
contest occurs in accordance with Section 8.3.4, within 30 days after a Final
Determination (as defined below)), but in no event more than one Business Day
prior to the date the Tax to which such amount payable hereunder relates is due.
If requested by a Tax Indemnitee in writing, Owner shall furnish to the
appropriate Tax Indemnitee the original or a certified copy of a receipt for
Owner's payment of any Tax paid by Owner or such other evidence of payment of
such Tax as is acceptable to such Tax Indemnitee. Owner shall also furnish
promptly upon written request such data as any Tax Indemnitee may reasonably
require to enable such Tax Indemnitee to comply with the requirements of any
taxing jurisdiction unless such data is not reasonably available to Owner or,
unless such data is specifically requested by a Taxing Authority, is not
customarily furnished by domestic air carriers under similar circumstances. For
purposes of this Section 8.3, a "Final Determination" shall mean (i) a decision,
judgment, decree or other order by any court of competent jurisdiction that
occurs pursuant to the provisions of Section 8.3.4, which decision, judgment,
decree or other order has become final and unappealable, (ii) a closing
agreement or settlement agreement entered into in accordance with Section 8.3.4
that has become binding and is not subject to further review or appeal (absent
fraud, misrepresentation, etc.), or (iii) the termination of administrative
proceedings and the expiration of the time for instituting a claim in a court
proceeding.
(e) If any Tax Indemnitee shall actually realize a tax savings by reason of
any Tax paid or indemnified by Owner pursuant to this Section 8.3 (whether such
tax savings shall be by means of a foreign tax credit, depreciation or cost
recovery deduction or otherwise) and such savings is not otherwise taken into
account in computing such payment or indemnity such Tax Indemnitee shall pay to
Owner an amount equal to the lesser of (i) the amount of such
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tax savings, plus any additional tax savings recognized as the result of any
payment made pursuant to this sentence, when, as, if, and to the extent,
realized or (ii) the amount of all payments pursuant to this Section 8.3 by
Owner to such Tax Indemnitee (less any payments previously made by such Tax
Indemnitee to Owner pursuant to this Section 8.3.3 (e)) (and the excess, if any,
of the amount described in clause (i) over the amount described in clause (ii)
shall be carried forward and applied to reduce pro tanto any subsequent
obligations of Owner to make payments to such Tax Indemnitee pursuant to this
Section 8.3); provided, that such Tax Indemnitee shall not be required to make
any payment pursuant to this sentence so long as 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 8.3.1 without regard to the provisions of Section
8.3.2 (other than Section 8.3.2 (f)). Each such Tax Indemnitee shall in good
faith use reasonable efforts in filing its tax returns and in dealing with
Taxing Authorities to seek and claim any such tax benefit.
8.3.4 Contest
(a) If a written claim is made against a Tax Indemnitee for Taxes with
respect to which Owner could be liable for payment or indemnity hereunder, or if
a Tax Indemnitee makes a determination that a Tax is due for which Owner could
have an indemnity obligation hereunder, such Tax Indemnitee shall promptly give
Owner notice in writing of such claim (provided, that failure to so notify Owner
shall not relieve Owner of its indemnity obligations hereunder unless such
failure to notify effectively forecloses Owner's rights to require a contest of
such claim) and shall take no action with respect to such claim without the
prior written consent of Owner for 30 days following the receipt of such notice
by Owner; provided, that, in the case of a claim made against a Tax Indemnitee,
if such Tax Indemnitee shall be required by law to take action prior to the end
of such 30-day period, such Tax Indemnitee shall, in such notice to Owner, so
inform Owner, and such Tax Indemnitee shall take no action for as long as it is
legally able to do so (it being understood that a Tax Indemnitee shall be
entitled to pay the Tax claimed and ▇▇▇ for a refund prior to the end of such
30-day period if (i)(A) the failure to so pay the Tax would result in
substantial penalties (unless immediately reimbursed by Owner) and the act of
paying the Tax would not materially prejudice the right to contest or (B) the
failure to so pay would result in criminal penalties and (ii) such Tax
Indemnitee shall take any action so required in connection with so paying the
Tax in a manner that is the least prejudicial to the pursuit of the contest). In
addition, such Tax Indemnitee shall (provided,
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that Owner shall have agreed to keep such information confidential other than to
the extent necessary in order to contest the claim) furnish Owner with copies of
any requests for information from any Taxing Authority relating to such Taxes
with respect to which Owner may be required to indemnify hereunder. If requested
by Owner in writing within 30 days after its receipt of such notice, such Tax
Indemnitee shall, at the expense of Owner (including, without limitation, all
reasonable costs, expenses and reasonable attorneys' and accountants' fees and
disbursements), in good faith contest (or, if permitted by applicable law, allow
Owner to contest) through appropriate administrative and judicial proceedings
the validity, applicability or amount of such Taxes by (I) resisting payment
thereof, (II) not paying the same except under protest if protest is necessary
and proper or (III) if the payment is made, using reasonable efforts to obtain a
refund thereof in an appropriate administrative and/or judicial proceeding. If
requested to do so by Owner, the Tax Indemnitee shall appeal any adverse
administrative or judicial decision, except that the Tax Indemnitee shall not be
required to pursue any appeals to the United States Supreme Court. If and to the
extent the Tax Indemnitee is able to separate the contested issue or issues from
other issues arising in the same administrative or judicial proceeding that are
unrelated to the transactions contemplated by the Operative Agreements without,
in the good faith judgment of such Tax Indemnitee, adversely affecting such Tax
Indemnitee, such Tax Indemnitee shall permit Owner to control the conduct of any
such proceeding and shall provide to Owner (at Owner's cost and expense) with
such information or data that is in such Tax Indemnitee's control or possession
that is reasonably necessary to conduct such contest. In the case of a contest
controlled by a Tax Indemnitee, such Tax Indemnitee shall consult with Owner in
good faith regarding the manner of contesting such claim and shall keep Owner
reasonably informed regarding the progress of such contest. A Tax Indemnitee
shall not fail to take any action expressly required by this Section 8.3.4
(including, without limitation, any action regarding any appeal of an adverse
determination with respect to any claim) or settle or compromise any claim
without the prior written consent of the Owner (except as contemplated by
Section 8.3.4(b) or (c)).
(b) Notwithstanding the foregoing, in no event shall a Tax Indemnitee be
required to pursue any contest (or to permit Owner to pursue any contest) unless
(i) Owner shall have agreed to pay such Tax Indemnitee on demand all reasonable
costs and expenses incurred by such Tax Indemnitee in connection with contesting
such Taxes, including, without limitation, all reasonable out of pocket costs
and expenses and reasonable attorneys' and accountants' fees and disbursements,
(ii) if such contest shall in-
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volve the payment of the claim, Owner shall advance the amount thereof (to the
extent indemnified hereunder) plus interest, penalties and additions to tax with
respect thereto that are required to be paid prior to the commencement of such
contest on an interest-free after-Tax basis to such Tax Indemnitee (and such Tax
Indemnitee shall promptly pay to the Owner any net realized tax benefits
resulting from such advance including any tax benefits resulting from making
such payment), (iii) such Tax Indemnitee shall have reasonably determined that
the action to be taken will not result in any material risk of forfeiture, sale
or loss of the Aircraft (unless Owner shall have made provisions to protect the
interests of any such Tax Indemnitee in a manner reasonably satisfactory to such
Tax Indemnitee) (provided, that such Tax Indemnitee agrees to notify Owner in
writing promptly after it becomes aware of any such risk), (iv) no Lease Event
of Default shall have occurred and be continuing unless Owner has provided
security for its obligations hereunder by advancing to such Tax Indemnitee
before proceeding or continuing with such contest, the amount of the Tax being
contested, plus any interest and penalties and an amount estimated in good faith
by such Tax Indemnitee for expenses, and (v) prior to commencing any judicial
action controlled by Owner, Owner shall have acknowledged its liability for such
claim hereunder, provided that Owner shall not be bound by its acknowledgment if
the Final Determination articulates conclusions of law and fact that demonstrate
that Owner has no liability for the contested amounts hereunder. Notwithstanding
the foregoing, if any Tax Indemnitee shall release, waive, compromise or settle
any claim which may be indemnifiable by owner pursuant to this Section 8.3
without the written permission of Owner, Owner's obligation to indemnify such
Tax Indemnitee with respect to such claim (and all directly related claims and
claims based on the outcome of such claim) shall terminate, subject to Section
8.3.4(c), and subject to Section 8.3.4(c), such Tax Indemnitee shall repay to
Owner any amount previously paid or advanced to such Tax Indemnitee with respect
to such claim, plus interest at the rate that would have been payable by the
relevant Taxing Authority with respect to a refund of such Tax.
(c) Notwithstanding anything contained in this Section 8.3, a Tax
Indemnitee will not be required to contest the imposition of any Tax and shall
be permitted to settle or compromise any claim without Owner's consent if such
Tax Indemnitee (i) shall waive its right to indemnity under this Section 8.3
with respect to such Tax (and any directly related claim and any claim the
outcome of which is determined based upon the outcome of such claim), (ii) shall
pay to Owner any amount previously paid or advanced by Owner pursuant to this
Section 8.3 with respect to such Tax, plus interest at the rate that would have
been payable by the relevant
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Taxing Authority with respect to a refund of such Tax, and (iii) shall agree to
discuss with Owner the views or positions of any relevant Taxing Authority with
respect to the imposition of such Tax.
8.3.5 Refund
If any Tax Indemnitee shall receive a refund of, or be entitled to a credit
against other liability for, all or any part of any Taxes paid, reimbursed or
advanced by Owner, such Tax Indemnitee shall pay to Owner within 30 days of such
receipt an amount equal to the lesser of (a) the amount of such refund or credit
plus any net tax benefit (taking into account any taxes incurred by such Tax
Indemnitee by reason of the receipt of such refund or realization of such
credit) actually realized by such Tax Indemnitee as a result of any payment by
such Tax Indemnitee made pursuant to this sentence (including this clause (a))
and (b) such tax payment, reimbursement or advance by Owner to such Tax
Indemnitee theretofore made pursuant to this Section 8.3 (and the excess, if
any, of the amount described in clause (a) over the amount described in clause
(b) shall be carried forward and applied to reduce pro tanto any subsequent
obligation of Owner to make payments to such Tax Indemnitee pursuant to this
Section 8.3). If, in addition to such refund or credit, such Tax Indemnitee
shall receive (or be credited with) an amount representing interest on the
amount of such refund or credit, such Tax Indemnitee shall pay to owner within
30 days of such receipt or realization of such credit that proportion of such
interest that shall be fairly attributable to Taxes paid, reimbursed or advanced
by Owner prior to the receipt of such refund or realization of such credit.
8.3.6 Tax Filing
If any report, return or statement is required to be filed with respect to
any Tax which is subject to indemnification under this Section 8.3, Owner shall
timely file the same (except for any such report, return or statement which a
Tax Indemnitee has timely notified the Owner in writing that such Tax Indemnitee
intends to file, or for which such Tax Indemnitee is required by law to file, in
its own name); provided, that the relevant Tax Indemnitee shall furnish Owner
with any information in such Tax Indemnitee's possession or control that is
reasonably necessary to file any such return, report or statement and is
reasonably requested in writing by Owner (it being understood that the Tax
Indemnitee shall not be required to furnish copies of its actual tax returns,
although it may be required to furnish relevant information contained therein).
Owner shall either file such report, return or statement and send a copy of such
report, return or state-
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ment to such Tax Indemnitee, or, where Owner is not permitted to file such
report, return or statement, it shall notify such Tax Indemnitee of such
requirement and prepare and deliver such report, return or statement to such Tax
Indemnitee in a manner satisfactory to such Tax Indemnitee within a reasonable
time prior to the time such report, return or statement is to be filed.
8.3.7 Forms
Each Tax Indemnitee agrees to furnish from time to time to Owner or
Mortgagee or to such other person as Owner or Mortgagee may designate, at
Owner's or Mortgagee's request, such duly executed and properly completed forms
as may be necessary or appropriate in order to claim any reduction of or
exemption from any withholding or other Tax imposed by any Taxing Authority, if
(x) such reduction or exemption is available to such Tax Indemnitee and (y)
Owner has provided such Tax Indemnitee with any information necessary to
complete such form not otherwise reasonably available to such Tax Indemnitee.
8.3.8 Non-Parties
If a Tax Indemnitee is not a party to this Agreement, Owner may require the
Tax Indemnitee to agree in writing, in a form reasonably acceptable to Owner, to
the terms of this Section 8.3 and Section 15.8 prior to making any payment to
such Tax Indemnitee under this Section 8.3.
8.3.9 Subrogation
Upon payment of any Tax by Owner pursuant to this Section 8.3 to or on
behalf of a Tax Indemnitee, Owner, without any further action, shall be
subrogated to any claims that such Tax Indemnitee may have relating thereto.
Such Tax Indemnitee shall cooperate with Owner (to the extent such cooperation
does not result in any unreimbursed cost, expense or liability to such Tax
Indemnitee) to permit Owner to pursue such claims.
8.4. Payments
Any payments made pursuant to Section 8.1 or 8.3 shall be due on the 60th
day after demand therefor and shall be made directly to the relevant Indemnitee
or Tax Indemnitee or to Owner, in immediately available funds at such bank or to
such account as specified by such Indemnitee or Tax Indemnitee or Owner, as the
case may be, in written directives to the payor, or, if no such direction shall
have been given, by check of the payor payable to the order of, and mailed to,
such Indemnitee or Tax Indemnitee or
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Owner, as the case may be, by certified mail, postage prepaid, at its address as
set forth in this Agreement.
8.5. Interest
If any amount, payable by Owner, any Indemnitee or any Tax Indemnitee under
Section 8.1 or 8.3 is not paid when due, the person obligated to make such
payment shall pay on demand, to the extent permitted by Law, to the person
entitled thereto, interest on any such amount for the period from and including
the due date for such amount to but excluding the date the same is paid, at the
Payment Due Rate. Such interest shall be paid in the same manner as the unpaid
amount in respect of which such interest is due.
8.6. Benefit of Indemnities
The obligations of Owner in respect of all indemnities, obligations,
adjustments and payments in Section 8.1 or 8.3 are expressly made for the
benefit of, and shall be enforceable by, the Indemnitee or Tax Indemnitee
entitled thereto, notwithstanding any provision of the Trust Indenture.
SECTION 9. ASSIGNMENT OR TRANSFER OF INTEREST
9.1. Note Holders
Subject to Section 6.3.2 hereof and Section 2.07 of the Trust Indenture,
any Note Holder may, at any time and from time to time, Transfer or grant
participations in all or any portion of the Equipment Notes and/or all or any
portion of its beneficial interest in its Equipment Notes to any person (it
being understood that the sale or issuance of Pass Through Certificates by a
Pass Through Trustee shall not be considered a Transfer or participation);
provided, that any participant in any such participations shall not have any
direct rights under the Operative Agreements or any Lien on all or any part of
the Aircraft or the Collateral and Owner shall not have any increased liability
or obligations as a result of any such participation. In the case of any such
Transfer, the Transferee, by acceptance of Equipment Notes in connection with
such Transfer, shall be deemed to be bound by all of the covenants of Note
Holders contained in the Operative Agreements.
9.2. Effect of Transfer
Upon any Transfer in accordance with Section 9.1 (other than any Transfer
by any Note Holder, to the extent it only grants participations in Equipment
Notes or in its beneficial interest therein) , Transferee shall be deemed a
"Note Holder," for all
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purposes of this Agreement and the other Operative Agreements, and the
transferring Note Holder shall be released from all of its liabilities and
obligations under this Agreement and any other Operative Agreements to the
extent such liabilities and obligations arise after such Transfer and, in each
case, to the extent such liabilities and obligations are assumed by the
Transferee; provided, that such transferring Note Holder (and its respective
Affiliates, successors, assigns, agents, servants, representatives, directors
and officers) will continue to have the benefit of any rights or indemnities
under any Operative Agreement vested or relating to circumstances, conditions,
acts or events prior to such Transfer.
SECTION 10. SECTION 1110
It is the intention of each of the Owner, the Note Holders (such intention
being evidenced by each of their acceptance of an Equipment Note), and Mortgagee
that Mortgagee shall be entitled to the benefits of Section 1110 in the event of
a case under Chapter 11 of the Bankruptcy Code in which Owner is a debtor.
SECTION 11. CHANGE OF CITIZENSHIP
11.1. Generally
Without prejudice to the representations, warranties or covenants regarding
the status of any party hereto as a Citizen of the United States, each of Owner,
WTC and Mortgagee agrees that it will, immediately upon obtaining knowledge of
any facts that would cast doubt upon its continuing status as a Citizen of the
United States and promptly upon public disclosure of negotiations in respect of
any transaction which would or might adversely affect such status, notify in
writing all parties hereto of all relevant matters in connection therewith.
11.2. Mortgagee
Upon WTC giving any notice in accordance with Section 11.1, Mortgagee 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 Owner, or any Note Holder), subject to Section
9.02 of the Trust Indenture, resign as Mortgagee promptly upon its ceasing to be
such a citizen.
SECTION 12. MISCELLANEOUS
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12.1. Amendments
No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to amend, supplement, waive, modify, discharge,
terminate or otherwise vary and is signed by the party against which the
enforcement of the amendment, supplement, waiver, modification, discharge,
termination or variance is sought. Each such amendment, supplement, waiver,
modification, discharge, termination or variance shall be effective only in the
specific instance and for the specific purpose for which it is given. No
provision of this Agreement shall be varied or contradicted by oral
communication, course of dealing or performance or other manner not set forth in
an agreement, document or instrument in writing and signed by the party against
which enforcement of the same is sought.
12.2. Severability
If any provision hereof shall be held invalid, illegal or unenforceable in
any respect in any jurisdiction, then, to the extent permitted by Law, (a) all
other provisions hereof shall remain in full force and effect in such
jurisdiction and (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction. If, however, any Law pursuant to which such provisions are held
invalid, illegal or unenforceable may be waived, such Law is hereby waived by
the parties hereto to the full extent permitted, to the end that this Agreement
shall be deemed to be a valid and binding agreement in all respects, enforceable
in accordance with its terms.
12.3. Survival
The indemnities set forth herein shall survive the delivery or return of
the Aircraft, the Transfer of any interest by any Note Holder of its Equipment
Note and the expiration or other termination of this Agreement or any other
Operative Agreement.
12.4. Reproduction of Documents
This Agreement, all schedules and exhibits hereto and all agreements,
instruments and documents relating hereto, including, without limitation, (a)
consents, waivers and modifications that may hereafter be executed and (b)
financial statements, certificates and other information previously or hereafter
furnished to any party hereto, may be reproduced by such party by any
photo-
-44-
graphic, 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.
12.5. Counterparts
This Agreement and any amendments, waivers, consents or supplements hereto
may be executed in any number of counterparts (or upon separate signature pages
bound together into one or more counterparts), each of which when so executed
shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.
12.6. No Waiver
No failure on the part of any party hereto to exercise, and no delay by any
party hereto in exercising, any of its respective rights, powers, remedies or
privileges under this Agreement or provided at Law, in equity or otherwise shall
impair, prejudice or constitute a waiver of any such right, power, remedy or
privilege or be construed as a waiver of any breach hereof or default hereunder
or as an acquiescence therein nor shall any single or partial exercise of any
such right, power, remedy or privilege preclude any other or further exercise
thereof by it or the exercise of any other right, power, remedy or privilege by
it. No notice to or demand on any party hereto in any case shall, unless
otherwise required under this Agreement, entitle such party to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any party hereto to any other or further action in any
circumstances without notice or demand.
12.7. Notices
Unless otherwise expressly permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers and other
communications required or permitted to be made, given, furnished or filed
hereunder shall be in writing (it being understood that the specification of a
writing in certain instances and not in others does not imply an intention that
a writing is not required as to the latter), shall refer specifically to this
Agreement or other applicable Operative Agree-
-45-
ment, and shall be personally delivered, sent by facsimile (followed by
overnight courier service by next Business Day receipt) 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;
provided there is receipt of such notice the next Business Day from an overnight
courier service or (b) by registered or certified mail, three Business Days
after being deposited, properly addressed, with the U.S. Postal Service.
12.8. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE
(a) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(b) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS ITSELF
TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN THE
CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN DISTRICT
OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING WITH
RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT.
(c) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES TO THE SERVICE
OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE
ADDRESS SET FORTH PURSUANT TO SECTION 12.7. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE UPON WTC, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 12.8(c), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH
PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS
TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT
IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED
IN ANY ACTION OR PROCEEDING BASED THEREON.
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(d) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR
OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN ANY OF THE
ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT THIS
AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH
COURTS.
(e) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION BASED UPON OR
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
12.9. Third-Party Beneficiary
This Agreement is not intended to, and shall not, provide any person not a
party hereto (other than the Indenture Indemnitees, each of which is an intended
third party beneficiary with respect to the provisions of Section 8.1 and the
persons referred to in Section 6.4.6, which are intended third party
beneficiaries with respect to such Section) with any rights of any nature
whatsoever against any of the parties hereto and no person not a party hereto
(other than the Indenture Indemnitees, with respect to the provisions of Section
8.1, and the persons referred to in Section 6.4.6 with respect to the provisions
of such Section) shall have any right, power or privilege in respect of any
party hereto, or have any benefit or interest, arising out of this Agreement.
12.10. Entire Agreement
This Agreement, together with the other Operative Agreements, on and as of
the date hereof, constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof, and all prior or contemporaneous
understandings or agreements, whether written or oral, among any of the parties
hereto with respect to such subject matter are hereby superseded in their
entireties.
12.11. Further Assurances
Each party hereto shall execute, acknowledge and deliver or shall cause to
be executed, acknowledged and delivered, all such further agreements,
instruments, certificates or documents, and shall do and cause to be done such
further acts and things, in any case, as any other party hereto shall reasonably
request in connection with the administration of, or to carry out more
effec-
-47-
tually 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.
SECTION 13. SALE/LEASEBACK TRANSACTIONS
Notwithstanding anything to the contrary contained herein or any other
Operative Agreement, upon not less than _ days prior written notice to the
parties hereto, the Owner shall have the right to sell the Aircraft and transfer
title to the Aircraft to an owner trustee for the benefit of an owner
participant (which shall be a "Transferee" (as defined in the form of Leased
Aircraft Participation Agreement (as such term is defined in the Note Purchase
Agreement)) in a transaction in which such owner trustee assumes all of the
obligations of the Owner under the Equipment Notes and the Trust Indenture on a
non-recourse basis (with the Owner being released from such obligations, except
to the extent accrued prior thereto), leases the Aircraft to the Owner and
assigns such lease to the Mortgagee pursuant to an amended and restated trust
indenture (a "Sale/Leaseback Transaction"). In connection with such
Sale/Leaseback Transaction, each of the parties hereto and each Note Holder will
execute and deliver appropriate documentation permitting the owner trustee to
assume the obligations of the Owner under the Equipment Notes and the Trust
Indenture on a non-recourse basis, releasing the Owner from all obligations in
respect of the Equipment Notes and the Trust Indenture (except to the extent
accrued prior thereto), and take all other actions as are reasonably necessary
to permit such assumption by the owner trustee. In connection with any such
Sale/Leaseback Transaction, the parties agree that (a) the documents to be
utilized shall be (i) an amended and restated participation agreement amending
and restating the Participation Agreement, such amended and restated
participation agreement to be substantially in the form of the Leased Aircraft
Participation Agreement (as such term is defined in the Note Purchase
Agreement), among the parties hereto, any Note Holder which is not a party
hereto and the owner trustee and owner participant, with (x) such changes to
such form to reflect the assumption of the Equipment Notes by the owner trustee
on a non-recourse basis rather than the issuance thereof by the owner trustee
and purchase thereof by the Pass Through Trustee and also to reflect the release
of the Owner from all obligations under the Equipment Notes and the Trust
Indenture (except to the extent accrued prior thereto) and (y) such other
changes as may be permitted in accordance with the Note Purchase Agreement
applicable to the revision of the Leased Aircraft Participation Agreement in
connection with a leveraged lease transaction, (ii) a lease agreement, such
lease agreement to be substantially in the form of the Lease (as such term is
defined in the
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Note Purchase Agreement), between the Owner and the owner trustee with such
changes as may be permitted in accordance with the provisions of the Note
Purchase Agreement applicable to the revision of the Lease in connection with a
leveraged lease transaction, (iii) an amended and restated trust indenture
amending and restating the Trust Indenture, such amended and restated trust
indenture to be substantially in the form of the Leased Aircraft Indenture (as
such term is defined in the Note Purchase Agreement), between the owner trustee
and the Indenture Trustee, with (x) such changes to such form to reflect the
assumption of all of the obligations of the Owner under the Equipment Notes and
the Trust Indenture on a non-recourse basis and the release of the obligations
of the Owner under the Equipment Notes and the Trust Indenture and (y) such
other changes as may be permitted in accordance with the Note Purchase Agreement
applicable to the revision of the Leased Aircraft Indenture in connection with a
leveraged lease transaction, a (iv) purchase agreement assignment, such purchase
agreement assignment to be substantially in the form of the Aircraft Purchase
Agreement Assignment (as such term is defined in the Note Purchase Agreement)
between the Owner and the owner trustee with such changes as may be permitted in
accordance with the provisions of the Note Purchase Agreement applicable to the
Aircraft Purchase Agreement Assignment in connection with a leveraged lease
transaction, and (v) a trust agreement, such trust agreement to be substantially
in the form of the Leased Aircraft Trust Agreement (as such term is defined in
the Note Purchase Agreement), between the owner trustee and the owner
participant with such changes as may be permitted in accordance with the
provisions of the Note Purchase Agreement applicable to the Leased Aircraft
Trust Agreement in connection with a leveraged lease transaction and (b) the
Equipment Notes shall be delivered to the Indenture Trustee for cancellation in
exchange for new equipment notes to be issued to the Note Holders by the owner
trustee, such new equipment notes to be substantially in the form contained in
Section 2.01 of the Leased Aircraft Indenture (as such term is defined in the
Note Purchase Agreement). Such new equipment notes will have the same payment
terms except that in the event that the Owner enters into a Sale/Leaseback
Transaction prior to December 31, 1999, Owner shall have the right to reoptimize
the new equipment notes to be issued to the Note Holders by the owner trustee in
compliance with the Mandatory Economic Terms.
Notwithstanding the foregoing, the Owner shall not have the right to enter
into a Sale/Leaseback Transaction unless the Owner causes to be delivered to the
Indenture Trustee an opinion of counsel to the effect that the Note Holders will
not recognize income, gain or loss for Federal income tax purposes as a result
of such assumption and release and will be subject to Federal income tax in the
same amounts, in the same manner and at the same time as would have been the
case if such assumption and release had not occurred and that the Pass Through
Trusts will not be subject to Federal in-
-49-
come taxation as a result of such assumption and release. In addition, the Owner
agrees to comply with Section 1(c) of the Note Purchase Agreement in connection
with any Sale/Leaseback Transaction.
[This space intentionally left blank]
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IN WITNESS WHEREOF, each of the parties has caused this Participation
Agreement to be duly executed and delivered as of the day and year first above
written.
ATLAS AIR, INC.,
Owner
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
Atlas Air Pass Through
Trust, 1999-.
By___________________________
Name:
Title:
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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
Atlas Air Pass Through
Trust, 1999-
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
Atlas Air Pass Through
Trust, 1999-
By___________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
expressly provided herein, but
solely as Subordination Agent
By___________________________
Name:
Title:
SCHEDULE 1
TO
PARTICIPATION AGREEMENT
ACCOUNTS; ADDRESSES
Account for Payments Address For Notices
ATLAS AIR, INC. Atlas Air, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial
Officer
Facsimile:
WILMINGTON TRUST COMPANY, AS Wilmington Trust Company
MORTGAGEE One ▇▇▇▇▇▇ Square
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust
Administration
Facsimile:
WILMINGTON TRUST COMPANY, AS Wilmington Trust Company
SUBORDINATION AGENT One ▇▇▇▇▇▇ Square
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust
Administration
Facsimile:
WILMINGTON TRUST COMPANY, AS PASS Wilmington Trust Company
THROUGH TRUSTEE FOR THE ▇▇▇▇- ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
THROUGH TRUST ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust
Administration
Facsimile:
WILMINGTON TRUST COMPANY, AS PASS Wilmington Trust Company
THROUGH TRUSTEE FOR THE ▇▇▇▇- ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
THROUGH TRUST ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust
Administration
Facsimile:
WILMINGTON TRUST COMPANY, AS PASS Wilmington Trust Company
THROUGH TRUSTEE FOR THE ▇▇▇▇- ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
THROUGH TRUST ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust
Administration
Facsimile:
SCHEDULE 2 - COMMITMENTS
PARTICIPATION AGREEMENT
COMMITMENTS
Pass Through Series of Dollar Amount
Trustee Equipment Notes of Loan
------------------- ------------------- -------------
Wilmington Trust Company Series A-1 $
Wilmington Trust Company Series A-2 $
Wilmington Trust Company Series B $
Wilmington Trust Company Series C $
Wilmington Trust Company Series D $
SCHEDULE 3 - CERTAIN TERMS
PARTICIPATION AGREEMENT
CERTAIN TERMS
Defined Term Definition
Minimum Liability Insurance Amount $
Threshold Amount $7.5 million, subject, from time to time,
to adjustment for inflation
SCHEDULE 4 - PERMITTED COUNTRIES
PARTICIPATION AGREEMENT
PERMITTED COUNTRIES
Argentina Malta
Australia Mexico
Austria Monaco
Bahamas Morocco
Belgium Netherlands
Brazil New Zealand
Canada Norway
Chile Paraguay
Denmark People's Republic of China
Egypt Philippines
Ecuador Portugal
Finland Republic of China (Taiwan)
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland Tobago
Italy Trinidad
Japan United Arab Emirates
Liechtenstein United Kingdom
Luxembourg Uruguay
Malaysia Venezuela
Exhibit A
FORM OF OPINION OF SPECIAL COUNSEL TO OWNER
,
To the Persons Listed
on Schedule I Attached Hereto
Re: Purchase of Boeing Model 747-47UF Aircraft
with Manufacturer's Serial Number
and U.S. Registration Number N MC
Gentlemen:
We have been requested by Atlas Air, Inc., a Delaware corporation (the
"Company"), to act as special counsel with respect to, and to render this
opinion letter as required by Section 4.1.2(x)(A) of, the Participation
Agreement, dated as of , (the "Participation Agreement"), among the Company,
Wilmington Trust Company, a Delaware banking corporation ("WTC"), as Mortgagee
under the Trust Indenture, WTC, as Subordination Agent under the Intercreditor
Agreement, and WTC, as Pass Through Trustee under the Pass Through Trust
Agreements. Capitalized terms used herein and not otherwise defined herein have
the respective meanings given those terms in the Participation Agreement.
In connection with this opinion letter, we have examined, among other
things, originals or copies certified or otherwise identified to our
satisfaction of the following documents:
(i) Participation Agreement;
(ii) Trust Indenture;
(iii) Trust Indenture Supplement;
(iv) Purchase Agreement Assignment
(v) Consent and Agreement;
(vi) Engine Consent and Agreement;
(vii) Forms of the Equipment Notes; and
(viii) Bills of Sale
We have also examined and relied upon such other documents and such other
corporate records, certificates and other statements of governmental officials
and corporate officers and other representatives of the Company as we have
deemed necessary or appropriate for the purposes of this opinion. As to certain
facts material to the opinions expressed herein, we
A-2
have relied upon representations and warranties contained in the Operative
Agreements. The opinions expressed herein are subject to the following
exceptions, assumptions, qualifications and limitations:
A. The opinions set forth below are limited to the laws of the State of New
York, the federal laws of the United States of America and the General
Corporation Law of the State of Delaware, except that we express no opinion with
respect to (i) the laws, regulations or ordinances of any county, town or
municipality or governmental subdivision or agency thereof, (ii) state
securities or blue sky laws or federal securities laws, including the Securities
Act of 1933, as amended, and the Investment Company Act of 1940, (iii) federal
or state tax, antitrust or fraudulent transfer or conveyance laws, (iv) the
Employee Retirement Income Security Act of 1974, as amended, or (v) part A of
subtitle VII of ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code (the "Federal Aviation Act"), or
any other laws, rules or regulations governing, regulating or relating to the
acquisition, ownership, registration, use or sale of an aircraft, airframe or
aircraft engine or to the particular nature of the equipment to be acquired by
the Company. In addition, our opinions are based upon a review of those laws,
statutes, rules and regulations which, in our experience, are normally
applicable to transactions of the type contemplated by the Participation
Agreement.
B. The opinions set forth in paragraph 3 below are subject to (i)
limitations on enforceability arising from applicable bankruptcy, insolvency,
reorganization, moratorium, receivership, fraudulent conveyance, fraudulent
transfer, preferential transfer and similar laws relating to or affecting the
rights and remedies of creditors generally and the effect of general principles
of equity, including, without limitation, laches and estoppel as equitable
defenses and concepts of materiality, reasonableness, good faith and fair
dealing (regardless of whether such enforceability is considered or applied in a
proceeding in equity or at law) and considerations of impracticability or
impossibility of performance, and defenses based upon unconscionability of
otherwise enforceable obligations in the context of the factual circumstances
under which enforcement thereof is sought, (ii) the qualification that the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought and (iii) the requirements
of Section 9-306 of the Uniform Commercial Code of the State of New York (the
"UCC") with respect to the continuation of per-
A-3
fection of a security interest in "proceeds" of collateral. In addition, certain
remedial and procedural provisions of the Company Documents (as defined in
paragraph 2 below) and the Trust Indenture are or may be unenforceable in whole
or in part, but the inclusion of such provisions does not affect the validity of
those agreements and does not, in our opinion, make the remedies provided in
those agreements, or otherwise available under applicable law, inadequate for
the practical realization of the substantive benefits purported to be provided
thereby, except for the economic consequences resulting from any delay imposed
by, or any procedure required by, applicable laws, rules, regulations and by
constitutional requirements. We express no opinion as to (i) any provision
contained in any Operative Agreement (a) providing for indemnification or
exculpation of any Person for such Person's gross negligence, willful
misconduct, recklessness or unlawful conduct or in respect of liabilities under
the Securities Act, (b) providing for late payment charges or an increase in
interest rate upon delinquency in payment or the occurrence of a default or
other specified event but only to the extent such provision is deemed to
constitute a penalty or liquidated damages provision, (c) as such provision
relates to the subject matter jurisdiction of federal courts or the waiver of
inconvenient forum with respect to proceedings in federal courts, (d) that
purports to establish (or may be construed to establish) evidentiary standards
or (e) providing for the waiver of any statutory right or any broadly or vaguely
stated rights or unknown future rights, or any waiver which is against public
policy considerations or (ii) Section 12.8 of the Participation Agreement or any
comparable provision of any other Operative Agreement. Under certain
circumstances the requirement that the provisions of an Operative Agreement may
be modified or waived only in writing or only in a specific instance and
provisions to the effect that failure or delay in exercising any right, remedy,
power and/or privilege will not impair or waive such right, remedy, power and/or
privilege may be unenforceable to the extent that an oral agreement has been
effected or a course of dealing has occurred modifying such provisions. A court
may modify or limit contractual agreements regarding attorneys' fees.
C. To the extent that our opinions expressed herein involve conclusions as
to the matters set forth in the opinions dated the date hereof of ▇▇▇▇▇ &
▇▇▇▇▇▇▇ being delivered to you on the date hereof, we have assumed, without
independent investigation, the correctness of the matters set forth in such
opinions and have relied with your permission on such opinions.
A-4
D. We have assumed the due authorization, execution and delivery of the
Operative Agreements by each of the parties thereto, that each of such parties
(other than the Company) has the power and authority to execute, deliver and
perform each such Operative Agreement and has obtained or made all necessary
consents, approvals, filings and registrations in connection therewith, that
such execution, delivery and performance does not violate its charter, by-laws
or similar instrument, that the Trust Indenture constitutes the valid, binding
and enforceable obligation of the Mortgagee and duly creates the trust it
purports to create, that the Mortgagee for purposes of Section 9-103(3) of the
UCC is located in New York and that, under applicable law, the Company would be
deemed to be the owner of the Trust Indenture Estate, that value has been given
by the Loan Participants to the Company under the Trust Indenture, that the
Company has rights in the Trust Indenture Estate, that WTC is duly organized,
validly existing and in good standing in its jurisdiction of organization and
qualified to transact business in each other jurisdiction where such
qualification is required.
E. We have assumed the due authentication of the Equipment Notes by the
Mortgagee and the delivery thereof against payment therefor, all in accordance
with the Participation Agreement and the Trust Indenture, and that the Equipment
Notes conform to the forms thereof examined by us.
F. We have assumed that all signatures on documents examined by us are
genuine, that all persons signing such documents have legal capacity, that all
documents submitted to us as originals are authentic and that all documents
submitted to us as copies or specimens conform with the originals, which facts
we have not independently verified.
G. We have not made any examination of, and express no opinion with respect
to (and to the extent relevant have assumed the accuracy and sufficiency of),
(i) descriptions of, the legal or beneficial ownership of, or the title or
condition of title to, the Trust Indenture Estate or any other property covered
by any of the Operative Agreements, (ii) except as expressly set forth in
paragraphs 5 and 7 below, the existence, creation, validity or attachment of any
Lien thereon, (iii) except as expressly set forth in paragraph 5 below, the
perfection of any Lien thereon and (iv) the priority or enforcement of any Lien
thereon.
A-5
H. We have assumed the continuous presence in the State of New York of all
collateral constituting "chattel paper" for purposes of the UCC.
I. In giving an opinion regarding the valid existence and good standing of
the Company, we have relied solely upon certificates of public officials.
J. In giving the opinion set forth in paragraph 6, we have relied upon a
certificate from an officer of the Company (i) that the Aircraft and Engines
constitute "aircraft equipment" for purposes of the Federal Aviation Act and
(ii) that the Airframe and Engines have not been placed in service prior to
October 22, 1994.
K. The opinions expressed herein are given as of the date hereof. We assume
no obligation to advise you of any facts or circumstance that may come to our
attention, or any changes in law that may occur after the date hereof, which may
affect the opinion expressed herein.
Based on, and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware.
2. The Company has all necessary corporate power to execute, deliver
and perform its obligations under the Participation Agreement, the Trust
Indenture, Trust Indenture Supplement No. 1 and the Purchase Agreement
Assignment (collectively, the "Company Documents"). Neither the execution
nor delivery of the Company Documents by the Company nor the consummation
of the transactions contemplated thereby will result in any violation of
(a) its Certificate of Incorporation or By-laws or (b) any law,
governmental rule or regulation known to us to be applicable to, or binding
on, the Company, or which requires the approval of the stockholders of the
Company.
3. Each Company Document constitutes the valid and binding obligation
of the Company and is enforceable against the Company in accordance with
its terms.
4. Except for the matters referred to in clauses (i) through (iii) of
paragraph 5 below, no approval, authorization or other action by or filing
with
A-6
any governmental authority is required for the execution and delivery by
the Company of the Company Documents or the consummation of the
transactions contemplated thereby to occur at the Closing.
5. Except for (i) the registration of the Aircraft with the FAA
pursuant to the Federal Aviation Act, (ii) the filing and recordation in
accordance with the Federal Aviation Act of the FAA Filed Documents, and
assuming that at the time of such filing no other unrecorded document
relating to the Aircraft has been filed pursuant to the Federal Aviation
Act, and (iii) the filing of Financing Statements referred to in Section
4.1.11 of the Participation Agreement, and the filing of periodic
continuation statements with respect thereto, (a) no further filing or
recording of any document is necessary (x) to establish the Company's title
to the Airframe and Engines, and (y) to create a valid security interest in
the Company's interest as owner of the Airframe and Engines, in favor of
the Mortgagee pursuant to the Trust Indenture and (b) no further filing or
recording of any document in the State of New York or under the Federal
Aviation Act is required to perfect a security interest in the Company's
interest as owner of the Airframe and Engines in favor of the Mortgagee
pursuant to the Trust Indenture.
6. So long as the Company continues to be a "citizen of the United
States", as defined in section 40102 of Title 49 of the United States Code,
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 6,000
pounds or more of cargo, Mortgagee, as holder of a security interest
pursuant to the Trust Indenture, will be entitled to the benefits of
Section 1110 of Title 11 of the United States Code with respect to the
Airframe and Engines delivered on the date hereof in connection with any
case commenced by or against the Company under Chapter 11 of Title 11 of
the United States Code. We call to your attention that the U.S. District
Court for the District of Colorado recently issued an opinion regarding
Section 1110, In re Western Pacific Airlines, Inc., 219 B.R. 305, (D. Colo.
1998) and 221 B.R. 1 (D. Colo. 1998), which opinion, we are informed, has
been appealed to the United States Court of Appeals for the Tenth Circuit.
The decision, reversing an order of the bankruptcy court, held that once a
debtor air carrier agrees to perform its obligations and cures its defaults
A-7
under an aircraft lease within the prescribed period in accordance with
Section 1110, the lessor under such lease is not entitled to repossess the
aircraft under Section 1110 if the airline subsequently defaults under such
lease. We are of the opinion that the District Court opinion was
incorrectly decided because it is contrary to prior treatment of this issue
by the courts and is contrary to the intent of Congress in enacting Section
1110. We do not express any opinion with respect to the outcome of any
appeal of this decision.
7. Upon issuance, execution, authentication and delivery of the
Equipment Notes at the Closing, the Trust Indenture creates the security
interest in favor of the Mortgagee, as trustee for the benefit of the
holders of the Equipment Notes, in the Trust Indenture Estate it purports
to create to the extent that the UCC applies to a security interest in such
property.
This opinion may be relied upon by you (and any permitted Transferee under
Section 9.1 of the Participation Agreement) in connection with the matters set
forth herein and, without our prior written consent, may not be relied upon for
any other purpose and may not be furnished to any other Person for any purpose.
Very truly yours,
Schedule I
Wilmington Trust Company, not in its individual capacity, but solely as
Mortgagee, Subordination Agent and Pass Through Trustee
Standard & Poor's Ratings Services
Exhibit B
FORM OF OPINION OF CORPORATE COUNSEL TO OWNER
To the Persons Listed
on Schedule I Hereto
Re: Purchase of Boeing Model 747-47UF Aircraft
with Manufacturer's Serial Number
and U.S. Registration Number N MC
Ladies and Gentlemen:
This opinion letter is being delivered by Atlas Air, Inc., a Delaware
corporation ("Atlas"), through its Legal Department in connection with the
transactions contemplated by the Participation Agreement dated as of __, , among
Atlas, as Owner, Wilmington Trust Company ("WTC"), a Delaware banking
corporation, as Mortgagee under the Trust Indenture, WTC, as Subordination Agent
under the Intercreditor Agreement, and WTC, as Pass Through Trustee under the
Pass Through Trust Agreements (the "Participation Agreement"). All capitalized
terms used herein and not otherwise defined herein shall have the respective
meanings given those terms in the Participation Agreement. This opinion letter
is being furnished to you pursuant to Section 4.1.2(x)(B) of the Participation
Agreement.
In giving the following opinions, members of Atlas's Legal Department or
lawyers retained by Atlas's Legal Department have reviewed the Participation
Agreement and the other Operative Agreements to which Atlas is a party and have
relied upon originals, or copies certified or otherwise identified to our
satisfaction, of such records, documents, certificates and other instruments as
in our judgment are necessary or appropriate to enable us to render the opinions
expressed below. In addition, Atlas's Legal Department has assumed and has not
verified the accuracy as to factual matters of each document reviewed. As used
herein, the phrase "to our knowledge" or words of similar import shall mean to
the actual knowledge of Atlas's Legal Department after reasonable investigation,
but shall not be interpreted to impute knowledge of others (other than members
of Atlas's Legal Department).
Based on the foregoing, and subject to the assumptions and limitations
contained herein, Atlas's Legal Department is of the opinion that:
B-2
(a) Atlas is an "air carrier" within the meaning of Section 40102 of the
Act, operating under a certificate issued pursuant to Chapter 447 of the Act, is
a "citizen of the United States" as such term is defined in Section 40102 of
such Act and holds all authority, necessary licenses and certificates under such
Act and the rules and regulations promulgated thereunder necessary for the
conduct of its business and to perform its obligations under the Participation
Agreement, the Trust Indenture, the Trust Indenture Supplement and the Purchase
Agreement Assignment (collectively, the "Agreements").
(b) The execution, delivery and performance by Atlas of each of the
Agreements do not, to our knowledge, breach or result in a default under any
indenture, mortgage, deed of trust, credit agreement, conditional sale contract
or other agreement to which Atlas is a party or by which Atlas or its property
may be bound.
(c) The execution, delivery and performance of each of the Agreements has
been duly authorized by all necessary corporate action on the part of Atlas, and
each of the Agreements has been duly executed and delivered by Atlas.
(d) There are no pending or, to our knowledge, threatened actions, suits or
proceedings before any court or administrative agency or arbitrator that
question the validity of any of the Agreements or that would have been required
to be disclosed in Atlas's Annual Report on Form 10-K filed for the year ended
December 31, 1998, on any subsequent Quarterly Report on Form 10-Q or Current
Report on Form 8-K, except such as are therein disclosed.
The foregoing opinions are limited to the federal law of the United States
of America (other than (i) the Act (except as expressly provided in paragraph
(a) above) or any other laws, rules or regulations governing, regulating or
relating to the acquisition, ownership, registration, use or sale of an
aircraft, airframe or aircraft engine or to the particular nature of the
equipment to be acquired by Atlas, (ii) state securities or blue sky laws, or
federal securities laws, (iii) federal or state tax, antitrust or fraudulent
transfer or conveyance laws, as to which we express no opinion), and the General
Corporation Law of the State of Delaware.
This opinion letter is furnished to you for the purpose indicated above,
and may not be relied upon by any other Person (except any permitted Transferee
under Section 9.1 of
B-3
the Participation Agreement) or for any other purpose
without our written consent.
Very truly yours,
ATLAS AIR, INC.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Legal Counsel
Schedule I
Wilmington Trust Company, not in its individual capacity, but solely as
Mortgagee, Subordination Agent and Pass Through Trustee
Standard & Poor's Ratings Services
Exhibit C
FORM OF BOEING OPINION
To the Addressees Listed
in the Attached Schedule
Subject: One Boeing Model 747-47UF Aircraft
Bearing Manufacturer's Serial No.
and U.S. Registration Number N MC
Ladies and Gentlemen:
I am an attorney employed by The Boeing Company ("Boeing") and I am
licensed to practice law in the State of Washington, United States of America.
As such, I have represented Boeing in connection with the sale of the Boeing
Model 747-47UF aircraft bearing Manufacturer's Serial No. and U.S. Registration
Number N MC(including the engines installed thereon but excluding equipment
furnished by Atlas Air, Inc. ("Atlas") therefor, said aircraft herein called the
"Aircraft"), pursuant to Purchase Agreement No. 2021 between Boeing and Atlas,
dated June 6, 1997, as subsequently amended (the "Purchase Agreement") and as
assigned by the Purchase Agreement and Engine Warranties Assignment between
Atlas, as Assignor, and Wilmington Trust Company, not in its individual capacity
but solely as Mortgagee under the Trust Indenture dated as of , , as Assignee.
Atlas is sometimes referred to in the ▇▇▇▇ of Sale (as hereinafter defined) and
in this opinion as "Buyer").
For the purpose of this opinion, I have examined and relied upon originals,
or copies certified to my satisfaction, of the Purchase Agreement and of the
following documents:
1. The Manufacturer Consent and Agreement to the Purchase Agreement
and Engine Warranties Assignment dated as of , executed by Boeing (the
"Consent and Agreement");
2. The ▇▇▇▇ of Sale executed by Boeing in favor of Buyer dated as of ,
(the "▇▇▇▇ of Sale"); __________ __ __________ and
3. The FAA ▇▇▇▇ of Sale executed by Boeing in favor of Buyer dated as
of , (the "FAA ▇▇▇▇ of _________ __ __________ Sale").
C-2
I have also examined such other documents and records as I have deemed
relevant or necessary for the purpose of giving this opinion. Based upon such
examination, I am of the opinion that:
(a) Boeing is a corporation duly incorporated, validly existing, and in
good standing under the laws of the State of Delaware.
(b) The Purchase Agreement, the Consent and Agreement, the ▇▇▇▇ of Sale and
the FAA ▇▇▇▇ of Sale have been duly authorized, executed and delivered by, and
constitute the legal, valid, and binding obligations of Boeing enforceable
against it in accordance with the respective terms thereof, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting the enforcement of creditors' rights in general and except as the
enforceability of such obligations may be subject to general principles of
equity.
(c) Boeing has the full power, authority, and legal right to enter into and
perform its obligations under the Purchase Agreement, the Consent and Agreement,
the ▇▇▇▇ of Sale, and the FAA ▇▇▇▇ of Sale and Boeing's execution, performance,
and delivery of such documents have been duly authorized by all necessary
corporate action.
(d) Good title to the Aircraft was at the time of delivery to Buyer vested
in Boeing free and clear of all liens, claims, encumbrances, and rights of
others; and good title to the Aircraft has been duly conveyed by Boeing to Buyer
free and clear of all liens, claims, encumbrances, and rights of others.
(e) Each of the ▇▇▇▇ of Sale and the FAA ▇▇▇▇ of Sale constitutes an
effective instrument for the conveyance of good title to the Aircraft to Buyer,
assuming the filing for recordation of the FAA ▇▇▇▇ of Sale for the Aircraft in
accordance with the provisions of Title 49 of the United States Code, as
amended.
For the purpose of this opinion, I have assumed that Buyer has the power
and authority to accept title to and delivery of the Aircraft and that the
representative acting on behalf of Buyer was duly authorized to accept title to
and delivery of the Aircraft on its behalf.
With respect to the conclusions set forth herein, I express no opinion as
to any laws other than the laws of the
C-3
State of Washington, the corporate laws of the State of Delaware, and the
federal laws of the United States.
Very truly yours,
Counsel
SCHEDULE
ATLAS AIR, INC.
WILMINGTON TRUST COMPANY
Not in its individual capacity but solely as Mortgagee,
Pass Through Trustee and Subordination Agent
STANDARD & POOR'S RATINGS SERVICES
Exhibit D
FORM OF OPINION OF SPECIAL COUNSEL
TO MORTGAGEE AND LOAN PARTICIPANTS
_____________, _____
To Each of the Persons
Listed on Schedule A
Attached Hereto
Re: Atlas Air, Inc.
Ladies and Gentlemen:
We have acted as counsel to Wilmington Trust Company, a Delaware banking
corporation ("Wilmington Trust"), in connection with the Trust Indenture and
Mortgage, dated as of , (the "Trust Indenture"), between Wilmington Trust, as
Mortgagee (the "Mortgagee"), and Atlas Air, Inc., as Owner (the "Owner").
Pursuant to the Participation Agreement, dated as of , (the "Participation
Agreement"), among Atlas Air, Inc., as Owner, and Wilmington Trust, as Mortgagee
under the Trust Indenture, Wilmington Trust as Subordination Agent under the
Intercreditor Agreement (as defined in the Participation Agreement), and
Wilmington Trust as Pass Through Trustee (as defined in the Participation
Agreement), financing is being provided for the acquisition of one Boeing Model
747-47UF Aircraft bearing U.S. Registration ▇▇▇▇ No. N MC. This opinion is
furnished pursuant to Section 4.1.2(x)(D) of the Participation Agreement.
Capitalized terms used herein and not otherwise defined are used as defined in
the Participation Agreement or as defined in the Trust Indenture, except that
reference herein to any instrument shall mean such instrument as in effect on
the date hereof.
We have examined executed counterparts, forms or copies otherwise
identified to our satisfaction of the following documents:
(a) The Participation Agreement;
(b) The Trust Indenture and the Trust Indenture Supplement (the documents
in paragraphs (a) and (b) above being collectively referred to as the "Mortgagee
Documents"); and
D-2
(c) The Equipment Notes being issued today and authenticated by the
Mortgagee (the "Equipment Notes").
We have also examined originals or copies of such other documents, such
corporate records, certificates and other statements of governmental officials
and corporate officers and other representatives of the corporations or entities
referred to herein and such other instruments as we have deemed necessary or
appropriate for the purposes of this opinion. Moreover, as to certain facts
material to the opinions expressed herein, we have relied upon representations
and warranties contained in the Mortgagee Documents.
Based upon the foregoing and upon an examination of such questions of law
as we have considered necessary or appropriate, and subject to the assumptions,
exceptions and qualifications set forth herein, we advise you that, in our
opinion:
1. Wilmington Trust has been duly incorporated and is validly existing
as a Delaware banking corporation in good standing under the laws of the
State of Delaware, is a citizen of the United States of America within the
meaning of Section 40102(a)(15)(C) of Title 49, U.S.C., as amended, and has
full corporate power, authority and legal right in its individual capacity,
as Mortgagee, as Pass Through Trustee, or as Subordination Agent, as the
case may be, to execute, deliver and perform the Mortgagee Documents, and
to authenticate the Equipment Notes.
2. Each of Wilmington Trust, the Mortgagee, the Pass Through Trustee
and the Subordination Agent, as the case may be, has duly authorized,
executed and delivered each Mortgagee Document to which it is a party; each
such document constitutes a legal, valid and binding obligation of
Wilmington Trust, the Mortgagee, the Pass Through Trustee or the
Subordination Agent, as the case may be, enforceable against Wilmington
Trust, the Mortgagee, the Pass Through Trustee or the Subordination Agent,
as the case may be, in accordance with its terms.
3. The execution, delivery and performance by Wilmington Trust, the
Mortgagee, the Pass Through Trustee or the Subordination Agent, as the case
may be, of the Mortgagee Documents to which each is a party, the
authentication by the Mortgagee of the Equipment Notes and the consummation
by Wilmington Trust, the Mortgagee, the Pass Through Trustee or the
Subordination Agent, as the case may be, of any of the transactions
contemplated thereby
D-3
are not in violation of the charter or by-laws of Wilmington Trust or of
any law, governmental rule, or regulation of the State of Delaware or of
any law, governmental rule, or regulation of the United States of America
governing the banking or trust powers of Wilmington Trust or, to our
knowledge, of any indenture, mortgage, bank credit agreement, note or bond
purchase agreement, long-term lease, license or other agreement or
instrument to which it is a party or by which it is bound or, to our
knowledge, of any judgment or order of the State of Delaware or the United
States of America relating to the banking or trust powers of Wilmington
Trust.
4. Neither the execution and delivery by Wilmington Trust, the
Mortgagee, the Pass Through Trustee or the Subordination Agent, as the case
may be, of the Mortgagee Documents to which each is a party, the
authentication of the Equipment Notes, nor the consummation of any of the
transactions by Wilmington Trust, the Mortgagee, the Pass Through Trustee
or the Subordination Agent, as the case may be, contemplated thereby
requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of, any
governmental authority or agency of the State of Delaware or the United
States of America governing the banking or trust powers of Wilmington Trust
or under any Delaware law.
5. There are no taxes, fees or other charges (other than taxes payable
by Wilmington Trust on or measured by any compensation received by
Wilmington Trust for its services as Mortgagee, Subordination Agent or Pass
Through Trustee) payable under the laws of the State of Delaware or any
political subdivision thereof in respect of the execution and delivery by
Wilmington Trust (in its individual capacity, as Mortgagee, Pass Through
Trustee or Subordination Agent, as the case may be) of the Mortgagee
Documents and the Equipment Notes, which taxes, fees or other charges would
not have been imposed if Wilmington Trust were not a Delaware banking
corporation and did not perform its obligations as Mortgagee under the
Trust Indenture in the State of Delaware.
6. The Equipment Notes have been duly and validly authenticated by the
Mortgagee in accordance with the Trust Indenture.
D-4
7. To the best of our knowledge, there are no proceedings pending or
threatened against or affecting Wilmington Trust, the Mortgagee, the Pass
Through Trustee or the Subordination Agent in any court or before any
governmental authority, agency or arbitration board or tribunal which, if
adversely determined, individually or in the aggregate, would materially
and adversely affect the right, power and authority of Wilmington Trust,
the Mortgagee, the Pass Through Trustee, or the Subordination Agent, as the
case may be, to enter into or perform its obligations under the Mortgagee
Documents to which it is a party.
The foregoing opinions are subject to the following assumptions, exceptions
and qualifications:
A. The foregoing opinions are limited to the laws of the State of Delaware
and the federal laws of the United States of America governing the banking and
trust powers of Wilmington Trust. In addition, we express no opinion with
respect to (i) federal securities laws, including the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the Investment Company
Act of 1940, as amended, and the Trust Indenture Act of 1939, as amended, (ii)
Part A of Subtitle VII of Title 49 of the United States Code, as amended (except
with respect to the opinion set forth in paragraph l above concerning the
citizenship of Wilmington Trust), (iii) the Federal Communications Act of 1934,
as amended, or (iv) state securities or blue sky laws. Insofar as the foregoing
opinions relate to the validity and enforceability in Delaware of the Mortgagee
Documents which are expressed to be governed by the laws of any state other than
the State of Delaware, we have assumed that such Mortgagee Documents constitute
legal, valid, binding and enforceable documents under such laws (as to which we
express no opinion).
B. The foregoing opinions regarding enforceability of any document are
subject to (i) applicable bankruptcy, insolvency, moratorium, reorganization,
fraudulent conveyance, receivership and similar laws affecting the rights and
remedies of creditors generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
C. We have assumed the due authorization, execution and delivery by each of
the parties thereto (other than Wilmington Trust, the Mortgagee, the Pass
Through Trustee and the Subordination Agent) of the Mortgagee Documents to which
each is a party and that each of such parties has the full power,
D-5
authority and legal right to execute and deliver each such document.
D. The opinion set forth in paragraph l above concerning the citizenship of
Wilmington Trust is based upon an affidavit of Wilmington Trust, made by its
Vice President, the facts set forth in which we have not independently verified.
E. We have assumed that all signatures (other than those of Wilmington
Trust, the Mortgagee, the Pass Through Trustee and the Subordination Agent) on
documents and instruments examined by us are genuine, that all documents and
instruments submitted to us as originals are authentic, and that all documents
and instruments submitted to us as copies conform with the originals, which
facts we have not independently verified.
F. We have made no investigation of, and we express no opinion concerning
the priority of any mortgage or security interest.
G. We have assumed that the Participation Agreement and the transactions
contemplated thereby are not within the prohibitions of Section 406 of the
Employee Retirement Income Security Act of 1974.
This opinion may be relied upon by you in connection with the matters set
forth herein. This opinion may also be relied upon by any transferee of a Note
Holder, subject to the understanding that the opinions expressed herein are
rendered as of the date hereof and only with respect to the laws, rules and
regulations in effect as of such date. Otherwise, without our prior written
consent, this opinion may not be relied upon by any person or entity for any
purpose.
Very truly yours,
SCHEDULE A
Owner
Atlas Air, Inc.
Mortgagee, Pass Through Trustee and Subordination Agent
Wilmington Trust Company
Ratings Agency
Standard & Poor's Ratings Services
Exhibit E-1
FORM OF OPINIONS OF SPECIAL COUNSEL
IN OKLAHOMA CITY, OK
____________, ____
To the Addressees Listed on
Exhibit A Attached Hereto
Re: Atlas Air, Inc.
Ladies and Gentlemen:
Pursuant to Section 4.1.2(x)(E) of the Participation Agreement dated as of
, (the "Participant Agreement") among Atlas Air, Inc., as Owner (the "Owner"),
and Wilmington Trust Company, not in its individual capacity, except as
expressly provided therein but solely as Mortgagee under the Trust Indenture
(the "Mortgagee"), which provides for the financing of the purchase today by the
Owner of the Boeing model 747-47UF aircraft with manufacturer's serial number
and United States nationality and registration marks N MC (the "Aircraft") and
four General Electric model CF6-80C2B1F aircraft engines with manufacturer's
serial numbers - , - , - and - (the "Engines"), this opinion is rendered with
respect to matters arising under that portion of Title 49 of the United States
Code (the "Transportation Code") relating to the recordation of the instruments
hereinafter described and the registration of the Aircraft pursuant to the
Transportation Code. As contemplated by the Participant Agreement, title to the
Aircraft has been conveyed by The Boeing Company to the Owner by an AC Form
8050-2 Aircraft ▇▇▇▇ of Sale dated __, (the "FAA ▇▇▇▇ of Sale"), the
registration of the Aircraft will be accomplished by the filing with the Federal
Aviation Administration (the "FAA") of an AC Form 8050-1 Aircraft Registration
Application in the name of the Owner (the "Aircraft Registration Application"),
and the creation of a security interest in the Aircraft and the Engines is
pursuant to Trust Indenture and Mortgage dated as of , (the "Trust Indenture")
between the Owner and the Mortgagee, as supplemented by Trust Indenture and
Mortgage Supplement No. 1 dated , (the "Trust Supplement").
Based upon our examination of the above described instruments and of such
records of the FAA as we deemed necessary
E-1-2
to render this opinion and as were made available to us by the FAA, it is our
opinion that:
(a) the FAA ▇▇▇▇ of Sale, the Trust Indenture with the Trust
Supplement attached and the Trust Supplement are in due form for
recordation by and have been duly filed for recordation with the FAA
pursuant to and in accordance with the provisions of the Transportation
Code today at ______ P.M., C.D.T., ____ P.M., C.D.T. and _____ P.M.,
C.D.T., respectively;
(b) the Aircraft Registration Application, to which were attached the
Affidavit of the Owner required by Section 47.7(c)(2)(ii) of Part 47 of the
Federal Aviation Regulations, was duly filed with the FAA today at ______
P.M., C.D.T.;
(c) the Owner is the owner of legal title to the Aircraft, and the
Aircraft and the Engines are free and clear of all Liens (as such term is
defined in the Trust Indenture) except the security interest created by the
Trust Indenture, as supplemented by the Trust Supplement;
(d) the Aircraft is eligible for registration in the name of the Owner
under the Transportation Code, and the Aircraft will be duly registered by
the FAA in the name of the Owner in due course pursuant to and in
accordance with the provisions of the Transportation Code;
(e) the rights of the Mortgagee, with respect to the Aircraft and the
Engines are perfected;
(f) the Trust Indenture, as supplemented by the Trust Supplement,
constitutes a valid, duly perfected first priority mortgage and security
interest in favor of the Mortgagee in the Aircraft and the Engines (insofar
as such security interest and collateral assignment affect an interest
covered by the recording system established by the FAA pursuant to Section
44107 of the Transportation Code);
(g) neither the Trust Indenture nor the Trust Supplement is required
to be re-filed with the FAA or filed or recorded in any other place within
the United States in order to perfect and maintain the perfection of the
mortgage and security interest in the Aircraft and the Engines created by
the Trust Indenture, as supplemented by the Trust Supplement (insofar as
such security interest af-
E-1-3
fects an interest covered by the recording system established by the FAA
pursuant to Section 44107 of the Transportation Code) under the applicable
laws of any jurisdiction within the United States;
(h) no other registration of the Aircraft and no filings or recordings
(other than the filings and recordings with the FAA which have been
effected) are necessary to perfect in any jurisdiction within the United
States the Owner's title to the Aircraft, the first priority mortgage and
security interest created by the Trust Indenture, as supplemented by the
Trust Supplement, in the Aircraft and the Engines (insofar as such security
interest and collateral assignment affect an interest covered by the
recording system established by the FAA pursuant to Section 44107 of the
Transportation Code); and
(i) no authorization, approval, consent, license or order of, or
registration or filing with, or the giving of notice to the FAA Aircraft
Registry is required for the valid authorization, delivery or performance
of the Trust Indenture and the Trust Supplement except for such
authorizations, approvals, consents, licenses, orders, registrations and
notices as have been affected.
No opinion is herein expressed as to: (i) laws other than the federal laws
of the United States; (ii) the validity or enforceability under local law of the
Trust Indenture, as supplemented by the Trust Supplement; or (iii) the
recognition of the perfection of the mortgage, security interest and collateral
assignment created by the Trust Indenture, as supplemented by the Trust
Supplement, as against third parties in any legal proceedings outside the United
States. In rendering this opinion, we were subject to the accuracy of FAA
personnel in the filing, indexing and recording of instruments filed with the
FAA and in the search for encumbrance cross-reference index cards for the
Engines. Since our examination was limited to records maintained by the FAA
Aircraft Registry, our opinion does not cover liens which are perfected without
the filing of notice thereof with the FAA, such as federal tax liens, liens
arising under Section 1368(a) of Title 29 of the United States Code and
possessory artisans' liens. In rendering this opinion, we have relied upon the
opinion of the Aeronautical Center Counsel dated , (a copy of which is attached
hereto) and upon the past practice of the FAA which is consistent with said
opinion.
E-1-4
Although this opinion is not addressed to special counsel for the Loan
Participants, they may rely upon it as though addressed to them.
Very truly yours,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇
For the Firm
EXHIBIT A
Atlas Air, Inc.,
as Owner
Loan Participants named in the Participation Agreement
Wilmington Trust Company,
as Mortgagee
Standard & Poor's Ratings Services
Exhibit E-2
___________, ___,___
To the Addresses Listed on
Exhibit A Attached Hereto
Re: Atlas Air, Inc.
Ladies and Gentlemen:
This letter confirms that the following described instruments were recorded
by the Federal Aviation Administration (the "FAA") on ,
, and assigned the Conveyance Numbers noted below:
(a) AC Form 8050-2 Aircraft ▇▇▇▇ of Sale dated , (the "FAA ▇▇▇▇ of
Sale") by The Boeing Company to Atlas Air, Inc., as Owner (the "Owner"),
covering the Boeing model 747-47UF aircraft with manufacturer's serial
number and United States nationality and registration marks N MC (the
"Aircraft") was recorded as Conveyance No. P____________; and
(b) Trust Indenture and Mortgage dated as of , (the "Trust Indenture")
between the Owner and Wilmington Trust Company, not in its individual
capacity except as expressly stated therein but solely as Mortgagee (the
"Mortgagee"), to which was attached the Trust Indenture and Mortgage
Supplement No. 1 dated , (the "Trust Supplement") of the Owner covering the
Aircraft and the General Electric model CF6-80C2B1F aircraft engines with
manufacturer's serial numbers - , - , - and - (the "Engines"), was recorded
as Conveyance No. P________.
Subsequent to the recordations mentioned above, we examined the records
maintained by the FAA with respect to the Aircraft and the Engines. Based upon
such examination, it is our opinion that:
(a) the FAA ▇▇▇▇ of Sale and the Trust Indenture with the Trust
Supplement attached have been duly recorded by the FAA pursuant to and in
accordance with the provisions of Section 44107 of Title 49 of the United
States Code;
E-2-2
(b) the Owner is the owner of legal title to the Aircraft;
(c) the Aircraft is duly registered in the name of the Owner pursuant
to and in accordance with the provisions of Sections 44102 and 44103 of
Title 49 of the United States Code; and
(d) the Aircraft and the Engines are free and clear of all Liens (as
such term is defined in Annex A to the Trust Indenture) except the security
interest created by the Trust Indenture, as supplemented by the Trust
Supplement.
This opinion is subject to the same limitations and exceptions as were
set forth in our opinion letter dated , , covering the Aircraft and the
Engines.
Very truly yours,
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇
For the Firm
PGG/ch
EXHIBIT A
Atlas Air, Inc.,
as Owner
Loan Participants named in the Participation Agreement
Wilmington Trust Company,
as Mortgagee
Standard & Poor's Ratings Services