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PARTICIPATION AGREEMENT
[NW ____ _]
Dated as of
[________________]
Among
NORTHWEST AIRLINES, INC.,
Lessee,
NORTHWEST AIRLINES CORPORATION,
Guarantor,
[________________________________],
Owner Participant,
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
Pass Through Trustee under each of
the Pass Through Trust Agreements,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its Individual Capacity, except as expressly provided
herein, but solely as Owner Trustee,
STATE STREET BANK AND TRUST COMPANY,
Subordination Agent,
and
STATE STREET BANK AND TRUST COMPANY,
in its Individual Capacity and as Indenture Trustee
-----------------------
One Airbus [A320-212] [A319-113] Aircraft
N[_____]
Leased to Northwest Airlines, Inc.
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INDEX TO PARTICIPATION AGREEMENT
Page
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SECTION 1. Participations in Lessor's Cost of the Aircraft................3
SECTION 2. Lessee's Notice of Delivery Date...............................4
SECTION 3. Instructions to the Owner Trustee..............................4
SECTION 4. Conditions.....................................................5
(a) Conditions Precedent to the Participations in the
Aircraft.................................................5
(b) Conditions Precedent to the Obligations of Lessee and
the Guarantor...........................................12
SECTION 5. [Intentionally Omitted].......................................14
SECTION 6. Extent of Interest of Certificate Holders.....................14
SECTION 7. Representations and Warranties of Lessee and the
Guarantor; Indemnities.......................................14
(a) Representations and Warranties............................14
(b) General Tax Indemnity.....................................17
(c) General Indemnity.........................................17
(d) Income Tax................................................17
SECTION 8. Representations, Warranties and Covenants.....................18
SECTION 9. Reliance of Liquidity Provider................................35
SECTION 10. Other Documents...............................................36
SECTION 11. Certain Covenants of Lessee...................................36
SECTION 12. Owner for Federal Tax Purposes................................37
SECTION 13. Certain Definitions; Notices; Consent to Jurisdiction.........37
SECTION 14. Change of Situs of Owner Trust................................38
SECTION 15. Miscellaneous.................................................39
SECTION 16. Expenses......................................................40
SECTION 17. Refinancings..................................................40
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SCHEDULES
SCHEDULE I - Names and Addresses
SCHEDULE II - Commitments
SCHEDULE III - Pass Through Trust Agreements
EXHIBITS
Exhibit A - Schedule of Countries Authorized for Reregistration
Exhibit B-1 - Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special
counsel for the Lessee and the Guarantor
Exhibit B-2 - Form of Opinion of Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, special
counsel for the Lessee and the Guarantor
Exhibit B-3 - Form of Opinion of Lessee's Legal Department
Exhibit C - Form of Opinion of counsel for the Supplier and the
Manufacturer
Exhibit D - Form of Opinion of Ray, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special counsel
for the Owner Trustee
Exhibit E-1 - Form of Opinion of [___________________], special counsel for
the Owner Participant
Exhibit E-2 - Form of Opinion of Owner Participant's in-house counsel
Exhibit F - Form of Opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
Exhibit G - Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, special counsel for the
Indenture Trustee
Exhibit H-1 - [Intentionally Omitted]
Exhibit H-2 - [Intentionally Omitted]
Exhibit I - Form of ss.1110 Opinion of Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇,
special counsel for the Lessee
Exhibit J-1 - Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, special counsel for
the Pass Through Trustee
Exhibit J-2 - Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, special counsel for
the Subordination Agent
Exhibit K - Section 7(b) - General Tax Indemnity
Exhibit L - Section 7(c) - General Indemnity
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PARTICIPATION AGREEMENT
[NW ____ _]
THIS PARTICIPATION AGREEMENT [NW ____ _] dated as of
[_______________], among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation
(the "Lessee"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware corporation (the
"Guarantor"), (iii) [_________________________], a [__________] corporation (the
"Owner Participant"), (iv) STATE STREET BANK AND TRUST COMPANY OF CONNECTICUT,
NATIONAL ASSOCIATION, not in its individual capacity except as otherwise
provided herein, but solely as trustee (in such capacity, the "Pass Through
Trustee") under each of [three] separate Pass Through Trust Agreements (as
defined below), (v) FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association, not in its individual capacity, except as expressly
provided herein, but solely as Owner Trustee under the Trust Agreement (herein,
in such latter capacity, together with any successor owner trustee, called the
"Owner Trustee"), (vi) STATE STREET BANK AND TRUST COMPANY, not in its
individual capacity, but solely as subordination agent and trustee (in such
capacity, the "Subordination Agent") under the Intercreditor Agreement (defined
below), and (vii) STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust
company, in its individual capacity and as Indenture Trustee under the Trust
Indenture (as hereinafter defined) (herein, in such latter capacity together
with any successor indenture trustee, called the "Indenture Trustee");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement (as such term is defined
in the Lease hereinafter referred to) between Lessee and the Supplier, the
Supplier has agreed to sell to Lessee, among other things, certain Airbus
Industrie [A320-212] [A319-113] aircraft, including the Aircraft which has been
delivered by the Supplier to Lessee and is the subject of this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement,
(i) Lessee and the Owner Trustee are entering into a Purchase
Agreement Assignment [NW ____ _], dated as of the date hereof (herein
called the "Purchase Agreement Assignment"), whereby Lessee assigns to the
Owner Trustee certain rights and interests of Lessee under the Purchase
Agreement with respect to the Aircraft; and
(ii) the Manufacturer and the Supplier have executed the
Manufacturer Consent and Agreement to Assignment of Warranties [NW ____
__] and the Supplier Consent and Agreement to Assignment of Warranties [NW
____ _] (herein collectively called the "Consent and Agreement"),
substantially in the forms attached to the Purchase Agreement Assignment;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant is entering into a Trust Agreement [NW ____ _],
dated as of the date hereof (said Trust Agreement, as the same may be amended or
supplemented from time to time, being herein called the "Trust Agreement", such
term to include, unless the context otherwise
requires, any Trust Supplement referred to below), with the Owner Trustee,
pursuant to which Trust Agreement the Owner Trustee agrees, among other things,
to hold the Trust Estate defined in Section 1.01 thereof (herein called the
"Trust Estate") for the use and benefit of the Owner Participant;
WHEREAS, the Indenture Trustee and the Owner Trustee concurrently
with the execution and delivery of this Agreement are entering into the Trust
Indenture and Security Agreement [NW ____ _], dated as of the date hereof (said
Trust Indenture and Security Agreement, as the same may be amended or
supplemented from time to time, being herein called the "Trust Indenture", such
term to include, unless the context otherwise requires, the Trust Supplement
referred to below) pursuant to which the Owner Trustee will issue secured
certificates substantially in the form set forth in Section 2.01 thereof (the
"Secured Certificates", and individually, a "Secured Certificate") in three
series, which Secured Certificates are to be secured by the mortgage and
security interests created by the Owner Trustee in favor of the Indenture
Trustee, and the Owner Trustee shall execute and deliver a Trust and Indenture
Supplement substantially in the form of Exhibit A to the Trust Indenture (the
"Trust Supplement") covering the Aircraft, supplementing the Trust Agreement and
the Trust Indenture;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement
[NW ____ _], dated as of the date hereof (such Lease Agreement, as the same may
be amended or supplemented from time to time to the extent permitted by the
terms thereof and this Agreement, herein called the "Lease", such term to
include, unless the context otherwise requires, the Lease Supplement referred to
below), whereby, subject to the terms and conditions set forth therein, the
Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the
Owner Trustee the Aircraft on the date (the "Delivery Date") that the Aircraft
is sold and delivered by Lessee to the Owner Trustee under the ▇▇▇▇ of Sale, and
accepted by the Owner Trustee for all purposes of the Lease, such acceptance to
be evidenced by the execution of the Trust Supplement covering the Aircraft, and
such lease to be evidenced by the execution and delivery of a Lease Supplement
covering the Aircraft;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant is entering into a Tax Indemnity Agreement [NW
____ _], dated as of the date hereof, with Lessee (the "Tax Indemnity
Agreement");
WHEREAS, concurrently with the execution and delivery of this
Agreement; the Guarantor is entering into a Guarantee [NW ____ _], dated as of
the date hereof, pursuant to which the Guarantor guarantees certain obligations
of Lessee under the Operative Documents (the "Guarantee");
WHEREAS, pursuant to the Pass Through Trust Agreement and each of
the Pass Through Trust Supplements set forth in Schedule III hereto
(collectively, the "Pass Through Trust Agreements"), on the Issuance Date three
separate trusts (collectively, the "Pass Through Trusts" and, individually, a
"Pass Through Trust") were created to facilitate the transactions contemplated
hereby, including, without limitation, the issuance and sale by each
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Pass Through Trust of pass through certificates pursuant thereto (collectively,
the "Certificates");
WHEREAS, the proceeds from the issuance and sale of the Certificates
by each Pass Through Trust will be applied in part by the Pass Through Trustee
on the Delivery Date to purchase from the Owner Trustee, on behalf of each Pass
Through Trust, all of the Secured Certificates bearing the same interest rate as
the Certificates issued by such Pass Through Trust;
WHEREAS, on the Issuance Date (i) Citibank, N.A. (the "Liquidity
Provider") entered into three revolving credit agreements (each, a "Liquidity
Facility"), one for the benefit of the holders of Certificates of each Pass
Through Trust, with the Subordination Agent, as agent for the Pass Through
Trustee on behalf of each such Pass Through Trust; and (ii) the Pass Through
Trustee, the Liquidity Provider and the Subordination Agent entered into the
Intercreditor Agreement, dated June 25, 1999 (the "Intercreditor Agreement");
WHEREAS, the Secured Certificates will be held by the Subordination
Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through
Trusts;
WHEREAS, in order to facilitate the transactions contemplated
hereby, Lessee and the Guarantor have entered into the Underwriting Agreement,
dated as of June 18, 1999, among Lessee, the Guarantor and the several
underwriters named therein (the "Underwriting Agreement"); and
WHEREAS, certain terms are used herein as defined in Section 13(a)
hereof;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
SECTION 1. Participations in Lessor's Cost of the Aircraft. (a)
Participation by Pass Through Trustees. Subject to the terms and conditions of
this Agreement, the Pass Through Trustee for each Pass Through Trust agrees to
finance, in part, the Owner Trustee's payment of Lessor's Cost for the Aircraft
by paying to the Owner Trustee the aggregate purchase price of the Secured
Certificates being issued to such Pass Through Trustee as set forth on Schedule
II opposite the name of such Pass Through Trust. The Pass Through Trustees shall
make such payments to the Owner Trustee on a date to be designated pursuant to
Section 2 hereof, but in no event later than [__________], by transferring to
the account of the Owner Trustee at State Street Bank and Trust Company, ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ABA No. ▇▇▇-▇▇▇-▇▇▇, Account No.
▇▇▇▇-▇▇▇-▇, Reference: Northwest/NW [_____ __], not later than 9:30 a.m., New
York City time, on the Delivery Date in immediately available funds in Dollars,
the amount set forth opposite the name of such Pass Through Trust on Schedule II
hereto.
Upon the occurrence of the above transfers by the Pass Through
Trustee for each Pass Through Trust to the Owner Trustee, the Owner Trustee, at
the direction of the Owner Participant, shall issue, pursuant to Article II of
the Trust Indenture, to the Subordination Agent on behalf of the Pass Through
Trustee for each of the Pass Through Trusts, Secured Certificates of the
maturity and aggregate principal amount, bearing the interest rate and for the
purchase price set forth on Schedule II hereto opposite the name of such Pass
Through Trust.
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(b) Participation by Owner Participant. Subject to the terms and
conditions of this Agreement, the Owner Participant hereby agrees to participate
in the payment of Lessor's Cost for the Aircraft by making an equity investment
in the beneficial ownership of the Aircraft on a date to be designated pursuant
to Section 2 hereof, but in no event later than [__________], by transferring to
the account of the Owner Trustee at State Street Bank and Trust Company, ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ABA No. ▇▇▇-▇▇▇-▇▇▇, Account No.
▇▇▇▇-▇▇▇-▇, Reference: Northwest/NW [_____ __], not later than 9:30 a.m., New
York City time, on the Delivery Date in immediately available funds in Dollars,
the amount set forth opposite the Owner Participant's name on Schedule II
hereto.
(c) General Provisions. The amount of the participation of each of
the Pass Through Trustee and the Owner Participant to be made as provided above
in the payment of Lessor's Cost for the Aircraft is hereinafter called such
party's "Commitment" for the Aircraft. In case any of the Pass Through Trustee
or the Owner Participant shall default in its obligation under the provisions of
this Section 1, no other such party shall have any obligation to make any
portion of such defaulted amount available or to increase the amount of its
Commitment and the obligation of such nondefaulting party shall remain subject
to the terms and conditions set forth in this Agreement. Upon receipt by the
Owner Trustee of all amounts to be furnished to it on the Delivery Date pursuant
to this Section 1 and the satisfaction of the conditions set forth in Section 4
hereof, Lessee shall transfer title to and deliver the Aircraft to the Owner
Trustee, and the Owner Trustee shall purchase and take title to and accept
delivery of the Aircraft. In consideration of the transfer of title to and
delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall,
simultaneously with such transfer of title and delivery, pay to Lessee (from the
amounts so furnished it by the Participants) Lessor's Cost for the Aircraft.
SECTION 2. Lessee's Notice of Delivery Date. Lessee agrees to give
each Participant, the Owner Trustee and the Indenture Trustee at least two
Business Days' telecopy or other written notice of the Delivery Date for the
Aircraft, which Delivery Date shall be a Business Day, which notice shall
specify the amount of Lessor's Cost and the amount of each Participant's
Commitment for the Aircraft. As to each Participant, the making of its
Commitment for the Aircraft available in the manner required by Section 1 shall
constitute a waiver of such notice.
SECTION 3. Instructions to the Owner Trustee. The Owner Participant
agrees that its releasing the amount of its Commitment for the Aircraft to the
account of the Owner Trustee in accordance with the terms of Section 1 shall
constitute, subject to satisfaction or waiver of the conditions set forth in
Section 4(a), without further act, authorization and direction by the Owner
Participant to the Owner Trustee:
(i) to pay to Lessee Lessor's Cost for the Aircraft;
(ii) to the extent not previously accomplished by a prior
authorization, to authorize a representative or representatives of the
Owner Trustee (who shall be an employee or employees, or an agent or
agents, of Lessee designated by Lessee) to accept delivery of the Aircraft
on the Delivery Date pursuant to the Acceptance Certificate;
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(iii) to accept from Lessee the ▇▇▇▇ of Sale and the FAA ▇▇▇▇ of
Sale for the Aircraft referred to in Section 4(a)(v)(8) and 4(a)(v)(9);
(iv) to execute an Aircraft Registration Application, the Lease
Supplement and the Trust Supplement, in each case covering the Aircraft;
(v) to borrow from the Pass Through Trustee to finance a portion of
the Lessor's Cost for the Aircraft and to execute and deliver to the
Subordination Agent on behalf of the Pass Through Trustee for each of the
Pass Through Trusts a principal amount of Secured Certificates bearing the
interest rate set forth opposite the name of such Pass Through Trust on
Schedule II hereto, which Secured Certificates shall be in the principal
amounts set forth on Schedule II hereto, pursuant hereto and to the Trust
Indenture; and
(vi) to take such other action as may be required to be taken by the
Owner Trustee on the Delivery Date by the terms of any Operative Document.
SECTION 4. Conditions. (a) Conditions Precedent to the
Participations in the Aircraft. It is agreed that the obligations of each of the
Pass Through Trustee and the Owner Participant to participate in the payment of
Lessor's Cost and to make available the amount of its respective Commitment are
subject to the satisfaction prior to or on the Delivery Date of the following
conditions precedent, except that paragraphs (iii), (v)(5), (xxi), (xxii) and
(xxiv) shall not be a condition precedent to the obligations of the Pass Through
Trustee, and paragraphs (iv), (vii)(D) and (xiv) shall not be a condition
precedent to the obligation of the Owner Participant:
(i) The Pass Through Trustee and the Owner Participant shall have
received due notice with respect to such participation pursuant to Section
2 hereof (or shall have waived such notice either in writing or as
provided in Section 2).
(ii) No change shall have occurred after the date of the execution
and delivery of this Agreement in applicable law or regulations or
guidelines or interpretations thereof by appropriate regulatory
authorities which would make it a violation of law or regulations or
guidelines for the Pass Through Trustee or the Owner Participant to make
its Commitment available in accordance with Section 1 hereof.
(iii) In the case of the Owner Participant, the Pass Through
Trustees shall have made available the amount of their Commitments for the
Aircraft in accordance with Section 1 hereof.
(iv) In the case of the Pass Through Trustees, the Owner Participant
shall have made available the amount of its Commitment for the Aircraft in
accordance with Section 1 hereof.
(v) The following documents shall have been duly authorized,
executed and delivered by the respective party or parties thereto, shall
each be satisfactory in form and substance to the Pass Through Trustee and
the Owner Participant and shall be in full force and effect and executed
counterparts shall have been delivered to the Pass Through Trustee and the
Owner Participant, or their respective counsel, provided that only the
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Subordination Agent on behalf of each Pass Through Trustee shall receive
an executed original of such Pass Through Trustee's respective Secured
Certificate and provided, further, that an excerpted copy of the Purchase
Agreement shall only be delivered to and retained by the Owner Trustee
(but the Indenture Trustee shall also retain an excerpted copy of the
Purchase Agreement which may be inspected by the Owner Participant and its
counsel prior to the Delivery Date and subsequent to the Delivery Date may
be inspected and reviewed by the Indenture Trustee if and only if there
shall occur and be continuing an Event of Default), the chattel paper
counterpart of the Lease and the Lease Supplement covering the Aircraft
dated the Delivery Date shall be delivered to the Indenture Trustee, and
the Tax Indemnity Agreement need only be satisfactory to the Owner
Participant and Lessee and shall only be delivered to Lessee and the Owner
Participant and their respective counsel:
(1) an excerpted copy of the Purchase Agreement (insofar as it
relates to the Aircraft) and the Guaranty;
(2) the Purchase Agreement Assignment;
(3) the Lease;
(4) a Lease Supplement covering the Aircraft dated the
Delivery Date;
(5) the Tax Indemnity Agreement;
(6) the Trust Agreement;
(7) a Trust Supplement covering the Aircraft dated the
Delivery Date;
(8) the ▇▇▇▇ of Sale;
(9) the FAA ▇▇▇▇ of Sale;
(10) an acceptance certificate covering the Aircraft in the
form agreed to by the Owner Participant and Lessee (herein called
the "Acceptance Certificate") duly completed and executed by the
Owner Trustee or its agent, which may be a representative of Lessee,
and by such representative on behalf of Lessee;
(11) the Trust Indenture;
(12) the Secured Certificates;
(13) the Consent and Agreement;
(14) the Guarantee; and
(15) the French Pledge Agreement.
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In addition, the Pass Through Trustee and the Owner Participant each
shall have received executed counterparts or conformed copies of the following
documents:
(1) each of the Pass Through Trust Agreements;
(2) the Intercreditor Agreement; and
(3) the Liquidity Facility for each of the Pass Through
Trusts.
(vi) A Uniform Commercial Code financing statement or statements
covering all the security interests created by or pursuant to the Granting
Clause of the Trust Indenture that are not covered by the recording system
established by the Federal Aviation Act, shall have been executed and
delivered by the Owner Trustee, and such financing statement or statements
shall have been duly filed in all places necessary or advisable, and any
additional Uniform Commercial Code financing statements deemed advisable
by the Owner Participant or the Pass Through Trustee shall have been
executed and delivered by Lessee or the Owner Trustee and duly filed.
(vii) The Pass Through Trustee and the Owner Participant shall have
received the following:
(A)(1) an incumbency certificate of Lessee and the Guarantor
(as the case may be) as to the person or persons authorized to
execute and deliver this Agreement, the Lease, the Lease Supplement
covering the Aircraft, the ▇▇▇▇ of Sale, the FAA ▇▇▇▇ of Sale, the
Purchase Agreement Assignment, the Tax Indemnity Agreement, the Pass
Through Trust Agreements, the Guarantee and any other documents to
be executed on behalf of Lessee or the Guarantor (as the case may
be) in connection with the transactions contemplated hereby and the
signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
Lessee and the Guarantor or the executive committee thereof,
certified by the Secretary or an Assistant Secretary of Lessee and
the Guarantor (as the case may be), duly authorizing the
transactions contemplated hereby and the execution and delivery of
each of the documents required to be executed and delivered on
behalf of Lessee or the Guarantor (as the case may be) in connection
with the transactions contemplated hereby; and
(3) a copy of the certificate of incorporation of Lessee and
the Guarantor, certified by the Secretary of State of the State of
Minnesota in the case of Lessee and certified by the Secretary of
State of the State of Delaware in the case of the Guarantor, a copy
of the by-laws of Lessee and the Guarantor, certified by the
Secretary or Assistant Secretary of Lessee and the Guarantor (as the
case may be), and a certificate or other evidence from the Secretary
of State of the State of Minnesota in the case of Lessee and from
the Secretary of State of the State of Delaware in the case of the
Guarantor, dated as of a date reasonably near the Delivery Date, as
to the due incorporation and good standing of Lessee or the
Guarantor (as the case may be) in such state.
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(B)(1) an incumbency certificate of the Indenture Trustee as
to the person or persons authorized to execute and deliver this
Agreement, the Trust Indenture and any other documents to be
executed on behalf of the Indenture Trustee in connection with the
transactions contemplated hereby and the signatures of such person
or persons;
(2) a copy of the resolutions of the board of directors of the
Indenture Trustee, certified by the Secretary or an Assistant
Secretary of the Indenture Trustee, duly authorizing the
transactions contemplated hereby and the execution and delivery of
each of the documents required to be executed and delivered on
behalf of the Indenture Trustee in connection with the transactions
contemplated hereby;
(3) a copy of the articles of association and by-laws of the
Indenture Trustee, each certified by the Secretary or an Assistant
Secretary of the Indenture Trustee; and
(4) a certificate signed by an authorized officer of the
Indenture Trustee, dated the Delivery Date, certifying that the
representations and warranties contained herein of the Indenture
Trustee are correct as though made on and as of the Delivery Date,
except to the extent that such representations and warranties relate
solely to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date).
(C)(1) an incumbency certificate of the Owner Trustee as to
the person or persons authorized to execute and deliver this
Agreement, the Lease, the Lease Supplement covering the Aircraft,
the Trust Agreement, the Trust Indenture, the Purchase Agreement
Assignment and any other documents to be executed on behalf of the
Owner Trustee in connection with the transactions contemplated
hereby and the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of the
Owner Trustee, certified by the Secretary or an Assistant Secretary
of the Owner Trustee, duly authorizing the transactions contemplated
hereby and the execution and delivery of each of the documents
required to be executed and delivered on behalf of the Owner Trustee
in connection with the transactions contemplated hereby;
(3) a copy of the articles of association and by-laws of the
Owner Trustee, each certified by the Secretary or an Assistant
Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of the Owner
Trustee, dated the Delivery Date, certifying that the
representations and warranties contained herein of the Owner Trustee
(in its individual capacity and as trustee) are correct as though
made on and as of the Delivery Date, except to the extent that such
representations and warranties relate solely to an earlier date (in
which
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case such representations and warranties are correct on and as of
such earlier date).
(D)(1) an incumbency certificate of the Owner Participant as
to the person or persons authorized to execute and deliver this
Agreement, the Tax Indemnity Agreement, the Trust Agreement and any
other documents to be executed on behalf of the Owner Participant in
connection with the transactions contemplated hereby and the
signatures of such person or persons;
(2) a certificate signed by the Secretary or an Assistant
Secretary of the Owner Participant, to the effect that the
transactions contemplated hereby and the execution and delivery of
each of the documents required to be executed and delivered on
behalf of the Owner Participant in connection with the transactions
contemplated hereby have been duly authorized;
(3) a copy of the articles of association and by-laws of the
Owner Participant, each certified by the Secretary or an Assistant
Secretary of the Owner Participant; and
(4) a certificate signed by an authorized officer of the Owner
Participant, dated the Delivery Date, certifying that the
representations and warranties contained herein of the Owner
Participant are correct as though made on and as of the Delivery
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such representations
and warranties are correct on and as of such earlier date).
(viii) All appropriate action required to have been taken prior to
the Delivery Date in connection with the transactions contemplated by this
Agreement shall have been taken by the Federal Aviation Administration, or
any governmental or political agency, subdivision or instrumentality of
the United States, and all orders, permits, waivers, authorizations,
exemptions and approvals of such entities required to be in effect on the
Delivery Date in connection with the transactions contemplated by this
Agreement shall have been issued, and all such orders, permits, waivers,
authorizations, exemptions and approvals shall be in full force and effect
on the Delivery Date.
(ix) On the Delivery Date the Pass Through Trustee and the Owner
Participant shall have received a certificate signed by an authorized
officer of Lessee (and with respect to the matters set forth in clause (4)
below, the Guarantor) to the effect that:
(1) the Aircraft has been duly certified by the Federal
Aviation Administration as to type and has a current certificate of
airworthiness;
(2) the FAA ▇▇▇▇ of Sale, the Lease, the Lease Supplement, the
Trust Indenture and the Trust Supplement covering the Aircraft shall
have been duly filed for recordation (or shall be in the process of
being so duly filed for recordation) with the Federal Aviation
Administration, and the Trust Agreement shall have been filed (or
shall be in the process of being so filed) with the Federal Aviation
Administration;
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(3) application for registration of the Aircraft in the name
of the Owner Trustee has been duly made with the Federal Aviation
Administration; and
(4) the representations and warranties contained herein of
Lessee and the Guarantor are correct as though made on and as of the
Delivery Date, except to the extent that such representations and
warranties (other than those contained in clause (F) of Section
7(a)(iv)) relate solely to an earlier date (in which case such
representations and warranties were correct on and as of such
earlier date).
(x) Lessee and the Guarantor shall have entered into the
Underwriting Agreement and each of the Pass Through Trust Agreements, the
Certificates shall have been issued and sold pursuant to the Underwriting
Agreement and the Pass Through Trust Agreements.
(xi) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee,
the Owner Participant and the Owner Trustee, and reasonably satisfactory
as to scope and substance to the Pass Through Trustee and the Owner
Participant, an opinion substantially in the form of Exhibit B-1 hereto
from ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, special counsel for Lessee and the
Guarantor, an opinion substantially in the form of Exhibit B-2 hereto from
Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, special counsel for Lessee and the
Guarantor, and an opinion substantially in the form of Exhibit B-3 hereto
from Lessee's legal department.
(xii) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee,
the Owner Participant, the Owner Trustee, the Guarantor and Lessee and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of Exhibit C hereto from counsel to the Supplier
and the Manufacturer.
(xiii) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee,
the Owner Participant, the Owner Trustee, the Guarantor and Lessee, and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of Exhibit D hereto from Ray, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
special counsel for the Owner Trustee.
(xiv) The Pass Through Trustee shall have received, addressed to the
Pass Through Trustee, the Indenture Trustee, the Owner Trustee, the
Guarantor and Lessee, and reasonably satisfactory as to scope and
substance to the Pass Through Trustee, the Guarantor and Lessee, an
opinion substantially in the form of Exhibit E-1 hereto from
[________________], special counsel for the Owner Participant, and an
opinion substantially in the form of Exhibit E-2 hereto from the Owner
Participant's in-house counsel.
(xv) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee,
the Owner Participant, the
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Owner Trustee, the Guarantor and Lessee, and reasonably satisfactory as to
scope and substance to the Pass Through Trustee, the Owner Participant,
the Guarantor and Lessee, an opinion substantially in the form of Exhibit
F hereto from ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C.
(xvi) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Owner Participant,
the Owner Trustee, the Guarantor and Lessee, and reasonably satisfactory
as to scope and substance to the Pass Through Trustee, the Owner
Participant, the Guarantor and Lessee, an opinion substantially in the
form of Exhibit G hereto from ▇▇▇▇▇▇▇ ▇▇▇▇ LLP, special counsel for the
Indenture Trustee.
(xvii) [Intentionally Omitted].
(xviii) The Pass Through Trustee and Owner Participant shall have
received an independent insurance broker's report, in form and substance
satisfactory to the Pass Through Trustee and the Owner Participant, as to
the due compliance with the terms of Section 11 of the Lease relating to
insurance with respect to the Aircraft.
(xix) Lessor's Cost for the Aircraft shall be $[______________].
(xx) No action or proceeding shall have been instituted nor shall
governmental action be threatened before any court or governmental agency,
nor shall any order, judgment or decree have been issued or proposed to be
issued by any court or governmental agency at the time of the Delivery
Date to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or the transactions contemplated hereby.
(xxi) The Owner Participant shall have received from
[___________________], special tax counsel to the Owner Participant, an
opinion, in form and substance satisfactory to the Owner Participant, with
respect to certain Federal income tax aspects of the transaction
contemplated by the Operative Documents.
(xxii) In the opinion of the Owner Participant and its special tax
counsel, there shall have been, since the date hereof, no amendment,
modification, addition, or change in or to the provisions of the Internal
Revenue Code of 1986, as amended through the date hereof, and the
regulations promulgated under the Code (including temporary regulations),
Internal Revenue Service Revenue Procedures or Revenue Rulings, or other
administrative interpretations, applicable judicial precedents or
Executive Orders of the President of the United States, all as in effect
on the date hereof, the effect of which might preclude the Owner
Participant from obtaining any of the income tax benefits and consequences
assumed to be available to the Owner Participant as set forth in Section 2
of the Tax Indemnity Agreement.
(xxiii) The Pass Through Trustee and the Owner Participant shall
have received a favorable opinion substantially in the form of Exhibit I
hereto addressed to the Pass Through Trustee and the Owner Participant,
and reasonably satisfactory as to scope and substance to the Pass Through
Trustee and the Owner Participant, from Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇,
special counsel for the Lessee, which opinion shall state (with
-11-
customary assumptions and qualifications) that the Owner Trustee, as
lessor under the Lease, and the Indenture Trustee, as assignee of the
Owner Trustee's rights under the Lease pursuant to the Trust Indenture,
would be entitled to the benefits of 11 U.S.C. ss.1110 with respect to the
Aircraft.
(xxiv) The Owner Participant shall have received (A) a certificate
signed by an authorized officer of the Pass Through Trustee, dated the
Delivery Date, certifying that the representations and warranties
contained herein of the Pass Through Trustee are correct as though made on
and as of the Delivery Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which
case such representations and warranties are correct on and as of such
earlier date), (B) an opinion substantially in the form of Exhibit J-1
hereto addressed to the Owner Participant, the Guarantor and Lessee of
▇▇▇▇▇▇▇ ▇▇▇▇ LLP, special counsel for the Pass Through Trustee, and
reasonably satisfactory as to scope and substance to the Owner
Participant, the Guarantor and Lessee, and (C)(1) an incumbency
certificate of the Pass Through Trustee as to the person or persons
authorized to execute and deliver this Agreement and any other documents
to be executed on behalf of the Pass Through Trustee in connection with
the transactions contemplated hereby and the signatures of such person or
persons; (2) a copy of the articles of association and by-laws of the Pass
Through Trustee, each certified by the Secretary or an Assistant Secretary
of the Pass Through Trustee; and (3) such other documents and evidence
with respect to the Pass Through Trustee as it may reasonably request in
order to establish the due consummation of the transactions contemplated
by this Agreement, the taking of all necessary action in connection
therewith and compliance with the conditions herein set forth.
(xxv) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Owner Participant,
the Owner Trustee, the Indenture Trustee, the Guarantor and Lessee, and
reasonably satisfactory as to scope and substance, to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of Exhibit J-2 hereto from ▇▇▇▇▇▇▇ ▇▇▇▇ LLP,
special counsel to the Subordination Agent.
Promptly upon the registration of the Aircraft and the recording of
the Trust Indenture, the Lease, the Lease Supplement covering the Aircraft and
the Trust Supplement covering the Aircraft pursuant to the Federal Aviation Act,
Lessee will cause ▇▇▇▇▇ & ▇▇▇▇▇▇▇, P.C., special counsel in Oklahoma City,
Oklahoma, to deliver to the Pass Through Trustee, the Indenture Trustee, the
Owner Participant, the Owner Trustee and Lessee an opinion as to the due and
valid registration of the Aircraft in the name of the Owner Trustee, the due
recording of the FAA ▇▇▇▇ of Sale, the Trust Indenture, such Lease Supplement,
such Trust Supplement and the Lease and the filing of the Trust Agreement and
the lack of filing of any intervening documents with respect to the Aircraft.
(b) Conditions Precedent to the Obligations of Lessee and the
Guarantor. It is agreed that (A) the obligations of Lessee to sell the Aircraft
to the Owner Trustee and to accept delivery of the Aircraft under the Lease, and
(B) the obligations of Lessee and the Guarantor to enter into the other
Operative Documents, are all subject to the fulfillment to the satisfaction of
Lessee and the Guarantor prior to or on the Delivery Date of the following
conditions precedent:
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(i) All appropriate action required to have been taken on or prior
to the Delivery Date in connection with the transactions contemplated by
this Agreement shall have been taken by the Federal Aviation
Administration, or any governmental or political agency, subdivision or
instrumentality of the United States, and all orders, permits, waivers,
exemptions, authorizations and approvals of such entities required to be
in effect on the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been issued, and all such
orders, permits, waivers, exemptions, authorizations and approvals shall
be in full force and effect on the Delivery Date.
(ii) The conditions specified in Sections 4(a)(ii), 4(a)(iii) and
4(a)(iv) hereof shall have been satisfied.
(iii) Those documents described in Section 4(a)(v) shall have been
duly authorized, executed and delivered by the respective party or parties
thereto (other than Lessee and the Guarantor) in the manner specified in
Section 4(a)(v), shall each be satisfactory in form and substance to
Lessee and the Guarantor, shall be in full force and effect on the
Delivery Date, and an executed counterpart of each thereof (other than the
Secured Certificates) shall have been delivered to Lessee or its special
counsel and the Guarantor or its special counsel.
(iv) Lessee and the Guarantor shall have received (A) each
certificate referred to in Section 4(a)(vii) (other than the certificate
referred to in clause (A) thereof), (B) the certificate referred to in
Section 4(a)(xxiv)(A), and (C)(1) an incumbency certificate of the Pass
Through Trustee as to the person or persons authorized to execute and
deliver this Agreement and any other documents to be executed on behalf of
the Pass Through Trustee in connection with the transactions contemplated
hereby and the signatures of such person or persons; (2) a copy of the
articles of association and by-laws of the Pass Through Trustee, each
certified by the Secretary or an Assistant Secretary of the Pass Through
Trustee; and (3) such other documents and evidence with respect to the
Pass Through Trustee as Lessee or its special counsel and the Guarantor or
its special counsel may reasonably request in order to establish the due
consummation of the transactions contemplated by this Agreement, the
taking of all necessary action in connection therewith and compliance with
the conditions herein set forth.
(v) Lessee and the Guarantor shall have received the opinions set
forth in Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv), 4(a)(xvi),
4(a)(xxiv)(B) and 4(a)(xxv) in each case addressed to Lessee and the
Guarantor and dated the Delivery Date and in each case in scope and
substance reasonably satisfactory to Lessee and its special counsel and
the Guarantor and its special counsel.
(vi) No action or proceeding shall have been instituted nor shall
governmental action be threatened before any court or governmental agency,
nor shall any order, judgment or decree have been issued or proposed to be
issued by any court or governmental agency at the time of the Delivery
Date to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or the transactions contemplated hereby.
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(vii) No change shall have occurred after the date of the execution
and delivery of this Agreement in applicable law or regulations or
guidelines or interpretations by appropriate regulatory authorities which
would make it a violation of law or regulations or guidelines for Lessee
or the Guarantor to enter into any transaction contemplated by the
Operative Documents.
(viii) In the opinion of Lessee and its special counsel, there shall
have been, since the date hereof, no amendment, modification, addition or
change in or to the Internal Revenue Code of 1986, as amended through the
date hereof, the regulations promulgated under the Code (including
temporary regulations), Internal Revenue Service Revenue Procedures or
Revenue Rulings, or other administrative interpretations, applicable
judicial precedents or Executive Orders of the President of the United
States which might give rise to an indemnity obligation of Lessee under
any of the Operative Documents.
(ix) Lessee shall have been paid Lessor's Cost for the Aircraft.
SECTION 5. [Intentionally Omitted].
SECTION 6. Extent of Interest of Certificate Holders. No Certificate
Holder (as defined in the Trust Indenture) shall have any further interest in,
or other right with respect to, the mortgage and security interests created by
the Trust Indenture when and if the principal of and interest on all Secured
Certificates held by such holder and all other sums payable to such holder
hereunder, under the Trust Indenture and under such Secured Certificates shall
have been paid in full. Each Pass Through Trustee and, by its acceptance of a
Secured Certificate, each Certificate Holder agrees that it will look solely to
the income and proceeds from the Trust Indenture Estate to the extent available
for distribution to such Certificate Holder as provided in Article III of the
Trust Indenture and that neither the Owner Participant nor the Owner Trustee
shall be personally liable to the Pass Through Trustees or any Certificate
Holder for any amounts payable under the Secured Certificates, the Trust
Indenture or hereunder, except as expressly provided in the Operative Documents.
SECTION 7. Representations and Warranties of Lessee and the
Guarantor; Indemnities. (a) Representations and Warranties. Lessee and the
Guarantor represent and warrant to the Pass Through Trustee, the Owner Trustee,
the Indenture Trustee, the Liquidity Provider, the Subordination Agent and the
Owner Participant that as of the Delivery Date:
(i) each of Lessee and the Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the
state of its incorporation, has the corporate power and authority to own
or hold under lease its properties, has, or had on the respective dates of
execution thereof, the corporate power and authority to enter into and
perform its obligations under (i) in the case of Lessee, the Lessee
Documents, the Pass Through Trust Agreements, the Underwriting Agreement
and the other Operative Documents to which it is a party and (ii) in the
case of the Guarantor, this Agreement, the Pass Through Trust Agreements,
the Underwriting Agreement and the other Operative Documents to which it
is a party, and is duly qualified to do business as a foreign corporation
in each state in which its operations or the nature of its business
requires
-14-
other than failures to so qualify which would not have a material adverse
effect on the condition (financial or otherwise), consolidated business or
properties of it and its subsidiaries considered as one enterprise;
(ii) Lessee is a Certificated Air Carrier, and its chief executive
office (as such term is used in Article 9 of the Uniform Commercial Code
in effect in the State of Minnesota) is located at Eagan, Minnesota;
(iii) the execution and delivery by Lessee or the Guarantor (as the
case may be) of the Lessee Documents, the Pass Through Trust Agreements,
the Underwriting Agreement and each other Operative Document to which
Lessee or the Guarantor (as the case may be) is a party, and the
performance of the obligations of Lessee or the Guarantor (as the case may
be) under the Lessee Documents, the Pass Through Trust Agreements, the
Underwriting Agreement and each other Operative Document to which Lessee
or the Guarantor (as the case may be) is a party, have been duly
authorized by all necessary corporate action on the part of Lessee or the
Guarantor, do not require any stockholder approval, or approval or consent
of any trustee or holder of any material indebtedness or material
obligations of Lessee or the Guarantor, except such as have been duly
obtained and are in full force and effect, and do not contravene any law,
governmental rule, regulation or order binding on Lessee or the Guarantor
(as the case may be) or the certificate of incorporation or by-laws of
Lessee or the Guarantor (as the case may be), or contravene the provisions
of, or constitute a default under, or result in the creation of any Lien
(other than Permitted Liens) upon the property of Lessee or the Guarantor
(as the case may be) under, any indenture, mortgage, contract or other
agreement to which Lessee or the Guarantor (as the case may be) is a party
or by which it may be bound or affected which contravention, default or
Lien, individually or in the aggregate, would be reasonably likely to have
a material adverse effect on the condition (financial or otherwise),
business or properties of the Guarantor and its subsidiaries considered as
one enterprise;
(iv) neither the execution and delivery by Lessee or the Guarantor
(as the case may be) of the Lessee Documents, the Pass Through Trust
Agreements, the Underwriting Agreement or any other Operative Document to
which Lessee or the Guarantor (as the case may be) is a party, nor the
performance of the obligations of Lessee or the Guarantor (as the case may
be) under the Lessee Documents, the Pass Through Trust Agreements, the
Underwriting Agreement or the other Operative Documents to which Lessee or
the Guarantor (as the case may be) is a party, requires the consent or
approval of, the giving of notice to, the registration with, or the taking
of any other action in respect of, the Department of Transportation, the
FAA, or any other federal, state or foreign governmental authority having
jurisdiction over Lessee or the Guarantor, other than (A) the registration
of the Certificates under the Securities Act of 1933, as amended, and
under the securities laws of any state in which the Certificates may be
offered for sale if the laws of such state require such action, (B) the
qualification of the Pass Through Trust Agreements under the Trust
Indenture Act of 1939, as amended, pursuant to an order of the Securities
and Exchange Commission, (C) the orders, permits, waivers, exemptions,
authorizations and approvals of the regulatory authorities having
jurisdiction over the operation of the Aircraft by Lessee or any Sublessee
required to be obtained on or prior to
-15-
the Delivery Date, which orders, permits, waivers, exemptions,
authorizations and approvals have been duly obtained and are, or on the
Delivery Date will be, in full force and effect (other than a flying time
wire, all steps to obtain the issuance of which will have been, on the
Delivery Date, taken or caused to be taken by Lessee), (D) the
registration of the Aircraft referred to in Section 4(a)(ix)(3), (E) the
registrations and filings referred to in Section 7(a)(vi), and (F)
authorizations, consents, approvals, actions, notices and filings required
to be obtained, taken, given or made either only after the date hereof or
the failure of which to obtain, take, give or make would not be reasonably
likely to have a material adverse effect on the condition (financial or
otherwise), business or properties of the Guarantor and its subsidiaries
considered as one enterprise;
(v) this Agreement, each of the other Lessee Documents, the Pass
Through Trust Agreements and the Guarantee constitute the legal, valid and
binding obligations of Lessee or the Guarantor (as the case may be)
enforceable against Lessee or the Guarantor (as the case may be) in
accordance with their respective terms, except as the same may be limited
by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the rights of
creditors or lessors generally and by general principles of equity,
whether considered in a proceeding at law or in equity, and except, in the
case of the Lease, as limited by applicable laws which may affect the
remedies provided in the Lease, which laws, however, do not make the
remedies provided in the Lease inadequate for practical realization of the
benefits intended to be afforded thereby;
(vi) except for (A) [the filing for recording pursuant to the
Federal Aviation Act of the termination of the Mortgage, (B)] the filing
of the Trust Agreement with the FAA, [(B)] the registration of the
Aircraft pursuant to the Federal Aviation Act, [(C)] the filing for
recording pursuant to the Federal Aviation Act of the Lease with the Lease
Supplement covering the Aircraft, the Trust Indenture and the Trust
Supplement attached thereto and made a part thereof, the Trust Indenture
with the Trust Supplement attached thereto and made a part thereof and the
FAA ▇▇▇▇ of Sale, [(D)] the filing of financing statements (and
continuation statements at periodic intervals) with respect to the
security interests created by such documents under the Uniform Commercial
Code of Minnesota and Utah and such other states as may be specified in
the opinions furnished pursuant to Section 4(a)(xi) hereof, and [(E)] the
taking of possession by the Indenture Trustee of the original chattel
paper counterpart of each of the Lease and the Lease Supplement covering
the Aircraft, no further filing or recording of any document (including
any financing statement in respect thereof under Article 9 of the Uniform
Commercial Code of any applicable jurisdiction) is necessary under the
laws of the United States of America or any State thereof in order to
perfect the Owner Trustee's interest in the Aircraft as against Lessee and
any third parties, or to perfect the security interest in favor of the
Indenture Trustee in the Owner Trustee's interest in the Aircraft (with
respect to such portion of the Aircraft as is covered by the recording
system established by the FAA pursuant to 49 U.S.C. Section 44107) and in
the Lease in any applicable jurisdiction in the United States;
-16-
(vii) neither Lessee, the Guarantor nor any of their affiliates has
directly or indirectly offered the Certificates for sale to any Person
other than in a manner permitted by the Securities Act of 1933, as
amended, and by the rules and regulations thereunder;
(viii) neither Lessee nor the Guarantor is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(ix) no event has occurred and is continuing which constitutes an
Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time lapse or both;
(x) no event has occurred and is continuing which constitutes an
Event of Loss or would constitute an Event of Loss with the lapse of time;
(xi) Lessee is solvent and will not be rendered insolvent by the
sale of the Aircraft; after the sale of the Aircraft the capital of Lessee
will not be unreasonably small for the conduct of the business in which
Lessee is engaged or is about to engage; Lessee has no intention or belief
that it is about to incur debts beyond its ability to pay as they mature;
and Lessee's sale of the Aircraft is made without any intent to hinder,
delay or defraud either present or future creditors;
(xii) none of the proceeds from the issuance of the Secured
Certificates or from the acquisition by the Owner Participant of its
beneficial interest in the Trust Estate will be used directly or
indirectly by Lessee to purchase or carry any "margin security" as such
term is defined in Regulation U of the Board of Governors of the Federal
Reserve System; and
(xiii) On the Delivery Date, all sales or use tax then due and for
which Lessee is responsible pursuant to Section 7(b)(i) hereof shall have
been paid, other than such taxes which are being contested by Lessee in
good faith and by appropriate proceedings so long as such proceedings do
not involve any material risk of the sale, forfeiture or loss of the
Aircraft.
(b) General Tax Indemnity. Exhibit K, which is a complete statement
of the provisions of Section 7(b), is incorporated herein in its entirety as if
fully set forth herein.
(c) General Indemnity. Exhibit L, which is a complete statement of
the provisions of Section 7(c), is incorporated herein in its entirety as if
fully set forth herein.
(d) Income Tax. For purposes of this Section 7, the term "Income
Tax" means any Tax based on or measured by gross or net income or receipts
(other than sales, use, license or property Taxes or Taxes in the nature
thereof) (including, without limitation, capital gains taxes, minimum taxes,
income taxes collected by withholding and taxes on tax preference items), and
Taxes which are capital, doing business, excess profits or net worth taxes and
interest, additions to tax, penalties, or other charges in respect thereof.
-17-
SECTION 8. Representations, Warranties and Covenants.
(a) [Intentionally Omitted].
(b) [Intentionally Omitted].
(c) Each of the Owner Participant and First Security Bank, National
Association, in its individual capacity, represents and warrants to the other
parties to this Agreement that it is, and on the Delivery Date will be, a
Citizen of the United States without making use of any voting trust, voting
powers agreement or similar arrangement. The Owner Participant agrees, solely
for the benefit of Lessee and the Loan Participants, that if (i) it shall cease
to be, or believes itself likely to cease to be, a Citizen of the United States
and (ii) the Aircraft shall or would therefore become ineligible for
registration in the name of the Owner Trustee under the Federal Aviation Act and
regulations then applicable thereunder, then the Owner Participant shall (at its
own expense and without any reimbursement or indemnification from Lessee)
promptly effect a voting trust, voting powers agreement or other similar
arrangement or take any other action as may be necessary to prevent any
deregistration and to maintain the United States registration of the Aircraft.
It is agreed that: (A) the Owner Participant shall be liable to pay on request
to each of the other parties hereto and to each holder of a Secured Certificate
for any damages suffered by any such other party or holder as the result of the
representation and warranty of the Owner Participant in the first sentence of
this Section 8(c) proving to be untrue as of the Delivery Date; and (B) the
Owner Participant shall be liable to pay on request to Lessee, any Sublessee and
the Loan Participants for any damages which may be incurred by Lessee, any
Sublessee or the Loan Participants as a result of the Owner Participant's
failure to comply with its obligations pursuant to the second sentence of this
Section 8(c). Each party hereto agrees, upon the request and at the sole expense
of the Owner Participant, to cooperate with the Owner Participant in complying
with its obligations under the provisions of the second sentence of this Section
8(c). First Security Bank, National Association, in its individual capacity,
agrees that if at any time an officer or responsible employee of the Corporate
Trust Department of First Security Bank, National Association, shall obtain
actual knowledge that First Security Bank, National Association, has ceased to
be a Citizen of the United States without making use of a voting trust, voting
powers agreement or similar arrangement, it will promptly resign as Owner
Trustee (if and so long as such citizenship is necessary under the Federal
Aviation Act as in effect at such time or, if it is not necessary, if and so
long as the Owner Trustee's citizenship would have any material adverse effect
on the Loan Participants, Lessee or the Owner Participant), effective upon the
appointment of a successor Owner Trustee in accordance with Section 9.01 of the
Trust Agreement. If the Owner Participant or First Security Bank, National
Association, in its individual capacity, does not comply with the requirements
of this Section 8(c), the Owner Trustee, the Indenture Trustee and the
Participants hereby agree that an Event of Default (or an event which would
constitute an Event of Default but for lapse of time or the giving of notice or
both) shall not have occurred and be continuing under the Lease due to
non-compliance by Lessee with the registration requirements in the Lease.
(d) First Security Bank, National Association, in its individual
capacity, represents and warrants that both the principal place of business of
the Owner Trustee and the place where its records concerning the Aircraft and
all of its interest in, to and under the
-18-
Operative Documents to which it is a party are kept is Salt Lake City, Utah.
First Security Bank, National Association, in its individual capacity, agrees
that it will not change the location of such office to a location outside of
Salt Lake City, Utah, without prior written notice to all parties. First
Security Bank, National Association, in its individual capacity, further
represents and warrants that (A) on the Delivery Date the Owner Trustee shall
have received whatever title to the Aircraft as was conveyed to it by Lessee,
and (B) the Trust Agreement, and, assuming due authorization, execution and
delivery of the Trust Agreement by the Owner Participant, the other Owner
Trustee Documents, when executed and delivered, shall have been duly executed
and delivered by one of its officers who is duly authorized to execute and
deliver such instruments on behalf of the Owner Trustee. First Security Bank,
National Association, in its individual capacity, represents that it has not
offered any interest in the Trust Estate or any Secured Certificates or any
similar securities for sale to, or solicited any offer to acquire the same from,
anyone, and that no officer or responsible employee of the Corporate Trust
Department of First Security Bank, National Association, has knowledge of any
such offer or solicitation by anyone other than Lessee.
(e) Each Loan Participant represents and warrants that neither it
nor anyone acting in its behalf has offered any Secured Certificates for sale
to, or solicited any offer to buy any Secured Certificate from, any Person other
than in a manner in compliance with, and which does not require registration
under, the Securities Act of 1933, as amended, or the rules and regulations
thereunder.
(f) The Owner Participant and the Indenture Trustee agree that, at
any time after the Depreciation Period, Lessee may elect to effect a change in
registration of the Aircraft, at Lessee's cost and expense, so long as (a) the
country of registry of the Aircraft is a country listed on Exhibit A hereto (or
such other country as the Owner Trustee approves) and (b) the following
conditions are met: (i) unless the country of registry is Taiwan, the United
States maintains normal diplomatic relations with the country of registry of the
Aircraft, and if the country of registry is Taiwan, the United States maintains
diplomatic relations at least as good as those in effect on the Delivery Date;
and (ii) the Owner Trustee and the Indenture Trustee shall have received
favorable opinions (subject to customary exceptions) addressed to each such
party, from counsel of recognized reputation qualified in the laws of the
relevant jurisdiction to the effect that:
(A) the Owner Trustee's ownership interest in the Aircraft
shall be recognized under the laws of such jurisdiction, (B) the
obligations of Lessee, and the rights and remedies of the Owner
Trustee, under the Lease shall remain valid, binding and (subject to
customary bankruptcy and equitable remedies exceptions and to other
exceptions customary in foreign opinions generally) enforceable
under the laws of such jurisdiction (or the laws of the jurisdiction
to which the laws of such jurisdiction would refer as the applicable
governing law), (C) after giving effect to such change in
registration, the Lien of the Trust Indenture on the Owner Trustee's
right, title and interest in and to the Aircraft and the Lease shall
continue as a valid and duly perfected first priority security
interest and all filing, recording or other action necessary to
protect the same shall have been accomplished (or, if such opinion
cannot be given at the time of such proposed change in registration
because such change in registration is not yet effective, (1)
-19-
the opinion shall detail what filing, recording or other action is
necessary and (2) the Owner Trustee and the Indenture Trustee shall
have received a certificate from Lessee that all possible
preparations to accomplish such filing, recording and other action
shall have been done, and such filing, recording and other action
shall be accomplished and a supplemental opinion to that effect
shall be delivered to the Owner Trustee and the Indenture Trustee on
or prior to the effective date of such change in registration), (D)
it is not necessary, solely as a consequence of such change in
registration and without giving effect to any other activity of the
Owner Trustee, the Owner Participant or the Indenture Trustee (or
any Affiliate thereof), as the case may be, for the Owner Trustee,
the Owner Participant or the Indenture Trustee to qualify to do
business in such jurisdiction, (E) there is no tort liability of the
owner of an aircraft not in possession thereof under the laws of
such jurisdiction (it being agreed that, in the event such latter
opinion cannot be given in a form satisfactory to the Owner
Participant, such opinion shall be waived if insurance reasonably
satisfactory to the Owner Participant is provided to cover such
risk), and (F) (unless Lessee shall have agreed to provide insurance
covering the risk of requisition of use of such Aircraft by the
government of such jurisdiction so long as such Aircraft is
registered under the laws of such jurisdiction) the laws of such
jurisdiction require fair compensation by the government of such
jurisdiction payable in currency freely convertible into Dollars for
the loss of use of such Aircraft in the event of the requisition by
such government of such use.
In addition, as a condition precedent to any such change in registration, Lessee
shall furnish to the Owner Trustee and the Indenture Trustee an Officer's
Certificate to the effect that the insurance required by Section 11 of the Lease
shall be in full force and effect at the time of such change in registration
after giving effect to such change in registration and that the new country of
registry imposes aircraft maintenance standards not materially different from
those of the United States, France, Germany, Japan, the Netherlands or the
United Kingdom. Lessee shall pay all costs, expenses, fees, recording and
registration taxes, including the reasonable fees and expenses of counsel to the
Owner Trustee, the Owner Participant and the Indenture Trustee, and other
charges in connection with any such change in registration.
(g) The Owner Participant represents and warrants to Lessee, the
Guarantor, the Indenture Trustee, the Pass Through Trustee, the Subordination
Agent, the Liquidity Provider and the Owner Trustee, in its capacity as such and
in its individual capacity, as follows:
(i) it is duly incorporated, validly existing and in good standing
under the laws of [_______________] and has the corporate power and
authority to carry on its present business and operations and to own or
lease its properties, and has the corporate power and authority to enter
into and to perform its obligations under the Owner Participant Documents;
this Agreement and the other Owner Participant Documents have been duly
authorized, executed and delivered by it; and this Agreement and each of
the other Owner Participant Documents constitute the legal, valid and
binding obligations of the Owner Participant enforceable against it in
accordance with its respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the rights of creditors generally and by general
-20-
principles of equity, whether considered in a proceeding at law or in
equity; and it has a tangible net worth (exclusive of goodwill) greater
than $50,000,000;
(ii) neither (A) the execution and delivery by the Owner Participant
of the Owner Participant Documents nor (B) compliance by it with all of
the provisions thereof, (x) will contravene any law or order of any court
or governmental authority or agency applicable to or binding on the Owner
Participant (it being understood that no representation or warranty is
made with respect to laws, rules or regulations relating to aviation or to
the nature of the equipment owned by the Owner Trustee other than such
laws, rules or regulations relating to the citizenship requirements of the
Owner Participant under applicable law), or (y) will contravene the
provisions of, or constitutes or has constituted or will constitute a
default under, or result in the creation of any Lien (other than Liens
provided for in the Operative Documents) upon any property of the Owner
Participant under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its property may
be bound or affected;
(iii) no authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body (other
than as required by the Federal Aviation Act or the regulations
promulgated thereunder) is required for the due execution, delivery or
performance by it of the Owner Participant Documents;
(iv) there are no pending or, to its knowledge, threatened actions
or proceedings before any court or administrative agency or arbitrator
which would materially adversely affect the Owner Participant's ability to
perform its obligations under this Agreement, the Tax Indemnity Agreement
and the Trust Agreement;
(v) neither the Owner Participant nor anyone authorized by it to act
on its behalf (it being understood that in proposing, facilitating and
otherwise taking any action in connection with the financing contemplated
hereby and agreed to herein by the Owner Participant, Lessee has not acted
as agent of the Owner Participant) has directly or indirectly offered any
Secured Certificate or Certificate or any interest in and to the Trust
Estate, the Trust Agreement or any similar interest for sale to, or
solicited any offer to acquire any of the same from, any Person; the Owner
Participant's interest in the Trust Estate and the Trust Agreement is
being acquired for its own account and is being purchased for investment
and not with a view to any resale or distribution thereof;
(vi) on the Delivery Date, the Trust Estate shall be free of Lessor
Liens (including for this purpose Liens which would be Lessor Liens but
for the proviso in the definition of Lessor Liens) attributable to the
Owner Participant; and
(vii) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar arrangement).
(h) Each of First Security Bank, National Association, in its
individual capacity, and the Owner Participant covenants and agrees that it
shall not cause or permit to exist a Lessor Lien attributable to it with respect
to the Aircraft or any other portion of the Trust
-21-
Estate. Each of First Security Bank, National Association, in its individual
capacity, and the Owner Participant agrees that it will promptly, at its own
expense, take such action as may be necessary duly to discharge such Lessor Lien
attributable to it. Each of First Security Bank, National Association, in its
individual capacity, and the Owner Participant agrees to make restitution to the
Trust Estate for any actual diminution of the assets of the Trust Estate
resulting from Lessor Liens (including for this purpose Liens which would be
Lessor Liens but for the proviso in the definition of Lessor Liens) attributable
to it. The Owner Participant agrees to make restitution to the Trust Estate for
any actual diminution of the assets of the Trust Estate resulting from any Taxes
or Expenses imposed on the Trust Estate against which Lessee is not required to
indemnify the Trust Estate pursuant to Section 7 hereof.
(i) State Street Bank and Trust Company, in its individual capacity,
covenants and agrees that it shall not cause or permit to exist any Lien,
arising as a result of (A) claims against the Indenture Trustee not related to
its interest in the Aircraft or the administration of the Trust Indenture Estate
pursuant to the Trust Indenture, (B) acts of the Indenture Trustee not permitted
by, or failure of the Indenture Trustee to take any action required by, the
Operative Documents to the extent such acts arise or such failure arises from or
constitutes gross negligence or willful misconduct, (C) claims against the
Indenture Trustee relating to Taxes or Expenses which are excluded from the
indemnification provided by Section 7 pursuant to said Section 7, or (D) claims
against the Indenture Trustee arising out of the transfer by the Indenture
Trustee of all or any portion of its interest in the Aircraft, the Trust Estate,
the Trust Indenture Estate or the Operative Documents other than a transfer of
the Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article IV or V of
the Trust Indenture or a transfer of the Aircraft pursuant to Section 15 of the
Lease while an Event of Default is continuing and prior to the time that the
Indenture Trustee has received all amounts due pursuant to the Trust Indenture.
(j) [Intentionally Omitted].
(k) Each Loan Participant represents and warrants that the Secured
Certificate to be issued to it pursuant to the Trust Indenture is being acquired
by it for investment and not with a view to resale or distribution (it being
understood that such Loan Participant may pledge or assign as security its
interest in each Secured Certificate issued to it), provided that the
disposition of its property shall at all times be and remain within its control,
except that the Loan Participants may sell, transfer or otherwise dispose of any
Secured Certificate or any portion thereof, or grant participations therein, in
a manner which in itself does not require registration under the Securities Act
of 1933, as amended.
(l) The Indenture Trustee, and by acceptance of the Secured
Certificates the Certificate Holders, hereby (i) agree that for purposes of the
application of Section 1111(b) of Title 11 of the United States Code or any
successor provision or any comparable provisions that the "debtor" in any
bankruptcy proceeding involving the assets held or administered pursuant to the
Trust Agreement shall be strictly limited to the Trust Estate (excluding the
Excluded Payments) and (ii) make (and hereby agree to make), with respect to the
Trust Indenture Estate, the election provided for in Section 1111(b)(2) of Title
11 of the United States Code. It is hereby agreed by the Indenture Trustee, and
by the acceptance of the Secured Certificates the Certificate Holders hereby
agree, that if (i) all or any part of the Trust Estate becomes the property of,
or the Owner Participant becomes, a debtor subject to the reorganization
provisions of the Bankruptcy
-22-
Reform Act of 1978 or any successor provision or any comparable proceeding, (ii)
pursuant to such reorganization provisions the Owner Trustee (in its individual
capacity) or the Owner Participant is required, by reason of the Owner Trustee
(in its individual capacity) or the Owner Participant being held to have
recourse liability to the holder(s) of the Secured Certificates or to the
Indenture Trustee, directly or indirectly (other than the recourse liability of
the Owner Participant under this Participation Agreement), to make payment on
account of any amount payable as principal or interest on the Secured
Certificates and (iii) any holder(s) of the Secured Certificates or the
Indenture Trustee actually receives any Excess Payment (as hereinafter defined)
which reflects any payment by the Owner Trustee (in its individual capacity) or
the Owner Participant on account of (ii) above, then such holder(s) or the
Indenture Trustee, as the case may be, shall promptly refund to the Owner
Trustee or the Owner Participant (whichever shall have made such payment) such
Excess Payment. For purposes of this Section 8(l), "Excess Payment" means the
amount by which such payment exceeds the amount which would have been received
by the holder(s) of the Secured Certificates or the Indenture Trustee if the
Owner Trustee (in its individual capacity) or the Owner Participant had not
become subject to the recourse liability referred to in (ii) above. Nothing
contained in this Section 8(l) shall prevent the holder of a Secured Certificate
or the Indenture Trustee from enforcing any personal recourse obligation (and
retaining the proceeds thereof) of the Owner Trustee (in its individual
capacity) or the Owner Participant under this Agreement or the Trust Indenture
(and any exhibits or annexes thereto).
(m) State Street Bank and Trust Company represents, warrants and
covenants, in its individual capacity, to Lessee, the Guarantor, the Owner
Trustee, the Pass Through Trustee, the Subordination Agent, the Liquidity
Provider and the Owner Participant as follows:
(i) the Indenture Trustee is a Massachusetts trust company duly
incorporated, validly existing and in good standing under the laws of
Massachusetts, is a Citizen of the United States (without making use of
any voting trust, voting powers agreement or similar arrangement), will
notify promptly all parties to this Agreement if in its reasonable opinion
its status as a Citizen of the United States (without making use of any
voting trust, voting powers agreement or similar arrangement) is likely to
change and will resign as Indenture Trustee as provided in Section 8.02 of
the Trust Indenture promptly after it obtains actual knowledge that it has
ceased to be such a Citizen of the United States (without making use of a
voting trust, voting powers agreement or similar arrangement), and has the
full corporate power, authority and legal right under the laws of the
Commonwealth of Massachusetts and the United States pertaining to its
banking, trust and fiduciary powers to execute and deliver each of this
Agreement, the Trust Indenture and each other Operative Document to which
it is a party and to carry out its obligations under this Agreement, the
Trust Indenture, each other Operative Document to which it is a party and
to authenticate the Secured Certificates;
(ii) the execution and delivery by the Indenture Trustee of the
Indenture Trustee Documents and the authentication of the Secured
Certificates and the performance by the Indenture Trustee of its
obligations under the Indenture Trustee Documents have been duly
authorized by the Indenture Trustee and will not violate its articles of
association or by-laws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it is
bound;
-23-
(iii) this Agreement and each of the other Indenture Trustee
Documents constitute the legal, valid and binding obligations of the
Indenture Trustee enforceable against it in accordance with their
respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in equity;
(iv) there are no pending or, to its knowledge, threatened actions
or proceedings against the Indenture Trustee, either in its individual
capacity or as Indenture Trustee, before any court or administrative
agency which, if determined adversely to it, would materially adversely
affect the ability of the Indenture Trustee, in its individual capacity or
as Indenture Trustee as the case may be, to perform its obligations under
the Operative Documents to which it is a party; and
(v) there are no Indenture Trustee's Liens on the Aircraft or any
portion of the Trust Estate.
(n) The Owner Participant will not, directly or indirectly, sell,
assign, convey or otherwise transfer any of its right, title or interest in and
to this Agreement, the Trust Estate or the Trust Agreement or any proceeds
therefrom to any person or entity, unless (i) the proposed transferee is a
"Transferee" (as defined below), (ii) Lessee shall have (1) received an opinion
(in form and substance reasonably satisfactory to Lessee) of counsel to the
Owner Participant (who shall be reasonably satisfactory to Lessee) to the effect
that such transfer will not result in any risk of loss of tax benefits to, or
any increase in the tax liability of, Lessee and (2) received from the Owner
Participant so seeking to transfer such right, title or interest reasonably
satisfactory indemnification for any loss of tax benefits to, and increase in
the tax liability of, Lessee, and (iii) the Owner Participant sells, assigns,
conveys or otherwise transfers all of its right, title and interest in and to
this Agreement, the Trust Estate, the Trust Agreement and the proceeds therefrom
to a single entity. A "Transferee" shall mean either (A) a bank or other
financial institution with a combined capital, surplus and undivided profits of
at least $50,000,000 or a corporation whose tangible net worth is at least
$50,000,000, exclusive of goodwill, in either case as of the proposed date of
such transfer, as determined in accordance with generally accepted accounting
principles, or (B) any subsidiary of such a bank, financial institution or
corporation, provided that such bank, financial institution or corporation
furnishes to the Owner Trustee, the Indenture Trustee and Lessee a guaranty with
respect to the Owner Participant's obligations, in the case of the Owner
Trustee, under the Trust Agreement and, in the case of the Indenture Trustee and
Lessee, the Owner Participant's obligations hereunder, including but not limited
to, under Section 8(c) and Section 8(h) hereof, in form and substance reasonably
satisfactory to Lessee, the Owner Trustee and the Indenture Trustee; provided,
however, that any Transferee shall not be an airline, a commercial air carrier,
an air freight forwarder, an entity engaged in the business of parcel transport
by air or other similar person or a corporation or other entity controlling,
controlled by or under common control with such an airline, a commercial air
carrier, an air freight forwarder, an entity engaged in the business of parcel
transport by air or other similar person. Each such transfer to a Transferee
shall be subject to the conditions that (M) upon giving effect to such transfer,
the Transferee is a Citizen of the United States (without making use of a voting
trust agreement, voting powers agreement or other similar arrangement unless
approved by Lessee), and has full power and authority to enter into the
transactions
-24-
contemplated hereby, (N) the Transferee has the requisite power and authority to
enter into and carry out the transactions contemplated hereby and such
Transferee shall have delivered to Lessee, the Owner Trustee and the Indenture
Trustee an opinion of counsel in form and substance reasonably satisfactory to
such persons as to the due authorization, delivery, legal, valid and binding
effect and enforceability of the agreement or agreements referred to in the next
clause with respect to the Transferee and any guaranty provided pursuant to the
provisions of this Section 8(n) as to the guarantor, (O) the Transferee enters
into an agreement or agreements, in form and substance reasonably satisfactory
to the Owner Trustee, Lessee and the Indenture Trustee, whereby the Transferee
confirms that it shall be deemed a party to this Agreement and a party to the
Trust Agreement and agrees to be bound by all the terms of, and to undertake all
of the obligations of the transferor Owner Participant contained in, the Owner
Participant Documents (to the extent of the participation so transferred to it)
and makes the representations and warranties made by the Owner Participant
thereunder, (P) such transfer does not affect registration of the Aircraft under
the Federal Aviation Act, or any rules or regulations promulgated thereunder or
create a relationship which would be in violation thereof or violate any
provision of the Securities Act of 1933, as amended, or any other applicable
Federal or state law, (Q) the transferor Owner Participant assumes the risk of
any loss of Interest Deductions, Amortization Deductions and MACRS Deductions,
the risk of any Inclusion Event (each as defined in the Tax Indemnity
Agreement), and the risk of any sales, use, value added or similar tax resulting
from such transfer, (R) the transferor Owner Participant pays all of the costs
and expenses (including, without limitation, fees and expenses of counsel)
incurred in connection with such transfer, including the costs and expenses of
the Owner Trustee, the Indenture Trustee, Lessee and the Loan Participants in
connection therewith, and (S) the terms of the Operative Documents and the
Overall Transaction shall not be altered. Upon any such transfer by the Owner
Participant as above provided, the Transferee shall be deemed the Owner
Participant for all purposes hereof and of the other Operative Documents and
each reference herein to the transferor Owner Participant shall thereafter be
deemed for all purposes to be to the Transferee and the transferor Owner
Participant shall be relieved of all obligations of the transferor Owner
Participant under the Owner Participant Documents arising after the date of such
transfer except to the extent fully attributable to or arising out of acts or
events occurring prior thereto and not assumed by the Transferee (in each case,
to the extent of the participation so transferred). If the Owner Participant
intends to transfer any of its interests hereunder, it shall give 30 days prior
written notice thereof to the Indenture Trustee, the Owner Trustee and Lessee,
specifying the name and address of the proposed Transferee.
(o) Notwithstanding the provisions of Section 8(x) hereof, unless
waived by the Loan Participants, Lessee shall not be entitled to assume the
Secured Certificates on the date for purchase of the Aircraft pursuant to
Section 19(d) of the Lease if on such date an Event of Default shall have
occurred and be continuing or any condition or event shall exist which, with the
passage of time or giving of notice or both, would become such an Event of
Default.
(p) First Security Bank, National Association, and State Street Bank
and Trust Company, each in its individual capacity, agrees for the benefit of
Lessee to comply with the terms of the Trust Indenture which it is required to
comply with in its individual capacity.
(q) The Owner Participant represents and warrants that it is not
acquiring its interest in the Trust Estate, any Secured Certificate or any
interests represented thereby with the
-25-
assets of any "employee benefit plan" as defined in Section 3(3) of ERISA or of
any "plan" within the meaning of Section 4975(e)(1) of the Code. Each Loan
Participant agrees that it will not transfer any Secured Certificate (or any
part thereof) to any entity (except pursuant to Section 2.14 of the Trust
Indenture) unless such entity makes (or is deemed to have made) a representation
and warranty as of the date of transfer that either no part of the funds to be
used by it for the purchase and holding of such Secured Certificate (or any part
thereof) constitutes assets of any "employee benefit plan" or that such purchase
and holding will not result in a non-exempt prohibited transaction (under
Section 4975 of the Code and Section 406 of ERISA). The Owner Participant agrees
that it will not transfer any of its right, title or interest in and to this
Agreement, the Trust Estate or the Trust Agreement or any proceeds therefrom to
any entity unless such entity makes (or is deemed to have made) a representation
and warranty as of the date of transfer that either no part of the funds to be
used by it for the purchase of such right, title and interest (or any part
thereof) constitutes assets of any "employee benefit plan" or that such transfer
will not result in a non-exempt prohibited transaction (under Section 4975 of
the Code and Section 406 of ERISA). The Pass Through Trustee agrees that it will
not agree to any amendment, modification or waiver of Section 1.01(e)(i) of the
Trust Supplement to each Pass Through Trust Agreement specified in Schedule III
hereto without the prior written consent of the Owner Participant.
(r) Each Participant, the Owner Trustee and the Indenture Trustee
agrees for the benefit of the Manufacturer and Lessee that it will not disclose
or suffer to be disclosed the terms of the Purchase Agreement to any third party
except (A) as may be required by any applicable statute, court or administrative
order or decree or governmental ruling or regulation or to any regulatory
authorities having official jurisdiction over them, (B) in connection with the
financing of the Aircraft and the other transactions contemplated by the
Operative Documents (including any transfer of Secured Certificates (including
by way of participation or assignment of an interest, provided such participant
or assignee agrees to hold such terms confidential to the same extent as herein
provided) or the Owner Participant's beneficial interest in the Trust Estate and
any exercise of remedies under the Lease and the Trust Indenture), (C) with the
prior written consent of the Manufacturer and Lessee, (D) to the Owner
Trustee's, the Indenture Trustee's and each Participant's counsel or special
counsel, independent insurance brokers or other agents who agree to hold such
information confidential, or (E) in the case of the Owner Participant and/or the
Owner Trustee, it may disclose so much of the Purchase Agreement as has been
assigned to the Owner Trustee under the Purchase Agreement Assignment to bona
fide potential purchasers of the Aircraft.
(s) The Owner Trustee and the Owner Participant severally, not
jointly, represent and warrant that none of the funds made available by the Pass
Through Trustee pursuant to Section 1 hereof will be used for the purpose of
purchasing or carrying any "margin security" as defined in Regulation U of the
Board of Governors of the Federal Reserve System or for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or carry
such margin security or for any other purpose which might cause the transaction
contemplated by this Agreement to constitute a "purpose credit" within the
meaning of Regulation X of the Board of Governors of the Federal Reserve System,
assuming that the proceeds were and are applied as contemplated by the
provisions of this Agreement.
-26-
(t) Each Loan Participant covenants and agrees that it shall not
cause or permit to exist a Loan Participant Lien attributable to it with respect
to the Aircraft or any other portion of the Trust Estate. Each Loan Participant
agrees that it will promptly, at its own expense, take such other action as may
be necessary duly to discharge such Loan Participant Lien attributable to it.
Each Loan Participant agrees to make restitution to the Trust Estate for any
actual diminution of the assets of the Trust Estate resulting from such Loan
Participant Lien attributable to it.
(u) State Street Bank and Trust Company, in its individual capacity,
covenants and agrees that it shall not cause or permit to exist any Indenture
Trustee's Liens with respect to the Trust Indenture Estate or the Trust Estate.
State Street Bank and Trust Company, in its individual capacity, agrees that it
will promptly, at its own expense, take such action as may be necessary duly to
discharge such Indenture Trustee's Liens. State Street Bank and Trust Company,
in its individual capacity, agrees to make restitution to the Trust Estate for
any actual diminution of the assets of the Trust Indenture Estate or the Trust
Estate resulting from such Indenture Trustee's Liens.
(v) The Owner Trustee, in its individual capacity (except as
provided in clauses (iii) and (vii) below) and (but only as provided in clauses
(iii) and (vii) and, to the extent that it relates to the Owner Trustee, clauses
(ii), (ix) and (xi) below) as Owner Trustee, represents and warrants to Lessee,
the Guarantor, the Pass Through Trustee, the Subordination Agent, the Liquidity
Provider and the Owner Participant that:
(i) the Owner Trustee, in its individual capacity, is a national
banking association duly organized and validly existing in good standing
under the laws of the United States, has full corporate power and
authority to carry on its business as now conducted, has the corporate
power and authority to execute and deliver the Trust Agreement, has the
corporate power and authority to carry out the terms of the Trust
Agreement, and has (assuming the authorization, execution and delivery of
the Trust Agreement by the Owner Participant), as Owner Trustee, and to
the extent expressly provided herein or therein, in its individual
capacity, the corporate power and authority to execute and deliver and to
carry out the terms of this Agreement, the Trust Indenture, the Secured
Certificates, the Lease and each other Operative Document (other than the
Trust Agreement) to which it is a party;
(ii) the Owner Trustee in its trust capacity and, to the extent
expressly provided herein, in its individual capacity, has duly
authorized, executed and delivered this Agreement, in its individual
capacity, has duly authorized, executed and delivered the Trust Agreement
and in its trust capacity, except as expressly provided therein, has duly
authorized, executed and delivered the other Owner Trustee Documents and
(assuming the due authorization, execution and delivery of the Trust
Agreement by the Owner Participant) this Agreement and each of the other
Owner Trustee Documents constitute the legal, valid and binding
obligations of the Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, enforceable against it in its individual
capacity or as Owner Trustee, as the case may be, in accordance with its
terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization,
-27-
moratorium or similar laws affecting the rights of creditors generally and
by general principles of equity, whether considered in a proceeding at law
or in equity;
(iii) assuming the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, the Owner Trustee has duly
authorized, and on the Delivery Date shall have duly issued, executed and
delivered to the Indenture Trustee for authentication, the Secured
Certificates pursuant to the terms and provisions hereof and of the Trust
Indenture, and each Secured Certificate on the Delivery Date will
constitute the valid and binding obligation of the Owner Trustee and will
be entitled to the benefits and security afforded by the Trust Indenture
in accordance with the terms of such Secured Certificate and the Trust
Indenture;
(iv) neither the execution and delivery by the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, of any Owner
Trustee Document, nor the consummation by the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, of any of the
transactions contemplated thereby, nor the compliance by the Owner
Trustee, in its individual capacity or as Owner Trustee, as the case may
be, with any of the terms and provisions thereof, (A) requires or will
require any approval of its stockholders, or approval or consent of any
trustees or holders of any indebtedness or obligations of it, or (B)
violates or will violate its articles of association or by-laws, or
contravenes or will contravene any provision of, or constitutes or will
constitute a default under, or results or will result in any breach of, or
results or will result in the creation of any Lien (other than as
permitted under the Operative Documents) upon its property under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional sale
contract, bank loan or credit agreement, license or other agreement or
instrument to which it is a party or by which it is bound, or contravenes
or will contravene any law, governmental rule or regulation of the United
States of America or the State of Utah governing the trust powers of the
Owner Trustee, or any judgment or order applicable to or binding on it;
(v) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in respect
of, any Utah state or local governmental authority or agency or any United
States federal governmental authority or agency regulating the trust
powers of the Owner Trustee in its individual capacity is required for the
execution and delivery of, or the carrying out by, the Owner Trustee, in
its individual capacity or as Owner Trustee, as the case may be, of any of
the transactions contemplated hereby or by the Trust Agreement, the
Participation Agreement, the Trust Indenture, the Lease or the Secured
Certificates, or any other Operative Document to which it is a party or by
which it is bound, other than any such consent, approval, order,
authorization, registration, notice or action as has been duly obtained,
given or taken or which is described in Section 7(a)(iv);
(vi) there exists no Lessor Lien (including for this purpose Liens
which would be Lessor Liens but for the proviso in the definition of
Lessor Liens) attributable to the Owner Trustee, in its individual
capacity;
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(vii) there exists no Lessor Lien (including for this purpose Liens
which would be Lessor Liens but for the proviso in the definition of
Lessor Liens) attributable to the Owner Trustee, as lessor under the
Lease;
(viii) there are no Taxes payable by the Owner Trustee, either in
its individual capacity or as Owner Trustee, imposed by the State of Utah
or any political subdivision thereof in connection with the issuance of
the Secured Certificates, or the execution and delivery in its individual
capacity or as Owner Trustee, as the case may be, of any of the
instruments referred to in clauses (i), (ii), (iii) and (iv) above, that,
in each case, would not have been imposed if the Trust Estate were not
located in the State of Utah and First Security Bank, National Association
had not (a) had its principal place of business in, (b) performed (in its
individual capacity or as Owner Trustee) any or all of its duties under
the Operative Documents in, and (c) engaged in any activities unrelated to
the transactions contemplated by the Operative Documents in, the State of
Utah;
(ix) there are no pending or, to its knowledge, threatened actions
or proceedings against the Owner Trustee, either in its individual
capacity or as Owner Trustee, before any court or administrative agency
which, if determined adversely to it, would materially adversely affect
the ability of the Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, to perform its obligations under any of the
instruments referred to in clauses (i), (ii), (iii) and (iv) above;
(x) both its chief executive office, and the place where its records
concerning the Aircraft and all its interests in, to and under all
documents relating to the Trust Estate, are located in Salt Lake City,
Utah;
(xi) the Owner Trustee has not, in its individual capacity or as
Owner Trustee, directly or indirectly offered any Secured Certificate or
Certificate or any interest in or to the Trust Estate, the Trust Agreement
or any similar interest for sale to, or solicited any offer to acquire any
of the same from, anyone other than the Pass Through Trustee and the Owner
Participant; and the Owner Trustee has not authorized anyone to act on its
behalf (it being understood that in arranging and proposing the financing
contemplated hereby and agreed to herein by the Owner Trustee, the Lessee
has not acted as agent of the Owner Trustee) to offer directly or
indirectly any Secured Certificate, any Certificate or any interest in and
to the Trust Estate, the Trust Agreement or any similar interest for sale
to, or to solicit any offer to acquire any of the same from, any Person;
(xii) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar arrangements);
and
(xiii) there has not occurred any event which constitutes (or, to
the best of its knowledge would, with the passing of time or the giving of
notice or both, constitute) an Event of Default as defined in the Trust
Indenture which has been caused by or relates to the Owner Trustee, in its
individual capacity, and which is presently continuing.
(w) The Owner Participant covenants and agrees that if (i) Lessee
has elected pursuant to Section 9(a)(2) of the Lease to terminate the Lease by
causing the Aircraft to be sold
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pursuant to Section 9(c) of the Lease and (ii) the Owner Trustee has, pursuant
to Section 9(c) of the Lease, given to Lessee written notice of Lessor's
election to retain title to the Aircraft and (iii) the Owner Trustee has failed
to make, on or before the Termination Date, any payment required to be made by
the Owner Trustee pursuant to Section 9(c) in connection with its retention of
title to the Aircraft, the Owner Participant will indemnify Lessee for any
losses, damages, costs or expenses of any kind (including any additional rents
paid by Lessee and any fees and expenses of lawyers, appraisers, brokers or
accountants) incurred as a consequence of such failure by the Owner Trustee. The
Owner Participant further covenants and agrees to pay those costs and expenses
specified to be paid by the Owner Participant pursuant to Exhibit E to the
Lease.
(x) Each of the Owner Participant, the Owner Trustee, the Indenture
Trustee and Lessee covenants and agrees that if Lessee elects to terminate the
Lease and purchase the Aircraft pursuant to Section 19(d) of the Lease, then
each of the parties will execute and deliver appropriate documentation
transferring all right, title and interest in the Aircraft to Lessee (including,
without limitation, such bills of sale and other instruments and documents as
Lessee shall reasonably request to evidence (on the public record or otherwise)
such transfer and the vesting of all right, title and interest in and to the
Aircraft in Lessee), and if Lessee, in connection with such purchase, elects to
assume the obligations of the Owner Trustee pursuant to the Trust Indenture and
the Secured Certificates each of the parties will execute and deliver
appropriate documentation permitting Lessee to assume such obligations on the
basis of full recourse to Lessee, maintaining the security interest in the
Aircraft created by the Trust Indenture, releasing the Owner Participant and the
Owner Trustee from all future obligations in respect of the Secured
Certificates, the Trust Indenture and all other Operative Documents and all such
other actions as are reasonably necessary to permit such assumption by Lessee.
Notwithstanding the foregoing, Lessee shall not be entitled to
assume the obligations of the Owner Trustee in respect of the Secured
Certificates unless Lessee causes to be delivered to the Indenture Trustee an
opinion of counsel to the effect that (i) the Lien of the Trust Indenture
continues to be a valid and duly perfected first priority security interest in
and to the Aircraft, (ii) the Indenture Trustee should be entitled to the
benefits of 11 U.S.C. ss.1110; provided that the opinion required by subclause
(ii) need only be given if immediately prior to such assumption the Owner
Trustee should have been entitled to the benefits of 11 U.S.C. ss.1110 and (iii)
the Pass Through Trusts will not be subject to Federal income taxation and the
Certificate Holders will not recognize income, gain or loss for Federal income
tax purposes as a result of such assumption 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 had not occurred.
(y) (A) Lessee will not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person unless:
(i) the corporation formed by such consolidation or into which
Lessee is merged or the Person which acquires by conveyance, transfer or
lease substantially all of the assets of Lessee as an entirety shall be a
Certificated Air Carrier;
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(ii) the corporation formed by such consolidation or into which
Lessee is merged or the Person which acquires by conveyance, transfer or
lease substantially all of the assets of Lessee as an entirety shall
execute and deliver to the Owner Trustee, the Indenture Trustee and the
Owner Participant an agreement in form and substance reasonably
satisfactory to the Indenture Trustee and the Owner Participant containing
an assumption by such successor corporation or Person of the due and
punctual performance and observance of each covenant and condition of this
Agreement, the Lease, the Purchase Agreement Assignment and the Tax
Indemnity Agreement to be performed or observed by Lessee;
(iii) immediately after giving effect to such transaction, no
Default or Event of Default under the Lease shall have occurred and be
continuing; and
(iv) Lessee shall have delivered to the Owner Trustee, the Indenture
Trustee and the Owner Participant a certificate signed by the President,
any Executive Vice President, any Senior Vice President, the Treasurer or
any Vice President and by the Secretary or an Assistant Secretary of
Lessee, and an opinion of counsel reasonably satisfactory to the Indenture
Trustee and the Owner Participant, each stating that such consolidation,
merger, conveyance, transfer or lease and the assumption agreement
mentioned in clause (ii) above comply with this subparagraph (A) of
Section 8(y) and that all conditions precedent herein provided for
relating to such transaction have been complied with.
Upon any such consolidation or merger or any such conveyance,
transfer or lease of substantially all of the assets of Lessee as an entirety in
accordance with this subparagraph (A) of Section 8(y), the successor corporation
or Person formed by such consolidation or into which Lessee is merged or to
which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, Lessee under this
Agreement with the same effect as if such successor corporation or Person had
been named as Lessee herein. No such conveyance, transfer or lease of
substantially all of the assets of Lessee as an entirety shall have the effect
of releasing Lessee or any successor corporation or Person which shall
theretofore have become such in the manner prescribed in this subparagraph (A)
of Section 8(y) from its liability in respect of any Operative Document to which
it is a party.
(B) Lessee shall at all times maintain its corporate existence
except as permitted by subparagraph (A) of this Section 8(y).
(z) Lessee, at its expense, will take, or cause to be taken, such
action with respect to the recording, filing, re-recording and refiling of the
Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture, the Trust
Supplement and any financing statements or other instruments as are necessary to
maintain, so long as the Trust Indenture or the Lease is in effect, the
perfection of the security interests created by the Trust Indenture and any
security interest that may be claimed to have been created by the Lease and the
interest of the Owner Trustee in the Aircraft or will furnish to the Owner
Trustee and the Indenture Trustee timely notice of the necessity of such action,
together with such instruments, in execution form, and such other information as
may be required to enable them to take such action. Lessee will notify the Owner
Trustee, the Owner Participant and the Indenture Trustee of any change in the
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location of its chief executive office (as such term is used in Article 9 of the
Uniform Commercial Code) promptly after making such change or in any event
within the period of time necessary under applicable law to prevent the lapse of
perfection (absent refiling) of financing statements filed under the Operative
Documents.
(aa) Section 3 of the Lease contemplates that, under certain
circumstances, the Owner Participant will make certain recalculations of Basic
Rent, the Special Purchase Price, [the Initial Installment, the Remaining
Installments,] Stipulated Loss Value percentages and Termination Value
percentages, and the Owner Participant hereby agrees to make such recalculations
as and when contemplated by the Lease and subject to all the terms and
conditions of the Lease and promptly to take such further actions as may be
necessary or desirable to give effect to and to cause the Owner Trustee to give
effect to the provisions of Section 3 of the Lease.
(bb) The Owner Participant hereby agrees with Lessee that it will
pay, or cause to be paid, all costs and expenses that are for the account of the
Owner Trustee pursuant to Section 5(d) of the Lease.
(cc) Each Loan Participant hereby represents, warrants and agrees
that it shall not transfer any interest in any Secured Certificate unless and
until the transferee agrees in writing (copies of which shall be provided by the
Indenture Trustee to Lessee, the Owner Trustee and the Owner Participant) to
make the representations contemplated to be made by a Loan Participant in this
Agreement and to be bound by the terms of this Agreement and the Trust Indenture
(including, without limitation, the representations and covenants set forth in
Sections 8(e), 8(k), 8(l), 8(q), and 8(t) hereof and this Section 8(cc) and
Sections 2.03, 2.14 and 4.03 of the Trust Indenture).
(dd) The Pass Through Trustee represents and warrants to Lessee, the
Guarantor, the Indenture Trustee, the Subordination Agent, the Liquidity
Provider, the Owner Participant and the Owner Trustee, in its capacity as such
and in its individual capacity, as follows:
(i) the Pass Through Trustee is a duly organized national banking
association, validly existing and in good standing with the Comptroller of
the Currency under the laws of the United States, has the full power,
authority and legal right under the laws of the United States pertaining
to its banking, trust and fiduciary powers to execute and deliver each of
the Pass Through Trust Agreements, the Intercreditor Agreement and this
Agreement and to perform its obligations under the Pass Through Trust
Agreements, the Intercreditor Agreement and this Agreement, and has its
chief executive office located in Hartford, Connecticut;
(ii) this Agreement, each of the Pass Through Trust Agreements and
the Intercreditor Agreement have been duly authorized, executed and
delivered by the Pass Through Trustee; this Agreement, each of the Pass
Through Trust Agreements and the Intercreditor Agreement constitute the
legal, valid and binding obligations of the Pass Through Trustee
enforceable against it in accordance with their respective terms, except
as the same may be limited by applicable bankruptcy, insolvency,
reorganization,
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moratorium or similar laws affecting the rights of creditors generally and
by general principles of equity, whether considered in a proceeding at law
or in equity;
(iii) none of the execution, delivery and performance by the Pass
Through Trustee of any of the Pass Through Trust Agreements, the
Intercreditor Agreement or this Agreement, the purchase by the Pass
Through Trustee of the Secured Certificates pursuant to this Agreement, or
the issuance of the Certificates pursuant to the Pass Through Trust
Agreements, contravenes any law, rule or regulation of the State of
Connecticut or any United States governmental authority or agency
regulating the Pass Through Trustee's banking, trust or fiduciary powers
or any judgment or order applicable to or binding on the Pass Through
Trustee and does not contravene or result in any breach of, or constitute
a default under, the Pass Through Trustee's articles of association or
by-laws or any agreement or instrument to which the Pass Through Trustee
is a party or by which it or any of its properties may be bound;
(iv) neither the execution and delivery by the Pass Through Trustee
of any of the Pass Through Trust Agreements, the Intercreditor Agreement
or this Agreement, nor the consummation by the Pass Through Trustee of any
of the transactions contemplated hereby or thereby, requires the consent
or approval of, the giving of notice to, the registration with, or the
taking of any other action with respect to, any Connecticut governmental
authority or agency or any federal governmental authority or agency
regulating the Pass Through Trustee's banking, trust or fiduciary powers;
(v) there are no Taxes payable by the Pass Through Trustee imposed
by the State of Connecticut or any political subdivision or taxing
authority thereof in connection with the execution, delivery and
performance by the Pass Through Trustee of this Agreement, any of the Pass
Through Trust Agreements or the Intercreditor Agreement (other than
franchise or other taxes based on or measured by any fees or compensation
received by the Pass Through Trustee for services rendered in connection
with the transactions contemplated by any of the Pass Through Trust
Agreements), and there are no Taxes payable by the Pass Through Trustee
imposed by the State of Connecticut or any political subdivision thereof
in connection with the acquisition, possession or ownership by the Pass
Through Trustee of any of the Secured Certificates (other than franchise
or other taxes based on or measured by any fees or compensation received
by the Pass Through Trustee for services rendered in connection with the
transactions contemplated by any of the Pass Through Trust Agreements),
and, assuming that for federal income tax purposes 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, such trusts will
not be subject to any Taxes imposed by the State of Connecticut or any
political subdivision thereof;
(vi) there are no pending or threatened actions or proceedings
against the Pass Through Trustee before any court or administrative agency
which individually or in the aggregate, if determined adversely to it,
would materially adversely affect the ability of the Pass Through Trustee
to perform its obligations under this Agreement, the Intercreditor
Agreement or any Pass Through Trust Agreement;
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(vii) except for the issue and sale of the Certificates, the Pass
Through Trustee has not directly or indirectly offered any Secured
Certificate for sale to any Person or solicited any offer to acquire any
Secured Certificates from any Person, nor has the Pass Through Trustee
authorized anyone to act on its behalf to offer directly or indirectly any
Secured Certificate for sale to any Person, or to solicit any offer to
acquire any Secured Certificate from any Person; and the Pass Through
Trustee is not in default under any Pass Through Trust Agreement; and
(viii) the Pass Through Trustee is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, Lessee or the Guarantor.
(ee) The Subordination Agent represents and warrants to Lessee, the
Guarantor, the Indenture Trustee, the Pass Through Trustee, the Liquidity
Provider, the Owner Participant and the Owner Trustee, in its capacity as such
and in its individual capacity, as follows:
(i) the Subordination Agent is duly incorporated, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts,
and has the full corporate power, authority and legal right under the laws
of the Commonwealth of Massachusetts and the United States pertaining to
its banking, trust and fiduciary powers to execute and deliver each of the
Liquidity Facilities, the Intercreditor Agreement and this Agreement and
to perform its obligations under this Agreement, the Liquidity Facilities
and the Intercreditor Agreement;
(ii) this Agreement, each of the Liquidity Facilities and the
Intercreditor Agreement have been duly authorized, executed and delivered
by the Subordination Agent; this Agreement, each of the Liquidity
Facilities and the Intercreditor Agreement constitute the legal, valid and
binding obligations of the Subordination Agent enforceable against it in
accordance with their respective terms, except as the same may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at law or in
equity;
(iii) none of the execution, delivery and performance by the
Subordination Agent of each of the Liquidity Facilities, the Intercreditor
Agreement or this Agreement contravenes any law, rule or regulation of the
Commonwealth of Massachusetts or any United States governmental authority
or agency regulating the Subordination Agent's banking, trust or fiduciary
powers or any judgment or order applicable to or binding on the
Subordination Agent and do not contravene or result in any breach of, or
constitute a default under, the Subordination Agent's articles of
association or by-laws or any agreement or instrument to which the
Subordination Agent is a party or by which it or any of its properties may
be bound;
(iv) neither the execution and delivery by the Subordination Agent
of any of the Liquidity Facilities, the Intercreditor Agreement or this
Agreement nor the consummation by the Subordination Agent of any of the
transactions contemplated
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hereby or thereby requires the consent or approval of, the giving of
notice to, the registration with, or the taking of any other action with
respect to, any Massachusetts governmental authority or agency or any
federal governmental authority or agency regulating the Subordination
Agent's banking, trust or fiduciary powers;
(v) there are no Taxes payable by the Subordination Agent imposed by
the Commonwealth of Massachusetts or any political subdivision or taxing
authority thereof in connection with the execution, delivery and
performance by the Subordination Agent of this Agreement, any of the
Liquidity Facilities or the Intercreditor Agreement (other than franchise
or other taxes based on or measured by any fees or compensation received
by the Subordination Agent for services rendered in connection with the
transactions contemplated by the Intercreditor Agreement or any of the
Liquidity Facilities), and there are no Taxes payable by the Subordination
Agent imposed by the Commonwealth of Massachusetts or any political
subdivision thereof in connection with the acquisition, possession or
ownership by the Subordination Agent of any of the Secured Certificates
(other than franchise or other taxes based on or measured by any fees or
compensation received by the Subordination Agent for services rendered in
connection with the transactions contemplated by the Intercreditor
Agreement or any of the Liquidity Facilities);
(vi) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative agency
which individually or in the aggregate, if determined adversely to it,
would materially adversely affect the ability of the Subordination Agent
to perform its obligations under this Agreement, the Intercreditor
Agreement or any Liquidity Facility;
(vii) the Subordination Agent has not directly or indirectly offered
any Secured Certificate for sale to any Person or solicited any offer to
acquire any Secured Certificates from any Person, nor has the
Subordination Agent authorized anyone to act on its behalf to offer
directly or indirectly any Secured Certificate for sale to any Person, or
to solicit any offer to acquire any Secured Certificate from any Person;
and the Subordination Agent is not in default under any Liquidity
Facility; and
(viii) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, Lessee or the Guarantor.
SECTION 9. Reliance of Liquidity Provider. Each of the parties
hereto agrees and acknowledges that the Liquidity Provider shall be a third
party beneficiary of each of the representations and warranties made herein by
such party, and that the Liquidity Provider may rely on such representations and
warranties to the same extent as if such representations and warranties were
made to the Liquidity Provider directly. Lessee agrees and acknowledges that the
Liquidity Provider shall be a third party beneficiary of the indemnities
contained in Section 7(c) hereof, and may rely on such indemnities to the same
extent as if such indemnities were made to the Liquidity Provider directly.
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SECTION 10. Other Documents. Each of the Owner Participant and the
Owner Trustee hereby (A) agrees with Lessee and the Loan Participants to comply
with all of the terms of the Trust Agreement (as the same may hereafter be
amended or supplemented from time to time in accordance with the terms thereof)
applicable to it; (B) agrees with Lessee and the Indenture Trustee not to amend,
supplement or otherwise modify any provision of the Trust Agreement in a manner
adversely affecting such party without the prior written consent of such party;
and (C) agrees with Lessee and the Loan Participants not to revoke the Trust
Agreement without the prior written consent of Lessee (so long as the Lease
remains in effect) and the Indenture Trustee (so long as the Lien of the Trust
Indenture remains in effect or there are any Secured Certificates outstanding).
Notwithstanding the foregoing, so long as the Lease has not been terminated, the
Indenture Trustee and the Owner Trustee hereby agree for the benefit of Lessee
that without the consent of Lessee they will not (i) amend or modify Article III
or IX of the Trust Indenture, (ii) make any amendment which will affect the
stated principal amount or interest on the Secured Certificates or (iii) amend
or modify the provisions of Sections 2.05 or 10.14 of the Trust Indenture. The
Indenture Trustee and the Owner Trustee agree to promptly furnish to Lessee
copies of any supplement, amendment, waiver or modification of any of the
Operative Documents to which Lessee is not a party. Notwithstanding anything to
the contrary contained herein, in the Trust Agreement or in any other Operative
Document, the Owner Participant will not consent to or direct a change in the
situs of the Trust Estate without the prior written consent of Lessee. Each Loan
Participant agrees that it will not take any action in respect of the Trust
Indenture Estate except through the Indenture Trustee pursuant to the Trust
Indenture or as otherwise permitted by the Trust Indenture.
SECTION 11. Certain Covenants of Lessee. Lessee covenants and agrees
with each of the Loan Participants, the Owner Participant, the Indenture Trustee
and the Owner Trustee, in its capacity as such and in its individual capacity as
follows:
(a) Lessee will cause to be done, executed, acknowledged and
delivered all and every such further acts, conveyances and assurances as the
Owner Trustee, the Indenture Trustee or the Owner Participant shall reasonably
require for accomplishing the purposes of this Agreement and the other Operative
Documents; provided that any instrument or other document so executed by Lessee
will not expand any obligations or limit any rights of Lessee in respect of the
transactions contemplated by any Operative Documents. Lessee, forthwith upon
delivery of the Aircraft under the Lease, shall cause the Aircraft to be duly
registered, and at all times thereafter to remain duly registered, in the name
of the Owner Trustee, except as otherwise required or permitted hereunder or
under the Lease, under the Federal Aviation Act, or shall furnish to the Owner
Trustee such information as may be required to enable the Owner Trustee to make
application for such registration, and shall promptly furnish to the Owner
Trustee such information as may be required to enable the Owner Trustee to
timely file any reports required to be filed by it as the lessor under the Lease
or as the owner of the Aircraft with any governmental authority.
(b) Lessee will cause the Lease, all Lease Supplements, all
amendments to the Lease, the Trust Indenture, all supplements and amendments to
the Trust Indenture and this Agreement to be promptly filed and recorded, or
filed for recording, to the extent permitted under the Federal Aviation Act, or
required under any other applicable law. Upon the execution and delivery of the
FAA ▇▇▇▇ of Sale, the Lease, the Lease Supplement covering the Aircraft, the
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Trust Supplement and the Trust Indenture shall be filed for recording with the
Federal Aviation Administration in the following order of priority; first, the
FAA ▇▇▇▇ of Sale, second, the Lease, with the Lease Supplement covering the
Aircraft, the Trust Indenture and the Trust Supplement attached, and third, the
Trust Indenture, with the Trust Supplement attached.
SECTION 12. Owner for Federal Tax Purposes. It is hereby agreed
among Lessee, the Owner Participant and the Owner Trustee that for Federal
income tax purposes the Owner Participant will be the owner of the Aircraft to
be delivered under the Lease and Lessee will be the lessee thereof, and each
party hereto agrees to characterize the Lease as a lease for Federal income tax
purposes.
SECTION 13. Certain Definitions; Notices; Consent to Jurisdiction.
(a) Except as otherwise defined in this Agreement, terms used herein in
capitalized form shall have the meanings attributed thereto in the Lease. The
term "Trust Office" shall have the meaning set forth in the Trust Agreement.
Unless the context otherwise requires, any reference herein to any of the
Operative Documents refers to such document as it may be amended from time to
time.
(b) All notices, demands, instructions and other communications
required or permitted to be given to or made upon any party hereto or to the
Guarantor shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, or by telecopier, or by prepaid
courier service, and shall be deemed to be given for purposes of this Agreement
on the day that such writing is delivered or sent to the intended recipient
thereof in accordance with the provisions of this Section 13(b). Unless
otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 13(b), notices, demands, instructions and
other communications in writing shall be given to or made upon the respective
parties hereto at their respective addresses (or to their respective telecopier
numbers) as follows: (A) if to Lessee, the Guarantor, the Owner Trustee, the
Pass Through Trustee, the Subordination Agent, the Indenture Trustee or the
Owner Participant, to the respective addresses set forth below the signatures of
such parties at the foot of this Agreement, or (B) if to a subsequent Owner
Participant, addressed to such subsequent Owner Participant at such address as
such subsequent Owner Participant shall have furnished by notice to the parties
hereto, or (C) if to any subsequent Certificate Holder, addressed to such
Certificate Holder at its address set forth in the Secured Certificate register
maintained pursuant to Section 2.07 of the Trust Indenture.
(c) Each of the parties hereto (A) hereby irrevocably submits itself
to the non-exclusive jurisdiction of the United States District Court for the
Southern District of New York and to the non-exclusive jurisdiction of the
Supreme Court of the State of New York, New York County, for the purposes of any
suit, action or other proceeding arising out of this Agreement, the Lease, the
Tax Indemnity Agreement or any other Operative Document, the subject matter of
any thereof or any of the transactions contemplated hereby or thereby brought by
any party or parties thereto, or their successors or assigns, and (B) hereby
waives, and agrees not to assert, by way of motion, as a defense, or otherwise,
in any such suit, action or proceeding, to the extent permitted by applicable
law, that the suit, action or proceeding is brought in an inconvenient forum,
that the venue of the suit, action or proceeding is improper, or that this
Agreement, the Lease, the Tax Indemnity Agreement or any other Operative
Document or the subject matter of any thereof or any of the transactions
contemplated hereby or thereby may not be enforced in or
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by such courts. Lessee hereby generally consents to service of process at
Cadwalader, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Managing Attorney, or such office of Lessee in New York City as from
time to time may be designated by Lessee in writing to the Owner Participant,
the Owner Trustee and the Indenture Trustee.
SECTION 14. Change of Situs of Owner Trust. The Owner Participant
agrees that if, at any time, the Trust Estate becomes subject to any Taxes for
which it is indemnified pursuant to Section 7(b) hereof and if, as a consequence
thereof, Lessee should request that the situs of the trust be moved to another
state in the United States from the state in which it is then located, the situs
of the trust may be moved with the written consent of the Owner Participant
(which consent shall not be unreasonably withheld) and the Owner Participant
will take whatever action may be reasonably necessary to accomplish such
removal; provided that (A) Lessee shall provide such additional tax
indemnification as the Owner Participant and the Indenture Trustee may
reasonably request, (B) the rights and obligations under the Operative Documents
of the Owner Participant and the Indenture Trustee shall not be altered as a
result of the taking of such action, (C) the lien of the Trust Indenture on the
Trust Indenture Estate shall not be adversely affected by such action, (D) the
Owner Participant and the Indenture Trustee shall have received an opinion or
opinions of counsel (satisfactory to the Owner Participant and the Indenture
Trustee), in scope, form and substance satisfactory to the Owner Participant and
the Indenture Trustee to the effect that (I) the trust, as thus removed, shall
remain a validly established trust, (II) any amendments to the Trust Agreement
necessitated by such removal shall have been duly authorized, executed and
delivered by the parties thereto and shall constitute the valid and binding
obligations of such parties, enforceable in accordance with their terms, (III)
such removal will not result in the imposition of, or increase in the amount of,
any Tax for which Lessee is not required to indemnify the Owner Participant, the
Indenture Trustee, the Owner Trustee or the Trust Estate pursuant to Section
7(b) hereof (taking into account any additional indemnification provided by
Lessee pursuant to clause (A) of this sentence), and (IV) such removal will not
result in any loss of Interest Deductions or MACRS Deductions or an Inclusion
Event (as defined in the Tax Indemnity Agreement) with respect to which Lessee
is not required to indemnify the Owner Participant pursuant to Section 4 of the
Tax Indemnity Agreement (taking into account any additional indemnification
provided by Lessee pursuant to clause (A) of this sentence), (E) if such removal
involves the replacement of the Owner Trustee, the Indenture Trustee and the
Owner Participant shall have received an opinion of counsel to such successor
Owner Trustee in form and substance reasonably satisfactory to the Indenture
Trustee and to the Owner Participant covering the matters described in the
opinion delivered pursuant to Section 4(a)(xiii) hereof and such other matters
as the Indenture Trustee and the Owner Participant may reasonably request, and
(F) Lessee shall indemnify and hold harmless the Owner Participant and the
Indenture Trustee on a net after-tax basis against any and all reasonable and
actual costs and expenses including reasonable counsel fees and disbursements,
registration fees, recording or filing fees and taxes incurred by the Owner
Trustee, the Owner Participant and the Indenture Trustee in connection with such
change of situs.
SECTION 15. Miscellaneous. (a) The Owner Participant covenants and
agrees that it shall not unreasonably withhold its consent to any consent
requested of the Owner Trustee, as Lessor, under the terms of the Lease which by
its terms is not to be unreasonably withheld by the Owner Trustee, as Lessor.
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(b) The representations, warranties, indemnities and agreements of
Lessee, the Guarantor, the Owner Trustee, the Indenture Trustee, the
Subordination Agent, the Pass Through Trustee and the Owner Participant provided
for in this Agreement, and Lessee's, the Guarantor's, the Owner Trustee's, the
Indenture Trustee's, the Subordination Agent's, the Pass Through Trustee's and
the Owner Participant's obligations under any and all thereof, shall survive the
making available of the respective Commitments by the Pass Through Trustee and
the Owner Participant, the delivery or return of the Aircraft, the transfer of
any interest of the Owner Participant in the Trust Estate or the Aircraft or any
Engine or the transfer of any interest by any Loan Participant in any Secured
Certificate or the Trust Indenture Estate and the expiration or other
termination of this Agreement or any other Operative Document.
(c) This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified, except by an instrument
in writing signed by the party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no such
termination, amendment, supplement, waiver or modification shall be effective
unless a signed copy thereof shall have been delivered to the Indenture Trustee
and the Owner Trustee. The terms of this Agreement shall be binding upon, and
inure to the benefit of, Lessee and, subject to the terms of this Agreement, its
successors and permitted assigns, the Guarantor, the Pass Through Trustee and
its successors as Pass Through Trustee (and any additional trustee appointed)
under any of the Pass Through Trust Agreements, the Owner Participant and,
subject to the terms of this Agreement, its successors and permitted assigns,
each Certificate Holder and its successors and registered assigns, the Indenture
Trustee and its successors as Indenture Trustee under the Trust Indenture and
the Owner Trustee and its successors as Owner Trustee under the Trust Agreement.
The terms of this Agreement shall inure to the benefit of the Liquidity
Provider, its successors and permitted assigns. THIS AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, 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.
(d) The parties hereto agree that all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Agreement and any agreement referred to
herein other than the Trust Agreement, unless expressly otherwise stated, are
made and intended only for the purpose of binding the Trust Estate and
establishing the existence of rights and remedies which can be exercised and
enforced against the Trust Estate. Therefore, anything contained in this
Agreement or such other agreements to the contrary notwithstanding (except for
any express provisions that the Owner Trustee is responsible for in its
individual capacity), no recourse shall be had with respect to this Agreement or
such other agreements against the Owner Trustee in its individual capacity or
against any institution or person which becomes a successor trustee or
co-trustee or any officer, director, trustee, servant or direct or indirect
parent or controlling person or persons of any of them; provided, however, that
this Section 15(d) shall not be construed to prohibit any action or proceeding
against any party hereto for its own willful misconduct or grossly negligent
conduct for which it would otherwise be liable; and provided, further, that
nothing contained in this
-39-
Section 15(d) shall be construed to limit the exercise and enforcement in
accordance with the terms of this Agreement or such other agreements of rights
and remedies against the Trust Estate. The foregoing provisions of this Section
15(d) shall survive the termination of this Agreement and the other Operative
Documents.
(e) It is the intention of the parties hereto that the Owner
Trustee, as Lessor under the Lease, and the Indenture Trustee, as assignee of
such Owner Trustee's rights under the Lease pursuant to the Trust Indenture,
will be entitled to the benefits of 11 U.S.C. ss. 1110 in the event of any
reorganization of Lessee under Chapter 11 of the Bankruptcy Code.
SECTION 16. Expenses. (a) Invoices and Payment. Each of the parties
hereto shall promptly submit to the Owner Trustee and Lessee for their 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 Owner Participant agrees to transfer to the Owner
Trustee promptly but in any event no later than [______________] such amount as
shall be necessary in order to enable the Owner Trustee to pay Transaction
Expenses. To the extent of funds received by it, the Owner Trustee agrees to pay
all invoices of Transaction Expenses that have been approved by it and Lessee
promptly upon receipt thereof. Notwithstanding the foregoing, to the extent that
Transaction Expenses exceed [___]% of Lessor's Cost, Lessee at its sole option
shall have the right to pay directly any or all Transaction Expenses which are
in excess of [____]% of Lessor's Cost.
(b) Payment of Other Expenses. In the event that the transaction
contemplated by this Participation Agreement fails to close as a result of the
Owner Participant's failure to negotiate in good faith or to comply with the
terms and conditions upon which its participation in the transaction was
predicated, the Owner Participant will be responsible for all of its fees and
expenses, including but not limited to the fees, expenses and disbursements of
its special counsel.
SECTION 17. Refinancings.
(a) So long as no Event of Default shall have occurred and be
continuing, Lessee shall have the right to refinance all (but not less than all)
of the Secured Certificates no more than three times by giving written notice to
the Owner Participant and the Owner Trustee that there be effected a voluntary
redemption of the Secured Certificates by the Owner Trustee, whereupon the Owner
Participant agrees to negotiate promptly in good faith to conclude an agreement
with Lessee as to the terms of such refinancing operation (including the terms
of any debt to be issued in connection with such refinancing); provided that no
such refinancing shall require an increase in the amount of the Owner
Participant's investment in the beneficial ownership of the Aircraft.
Upon such agreement:
(1) within ten Business Days after the reaching of such agreement,
the Owner Participant will deliver to Lessee a certificate of an authorized
representative of the Owner Participant (the "Refinancing Certificate") setting
forth (i) the proposed date on which the
-40-
outstanding Secured Certificates will be redeemed, any new debt will be issued
and the other aspects of such refinancing will be consummated (such date, the
"Refinancing Date") and (ii) the following information calculated pursuant to
the provisions of paragraph (6) of this Section 17(a): (A) subject to the
limitations set forth in this Section 17, the proposed adjusted debt/equity
ratio, (B) the principal amount of debt to be issued by the Owner Trustee on the
Refinancing Date, (C) the amount, if any, by which the Owner Participant's
aggregate investment in the beneficial interest in the Aircraft is to be
decreased and (D) the proposed revised schedules of Basic Rent percentages, debt
amortization, Special Purchase Price, [Initial Installment, Remaining
Installments,] Stipulated Loss Value percentages and Termination Value
percentages. The Refinancing Certificate shall not provide for a debt/equity
ratio of more than 4:1. Within fourteen days of its receipt of the Refinancing
Certificate, Lessee may demand a verification pursuant to Exhibit E to the Lease
of the information set forth in the Refinancing Certificate. Upon the acceptance
by Lessee of the accuracy of the information set forth in the Refinancing
Certificate (or the determination pursuant to such verification procedures), as
to the debt/equity ratio, the principal amount of debt to be issued by the Owner
Trustee on the Refinancing Date and the revised Basic Rent percentages, debt
amortization, Special Purchase Price, [Initial Installment, Remaining
Installments,] Stipulated Loss Value percentages and Termination Value
percentages (such information, whether as set forth or as so determined, the
"Refinancing Information") the appropriate parties will take the actions
specified in paragraphs (2) through (5) below;
(2) the appropriate parties will enter into appropriate
documentation (which may involve an underwriting agreement in connection with
such sale or the sale of the Owner Trustee's interest in the Trust Estate and/or
the Aircraft and its resale to the Owner Trustee) with the institution or
institutions to be named therein providing for (i) the issuance and sale by the
Owner Trustee to such institution or institutions on the Refinancing Date of
debt securities in an aggregate principal amount specified in the Refinancing
Information which amount shall be equal to the aggregate principal amount of all
Secured Certificates outstanding on the Refinancing Date (such debt securities,
the "New Debt") except that the principal amount of New Debt may exceed the
principal amount of all outstanding Secured Certificates in connection with the
first refinancing under this Section 17, (ii) the application of the proceeds of
the sale of the New Debt to the redemption of all such Secured Certificates on
the Refinancing Date and (iii) the payment of the excess, if any, of such
proceeds over the amounts necessary to effect such redemption to the Owner
Trustee;
(3) Lessee shall give the notice to the Indenture Trustee pursuant
to Section 2.11 of the Trust Indenture, and Lessee and the Owner Trustee will
amend the Lease to provide that (i) Basic Rent payable in respect of the period
from and after the Refinancing Date shall be as provided in the Refinancing
Information and (ii) amounts payable in respect of the Special Purchase Price,
[Initial Installments, Remaining Installments,] Stipulated Loss Value and
Termination Value from and after the Refinancing Date shall be as provided in
the Refinancing Information;
(4) the Owner Trustee will enter into an agreement to provide for
the securing thereunder of the New Debt in like manner as the Secured
Certificates and will enter into such amendments and supplements to the Trust
Indenture (or such new indenture or other security agreement) as may be
necessary to effect such refinancing;
-41-
(5) the Owner Participant shall pay all of the expenses (other than
those of Lessee) of such refinancing (including, but not limited to, the fees,
expenses and disbursements of counsel and any placement or underwriting fees)
and such expenses shall be treated as Transaction Expenses; and
(6) when calculating any of the information required to be set forth
in a Refinancing Certificate, the Owner Participant shall make such calculations
in a manner which (A) maintains the Owner Participant's Net Economic Return
(except to the extent the assumptions referred to in the definition of "Net
Economic Return" have been altered since the Delivery Date in connection with an
adjustment to Rents pursuant to Section 3(d) of the Lease or such assumptions
are the subject of the recalculations being conducted by the Owner Participant),
and (B) minimizes the Net Present Value of Rents to Lessee to the extent
possible consistent with clause (A).
(b) The Secured Certificates shall not be subject to voluntary
redemption by the Owner Trustee without the consent of Lessee except as set
forth in Section 2.14 of the Trust Indenture.
-42-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By:____________________________________
Name:
Title:
Address: U.S. Mail
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Overnight Courier
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Attn: Treasurer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
NORTHWEST AIRLINES CORPORATION,
Guarantor
By:____________________________________
Name:
Title:
Address: U.S. Mail
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Overnight Courier
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Attn: Treasurer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
- Signature Page -
[__________________________],
Owner Participant
By:____________________________________
Name:
Title:
Address:
Attn:
Telecopy No.:
STATE STREET BANK AND
TRUST COMPANY,
Indenture Trustee
By: __________________________________
Name:
Title:
Address: U.S. Mail
Corporate Trust Department
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Overnight Courier
Corporate Trust Department
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Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not in its individual
capacity, except as expressly provided
herein, but solely as Owner Trustee,
Owner Trustee
By:____________________________________
Name:
Title:
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Trust Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
- Signature Page -
STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, not in
its individual capacity, except as
otherwise provided herein, but solely as
Pass Through Trustee, Pass Through
Trustee
By: __________________________________
Name:
Title:
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Square
Hartford, CT 06103
Attn: Corporate/Muni Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
STATE STREET BANK AND TRUST COMPANY, not
in its individual capacity, except as
otherwise provided herein, but solely as
Subordination Agent, Subordination Agent
By:____________________________________
Name:
Title:
Address: U.S. Mail
Corporate Trust Department
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Overnight Courier
Corporate Trust Department
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SCHEDULE I
Names and Addresses
Lessee: Northwest Airlines, Inc.
U.S. Mail
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Overnight Courier
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Attn: Treasurer
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Wire Transfer
USBank, Minneapolis
ABA No. ▇▇▇▇▇▇▇▇▇
Acct. No. 150250099440
Owner Participant: [__________________________]
Attn: _____________________
Telecopy No.:______________
with a copy to:
[Address]
Attn: _____________________
Telecopy No.: _____________
Payments made
to the Owner Participant as provided in Section
3.06 of the Trust Indenture shall be made to:
[Bank]
[Address] New York, New York
ABA No. ___________________
Account No. _______________
Account Name: _____________
Reference: ________________
SCHEDULE I - PAGE 1
Indenture Trustee: State Street Bank and Trust Company
U.S. Mail
Corporate Trust Department
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Overnight Courier
Corporate Trust Department
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Wire Transfer
State Street Bank and Trust Company
ABA No. ▇▇▇-▇▇▇-▇▇▇
for credit to State Street Bank and Trust Company
Acct. No. ▇▇▇▇-▇▇▇-▇
Attn: Corporate Trust Department
Reference: Northwest/NW [____ _]
Owner Trustee: First Security Bank, National Association
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Attn: Corporate Trust Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Payments made to the Owner Trustee as provided in
Section 3(f) of the Lease shall be made to:
First Security Bank, National Association
ABA No. ▇▇▇-▇▇▇▇-▇▇
Acct. No. 051-0922115
Attn: Corporate Trust Department
Credit: Northwest/NW [____ _]
Loan Participant: State Street Bank and Trust Company
of Connecticut, National Association
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Hartford, CT 06103
Attn: Corporate/Muni Department
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
SCHEDULE I - PAGE 2
Subordination Agent: State Street Bank and Trust Company
U.S. Mail
Corporate Trust Department
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Overnight Courier
Corporate Trust Department
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SCHEDULE I - PAGE 3
SCHEDULE II
Commitments
Interest Rate Percentage of
Purchasers and Maturity Purchase Price Lessor's Cost
---------- ------------ -------------- -------------
Northwest Airlines
Pass Through Trust
7.575% Series A
Secured Certificates due
1999-2A [___________] $[___________] [___________]%
7.950% Series B
Secured Certificates due
1999-2B [___________] $[___________] [___________]%
8.304% Series C
Secured Certificates due
1999-2C [___________] $[___________] [___________]%
Owner Participant Equity Investment
----------------- -----------------
[___________] $[___________] [___________]%
Total Commitments $[___________] 100%
SCHEDULE II - PAGE 1
SCHEDULE III
Pass Through Trust Agreements
1. Pass Through Trust Agreement, dated as of June 3, 1999, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company of Connecticut, National Association, as supplemented by
Trust Supplement No. 1999-2A, dated as of June 25, 1999 among Northwest
Airlines, Inc., Northwest Airlines Corporation and State Street Bank and
Trust Company of Connecticut, National Association.
2. Pass Through Trust Agreement, dated as of June 3, 1999, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company of Connecticut, National Association, as supplemented by
Trust Supplement No. 1999-2B, dated as of June 25, 1999 among Northwest
Airlines, Inc., Northwest Airlines Corporation and State Street Bank and
Trust Company of Connecticut, National Association.
3. Pass Through Trust Agreement, dated as of June 3, 1999, among Northwest
Airlines Corporation, Northwest Airlines, Inc., and State Street Bank and
Trust Company of Connecticut, National Association, as supplemented by
Trust Supplement No. 1999-2C, dated as of June 25, 1999 among Northwest
Airlines, Inc., Northwest Airlines Corporation and State Street Bank and
Trust Company of Connecticut, National Association.
SCHEDULE III - PAGE 1
EXHIBIT A
TO PARTICIPATION
AGREEMENT
[NW ____ _]
SCHEDULE OF COUNTRIES FOR REREGISTRATION
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland Trinidad and Tobago
Italy United Kingdom
Japan Uruguay
Luxembourg Venezuela
Malaysia
EXHIBIT A - PAGE 1
EXHIBIT K
TO PARTICIPATION
AGREEMENT
[NW ____ _]
Section 7(b) - General Tax Indemnity
(b) General Tax Indemnity.
(i) Indemnity. Except as provided in Section 7(b)(ii) hereof, Lessee shall
pay, protect, save and on written demand shall indemnify and hold harmless any
Tax Indemnitee from and against any and all Taxes howsoever imposed against any
Tax Indemnitee, Lessee or the Aircraft, the Airframe, any Engine or any Part
thereof or interest therein by any Federal, state or local government or other
taxing authority in the United States or by any foreign government or any
political subdivision or taxing authority thereof or by any territory or
possession of the United States or by any international authority ("Taxing
Authority") upon or in connection with or relating to (A) the construction,
financing, refinancing, purchase, acquisition, acceptance, rejection, delivery,
nondelivery, transport, ownership, registration, reregistration, insuring,
assembly, possession, repossession, operation, location, use, control,
condition, maintenance, repair, sale, return, abandonment, installation,
storage, redelivery, replacement, manufacture, leasing, subleasing,
modification, rebuilding, importation, transfer of title, transfer of
registration, exportation or other application or disposition of the Aircraft,
the Airframe, any Engine or any Part thereof or interest therein, (B) the
rentals, receipts or earnings from the Aircraft, the Airframe, any Engine or any
Part, (C) any amount paid or payable pursuant to any Operative Document or any
document related thereto or the property or the income or other proceeds with
respect to any of the property held in the Trust Estate or the Trust Indenture
Estate, (D) the Aircraft, the Airframe, any Engine or any Part, (E) any or all
of the Operative Documents, or the issuance of the Secured Certificates (or the
refinancing thereof) and any other documents contemplated hereby or thereby and
amendments and supplements hereto and thereto or the execution, delivery or
performance of any thereof or the issuance, acquisition, modification, holding
or subsequent transfer thereof, (F) the payment of the principal of, or interest
or Make-Whole Amount or other premium on, or other amounts payable with respect
to, the Secured Certificates or the Pass Through Certificates, or (G) otherwise
with respect to or in connection with the transactions contemplated by the
Operative Documents.
(ii) Exclusions from General Tax Indemnity. The provisions of Section
7(b)(i) shall not apply:
(1) with respect to any Tax Indemnitee to any Income Tax (as defined
in Section 7(d) hereof) imposed by (A) the United States Federal
government or (B) any U.S. state or local taxing jurisdiction;
EXHIBIT K - PAGE 1
(2) with respect to any Tax Indemnitee, to any Income Taxes imposed
by any foreign or international government, jurisdiction or taxing
authority or territory or possession of the United States except to the
extent that such Tax Indemnitee would be subject to such Income Tax if the
sole connection between such Tax Indemnitee and the Taxing Authority had
been the location and operation of the Aircraft or the activities of
Lessee or any sublessee within such Taxing Authority;
(3) to any capital gains taxes, excess profits taxes, value added
taxes, accumulated earnings taxes, personal holding company taxes,
succession taxes or estate or similar taxes;
(4) to any Tax imposed as a result of a transfer or disposition by a
Tax Indemnitee including, without limitation, the revocation of the trust
created by the Trust Agreement or a transfer or disposition of all or any
portion of its respective equitable or legal ownership interest in the
Aircraft, the Trust Estate, a Secured Certificate (including sales of
participations therein), the Trust Indenture Estate (as defined in the
Trust Indenture) or any Operative Document or any interest in such Tax
Indemnitee, unless such transfer or disposition shall occur (A) pursuant
to the exercise of remedies pursuant to Section 15 of the Lease or (B) in
connection with the termination of the Lease or the action or direction of
Lessee pursuant to Sections 9, 10 or 19 thereof;
(5) to any Tax based on or measured by any fees received by the
Owner Trustee, the Pass Through Trustee, the Indenture Trustee or any
Agent in connection with any transaction contemplated by the Operative
Documents;
(6) to any Tax imposed with respect to events occurring or matters
arising after the earlier of (x) the expiration of the Term or the earlier
termination of the Lease pursuant to Section 9 or 19 thereof, (y) the
return of possession of the Aircraft to the Owner Trustee or its designee
pursuant to the terms of the Lease or (z) the commencement of storage
pursuant to Section 5(d) of the Lease provided that this exclusion shall
not apply to Taxes to the extent such Taxes are imposed on or with respect
to any events or matters occurring or arising prior to such expiration,
termination, return of possession of the Aircraft or storage;
(7) to any Tax in the nature of an intangible or similar tax upon or
with respect to the value or principal amount of the interest of any Tax
Indemnitee in any of the Secured Certificates or in the Owner Trust;
(8) with respect to any Tax Indemnitee to any Tax imposed on or with
respect to a transferee (or subsequent transferee) of an original Tax
Indemnitee to the extent such Taxes would not have been required to be
withheld or imposed on or with respect to such original Tax Indemnitee;
(9) to any Tax which would not have been imposed on (A) the Owner
Trustee, the Trust Estate or the Owner Participant but for, a Lessor Lien
EXHIBIT K - PAGE 2
(including, for this purpose, Liens which would be a Lessor Lien but for
the proviso in the definition of Lessor Liens) or (B) the Indenture
Trustee but for an Indenture Trustee's Lien, in each case with respect to
the Tax Indemnitee to whom such Lien is attributable;
(10) to any Tax to the extent such Tax would not have been imposed
but for a present or future connection between the Tax Indemnitee or any
Affiliate thereof and the jurisdiction imposing such Taxes (including,
without limitation, the Tax Indemnitee or an Affiliate thereof being or
having been a citizen or resident thereof, or being or having been
organized, present or engaged in a trade or business therein, or having or
having had, a permanent establishment or fixed place of business therein,
or engaging, or having engaged, in one or more transactions or activities
therein unrelated to the transactions contemplated by the Operative
Documents), other than a connection arising solely by reason of the
transactions contemplated by the Operative Documents;
(11) to any Tax imposed on a Tax Indemnitee to the extent imposed as
a result of such Tax Indemnitee's failure to comply with any
certification, information, documentation, reporting or similar procedure
that is required by law, treaty or regulation as a condition to the
allowance of any reduction in the rate of such Tax or any exemption or
other relief from such Tax;
(12) to any Tax on a Tax Indemnitee to the extent arising out of, or
caused by, or to the extent such Tax would not have been incurred but for,
(A) the willful misconduct or gross negligence of such Tax Indemnitee or
any of its Affiliates or (B) the inaccuracy or breach of any
representation, warranty, covenant or agreement by such Tax Indemnitee or
any of its Affiliates in any Operative Document;
(13) to any Tax on a Tax Indemnitee to the extent consisting of
interest, penalties, fines or additions to Tax resulting from the
negligence or willful misconduct of such Tax Indemnitee or any of its
Affiliates in connection with the filing of, or failure to file, any tax
return, the payment of, or failure to pay any Tax, or the conduct of any
proceeding in respect thereof unless resulting from the failure by Lessee
to perform its obligations under Section 7(b)(v) hereof; or
(14) to any excise tax imposed on any Tax Indemnitee under Section
4975 of the Internal Revenue Code as a result of the use by such Tax
Indemnitee or any of its Affiliates of the assets of an "employee benefit
plan" (as defined in Section 3(3) of ERISA) to purchase a Secured
Certificate, make an equity investment or otherwise acquire any interest
in the Trust Estate or any Secured Certificate.
(iii) Calculation of General Tax Indemnity Payments. Any payment which
Lessee shall be required to make to or for the account of any Tax Indemnitee
with respect to any Tax which is subject to indemnification under this Section
7(b) shall be in an amount which, after reduction by the amount of all Taxes
required to be paid by such Tax
EXHIBIT K - PAGE 3
Indemnitee in respect of the receipt or accrual of such amount and after
consideration of any current savings of such Tax Indemnitee resulting by way of
any deduction, credit or other tax benefit attributable to such indemnified Tax
that actually reduces any Taxes for which Lessee is not required to indemnify
such Tax Indemnitee pursuant to this Section 7(b) or the Tax Indemnity
Agreement, shall be equal to the payment otherwise required hereunder.
If, by reason of any Tax payment made to or for the account of a Tax
Indemnitee by Lessee pursuant to this Section 7(b), such Tax Indemnitee or any
of its Affiliates subsequently realizes a tax deduction or credit (including a
foreign tax credit) not previously taken into account in computing such payment,
such Tax Indemnitee shall promptly pay to Lessee an amount equal to the sum of
(I) the actual reduction in Taxes, if any, realized by such Tax Indemnitee which
is attributable to such deduction or credit and (II) the actual reduction in
Taxes realized by such Tax Indemnitee as a result of any payment made by such
Tax Indemnitee pursuant to this sentence. For purposes of this Section
7(b)(iii), items of foreign Tax of any Tax Indemnitee shall be deemed to be
utilized by such Tax Indemnitee as credits or deductions for any taxable year in
accordance with the following priorities:
First, all available foreign Taxes for which such Tax Indemnitee was not
indemnified or held harmless by anyone;
Second, all available foreign Taxes for which such Tax Indemnitee was
indemnified or held harmless by Lessee, and all available foreign taxes
indemnified under any other transaction (except any described in Clause
Third), on a pari passu basis; and
Third, any remaining foreign Taxes arising from any transaction in which
there is an express agreement that such Taxes shall be utilized after
foreign taxes from other transactions.
Once the foreign Tax for which such Tax Indemnitee was indemnified by
Lessee is deemed to be utilized pursuant to the ordering rules contained in this
paragraph, it shall not subsequently be recharacterized as not having been
utilized as a result of a foreign tax liability arising in a subsequent year.
Any Taxes that are imposed on any Tax Indemnitee as a result of the
disallowance or reduction of any tax benefit referred to in this subsection as
to which such Tax Indemnitee has made in full the payment to Lessee required
hereby (or as to which such Tax Indemnitee would have made its payment but for
Section 7(b)(viii) or which tax benefit was otherwise taken into account in
computing Lessee's indemnity obligation pursuant to this Section 7) in a taxable
year subsequent to the utilization by such Tax Indemnitee shall be treated as a
Tax for which Lessee is obligated to indemnify such Tax Indemnitee pursuant to
the provisions of this Section 7(b), without regard to the exclusions set forth
in Section 7(b)(ii) hereof (other than clauses (12) or (13) thereto).
EXHIBIT K - PAGE 4
Each 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 tax
savings which would result in payments to Lessee under this Section 7(b).
(iv) General Tax Indemnity--Contests. At Lessee's request Lessee shall be
entitled at its sole cost and expense (A) in the case of a contest involving
only Taxes indemnified hereunder ("Indemnified Taxes") or (B) in any proceeding
involving a claim for one or more Indemnified Taxes as well as a claim for other
Taxes, where the contest of the claim for Indemnified Taxes can be severed from
the contest of other Taxes, to assume responsibility for and control of the
contest ("Lessee Controlled Contest"). Unless otherwise required by law, any
such contest shall be conducted by and in the name of Lessee. If a written claim
shall be made against and received by any Tax Indemnitee for any Tax for which
Lessee is obligated pursuant to this Section 7(b), such Tax Indemnitee shall
notify Lessee promptly of such claim (it being understood and agreed that
failure to provide such notice shall not adversely affect or otherwise prejudice
any Tax Indemnitee's right to indemnity under this Section 7(b) except to the
extent such failure has a materially adverse effect on the ability to contest
such claim). If the Tax cannot be contested in a Lessee Controlled Contest, upon
request from Lessee within thirty (30) days after receipt of such notice, such
Tax Indemnitee shall in good faith at Lessee's sole cost and expense contest the
imposition of such Tax (a "Tax Indemnitee Controlled Contest"). After consulting
with Lessee and Lessee's counsel concerning the forum in which the adjustment is
most likely to be favorably resolved, such Tax Indemnitee may select in its sole
discretion after considering in good faith Lessee's and Lessee's counsel
recommendation the forum for such contest and determine whether any such contest
shall be by (A) resisting payment of such Tax, (B) paying such Tax under protest
or (C) paying such Tax and seeking a refund or other repayment thereof. Except
as otherwise provided in clause (Z) below, during the pendency of a contest
pursuant to this Section 7(b)(iv) Lessee may withhold payment of any Tax to the
extent provided by applicable law. In no event shall such Tax Indemnitee be
required, or Lessee be permitted, to contest the imposition of any Tax for which
Lessee is obligated pursuant to this Section 7(b) unless (W) no Event of Default
shall have occurred and be continuing (unless Lessee shall have provided
security reasonably satisfactory to such Tax Indemnitee securing Lessee's
performance of its obligations under this Section 7(b)), (X) Lessee shall have
agreed to pay to such Tax Indemnitee on demand all reasonable costs and expenses
on an after-tax basis that such Tax Indemnitee may incur in connection with
contesting such claim (including, without limitation, all reasonable legal and
accounting fees), (Y) such action to be taken will not result in a material risk
of sale, forfeiture or loss of, or the creation of any Lien on, the Aircraft,
the Engines or any Part, other than Permitted Liens, unless Lessee shall have
provided such Tax Indemnitee security against such risk in form and amount
reasonably acceptable to such Tax Indemnitee, and (Z) if such contest shall be
conducted in a manner requiring the payment of the claim, Lessee shall have paid
the amount required directly to the appropriate authority or made an advance of
the amount thereof to such Tax Indemnitee on an interest-free basis and agreed
to indemnify such Tax Indemnitee on an after-tax basis against any Taxes payable
by such Tax Indemnitee with respect to such advance.
EXHIBIT K - PAGE 5
Notwithstanding anything to the contrary in this Section 7(b), in any Tax
Indemnitee Controlled Contest the Tax Indemnitee may not settle or agree to any
claim without the prior written consent of Lessee, and the Tax Indemnitee shall
conduct any such administrative proceedings and judicial contest in good faith
in an attempt to minimize the amount payable by Lessee under this Section 7(b).
The term "after-tax basis" for purposes of this Section 7(b) shall mean an
amount which, after deduction of all Taxes required to be paid by or on behalf
of the Tax Indemnitee in respect of the receipt or accrual of such amount, is
equal to the payment required under the provisions of this Section 7(b) which
require payments to be made on an after-tax basis.
If any Tax Indemnitee shall obtain a refund of all or any part of any Tax
paid by Lessee, such Tax Indemnitee shall pay Lessee an amount equal to the
amount of such refund, including interest received attributable thereto, plus
any net tax benefit (or minus any net tax detriment) realized by such Tax
Indemnitee as a result of any refund received and payment by such Tax Indemnitee
made pursuant to this sentence.
Nothing contained in this Section 7(b)(iv) shall require any Tax
Indemnitee to contest, or permit Lessee to contest, a claim which such Tax
Indemnitee would otherwise be required to contest pursuant to this Section
7(b)(iv), if such Tax Indemnitee shall waive payment by Lessee of any amount
that might otherwise be payable by Lessee under this Section 7(b) in respect of
such claim and any other claim, the contest of which would be adversely
affected.
(v) General Tax Indemnity--Reports. If any report, return or statement is
required to be filed with respect to any Tax which is subject to indemnification
under this Section 7(b), Lessee shall timely file the same at its sole expense
(except for any such report, return or statement which the Tax Indemnitee has
notified Lessee that the Tax Indemnitee intends to file or which the Tax
Indemnitee is required by law to file in its own name). Lessee shall have no
obligation under the preceding sentence if such Tax Indemnitee, after receipt of
Lessee's written request, shall have failed to furnish Lessee with such
information in a timely fashion as is in such Tax Indemnitee's control and is
not otherwise reasonably available to Lessee and is necessary to file such
returns. Lessee shall either file such report, return or statement so as to show
the ownership of the Aircraft in the Owner Trustee and send a copy of such
report, return or statement to the Tax Indemnitee and Owner Trustee or, where
Lessee is not so permitted to file such report, return or statement, it shall
notify the Tax Indemnitee of such requirement and prepare and deliver such
report, return or statement to the 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. Lessee shall provide to the Owner
Participant upon request (or shall cause to be provided to the Owner Participant
upon request) such information maintained in the regular course of Lessee's
business and shall make available for inspection and copying by the Owner
Participant, at Lessee's expense, such records as Lessee retains in the regular
course of its business, or is required under applicable law to retain, as shall
be reasonably necessary for the Owner Participant to prepare or support any
required Federal, state, local or foreign tax returns or other filings, or to
comply with audit or litigation requirements. The Owner Participant shall
provide to Lessee upon request (or shall cause to be provided to Lessee on
request) such
EXHIBIT K - PAGE 6
information related to the Overall Transaction maintained in the regular course
of the Owner Participant's business, and shall make available (or shall cause to
be made available) for inspection and copying by Lessee, at the Owner
Participant's expense, such records related to the Overall Transaction as the
Owner Participant or the Owner Trustee retain in the regular course of their
business or are required by law to retain, as shall be necessary for Lessee to
prepare or support any required Federal, state, local or foreign returns or
other filings or to comply with audit or litigation requirements.
(vi) Verification. At Lessee's written request after Lessee receives a Tax
Indemnitee's computations showing the amount of any indemnity payable by Lessee
to such Tax Indemnitee pursuant to this Section 7(b) or any amount payable by
any Tax Indemnitee to Lessee pursuant to this Section 7(b), such computations
shall be subject to confidential verification in writing by any nationally
recognized firm of certified public accountants selected by Lessee and
reasonably acceptable to such Tax Indemnitee. The accounting firm shall complete
its review within thirty (30) days of Lessee's receipt of such Tax Indemnitee's
computations. The computations of such accounting firm shall (i) be delivered
simultaneously to Lessee and such Tax Indemnitee and (ii) absent manifest error,
be final, binding and conclusive upon Lessee and such Tax Indemnitee. If Lessee
pays such indemnity in whole or in part before completion of the verification
procedure, appropriate adjustments will be made promptly after completion of the
verification procedure (and nothing in this Section 7(b)(vi) shall be construed
as changing the time when any such indemnity is payable under this Section 7(b))
to take into account any redetermination of the indemnity by the accounting
firm. The fee and disbursements of such firm shall be paid by Lessee unless such
verification shall disclose an error made by such Tax Indemnitee in favor of
such Tax Indemnitee exceeding the lesser of five percent (5%) of the original
claim or $10,000, in which case such fee and disbursements shall be paid by such
Tax Indemnitee. Such Tax Indemnitee shall cooperate with such accounting firm
and (subject to such accounting firm's execution of a confidentiality agreement
satisfactory to such Tax Indemnitee) shall supply such accounting firm with all
information reasonably necessary to permit accomplishment of such review and
determination. The sole responsibility of such accounting firm shall be to
verify the computations of the amount payable hereunder and the interpretation
of this Agreement shall not be within the scope of such accounting firm's
responsibilities.
(vii) General Tax Indemnity--Payment. Except as provided in Section
7(b)(iv) hereof, Lessee shall pay any Tax for which it is liable pursuant to
this Section 7(b) directly to the appropriate taxing authority if legally
permissible or upon demand of a Tax Indemnitee shall pay such Tax and any other
amounts due hereunder to such Tax Indemnitee within fifteen (15) Business Days
of such demand, but in no event shall any such payments be required to be made
by Lessee more than five (5) Business Days prior to the date the Tax to which
any such payment hereunder relates is due in immediately available funds. Any
such demand for payment from a Tax Indemnitee shall specify in reasonable detail
the payment and the facts upon which the right to payment is based. Each Tax
Indemnitee shall promptly forward to Lessee any notice, ▇▇▇▇ or advice received
by it concerning any Tax, provided, however, that the failure of any Tax
Indemnitee to forward any such notice, ▇▇▇▇ or advice shall not adversely affect
or otherwise prejudice such Tax Indemnitee's rights to indemnification under
this Section 7(b) unless such
EXHIBIT K - PAGE 7
failure materially adversely affects the ability to contest any claim reflected
therein. Within thirty (30) days after the date of each payment by Lessee of any
Tax indemnified against hereunder, Lessee shall furnish the appropriate Tax
Indemnitee the original or a certified copy of a receipt for Lessee's payment of
such Tax or such other evidence of payment of such Tax as is reasonably
acceptable to such Tax Indemnitee.
(viii) Application of Payments During Existence of Event of Default. Any
amount payable to Lessee pursuant to the terms of this Section 7(b) shall not be
paid to or retained by Lessee if at the time of such payment or retention an
Event of Default shall have occurred and be continuing under the Lease. At such
time as there shall not be continuing any such Event of Default, such amount
shall be paid to the Lessee to the extent not previously applied against
Lessee's obligations hereunder as and when due after the Owner Trustee shall
have declared the Lease in default pursuant to Section 15 thereof.
(ix) Reimbursements by Tax Indemnitees Generally. If, for any reason,
Lessee is required to make any payment with respect to any Taxes imposed on any
Tax Indemnitee, any Pass Through Trustee, any Loan Participant or the
Subordination Agent in respect of the transactions contemplated by the Operative
Documents or on the Aircraft, the Airframe, the Engines or any Part, which Taxes
are not the responsibility of Lessee under this Section 7(b), then such Tax
Indemnitee, Pass Through Trustee, Loan Participant or the Subordination Agent,
as the case may be, shall pay to Lessee an amount which equals the amount paid
by Lessee with respect to such Taxes plus interest thereon computed at an annual
interest rate equal to the Base Rate plus one percent from the date of payment
by Lessee.
(x) Forms, etc. Each Tax Indemnitee agrees to furnish to Lessee from time
to time such duly executed and properly completed forms that are requested by
Lessee or that the Tax Indemnitee knows, or has reason to know in the ordinary
course of its business, may be necessary or appropriate in order to claim any
reduction of or exemption from any withholding tax imposed by any taxing
authority in respect of any payments otherwise required to be made by Lessee
pursuant to the Operative Documents, which reduction or exemption may be
available to such Tax Indemnitee.
(xi) Non-Parties. If a Tax Indemnitee is not a party to this Agreement,
Lessee may require the Tax Indemnitee to agree to the terms of this Section 7(b)
prior to making any payment to such Tax Indemnitee under this Section 7(b).
EXHIBIT K - PAGE 8
EXHIBIT L
TO PARTICIPATION
AGREEMENT
[NW ____ _]
Section 7(c) - General Indemnity
(c) General Indemnity. Lessee hereby agrees to indemnify each
Indemnitee against, and agrees to protect, defend, save and keep harmless each
thereof from (whether or not the transactions contemplated herein or in any of
the other Operative Documents are consummated), any and all liabilities,
obligations, losses, damages, penalties, claims, actions, suits, out-of-pocket
costs, expenses and disbursements (including reasonable legal fees and expenses
and Transaction Expenses to the extent not required to be paid by the Owner
Trustee or the Owner Participant pursuant to Section 16 hereof but excluding
internal costs and expenses such as salaries and overhead), of whatsoever kind
and nature (collectively called "Expenses") imposed on, incurred by or asserted
against any Indemnitee, in any way relating to or arising out of (A) any of the
Operative Documents or any sublease or sub-sublease of the Aircraft or the
enforcement of any of the terms thereof or any amendment, modification or waiver
in respect thereof and, only in the case of the Indemnitee who is the
Subordination Agent or the Liquidity Provider, the Intercreditor Agreement and
the Liquidity Facilities, (B) the manufacture, purchase, acceptance or rejection
of the Airframe or any Engine, (C) the Aircraft (or any portion thereof or any
Engine or engine affixed to the Airframe) whether or not arising out of the
finance, refinance, ownership, delivery, nondelivery, storage, lease, sublease,
sub-sublease, possession, use, non-use, operation, maintenance, registration,
reregistration, condition, modification, alteration, replacement, repair,
substitution, sale, return or other disposition of the Aircraft (or any portion
thereof or any Engine or engine affixed to the Airframe) including, without
limitation, latent or other defects, whether or not discoverable, strict tort
liability and any claim for patent, trademark or copyright infringement, (D) the
offer, sale or delivery of the Secured Certificates (the indemnity in this
clause (D) to extend also to any person who controls an Indemnitee within the
meaning of Section 15 of the Securities Act of 1933, as amended) or (E) the
offer or sale of any interest in the Trust Estate or the Trust Agreement or any
similar interest with respect to the Aircraft on or prior to the Delivery Date;
provided that the foregoing indemnity as to any Indemnitee shall not extend to
any Expense resulting from or arising out of or which would not have occurred
but for one or more of the following: (A) any representation or warranty by such
Indemnitee (or any member of the Related Indemnitee Group) in the Operative
Documents, the Intercreditor Agreement, the Liquidity Facilities or the Pass
Through Trust Agreements or in connection therewith being incorrect in any
material respect, or (B) the failure by such Indemnitee (or any member of the
Related Indemnitee Group) to perform or observe any agreement, covenant or
condition in any of the Operative Documents, the Intercreditor Agreement, the
Liquidity Facilities or the Pass Through Trust Agreements applicable to it
including, without limitation, the creation or existence of a Lessor Lien
(including for this purpose Liens which would be Lessor Liens but for the
proviso in the definition of Lessor Liens), a Loan Participant Lien or an
Indenture Trustee's Lien (except to the extent such failure was caused directly
by the failure of Lessee to perform any obligation under a Lessee Document), or
(C) the willful misconduct or the gross negligence of such Indemnitee (or any
member of the Related Indemnitee Group) (other than gross negligence imputed to
such
EXHIBIT L - PAGE 1
Indemnitee (or any member of the Related Indemnitee Group) solely by reason of
its interest in the Aircraft), or (D) with respect to the Owner Trustee, a
disposition (voluntary or involuntary) by the Owner Trustee of all or any part
of its interest in the Airframe or any Engine (other than as contemplated by the
Lease or the Trust Indenture) or with respect to any Indemnitee, by such
Indemnitee of all or any part of such Indemnitee's interest in the Airframe, any
Engine or in the Operative Documents other than during the continuance of an
Event of Default under the Lease, or (E) any Tax whether or not Lessee is
required to indemnify for such Tax pursuant to Section 7(b) hereof (it being
understood that Section 7(b) hereof and the Tax Indemnity Agreement provide for
Lessee's liability with respect to Taxes), or (F) in the case of an Indemnitee
which is the Owner Participant or the Owner Trustee (in its individual or trust
capacity) (other than in connection with an Event of Default) or, in connection
with an exercise of remedies under the Trust Indenture upon a default thereunder
(other than a default under Section 4.02(a) of the Trust Indenture), the
Indenture Trustee or a Loan Participant, the offer or sale of any interest in
the Trust Estate or the Trust Agreement or any similar interest, or (G) in the
case of an Indemnitee which is the Owner Participant or the Owner Trustee (in
its individual or trust capacity) and the affiliates, successors and assigns
thereof, a failure on the part of the Owner Trustee to use ordinary care to
distribute in accordance with the Trust Agreement any amounts received and
distributable by it thereunder, and in the case of an Indemnitee which is a Loan
Participant, a Certificate Holder or the Indenture Trustee (in its individual or
trust capacity) and the affiliates, successors and assigns thereof, a failure on
the part of the Indenture Trustee to use ordinary care to distribute in
accordance with the Trust Indenture any amounts received and distributable by it
thereunder, or (H) the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any of the
Operative Documents other than such as have been consented to, approved,
authorized or requested by Lessee, or (I) subject to the next succeeding
paragraph, any loss of tax benefits or increase in tax liability under any tax
law whether or not Lessee is required to indemnify therefor pursuant to this
Agreement or the Tax Indemnity Agreement, or (J) except to the extent fairly
attributable to acts, omissions or events occurring prior thereto, acts or
events which occur with respect to the Airframe, any Engine or any Part after
the earliest of: (I) the return of possession of the Airframe or such Engine or
Part to the Owner Trustee or its designee pursuant to the terms of the Lease,
(II) the termination of the Lease in accordance with Section 9 or Section 19
thereof or (III) the commencement of storage pursuant to Section 5(d) of the
Lease, or (K) any Expense which is specified to be for the account of an
Indemnitee pursuant to any Operative Document without express right of
reimbursement under any Operative Document, or (L) as to any Indemnitee the
funding of such Indemnitee's participation in the transaction contemplated by
the Operative Documents giving rise to a "prohibited transaction" within the
meaning of the provisions of the Code or the Regulations of the United States
Department of Labor implementing ERISA or any other violation of the fiduciary
responsibility provisions of ERISA. The foregoing indemnity shall not extend to
any Expense to the extent that such Expense is not caused by, or does not arise
out of, an act, omission or event which occurs prior to the termination of the
Lease and the payment of all other payments required to be paid by Lessee under
the Operative Documents.
Lessee further agrees that any payment or indemnity pursuant to this
Section 7(c) in respect of any Expenses shall be in an amount which, after
deduction of all Taxes required to be paid by such recipient with respect to
such payment or indemnity under the laws of any Federal, state or local
government or taxing authority in the United States, or under the laws of any
taxing authority or governmental subdivision of a foreign country, or any
territory or
EXHIBIT L - PAGE 2
possession of the United States or any international authority, shall be equal
to the excess, if any, of (A) the amount of such Expense over (B) the net
reduction in Taxes required to be paid by such recipient resulting from the
accrual or payment of such Expense.
If, by reason of any Expense payment made to or for the account of
an Indemnitee by Lessee pursuant to this Section 7(c), such Indemnitee
subsequently realizes a tax deduction or credit (including foreign tax credit
and any reduction in Taxes) not previously taken into account in computing such
payment, such Indemnitee shall promptly pay to Lessee, but only if Lessee shall
have made all payments then due and owing to such Indemnitee under the Operative
Documents, an amount equal to the sum of (I) the actual reduction in Taxes
realized by such Indemnitee which is attributable to such deduction or credit,
and (II) the actual reduction in Taxes realized by such Indemnitee as a result
of any payment made by such Indemnitee pursuant to this sentence.
Nothing in this Section 7(c) shall be construed as a guaranty by
Lessee of payments due pursuant to the Secured Certificates or of the residual
value of the Aircraft.
If a claim is made against an Indemnitee involving one or more
Expenses and such Indemnitee has notice thereof, such Indemnitee shall promptly,
upon receiving such notice, give notice of such claim to Lessee; provided that
the failure to provide such notice shall not release Lessee from any of its
obligations to indemnify hereunder, and no payment by Lessee to an Indemnitee
pursuant to this Section 7(c) shall be deemed to constitute a waiver or release
of any right or remedy which the Lessee may have against such Indemnitee for any
actual damages as a result of the failure by such Indemnitee to give Lessee such
notice. Lessee shall be entitled, at its sole cost and expense, acting through
counsel acceptable to the respective Indemnitee, (A) so long as Lessee has
agreed in a writing acceptable to such Indemnitee that Lessee is liable to such
Indemnitee for such Expense hereunder (unless such Expense is covered by the
proviso to the first paragraph of this Section 7(c)), in any judicial or
administrative proceeding that involves solely a claim for one or more Expenses,
to assume responsibility for and control thereof, (B) so long as Lessee has
agreed in a writing acceptable to such Indemnitee that Lessee is liable to such
Indemnitee for such Expense hereunder (unless such Expense is covered by the
proviso to the first paragraph of this Section 7(c)), in any judicial or
administrative proceeding involving a claim for one or more Expenses and other
claims related or unrelated to the transactions contemplated by the Operative
Documents, to assume responsibility for and control of such claim for Expenses
to the extent that the same may be and is severed from such other claims (and
such Indemnitee shall use its best efforts to obtain such severance), and (C) in
any other case, to be consulted by such Indemnitee with respect to judicial
proceedings subject to the control of such Indemnitee. Notwithstanding any of
the foregoing to the contrary, Lessee shall not be entitled to assume
responsibility for and control of any such judicial or administrative
proceedings (M) while an Event of Default shall have occurred and be continuing,
(N) if such proceedings will involve a material risk of the sale, forfeiture or
loss of, or the creation of any Lien (other than a Permitted Lien) on the
Aircraft, the Trust Indenture Estate or the Trust Estate or any part thereof, or
(O) if such proceeding could in the good faith opinion of such Indemnitee entail
any material risk of criminal liability or present a conflict of interest making
separate representation necessary. The affected Indemnitee may participate at
its own expense and with its own counsel in any judicial proceeding controlled
by Lessee pursuant to the preceding provisions.
EXHIBIT L - PAGE 3
The affected Indemnitee shall supply Lessee with such information
reasonably requested by Lessee as is necessary or advisable for Lessee to
control or participate in any proceeding to the extent permitted by this Section
7(c). Such Indemnitee shall not enter into a settlement or other compromise with
respect to any Expense without the prior written consent of Lessee, which
consent shall not be unreasonably withheld or delayed, unless such Indemnitee
waives its right to be indemnified with respect to such Expense under this
Section 7(c).
Lessee shall supply the affected Indemnitee with such information
reasonably requested by such Indemnitee as is necessary or advisable for such
Indemnitee to control or participate in any proceeding to the extent permitted
by this Section 7(c).
When Lessee or the insurers under a policy of insurance maintained
by Lessee (or any Sublessee) undertakes the defense of an Indemnitee with
respect to an Expense, no additional legal fees or expenses of such Indemnitee
in connection with the defense of such Indemnitee shall be indemnified hereunder
unless such fees or expenses were incurred at the written request of Lessee or
such insurers, provided that no such defense shall be compromised or settled on
a basis that admits any gross negligence or willful misconduct on the part of
such Indemnitee without such Indemnitee's prior consent.
In the case of any Expense indemnified by Lessee hereunder which is
covered by a policy of insurance maintained by Lessee (or any Sublessee)
pursuant to Section 11 of the Lease or otherwise, it shall be a condition of
such indemnity with respect to any particular Indemnitee that such Indemnitee
shall 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. Notwithstanding any of
the foregoing to the contrary, with respect to any Expense which is covered
under policies of insurance maintained by Lessee (or any Sublessee) pursuant to
Section 11 of the Lease or otherwise, the rights of an Indemnitee to control or
participate in any proceeding shall be modified to the extent necessary to
comply with the requirements of such policies and the rights of the insurers
thereunder.
Upon payment of any Expense or Tax pursuant to this Section 7,
Lessee or, if any Expense or Tax has been paid by insurers, the insurers,
without any further action, shall be subrogated to any claims the affected
Indemnitee may have relating thereto other than claims under Section 5.03 or
7.01 of the Trust Indenture or Section 5.03 or 7.01 of the Trust Agreement. Such
Indemnitee agrees to give such further assurances or agreements and to cooperate
with Lessee or the insurers to permit Lessee or the insurers to pursue such
claims, if any, to the extent reasonably requested by Lessee or the insurers.
In the event that Lessee shall have paid an amount to an Indemnitee
pursuant to this Section 7(c), and such Indemnitee subsequently shall be
reimbursed in respect of such indemnified amount from any other Person, such
Indemnitee shall promptly pay to Lessee an amount equal to the amount of such
reimbursement (but in no event more than such payment from Lessee) plus any net
tax benefit (or minus any net tax detriment) realized by such Indemnitee as a
result of any reimbursement received and payment made by such Indemnitee
pursuant to this sentence, provided that (i) no Event of Default has occurred
and is continuing and (ii) such Indemnitee shall have no obligation to reimburse
Lessee if Lessee has not paid such
EXHIBIT L - PAGE 4
Indemnitee all amounts required pursuant to this Section 7(c) and any other
amounts then due to such Indemnitee from Lessee under any of the Operative
Documents.
Lessee's obligations under the indemnities provided for in this
Agreement shall be those of a primary obligor, whether or not the Person
indemnified shall also be indemnified with respect to the same matter under the
terms of any other document or instrument, and the Person seeking
indemnification from Lessee pursuant to any provision of this Agreement may
proceed directly against Lessee without first seeking to enforce any other right
of indemnification.
Lessee agrees to pay the reasonable fees and expenses of the
Indenture Trustee and the Owner Trustee for acting as such, other than such fees
and expenses which constitute Transaction Expenses.
EXHIBIT L - PAGE 5