CONFORMED COPY
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PARTICIPATION AGREEMENT [N586ML]
Dated as of December 10, 1999
among
MIDWAY AIRLINES CORPORATION,
as Lessee
ICX CORPORATION,
as Owner Participant,
and
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
not in its individual capacity (except as otherwise
expressly set forth herein) but solely
as Owner Trustee
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COVERING ONE CANADAIR REGIONAL JET SERIES 200ER
AIRCRAFT BEARING U.S. REGISTRATION NO. N586ML
AND MANUFACTURER'S SERIAL NUMBER 7341
TABLE OF CONTENTS
PAGE
ARTICLE 1. INTERPRETATION.............................................................. 2
Section 1.01. Definitions............................................... 2
Section 1.02. References................................................ 2
Section 1.03. Headings.................................................. 2
Section 1.04. Appendices Schedules and Exhibits......................... 2
ARTICLE 2. SALE AND LEASING TRANSACTIONS............................................... 2
Section 2.01. Participation............................................. 2
(a) Sale and Purchase......................................... 2
(b) Leasing................................................... 2
(c) Owner Participant's Equity Investment..................... 3
(d) Delivery Date............................................. 3
Section 2.02. Closing Procedure......................................... 3
(a) Time and Place............................................ 3
(b) Actions of the Owner Trustee.............................. 3
(c) Actions of the Lessee..................................... 4
ARTICLE 3. CONDITIONS PRECEDENT........................................................ 5
Section 3.01. Conditions Precedent to Obligations of Owner Participant.. 5
(a) Notice.................................................... 5
(b) Delivery of Documents..................................... 5
(c) Airworthiness............................................. 7
(d) Violation of Law.......................................... 7
(e) No Event of Default....................................... 8
(f) No Event of Loss.......................................... 8
(g) Title..................................................... 8
(h) Certification............................................. 8
(i) Section 1110.............................................. 8
(j) Filings................................................... 8
(k) Precautionary Financing Statements........................ 8
(l) No Proceedings............................................ 8
(m) Governmental Action....................................... 9
(n) Representations and Warranties............................ 9
(o) Reserved.................................................. 9
(p) Lessee Advisor Letter..................................... 9
(q) Other Documents........................................... 9
Section 3.02. Conditions Precedent to Obligations of Lessee............. 9
(a) Documents................................................. 9
(b) Corporate Documents....................................... 9
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(c) Officer's Certificate..................................... 10
(d) Other Conditions Precedent................................ 10
Section 3.03. Post-Registration Opinion................................. 10
ARTICLE 4. LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS.......................... 10
Section 4.01. Lessee's Representations and Warranties................... 10
Section 4.02. Certain Covenants of Lessee............................... 13
(a) Filings and Recordings.................................... 13
(b) Registration.............................................. 14
(c) Information............................................... 16
(d) Privileges and Franchises................................. 17
(e) Merger and Consolidation.................................. 17
(f) Change of Location........................................ 18
(g) Financial Statements...................................... 18
(h) Filing of Documents....................................... 18
Section 4.03. Survival of Representations and Warranties................ 19
ARTICLE 5. OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND
COVENANTS................................................................... 19
Section 5.01. Representations, Warranties and Covenants of Owner
Participant............................................... 19
(a) Representations and Warranties............................ 19
(b) Lessor's Liens............................................ 21
(c) Assignment of Interests of Owner Participant.............. 21
(d) Actions with Respect to Lessor's Estate, Etc.............. 22
(e) Citizenship............................................... 22
Section 5.02. Citizenship............................................... 23
(a) Generally................................................. 23
(b) Owner Trustee............................................. 23
Section 5.03. Representations, Warranties and Covenants of Trust
Company and the Owner Trustee............................. 24
(a) Representations and Warranties............................ 24
(b) Lessor's Liens............................................ 26
(c) Indemnity for Lessor's Liens.............................. 26
(d) Securities Act............................................ 26
(e) Actions With Respect to Lessor's Estate, Etc.............. 26
(f) Other Business............................................ 26
(g) Performance of Agreements................................. 26
Section 5.04. The Lessee's Right of Quiet Enjoyment..................... 27
Section 5.05. Survival of Representations, Warranties and
Covenants................................................. 27
Section 5.06. Compliance with Trust Agreement, Etc...................... 27
ARTICLE 6. TAXES....................................................................... 27
Section 6.01. Lessee's Obligation to Pay Taxes.......................... 27
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(a) Generally................................................ 27
(b) Exceptions............................................... 28
Section 6.02. After Tax Basis.......................................... 31
Section 6.03. Time of Payment.......................................... 31
Section 6.04. Contests................................................. 32
(a) Notice of Claim.......................................... 32
(b) Request for Contest...................................... 32
(c) Declining to Contest; Settlement......................... 33
(d) Claims Barred............................................ 34
Section 6.05. Refunds.................................................. 34
Section 6.06. Reports.................................................. 34
Section 6.07. Survival of Obligations.................................. 35
Section 6.08. Payment of Taxes......................................... 35
Section 6.09. Reimbursements by Indemnitees Generally.................. 35
Section 6.10. Forms.................................................... 35
Section 6.11. Verification............................................. 35
Section 6.12. Non-Parties.............................................. 36
ARTICLE 7. GENERAL INDEMNITY.......................................................... 36
Section 7.01. Generally................................................ 36
(a) Indemnity................................................ 36
(b) Exceptions............................................... 37
(c) Non-Parties.............................................. 39
Section 7.02. Notice and Payment....................................... 39
Section 7.03. Defense of Claims........................................ 39
Section 7.04. Insured Claims........................................... 40
Section 7.05. Subrogation.............................................. 40
Section 7.06. Information.............................................. 40
Section 7.07. Survival of Obligations.................................. 40
Section 7.08. Effect of Other Indemnities.............................. 40
Section 7.09. Waiver of Certain Claims................................. 41
Section 7.10. Certain Limitations...................................... 41
ARTICLE 8. TRANSACTION COSTS.......................................................... 41
Section 8.01. Transaction Costs and Other Costs........................ 41
(a) Transaction Costs........................................ 41
(b) Continuing Expenses...................................... 41
(c) Amendments and Supplements............................... 41
ARTICLE 9. SUCCESSOR OWNER TRUSTEE.................................................... 42
Section 9.01. Appointment of Successor Owner Trustee................... 42
(a) Resignation and Removal.................................. 42
(b) Conditions to Appointment................................ 42
ARTICLE 10. LIABILITIES OF THE OWNER PARTICIPANT....................................... 43
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Section 10.01. Liabilities of the Owner Participant..................... 43
ARTICLE 11. OTHER DOCUMENTS............................................................ 43
Section 11.01. Consent of Lessee to Other Documents..................... 43
ARTICLE 12. NOTICES.................................................................... 43
Section 12.01. Notices.................................................. 43
ARTICLE 13. FINANCING.................................................................. 44
Section 13.01. Financing................................................ 44
ARTICLE 14. MISCELLANEOUS.............................................................. 45
Section 14.01. Counterparts............................................. 45
Section 14.02. No Oral Modifications.................................... 45
Section 14.03. Captions................................................. 45
Section 14.04. Successors and Assigns................................... 45
Section 14.05. Concerning the Owner Trustee............................. 45
Section 14.06. Severability............................................. 46
Section 14.07. GOVERNING LAW............................................ 46
Section 14.08. Section 1110 Compliance.................................. 47
Exhibit A Form of Owner Participant Guaranty
Exhibit B Form of Opinion of Counsel to the Owner Participant
in respect of the Assignment and Assumption Agreement
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PARTICIPATION AGREEMENT [N586ML] dated as of December 10, 1999 (this
"Agreement") among MIDWAY AIRLINES CORPORATION, a Delaware corporation (herein,
together with its successors and permitted assigns, the "Lessee"), FIRST UNION
TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as otherwise expressly stated herein, but solely as
owner trustee under the Trust Agreement referred to below (in such capacity as
trustee, together with its successors and permitted assigns, the "Owner
Trustee"), and ICX CORPORATION, an Ohio corporation (together with its
successors and permitted assigns, the "Owner Participant").
W I T N E S S E T H:
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WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article 1 hereof.
WHEREAS, pursuant to the Purchase Agreement the Manufacturer agreed to
manufacture and sell to the Lessee and the Lessee agreed to purchase from the
Manufacturer the Aircraft; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant and First Union Trust Company, National
Association, are entering into the Trust Agreement whereby, among other things,
First Union Trust Company, National Association, is appointed as Owner Trustee
and has undertaken to acquire and hold the Trust Estate in trust for the benefit
of the Owner Participant; and
WHEREAS, subject to the terms and conditions of this Agreement, the
Owner Trustee is willing to purchase the Aircraft from the Seller for immediate
lease to the Lessee pursuant to the Lease; and
WHEREAS, subject to the terms and conditions of this Agreement and the
Trust Agreement, the Owner Participant is willing to make the equity investment
provided for herein to fund such purchase by the Owner Trustee; and
WHEREAS, subject to the terms and conditions of this Agreement, the
Lessee has agreed to assign to the Owner Trustee, upon the terms and conditions
contained in the Purchase Agreement Assignment and the Engine Warranty
Assignment, respectively, certain of the Lessee's rights and interests in and to
the Purchase Agreement and the Warranties (as defined in the Engine Warranty
Assignment), respectively; and
WHEREAS, to induce the Owner Participant to make the equity investment
provided for herein to fund the purchase of the Aircraft by the Owner Trustee
from the Seller, the Manufacturer has agreed to enter into the Residual
Agreement [N586ML], dated as of December 10, 1999 (the "Residual Agreement")
with the Owner Participant and to undertake the obligations provided therein;
and
WHEREAS, to induce the Owner Trustee to purchase the Aircraft and to
enter into the Lease, Bombardier Inc. (the "Deficiency Obligor") has agreed to
enter into the Deficiency Agreement [N586ML], dated December 10, 1999 (the
"Deficiency Agreement") with the Owner Trustee and the Owner Participant and to
undertake the obligations provided therein;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration and receipt and adequacy of
which is hereby acknowledged, and intending to be legally bound, the parties do
hereby agree as follows:
ARTICLE 1.
INTERPRETATION
Section 1.01. Definitions. Capitalized terms used herein and defined
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in Appendix A shall, except as such definitions may be specifically modified in
the body of this Agreement for the purposes of a particular section, paragraph
or clause, have the meanings given such terms in Appendix A.
Section 1.02. References. References in this Agreement to sections,
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paragraphs, clauses, appendices, schedules and exhibits are to sections,
paragraphs, clauses, appendices, schedules and exhibits in and to this Agreement
unless otherwise specified.
Section 1.03. Headings. The headings of the various sections,
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paragraphs and clauses of this Agreement and the table of contents are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions hereof.
Section 1.04. Appendices Schedules and Exhibits. The appendices,
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schedules and exhibits hereto are part of this Agreement.
ARTICLE 2.
SALE AND LEASING TRANSACTIONS
Section 2.01. Participation. Subject to all of the terms and
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conditions of this Agreement, the parties agree to participate in the sale and
leasing transactions with respect to the Aircraft provided for in this Article
2.
(a) Sale and Purchase. The Owner Trustee agrees to purchase the
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Aircraft from the Seller on the Delivery Date for a purchase price equal to
Lessor's Cost.
(b) Leasing. The Owner Trustee agrees to lease to the Lessee, and
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the Lessee agrees to lease from the Owner Trustee, the Aircraft pursuant to the
Lease, such leasing to take place concurrently with the purchase of the Aircraft
by the Owner Trustee on the Delivery Date.
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(c) Owner Participant's Equity Investment. The Owner Participant
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agrees to provide immediately available funds in the amount equal to the
Lessor's Cost (the "Commitment") (i) by paying such amount to the Owner Trustee
prior to the time of closing on the Delivery Date at the account specified by
the Owner Trustee on or prior to the Delivery Date, such amount to be held and
applied toward the Owner Trustee's payment of Lessor's Cost for the Aircraft on
the Delivery Date (and if not so applied, to be promptly returned to the Owner
Participant) or (ii) by paying such amount at the time of the closing on the
Delivery Date directly to the Seller's account specified by the Lessee prior to
the closing to be applied toward the payment of Lessor's Cost. Such funds, once
so applied, shall constitute an equity investment by the Owner Participant in
the Trust Estate.
(d) Delivery Date. The "Delivery Date" shall be the date fixed by
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the Lessee in accordance with this Section 2.01(d) for the closing of the sale
and leasing transactions with respect to the Aircraft contemplated hereby,
except that following such closing the "Delivery Date" shall mean the date on
which such transactions actually closed. The Lessee shall give at least two
Business Days' notice to each other party hereto of the Delivery Date, which
notice shall also specify the amount of the Commitment. The Lessee may postpone
a scheduled Delivery Date from time to time, for any reason by notice given to
the other parties hereto not later than 2:00 p.m. on the date last scheduled as
the Delivery Date, such notice to specify a new Delivery Date. In the event that
the Owner Participant shall have provided the amount of the Commitment to the
Owner Trustee prior to such a postponement, the Owner Trustee shall return such
amount to the Owner Participant by 2:00 p.m. on the scheduled Delivery Date
unless the Owner Participant shall have agreed otherwise in writing. Absent such
an agreement, in the event that the Commitment is not returned to the Owner
Participant by 2:00 p.m. on a scheduled Delivery Date on which the closing does
not occur, the Lessee shall pay interest to the Owner Participant at a rate
equal to the rate per annum announced from time to time by Citibank, N.A. as its
prime rate for each day that such commitment is not returned to the Owner
Participant by 2:00 p.m.. The making available by the Owner Participant of the
Commitment at the closing shall be deemed a waiver of notice of the Delivery
Date by the Owner Participant and the Owner Trustee.
Section 2.02. Closing Procedure.
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(a) Time and Place. The closing shall take place at 11:00 a.m. New
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York City local time on the Delivery Date at the offices of Fulbright & ▇▇▇▇▇▇▇▇
L.L.P., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ or at such other time and place as
the parties may agree. The closing shall be preceded by a pre-closing at the
same place, the time for which shall be fixed by the Lessee, at which the forms
of the Operative Agreements to be executed, the certificates and other documents
to be delivered and the forms of the legal opinions to be delivered at the
closing by each party or its counsel pursuant to this Agreement shall be
available for inspection by the parties and their respective counsel.
(b) Actions of the Owner Trustee. Upon receipt in full by the Owner
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Trustee of the Commitment together with instructions (which may be oral) from
the Owner Participant or its
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special counsel that the applicable conditions precedent set forth in Section
3.01 have been satisfied or waived by the Owner Participant, the Owner Trustee
on the Delivery Date shall purchase the Aircraft from the Seller and lease the
Aircraft to the Lessee. To accomplish such transactions, the Owner Trustee
shall, concurrently with the actions of the Lessee pursuant to Section 2.02(c),
take the following actions: (i) pay or cause to be paid an amount equal to
Lessor's Cost to the Lessee (or directly to the Seller at Lessee's direction)
for the purchase of the Aircraft by transferring such amount in immediately
available funds to the account specified by the Lessee on or prior to the
Delivery Date; (ii) authorize its representative or representatives, who shall
be a person or persons designated by the Lessee and acceptable to the Owner
Trustee, to accept delivery of the Aircraft pursuant to this Agreement; (iii)
accept the Bills of Sale for the Aircraft; (iv) execute and deliver the Lease
and the Lease Supplement No. 1; (v) deliver the Aircraft to the Lessee pursuant
to the Lease; and (vi) execute and deliver all other documents or certificates
and take such other actions as may be required of the Owner Trustee on or before
the Delivery Date pursuant to any Operative Agreement. In addition, the Owner
Trustee shall take such actions as may be requested by the Lessee to effect the
due registration of the Aircraft with the FAA in the name of the Owner Trustee.
(c) Actions of the Lessee. Upon satisfaction or waiver by the Lessee
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of the conditions precedent set forth in Section 3.02, the Lessee shall on the
Delivery Date sell the Aircraft (or cause the Aircraft to be sold) to the Owner
Trustee, lease the Aircraft from the Owner Trustee pursuant to the Lease, assign
to the Owner Trustee pursuant to the Purchase Agreement Assignment certain of
the Lessee's rights and interests in and to the Purchase Agreement and assign to
the Owner Trustee pursuant to the Engine Warranty Assignment the Lessee's rights
and interests in and to the Warranties (as defined in the Engine Warranty
Assignment). To accomplish such transactions the Lessee shall, concurrently with
the actions of the Owner Trustee pursuant to Section 2.02(b), take the following
actions:
(i) cause the Seller to execute and deliver the Bills of Sale;
(ii) execute and deliver the Lease and the Lease Supplement No.
1;
(iii) execute and deliver the Purchase Agreement Assignment and
the Engine Warranty Assignment;
(iv) authorize its representative or representatives (who shall
be the same person or persons designated by the Lessee for purposes of
clause (ii) of Section 2.02(b)), to accept delivery of the Aircraft from
the Owner Trustee pursuant to the Lease; and
(v) execute and deliver all other documents or certificates
and take such other actions as may be required of the Lessee on or before
the Delivery Date pursuant to any Operative Agreement.
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ARTICLE 3.
CONDITIONS PRECEDENT
Section 3.01. Conditions Precedent to Obligations of Owner
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Participant. The obligation of the Owner Participant to make the Commitment
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available for payment as directed by the Owner Trustee on the Delivery Date is
subject to satisfaction or waiver by the Owner Participant, on or prior to the
Delivery Date, of the conditions precedent set forth below in this Section 3.01;
provided, that it shall not be a condition precedent to the obligation of the
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Owner Participant that any document be produced or action taken that is to be
produced or taken by the Owner Participant or by a Person within the Owner
Participant's control:
(a) Notice. The Owner Participant shall have received the notice of
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the Delivery Date as provided in Section 2.01(d), or shall have waived such
notice.
(b) Delivery of Documents. The Owner Trustee and Owner Participant
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shall, except as noted below, have received executed original counterparts of
the following agreements, instruments, certificates or documents, and such
counterparts (a) shall have been duly authorized, executed and delivered by the
respective party or parties thereto, (b) shall be reasonably satisfactory in
form and substance to the Owner Participant and (c) shall be in full force and
effect:
(i) this Agreement;
(ii) the Lease and Lease Supplement No. 1, provided that, the
chattel paper originals thereof shall be delivered to and maintained by the
Owner Trustee;
(iii) the Tax Indemnity Agreement;
(iv) the Trust Agreement;
(v) the Deficiency Agreement;
(vi) the Residual Agreement;
(vii) the Return Condition Agreement;
(viii) the Purchase Agreement, the Warranties (as defined in the
Engine Warranty Assignment), the Purchase Agreement Assignment and the
Engine Warranty Assignment;
(ix) the PAA Consent and the Engine Manufacturer's Consent;
(x) the Bills of Sale;
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(xi) the broker's report and insurance certificates required by
Section 9 of the Lease;
(xii) an appraisal or appraisals from BK Associates, which
appraisal or appraisals shall be satisfactory in form and substance to
Owner Participant;
(xiii) (A) a copy of the Certificate of Incorporation and By-Laws
of Lessee and resolutions of the board of directors of Lessee, in each case
certified as of the Delivery Date, by the Secretary or an Assistant
Secretary of Lessee, duly authorizing the execution, delivery and
performance by Lessee of the Operative Agreements required to be executed
and delivered by Lessee on or prior to the Delivery Date in accordance with
the provisions hereof and thereof; (B) an incumbency certificate of Lessee
and Trust Company as to the person or persons authorized to execute and
deliver the relevant Operative Agreements on behalf of such party; and (C)
a copy of the Certificate of Incorporation or Articles of Incorporation or
Articles of Association and By-Laws and general authorizing resolutions of
the boards of directors (or executive committees) or other satisfactory
evidence of authorization of Trust Company, certified as of the Delivery
Date by the Secretary or an Assistant Secretary of Trust Company, which
authorize the execution, delivery and performance by Trust Company of each
of the Operative Agreements to which it is a party, together with such
other documents and evidence with respect to it as Owner Participant may
reasonably request in order to establish the consummation of the
transactions contemplated by this Agreement and the taking of all corporate
proceedings in connection therewith;
(xiv) an Officer's Certificate of Lessee, dated as of the
Delivery Date, stating that its representations and warranties set forth in
this Agreement are true and correct as of the Delivery Date (or, to the
extent that any such representation and warranty expressly relates to an
earlier date, true and correct as of such earlier date);
(xv) an Officer's Certificate of Trust Company, dated as of the
Delivery Date, stating that its representations and warranties, in its
individual capacity and as Owner Trustee, set forth in this Agreement are
true and correct as of the Delivery Date (or, to the extent that any such
representation and warranty expressly relates to an earlier date, true and
correct as of such earlier date);
(xvi) the following opinions of counsel, in each case dated the
Delivery Date:
(A) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Senior Vice President and General Counsel
of the Lessee, in a form reasonably acceptable to the Owner Participant and
addressed to the Owner Participant and the Owner Trustee.
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(B) Fulbright & ▇▇▇▇▇▇▇▇, L.L.P. special counsel for the
Lessee, in a form reasonably acceptable to the Owner Participant and
addressed to the Lessee, the Owner Participant and the Owner Trustee;
(C) Morris, James, Hitchens & ▇▇▇▇▇▇▇▇ LLP, special counsel
for the Owner Trustee, in a form reasonably acceptable to the Owner
Participant and the Lessee and addressed to the Lessee, the Owner
Participant and the Owner Trustee;
(D) ▇▇▇▇▇ & ▇▇▇▇▇▇▇ P.C., special aviation counsel, in a form
reasonably acceptable to the Lessee, the Owner Participant and the Owner
Trustee and addressed to the Lessee, the Owner Participant and the Owner
Trustee;
(E) ▇▇▇▇▇▇, ▇▇▇▇▇ & Bockius LLP, special counsel for the
Manufacturer, the Deficiency Obligor and the Seller, in a form reasonably
acceptable to the Lessee, the Owner Participant and the Owner Trustee and
addressed to the Lessee, the Owner Participant and the Owner Trustee;
(F) counsel for the Engine Manufacturer, in a form reasonably
acceptable to the Lessee, the Owner Participant and the Owner Trustee and
addressed to the Lessee, the Owner Participant and the Owner Trustee;
(G) in the case of the Owner Participant only, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ P.C., tax counsel to the Owner Participant, addressed to the Owner
Participant, with respect to tax matters;
(H) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ P.C., special counsel for the Owner
Participant, and the Counsel to the Owner Participant, in forms reasonably
acceptable to the Lessee and the Owner Trustee and addressed to the Lessee,
the Owner Participant and the Owner Trustee;
(I) counsel for the Deficiency Obligor, in a form reasonably
acceptable to the Lessee, the Owner Participant and the Owner Trustee and
addressed to the Lessee, the Owner Participant and the Owner Trustee; and
(J) counsel for the Seller, in a form reasonably acceptable to
the Lessee, the Owner Participant and the Owner Trustee and addressed to
the Lessee, the Owner Participant and the Owner Trustee.
(c) Airworthiness. Owner Participant shall receive a copy of a
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current, valid Standard Certificate of Airworthiness for the Aircraft duly
issued by the FAA.
(d) Violation of Law. No change shall have occurred after the date
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of this Agreement in any Applicable Law that makes it a violation of law for (a)
Lessee, Owner Participant,
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or Owner Trustee to execute, deliver and perform the Operative Agreements to
which any of them is a party or (b) Owner Participant to make the Commitment
available.
(e) No Event of Default. On the Delivery Date, no event shall have
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occurred and be continuing, or would result from the sale, mortgage or lease of
the Aircraft, which constitutes a Default or Event of Default.
(f) No Event of Loss. No Event of Loss with respect to the Airframe
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or any Engine shall have occurred and no circumstance, condition, act or event
that, with the giving of notice or lapse of time or both, would give rise to or
constitute an Event of Loss with respect to the Airframe or any Engine shall
have occurred.
(g) Title. Owner Trustee shall have good and marketable title
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(subject to filing and recordation of the FAA ▇▇▇▇ of Sale with the FAA) to the
Aircraft, free and clear of Liens, except Permitted Liens.
(h) Certification. The Aircraft shall have been duly certificated by
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the FAA as to type and airworthiness as required by the terms of the Lease.
(i) Section 1110. Owner Trustee, as lessor under the Lease, shall be
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entitled to the benefits of Section 1110 (as currently in effect) with respect
to the right to take possession of the Airframe and Engines as provided in the
Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which
Lessee is a debtor.
(j) Filings. On the Delivery Date (i) application for registration
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of the Aircraft in the name of the Owner Trustee shall have been duly made with
the FAA in compliance with the provisions of the Transportation Code; and (ii)
the Trust Agreement, Lease, Lease Supplement No. 1 and the FAA ▇▇▇▇ of Sale
shall have been duly filed for recordation (or shall be in the process of being
so duly filed for recordation) with the FAA in accordance with the
Transportation Code.
(k) Precautionary Financing Statements. A Uniform Commercial Code
----------------------------------
"precautionary" financing statement or statements describing the Lease as a
lease but covering any security interest in favor of the Owner Trustee which may
be created thereby, shall have been executed and delivered by the Lessee and the
Owner Trustee (naming the Owner Trustee as Lessor and secured party), and shall
have been duly filed in all places necessary or desirable within the State of
North Carolina.
(l) No Proceedings. No action or proceeding shall have been
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instituted, nor shall any action be threatened in writing, before any
governmental authority, nor shall any order, judgment or decree have been issued
or proposed to be issued by any governmental authority, to set aside, restrain,
enjoin or prevent the completion and consummation of this Agreement or any other
Operative Agreement or the transactions contemplated hereby or thereby.
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(m) Governmental Action. All appropriate action required to have
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been taken prior to the Delivery Date by the FAA, or any governmental or
political agency, subdivision or instrumentality of the United States, in
connection with the transactions contemplated by this Agreement shall have been
taken, and all orders, permits, waivers, authorizations, exemptions and
approvals of such entities required to be in effect on the Delivery Date in
connection with the transactions contemplated by this Agreement shall have been
issued.
(n) Representations and Warranties. The representations and
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warranties of each other party to this Agreement made, in each case, in this
Agreement and in any other Operative Agreement to which it is party, shall be
true and accurate in all material respects as of the Delivery Date (unless any
such representation and warranty shall have been made with reference to a
specified date, in which case such representation and warranty shall be true and
accurate as of such specified date) and each other party to this Agreement shall
have performed and observed, in all material respects, all of its covenants,
obligations and agreements in this Agreement and in any other Operative
Agreement to which it is a party to be observed or performed by it as of the
Delivery Date.
(o) Reserved.
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(p) Lessee Advisor Letter. Letter from the Lessee Advisor (as
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defined in Section 8.01(a)) confirming the truth and accuracy of the
representations and warranties of the Lessee contained in Section 4.01(r).
(q) Other Documents. The Owner Participant receives such other
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document, certificates and opinions in connection with the transactions
contemplated hereby as it shall reasonably request.
Section 3.02. Conditions Precedent to Obligations of Lessee. The
---------------------------------------------
obligation of Lessee to lease the Aircraft on the Delivery Date is subject to
the satisfaction or waiver by Lessee, on or prior to the Delivery Date, of the
conditions precedent set forth below in this Section 3.02.
(a) Documents. Executed original counterparts of the agreements,
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instruments, certificates, documents and opinions described in Section
3.01(b)(i)-(xi), (xiii) (with respect to the Trust Company), (xv) and (xvi)
shall have been received by Lessee, except as specifically provided therein, and
shall be satisfactory to Lessee, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Lessee.
(b) Corporate Documents. (A) An incumbency certificate of Owner
-------------------
Participant as to the person or persons authorized to execute and deliver the
relevant Operative Agreements on behalf of Owner Participant; and (B) a copy of
the Certificate of Incorporation or Articles of Incorporation or Articles of
Association and By-Laws and general authorizing resolutions of the boards of
directors (or executive committees) or other satisfactory evidence of
authorization of Owner Participant, certified as of the Delivery Date by the
Secretary or an Assistant Secretary of Owner Participant which authorize the
execution, delivery and performance by Owner Participant
9
of each of the Operative Agreements to which it is a party, together with such
other documents and evidence with respect to it as Lessee may reasonably request
in order to establish the consummation of the transactions contemplated by this
Agreement and the taking of all corporate proceedings in connection therewith;
(c) Officer's Certificate. An Officer's Certificate of Owner
---------------------
Participant, dated as of the Delivery Date, stating that its representations and
warranties set forth in this Agreement are true and correct as of the Delivery
Date (or, to the extent that any such representation and warranty expressly
relates to an earlier date, true and correct as of such earlier date);
(d) Other Conditions Precedent. Each of the conditions set forth in
--------------------------
Sections 3.01(c) (as to the Owner Participant), (f), (g), (h), (i), (j), (k) and
(l) shall have been satisfied or waived by Lessee, unless the failure of any
such condition to be satisfied is the result of any action or inaction by
Lessee.
Section 3.03. Post-Registration Opinion. Promptly upon the
-------------------------
registration of the Aircraft and the recordation of the documents referenced in
Section 3.01(j)(ii), Lessee will direct ▇▇▇▇▇ & ▇▇▇▇▇▇▇ P.C., special counsel in
Oklahoma City, Oklahoma, to deliver to Lessee, Owner Participant and Owner
Trustee a favorable opinion or opinions addressed to each of them with respect
to such registration and recordation.
ARTICLE 4.
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 4.01. Lessee's Representations and Warranties. The Lessee
---------------------------------------
represents and warrants that, as of the Delivery Date (unless any such
representation and warranty is specifically made as of an earlier date, in which
case the Lessee represents and warrants as of such earlier date):
(a) the Lessee is a corporation duly organized and validly existing
and is in good standing under the laws of the State of Delaware, has its
principal place of business and chief executive office (as such terms are used
in Article 9 of the Uniform Commercial Code) in Morrisville, North Carolina at
the address set forth in Section 12.01(a), and is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
failure to be so qualified or in good standing would have a material adverse
effect on its business or would impair its ability to perform its obligations
under the Lessee Documents;
(b) the Lessee has full power, authority and legal right to conduct
its business and operations as currently conducted and to own or hold under
lease its properties and to enter into and perform its obligations under the
Lessee Documents;
(c) the Lessee is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Section 41102(a) of the
Transportation Code and a "citizen of the
▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇" within the meaning of Section 40102(a)(15) of the Transportation
Code holding an "air carrier operating certificate" issued under Chapter 447 of
the Transportation Code for aircraft capable of carrying ten or more individuals
or 6,000 pounds or more of cargo, and each such certificate is in full force and
effect;
(d) the Lessee possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively "permits")
which are necessary to the operation of the routes flown by it and the conduct
of its business and operations as currently conducted and each such permit is in
full force and effect, except for any such permits the failure to have or
maintain which would not have a material adverse effect on the Lessee or its
ability to perform its obligations under the Lessee Documents;
(e) the execution, delivery and performance of the Lessee Documents
by the Lessee have been duly authorized by all necessary corporate action on the
part of the Lessee and do not require any stockholder approval, or approval or
consent of any trustee or holder of any indebtedness or obligations of the
Lessee, and each such Lessee Documents has been duly executed and delivered and
constitutes the legal, valid and binding obligations of the Lessee enforceable
against it in accordance with the terms thereof except as such enforceability
may be limited by bankruptcy, insolvency, or other similar laws or by general
equitable principles;
(f) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state governmental
authority or regulatory body is required for the execution, delivery or
performance by the Lessee of the Lessee Documents except for such registrations,
applications and recordings referred to in the opinion of ▇▇▇▇▇ and ▇▇▇▇▇▇▇ P.C.
delivered pursuant to Section 3.01(b)(xvi)(D) and the filings referred to in
Section 3.01(j)(ii);
(g) neither the execution, delivery or performance by the Lessee of
the Lessee Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a breach
or violation of any of the terms, conditions or provisions of, or will require
any consent (other than the PAA Consent and the Engine Manufacturer's Consent)
or approval under, any Applicable Law or the charter documents, as amended, or
bylaws, as amended, of the Lessee or any order, writ, injunction or decree of
any court or governmental authority against the Lessee or by which it or any of
its properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which the Lessee is a party or by which it or any of
its properties is bound, or constitutes or will constitute a default thereunder
or results or will result in the imposition of any Lien upon the Aircraft or any
of its properties (other than Permitted Liens), except for any such conflict,
breach or default which would not have a material adverse effect on the Lessee
or its ability to perform its obligations under the Lessee Documents;
(h) except as disclosed in any of the filings of the Lessee referred
to in Section 4.01(o) or as otherwise disclosed in writing to the Owner
Participant, there are no pending or, to the knowledge of the Lessee, threatened
actions, suits, investigations or proceedings against or affecting the Lessee or
any of its properties before or by any court, governmental agency, arbitration
board,
11
tribunal or other administrative agency which, (A) may reasonably be expected to
have a material adverse effect on the Lessee's consolidated financial condition,
business, or operations, or (B) would materially adversely affect the ability of
the Lessee to consummate the transactions contemplated by the Operative
Agreements or perform its obligations under the Lessee Documents;
(i) except for (A) the registration in the Owner Trustee's name of
the Aircraft pursuant to the Transportation Code, (B) the filing with and, where
appropriate, recordation by the FAA pursuant to the Transportation Code of the
Trust Agreement and the Lease (including Lease Supplement No. 1) and (C) the
filing of the financing statement or statements referred to in Section 3.01(k),
no further action, including any filing or recording of any document, is
necessary or advisable in order to establish the Owner Trustee's title to and
interest in the Aircraft and the Lessor's Estate as against the Lessee and any
third parties;
(j) the Owner Trustee has received good and marketable title to the
Aircraft, free and clear of all Liens, except Permitted Liens;
(k) no Default or Event of Default exists and no Event of Loss, or
event which with the passage of time would constitute an Event of Loss, exists;
(l) the Aircraft is in such condition so as to enable the
airworthiness certificate of such Aircraft to be in good standing under the
Transportation Code; the Aircraft has been duly certificated by the FAA as to
type and airworthiness; there is in effect with respect to the Aircraft a
current and valid airworthiness certificate issued by the FAA pursuant to the
Transportation Code;
(m) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company" within
the meaning of the Investment Company Act of 1940, as amended;
(n) there are no broker's or underwriter's fees payable on behalf of
the Lessee in connection with the transactions contemplated in the Operative
Agreements, other than those of the Lessee Advisor (as defined in Section
8.01(a)) referred to in Article 8 hereof;
(o) the unaudited consolidated balance sheet of Lessee as of June 30,
1999 and the related consolidated statements of operations and cash flows for
the six-month period then ended have been prepared in accordance with generally
accepted accounting principles in the United States and fairly present in all
material respects the financial condition of Lessee as of such date and the
results of its operations and cash flows for such period, and since June 30,
1999, there has been no material adverse change in such financial condition or
operations of Lessee, except for matters disclosed in (a) any subsequent
Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by Lessee with
the SEC on or prior to the date hereof, or (b) otherwise disclosed by Lessee to
the Owner Participant;
12
(p) assuming the truth and accuracy of the representations and
warranties contained in Section 5.01(a)(vii) made by the Owner Participant and
in reliance upon such representations and warranties, the execution and delivery
of this Agreement and the other Operative Agreements and the consummation of the
transactions contemplated hereby and thereby will not involve any prohibited
transaction within the meaning of Section 406(a) of ERISA or Section
4975(c)(1)(A) through (D) of the Code;
(q) no part of the funds used or to be used by the Lessee to satisfy
its obligations under the Operative Agreements constitute or will constitute
assets (within the meaning of ERISA and any applicable rules and regulations) of
an ERISA Plan;
(r) neither Lessee nor anyone acting on its behalf has directly or
indirectly offered any beneficial interest or security relating to the ownership
of the Aircraft or the Lease or any interest in the Trust Estate and Trust
Agreement, for sale to, or solicited any offer to acquire any of the same from,
anyone other than the Owner Participant; and not more than 50 institutions
believed capable of evaluating and bearing the risks of investment in the
transactions contemplated hereby;
(s) none of the proceeds from the acquisition by the Owner
Participant of its beneficial interest in the Trust Estate will be used directly
or indirectly by the Lessee to purchase or carry any "margin security" as such
term is defined in Regulation G or U of the Board of Governors of the Federal
Reserve System;
(t) the Aircraft is fully equipped to operate in commercial service,
does not require any modifications, additions, or improvements for its intended
use by the Lessee, and complies with all governmental requirements governing the
service in which the Aircraft is being used and is anticipated to be used by the
Lessee. The Aircraft is in the same condition as when delivered to the Lessee by
the Seller, ordinary wear and tear excepted, and is in the condition required by
the Lease, and the Lessee is unaware of any material mechanical or structural
defects or material damage to the Aircraft;
(u) the conveyance of the Aircraft to the Owner Trustee is not void
or voidable under any applicable state or federal law;
(v) Owner Trustee, as lessor under the Lease, is entitled to the
benefits of Section 1110 of the Bankruptcy Code (as currently in effect) with
respect to the Aircraft;
(w) the Lessee is not in default (after any applicable grace periods)
in the performance of any material term or condition of the Purchase Agreement;
(x) to the best of Lessee's knowledge, Lessee is not in default
under, or in violation of, any Applicable Law, the violation of which would give
rise to a Material Adverse Change to Lessee.
13
Section 4.02. Certain Covenants of Lessee. The Lessee covenants and
---------------------------
agrees as follows:
(a) Filings and Recordings. The Lessee will cause to be done,
----------------------
executed, acknowledged and delivered at the Lessee's cost and expense all such
further acts, conveyances and assurances as the Owner Trustee or the Owner
Participant shall reasonably require for accomplishing the purposes of the
Operative Agreements. Without limiting the generality of this Section 4.02(a),
the Lessee will promptly take, or cause to be taken, at the Lessee's cost and
expense, such action with respect to the recording, filing, re-recording and re-
filing of the Lease (including each supplement thereto), and any financing
statements or other instruments as may be reasonably requested by the Owner
Trustee and appropriate, to maintain the Owner Trustee's title to and interest
in the Aircraft and the Lessor's Estate, as against the Lessee and any third
parties, or if the Lessee cannot itself take, or cause to be taken, such action,
will furnish to the Owner 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 either of them to take such action at the Lessee's
cost and expense in a timely manner.
(b) Registration. From and after the Delivery Date, the Lessee shall
------------
cause the Aircraft to be duly registered, and at all times to remain duly
registered, in the name of the Owner Trustee (provided, that the Owner Trustee
--------
and the Owner Participant shall be and remain Citizens of the United States),
under the Transportation Code, and shall furnish to the Owner Trustee such
information as may be required to enable the Owner Trustee to make application
for such registration; provided, however, that the Lessee may, at any time cause
-------- -------
the Aircraft to be appropriately re-registered under the laws of a country with
which at the time of such registration the United States maintains normal
diplomatic relations and is listed on Exhibit E to the Lease; provided that:
--------
(i) at the time of re-registration, no Specified Default exists
or would occur as a result of such re-registration;
(ii) the Lessee shall pay all fees and expenses (including the
reasonable fees and expenses of local counsel in such country) relating to
such re-registration;
(iii) the Lessee shall, at its cost, cause the interest of the
Owner Trustee as owner of the Aircraft to be duly registered or recorded
under the laws of such country and at all times thereafter to remain so
duly registered or recorded unless and until the registration of the
Aircraft is changed as provided herein, and shall, at its cost, cause to be
done at all times all other acts including the filing, recording and
delivery of any document or instrument and the payment of any sum necessary
or, by reference to prudent industry practice in such country, advisable in
order to create, preserve and protect such interest in the Aircraft as
against the Lessee or any third parties in such jurisdiction, and the laws
of such country would give effect to the Owner Trustee's title to and
ownership interest in the Aircraft;
14
(iv) the obligations of the Lessee (and of the Permitted
Sublessee under a Sublease) and the rights and remedies of the Lessor and
the Owner Participant under the Operative Agreements shall remain or be, as
the case may be, legal, valid, binding and enforceable in such country;
(v) the Lessee shall ensure that all insurance required by
Section 9 of the Lease shall be in full force and effect prior to, at the
time of, and after such change in registration and the Owner Participant
and the Owner Trustee shall receive a certificate of Lessee's insurance
broker to such effect;
(vi) the country of such re-registration imposes aircraft
maintenance standards approved by, or at least as stringent as those
approved by, the FAA or the central civil aviation authority of the United
Kingdom, France, Germany, Japan, the Netherlands or Canada and the Owner
Trustee and Owner Participant shall receive evidence reasonably
satisfactory to them of the same;
(vii) it shall not be necessary by reason of such re-
registration or for purposes of enforcing remedies contained in the Lease
or Sublease for the Owner Participant or Owner Trustee to register or
qualify to do business in such country (other than in respect of
administrative matters to be performed in the ordinary course of business
which shall not unduly delay or frustrate Owner Trustee's or Owner
Participant's right to exercise its remedies under any of the Operative
Agreements);
(viii) no Liens (except Permitted Liens) shall arise by reason of
such re-registration;
(ix) none of the Owner Trustee and the Owner Participant shall
be subjected to any risk of adverse tax consequences as a result of such
re-registration for which the Lessee does not then indemnify or cause to be
indemnified such Person in a manner satisfactory in form and substance to
such Person;
(x) any export licenses and certificate of deregistration
required in connection with any repossession or return of the Aircraft will
be readily obtainable in the normal course without material delay, it being
agreed that the Lessee shall be responsible for the cost thereof;
(xi) there is no tort liability of the owner or lessor of an
aircraft not in possession thereof under the laws of such jurisdiction more
onerous than under the laws of the United States or any state thereof (it
being agreed that, in the event such 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);
15
(xii) unless Lessee shall have agreed to provide insurance
reasonably satisfactory to the Owner Participant covering the risk of
requisition of use of or title to the Aircraft by the government of such
country (so long as the Aircraft is registered under the laws of such
country), the laws of such country require fair compensation by the
government of such country payable in currency freely convertible into
Dollars and freely removable from such country (without license or permit,
unless Lessee prior to such proposed reregistration has obtained such
license or permit or such license or permit will be readily obtainable in
the normal course without material delay or material burden on the Owner
Participant) for the taking or requisition by such government of such use
or title;
(xiii) the courts of such proposed country of registry will
respect the choice of New York law to govern the Lease;
(xiv) such re-registration may not be affected until after the
Recovery Period unless the Lessee prepays on a lump sum basis any liability
due under the Tax Indemnity Agreement as a result of such re-registration;
(xv) if necessary, the Aircraft has been duly certified as to
type and airworthiness by the Aeronautical Authority of such country;
(xvi) there exist no possessory rights in favor of the Lessee
(or any Permitted Sublessee) which would, upon bankruptcy or insolvency of
or other default by the Lessee, prevent the return or repossession of the
Aircraft in accordance with and when permitted by the terms of Section
17(a) of the Lease upon the exercise by Owner Trustee of its remedies under
Section 17(a) of the Lease and there is no adverse effect under the laws of
such country of re-registration to the enforceability (other than
immaterial differences in procedures of enforcement) of the material rights
and remedies of the Owner Trustee provided for in the Lease;
(xvii) the Owner Participant and the Owner Trustee shall have
received opinions in scope, form and substance reasonably satisfactory to
them, of counsel, expert in the laws of such country, to the effect set
forth in clauses (iii), (iv) (with respect to the obligations of the Lessee
under the Lease), (vii), (ix), (x), (xi), (xii), (xiii), (xv), and (xvi) of
this Section 4.02(b);
(xviii) such proposed change in registration is made in
connection with a Sublease to a Permitted Air Carrier and such Permitted
Sublessee is domiciled in such country;
(xix) Lessee shall deliver such request to Lessor and Owner
Participant in writing at least 10 days in advance of the date of any such
proposed change in registration; and
16
(xx) the Deficiency Agreement and the Residual Agreement shall
remain in full force and effect.
Lessee agrees to pay on an After Tax Basis all reasonable out-of-pocket costs
and expenses (including, without limitation, reasonable counsel fees and
disbursements) of the Owner Participant and the Owner Trustee in connection with
any re-registration pursuant to this Section.
(c) Information. The Lessee shall promptly furnish to the Owner Trustee
-----------
and the Owner Participant such information as may be required to enable the
Owner Trustee and the Owner Participant timely to file any reports required to
be filed by the Owner Trustee as the Lessor and the Owner Participant under the
Lease with any governmental authority as a result of the Owner Trustee's
ownership interest in the Aircraft.
(d) Privileges and Franchises. The Lessee shall at all times maintain
-------------------------
its corporate existence, except as permitted by Section 4.02(e) hereof and all
of its rights, privileges and franchises necessary in the normal conduct of its
business, except for any right, privilege or franchise that it determines is no
longer necessary or desirable in the conduct of its business.
(e) Merger and Consolidation. The Lessee shall not, during the Term,
------------------------
enter into any merger with or into or consolidation with, or sell, convey,
transfer, lease or otherwise dispose of in one or a series of transactions all
or substantially all of its assets as an entirety to any Person, unless the
surviving Person which acquires by purchase, conveyance, transfer or lease all
or substantially all of the assets of the Lessee as an entirety (i) is a
domestic Person organized and existing under the laws of the United States or
any State of the United States, (ii) is a Citizen of the United States, (iii) is
a Section 1110 Person, so long as such status is a condition to the availability
of Section 1110, (iv) immediately after giving effect to such transaction,
unless otherwise consented to by Owner Participant which consent shall not be
unreasonably withheld, shall have a tangible net worth (determined in accordance
with generally accepted accounting principles) at least equal to the lesser of
(1) Sixty Five Million Dollars ($65,000,000) and (2) 75% of Lessee's tangible
net worth (determined in accordance with generally accepted accounting
principles) immediately prior to such transaction; (v) if not the Lessee,
executes a duly authorized, legal, valid, binding, and enforceable agreement,
reasonably satisfactory in form and substance to Owner Trustee and Owner
Participant, containing an effective assumption of all of the Lessee's, as
applicable, obligations hereunder and under the other Operative Agreements, and
each other document contemplated hereby or thereby and delivers such instrument
to the Owner Participant and the Owner Trustee, (vi) provides an opinion from
counsel (which counsel may be the Lessee's General Counsel) delivered to the
Owner Trustee and the Owner Participant, which opinion shall be reasonably
satisfactory to the Owner Participant, and an Officer's Certificate (which may
rely, as to legal matters, on such legal opinion), each stating that such
merger, consolidation, conveyance, transfer, lease or other disposition and the
instrument noted in clause (v) above comply with this Section 4.02(e), that such
instrument is a legal, valid and binding obligation of, and is enforceable
against, such survivor or Person, and that all conditions precedent herein
provided for relating to such transaction have been complied with, and (vii)
such survivor or Person makes such filings and recordings with the FAA as may be
required pursuant to
17
part A of subtitle VII or ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code to evidence such merger
or consolidation; provided that, (x) the Deficiency Agreement and the Residual
-------- ----
Agreement shall remain in full force and effect and (y) no such merger,
consolidation or conveyance, transfer or lease shall be permitted if,
immediately after giving effect to such consolidation, merger, purchase,
conveyance, transfer, lease or other disposition, a Specified Default shall have
occurred and be continuing.
Upon any consolidation or merger, or any conveyance, transfer or lease
of all or substantially all of the assets of the Lessee and the satisfaction of
the conditions specified in this Section 4.02(e), the successor corporation
formed by such consolidation or into which the Lessee is merged or the Person to
which such conveyance, transfer or lease is made shall succeed to, and be
substituted for, and must perform every obligation and may exercise every right
and power of, the Lessee under this Agreement and the Lease and each other
Operative Agreement and any other document contemplated hereby and thereby to
which the Lessee is a party with the same effect as if such successor
corporation had been named as the Lessee herein and therein. No such
consolidation or merger, or sale, conveyance, transfer or lease of all or
substantially all of the assets of the Lessee as an entirety shall have the
effect of releasing the Lessee or any successor corporation which shall
theretofore have become the Lessee hereunder in the manner prescribed in this
Section 4.02(e) from its liability hereunder or under the other Operative
Agreements. Nothing contained herein shall permit any lease, sublease, or other
arrangement for the use, operation or possession of the Aircraft except in
compliance with the applicable provisions of the Lease.
(f) Change of Location. The Lessee agrees to give prompt written
------------------
notice (but in any event within 30 days prior to the expiration of the period of
time specified under Applicable Law to prevent lapse of perfection) to the Owner
Participant and the Owner Trustee of any change in the address of its chief
executive office (as such term is used in Section 9-103(3) of the North Carolina
Uniform Commercial Code) or of any change in its corporate name.
(g) Financial Statements. The Lessee agrees to furnish to the Owner
--------------------
Participant during the Term:
(i) within 60 days after the end of each of the first three
fiscal quarters in each fiscal year of the Lessee, unaudited consolidated
balance sheets of the Lessee and its subsidiaries (if any) as of the end of
such quarter and related consolidated statements of income, shareholder's
equity and cash flows of the Lessee and its subsidiaries (if any) for the
period commencing at the end of the previous fiscal year and ending with
the end of such quarter, provided that so long as the Lessee is subject to
--------
the reporting provisions of the Securities Exchange Act of 1934, a copy of
the Lessee's quarterly report on Form 10-Q will satisfy this requirement;
(ii) within 120 days after the end of each fiscal year of the
Lessee, a copy of the annual report for such year for the Lessee or the
affiliated group of which the Lessee is a member (on a consolidated basis,
if applicable) and a balance sheet of the Lessee and its subsidiaries (if
any) as of the end of such fiscal year and related statements of income,
18
shareholder's equity and cash flows of the Lessee for such fiscal year, in
comparative form with the preceding fiscal year, in each case certified by
independent certified public accountants of national standing as having
been prepared in accordance with generally accepted accounting principles
in the United States, provided that so long as the Lessee is subject to the
--------
reporting provisions of the Securities Exchange Act of 1934, a copy of the
Lessee's annual report on Form 10-K will satisfy this requirement; and
(iii) from time to time, such other non-confidential financial
information as the Lessor or the Owner Participant may reasonably request.
(h) Filing of Documents. Lessee, at its sole cost and expense, will
-------------------
cause the documents filed with the FAA pursuant to Section 3.01(j), the
financing statements required pursuant to Section 3.01(k) and all continuation
statements (and any amendments necessitated by any combination, consolidation or
merger pursuant to Section 4.02(e), or any relocation of its chief executive
office) in respect of such financing statements to be prepared and, subject only
to the execution and delivery thereof by Owner Trustee, duly and timely filed
and recorded, or filed for recordation, to the extent permitted under the
Transportation Code (with respect to such documents filed with the FAA) or the
Uniform Commercial Code or similar law of any other applicable jurisdiction
(with respect to such other documents).
Section 4.03. Survival of Representations and Warranties. The
------------------------------------------
representations and warranties of the Lessee provided in Section 4.01 and in any
other Operative Agreement shall survive the delivery of the Aircraft and the
expiration or other termination of this Agreement and the other Operative
Agreements.
ARTICLE 5.
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.01. Representations, Warranties and Covenants of
--------------------------------------------
Owner Participant.
-----------------
(a) Representations and Warranties. The Owner Participant
------------------------------
represents and warrants that, as of the Delivery Date (unless any such
representation and warranty is specifically made as of an earlier date, in which
case the Owner Participant represents and warrants as of such earlier date):
(i) it is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Ohio and it has
full corporate power, authority and legal right to carry on its present
business and operations, to own or lease its properties and to enter into
and to carry out the transactions contemplated by this Agreement and the
other Operative Agreements to which it is party;
19
(ii) the execution, delivery and performance by it of this
Agreement and the other Operative Agreements to which it is party have been
duly authorized by all necessary corporate action on its part;
(iii) neither the execution, delivery or performance by the
Owner Participant of the Operative Agreements to which it is party, nor
compliance with the terms and provisions hereof or thereof, conflicts or
will conflict with or results or will result in a breach or violation of
any of the terms, conditions or provisions of, under any law, governmental
rule or regulation applicable to the Owner Participant or the charter
documents, as amended, or bylaws, as amended, of the Owner Participant or
any order, writ, injunction or decree of any court or governmental
authority against the Owner Participant or by which it or any of its
properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which the Owner Participant is a party or by
which it or any of its properties is bound, or constitutes or will
constitute a default thereunder or results or will result in the imposition
of any Lien upon any of its properties, except for any such conflict,
breach or default which would not have a material adverse effect on the
Owner Participant or its ability to perform its obligations under the
Operative Agreements;
(iv) the Operative Agreements to which it is party have
been duly executed and delivered by the Owner Participant and constitute
the legal, valid and binding obligations of the Owner Participant
enforceable against it in accordance with their terms except as such
enforceability may be limited by bankruptcy, insolvency, or other similar
laws or general equitable principles;
(v) there are no pending or, to the knowledge of the
Owner Participant, threatened actions, suits, investigations or proceedings
against the Owner Participant before any court, administrative agency or
tribunal which are expected to materially adversely affect the ability of
the Owner Participant to perform its obligations under this Agreement and
the other Operative Agreements to which it is or is to be a party and the
Owner Participant knows of no pending or threatened actions or proceedings
before any court, administrative agency or tribunal involving it in
connection with the transactions contemplated by the Operative Agreements;
(vi) neither the execution and delivery by it of this
Agreement or the other Operative Agreements to which it is a party nor the
performance of obligations hereunder or thereunder requires the consent or
approval of or the giving of notice to, the registration with, or the
taking of any other action in respect of, any governmental authority or
agency that would be required to be obtained or taken by the Owner
Participant except for filings contemplated by this Agreement;
(vii) the funds to be used by the Owner Participant to
acquire its interests under this Agreement do not constitute assets (within
the meaning of ERISA and any applicable rules and regulations) of an ERISA
Plan; and
20
(viii) the Owner Participant is a bank, trust company,
insurance company, financial institution or corporation with a combined
capital and surplus or tangible net worth of at least $50,000,000.
Notwithstanding the foregoing or anything else contained in this
Agreement, the Owner Participant makes no representation or warranty in this
Agreement with respect to laws, rules or regulations relating to aviation or to
the nature or use of the equipment owned by the Owner Trustee, including,
without limitation, the airworthiness, value, condition, workmanship, design,
patent or trademark infringement, operation, merchantability or fitness for use
of the Aircraft, other than such laws, rules or regulations relating to the
citizenship requirements of the Owner Participant under applicable aviation law.
(b) Lessor's Liens. The Owner Participant represents, warrants
--------------
and covenants that on the Delivery Date there are no Lessor's Liens attributable
to it (or an Affiliate thereof). The Owner Participant agrees with and for the
benefit of the Lessee and the Owner Trustee that the Owner Participant will, at
its own cost and expense, take such action as may be necessary to duly discharge
and satisfy in full, promptly after the same first becomes known to the Owner
Participant, any Lessor's Lien attributable to the Owner Participant (or an
Affiliate thereof). The Owner Participant agrees to indemnify and hold harmless
the Lessee and the Owner Trustee from and against any loss, cost, expense
(including, without limitation, legal fees) or damage which may be suffered by
the Lessee or the Owner Trustee as a result of the failure of Owner Participant
to discharge and satisfy any Lessor's Liens attributable to it, as described in
this Section 5.01(b).
(c) Assignment of Interests of Owner Participant. At any time
--------------------------------------------
after the Delivery Date and subject to satisfaction of the conditions set forth
in this Section 5.01(c), the Owner Participant may assign, convey or otherwise
transfer to a single institutional investor or an Affiliate of an institutional
investor all (but not less than all) of the Beneficial Interest, provided that
--------
(i) the Owner Participant gives the Lessee at least 10 days' notice of
such assignment, conveyance or other transfer, (ii) the Owner Participant and
any Owner Participant Guarantor shall remain liable for all obligations of the
Owner Participant under the Trust Agreement and the other Operative Agreements
to which the Owner Participant is a party to the extent (but only to the extent)
relating to the period on or before the date of such transfer, (iii) the
transferee agrees by a written instrument in form and substance reasonably
satisfactory to Lessee and such transferee to assume liability for, and
undertake performance of, all obligations of the Owner Participant under the
Trust Agreement and the other Operative Agreements to which such Owner
Participant is a party relating to the period after the date of transfer, (iv)
the transferee shall make a representation to the effect that the funds to be
used by the transferee to acquire the Beneficial Interest do not constitute the
assets of an ERISA Plan, (v) at or prior to the time of such transfer, the
transferee shall furnish an opinion of counsel substantially in the form
attached hereto as Exhibit B (or otherwise in form and substance reasonably
satisfactory to Lessee) (which counsel may be in-house counsel) to the effect
that such transferee and any guarantor of the payment and performance
obligations of such transferee, as the case may be, shall have requisite power
and authority and legal right to enter into and carry out the transactions
21
contemplated hereby; and that such agreement and any guaranty of the
transferee's obligations has been duly authorized, executed and delivered by the
transferee or the guarantor of the payment and performance obligations of such
transferee, as the case may be, and is a valid and binding agreement of the
transferee or the guarantor of the payment and performance obligations of such
transferee enforceable in accordance with its terms, subject to customary
exceptions for such opinions and that the transfer does not violate the
Applicable Law, and (vi) the Lessee shall have received an opinion from counsel
selected by Owner Participant and reasonably acceptable to Lessee that no
withholding tax will be imposed by the U.S. on Basic Rent, assuming that the
Lessee is a U.S. Person. Any such transferee shall (a) be (i) a bank, finance
company or leasing company acting for its own account having a combined capital
and surplus (or, if applicable, consolidated net worth or its equivalent) of not
less than $50,000,000, (ii) a subsidiary of any Person described in clause (i)
where such Person provides (A) support for the obligations assumed by such
transferee subsidiary reasonably satisfactory to the Lessee and the Owner
Trustee or (B) a guaranty of such transferee subsidiary's obligations
substantially in the form attached hereto as Exhibit A (or otherwise in form and
substance reasonably satisfactory to Lessee and Owner Trustee), or (iii) an
Affiliate of the transferring Owner Participant, so long as such Affiliate has a
combined capital and surplus (or, if applicable, consolidated net worth or its
equivalent) of not less than $50,000,000 (unless the Owner Participant remains
liable for the obligations of such Affiliate under the Operative Agreements, in
which case there shall be no such net worth requirement), (b) be legally capable
of binding itself to the obligations of the Owner Participant and shall
expressly agree to assume all obligations of the Owner Participant under the
Trust Agreement and this Agreement and (c) provide representations, warranties,
and covenants substantially similar to those contained in clauses (a) and (c) of
this Section 5.01; provided that so long as no Event of Default has occurred and
--------
is continuing, without the prior written consent of the Lessee, such transferee
shall not be an airline or other aircraft operator or competitor of the Lessee
in the business of air transportation or an Affiliate of any thereof; and
provided further that so long as no Event of Default has occurred and is
-------- -------
continuing, neither such transferee nor any Affiliate thereof shall (x) be a
party to any material litigation or arbitration (whether as plaintiff or
defendant) with the Lessee or any Affiliate of the Lessee or (y) be attempting a
hostile takeover of the Lessee or any Affiliate of the Lessee. A transferee
hereunder shall be a Citizen of the United States or has established a voting
trust, voting powers or other arrangement reasonably satisfactory to the Owner
Trustee and the Lessee to permit the Owner Trustee to be the registered owner of
the Aircraft under the Transportation Code, without in any way restricting the
Lessee's use and operation of the Aircraft. The Owner Trustee shall not be on
notice of or otherwise bound by any such assignment, conveyance or transfer
unless and until it shall have received an executed counterpart of the
instrument of such assignment, conveyance or transfer. Upon any such
disposition by the Owner Participant to a transferee as above provided, the
transferee shall be deemed the "Owner Participant" for all purposes of the
Operative Agreements, and shall be deemed to have acquired the same interest in
the Lessor's Estate as theretofore held by its transferor; and each reference
therein to the "Owner Participant" shall thereafter be deemed a reference to
such transferee and the transferring Owner Participant shall be released from
all of its obligations under the Operative Agreements to the extent such
obligations are assumed by such transferee. So long as no Event of Default has
occurred and is continuing, no assignment, conveyance or transfer by the Owner
Participant of the Beneficial Interest shall increase the amount of the
liability of the Lessee
22
under Article 6 hereof or under the Tax Indemnity Agreement over the amount of
liability the Lessee would have incurred had such assignment, conveyance or
transfer not occurred. The Owner Participant shall pay all costs and expenses
(including the Lessee's costs and expenses) in connection with any such
assignment, conveyance or transfer.
(d) Actions with Respect to Lessor's Estate, Etc. The Owner
--------------------------------------------
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
(e) Citizenship. The Owner Participant agrees, solely for the
-----------
benefit of the Lessee and the Owner Trustee, that if at any time on or after the
Delivery Date when the Aircraft is registered or the Lessee proposes to register
the Aircraft in the United States (i) either the Owner Participant shall cease
to be, or an event which has been publicly disclosed has occurred of which the
Owner Participant has knowledge and which will cause the Owner Participant 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 Transportation Code and regulations then applicable thereunder
(such eligibility to be determined without regard to any provision of law that
permits the U.S. registration of the Aircraft by restricting where it is based
or used), then the Owner Participant shall give notice thereof to the Lessee and
the Owner Trustee and shall (at its own expense and without any reimbursement or
indemnification from the Lessee) immediately (and in any event within a period
of 20 days) promptly (x) effect a voting trust or other similar arrangement, (y)
transfer in accordance with the terms of this Agreement and the Trust Agreement
all its rights, title and interest in and to such Trust Agreement, the Lessor's
Estate and this Agreement, or (z) take any other alternative action that would
prevent any deregistration, or maintain or permit the United States
registration, of the Aircraft (determined without regard to any provision of law
that permits the U.S. registration of the Aircraft by restricting where it is
based or used). If the Owner Participant fails to comply with clause (x), (y) or
(z), then the Owner Participant shall reimburse Lessee, Permitted Sublessee or
Owner Trustee for added costs and expenses or loss of income that it incurs with
respect to the Aircraft due to such change in citizenship of the Owner
Participant. 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 first sentence of this Section
5.01(e), but without any obligation on the part of such other party to take any
action believed by it in good faith to be unreasonably burdensome to such party
or materially adverse to its business interests.
Section 5.02. Citizenship.
-----------
(a) Generally. The Owner Trustee, in its individual capacity,
---------
represents and warrants that it is and on the Delivery Date will be a Citizen of
the United States. If the Owner Trustee in its individual capacity does not
comply with the requirements of this Section 5.02, the Owner Trustee and the
Lessee hereby agree that no Default shall be deemed to exist due to non-
23
compliance by the Lessee with the registration requirements in the Lease or in
Section 4.02(b) hereof occasioned solely by such noncompliance of the Owner
Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual capacity,
-------------
covenants that if at any time on or after the Delivery Date any of its
Responsible Officers shall have actual knowledge that it has ceased to be a
Citizen of the United States, it will resign immediately as the Owner Trustee if
such citizenship is necessary for registration of the Aircraft in the Owner
Trustee's name under the Transportation Code as in effect at such time (such
necessity to be determined without regard to any provision of law that permits
the U.S. registration of the Aircraft by restricting where it is based or used)
or, if it is not necessary for such registration, if the Owner Trustee is
informed in writing by the Lessee or any Owner Participant that such lack of
United States citizenship would have any adverse effect on the Lessee or any
Owner Participant. The Owner Trustee, in its individual capacity, further
covenants that if at any time it appears reasonably probable that it will cease
to be a Citizen of the United States based on information that is (i) known to a
Responsible Officer of the Owner Trustee or (ii) generally known to the public,
it will promptly so notify, to the extent permitted by law, all parties to this
Agreement.
Section 5.03. Representations, Warranties and Covenants of Trust
--------------------------------------------------
Company and the Owner Trustee.
-----------------------------
(a) Representations and Warranties. In addition to and without
------------------------------
limiting its other representations and warranties provided for in this Article
5, Trust Company represents and warrants, in its individual capacity with
respect to items (i), (ii), (iii)(A), (iv), (v), (vi), (vii), (viii), (ix) and
(x) below, and as the Owner Trustee with respect to items (iii)(B) and (iv), on
the Delivery Date that:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States with
its principal place of business and chief executive office (as such terms
are used in Article 9 of the Uniform Commercial Code) in the State of
Delaware at the address set forth in Section 12.01(b), and has full
corporate power and authority, in its individual capacity or (assuming the
Trust Agreement has been duly authorized, executed and delivered by the
Owner Participant) as the Owner Trustee, as the case may be, to carry on
its business as now conducted, and to execute, deliver and perform this
Agreement and the Operative Agreements to which it is or is to be a party;
(ii) the execution, delivery and performance by Trust Company,
either in its individual capacity or as the Owner Trustee, as the case may
be, of this Agreement and the Operative Agreements to which it is or is to
be party have been duly authorized by all necessary corporate action on its
part, and do not contravene its articles of association or by-laws or other
constitutional documents; each of this Agreement and the other Operative
Agreements to which it is or is to be a party has been duly authorized, and
has been duly executed and delivered by Trust Company, either in its
individual capacity or as the Owner Trustee, as the case may be, and
neither the execution and delivery thereof nor Trust Company performance of
or compliance with any of the terms and provisions thereof will
24
violate any federal or Delaware law or regulation governing Trust Company's
banking or trust powers;
(iii) (A) assuming due authorization, execution and delivery by
each other party thereto, each of the Operative Agreements to which it is
or is to be party when duly executed and delivered will, to the extent each
such document is entered into by Trust Company in its individual capacity,
constitute the legal, valid and binding obligation of Trust Company in its
individual capacity enforceable against it in such capacity in accordance
with its respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights (regardless of whether enforceability is considered in a
proceeding in equity or at law), and the performance by Trust Company in
its individual capacity of any of its obligations thereunder does not
contravene any lease, regulation or contractual restriction binding on
Trust Company in its individual capacity;
(B) assuming due authorization, execution and delivery by each
other party thereto, each of the Operative Agreements to which it is or is
to be party when duly executed and delivered will, to the extent each such
document is entered into by the Owner Trustee in its trust capacity,
constitute the legal, valid and binding obligation of the Owner Trustee
enforceable against it in such capacity in accordance with its respective
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws or general equitable
principles, and the performance by the Owner Trustee of any of its
obligations thereunder does not contravene any lease, regulation or
contractual restriction binding on the Owner Trustee;
(iv) there are no pending or, to its knowledge, threatened
actions or proceedings against Trust Company before any court or
administrative agency which would materially adversely affect the ability
of Trust Company, either in its individual capacity or as the Owner
Trustee, as the case may be, to perform its obligations under the Operative
Agreements to which it is or is to be party;
(v) its chief executive office (as such term is defined in
Article 9 of the Uniform Commercial Code) is One ▇▇▇▇▇▇ Square, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and it shall give the Lessee
and the Owner Participant at least 30 days' prior written notice in the
event of any change in its chief executive office or name;
(vi) neither the execution and delivery by it, either in its
individual capacity or as the Owner Trustee, as the case may be, of any of
the Operative Agreements to which it is or is to be a party, requires on
the part of Trust Company in its individual capacity or any of its
Affiliates the consent or approval of or the giving of notice to, the
registration with, or the taking of any other action in respect of, any
federal or governmental authority or agency governing its banking or trust
powers;
25
(vii) the Owner Trustee holds whatever title to the Aircraft as
was conveyed to it by the Seller and the Aircraft is free of Lessor's Liens
attributable to Trust Company in its individual capacity;
(viii) Trust Company is a Citizen of the United States;
(ix) Trust Company has made a filing with the New York State
Banking Department under Section 131(3) of the New York State Banking Law
with respect to the trust formed by the Trust Agreement; and
(x) there are no Expenses or Taxes that may be imposed on or
asserted against the Trust, the Trust Estate or any part thereof or any
interest therein, Lessee, Owner Participant or Owner Trustee (except, as to
Owner Trustee, Taxes imposed on the fees payable to Owner Trustee) under
the laws of the State of Delaware in connection with the execution,
delivery or performance of any Operative Agreement by Owner Trustee, which
Expenses or Taxes would not have been imposed if Owner Trustee had not (x)
had its principal place of business in, (y) performed (in its individual
capacity or as Owner Trustee) any or all of its duties under the Operative
Agreements in or (z) engaged in any activities unrelated to the
transactions contemplated by the Operative Agreements in, the State of
Delaware.
(b) Lessor's Liens. Trust Company, in its individual capacity,
--------------
further represents, warrants and covenants that there are no Lessor's Liens
attributable to it in its individual capacity on the Delivery Date. The Owner
Trustee, in its trust capacity, and at the cost and expense of the Lessee,
covenants that it will in its trust capacity promptly, and in any event within
30 days after the same shall first become known to it, take such action as may
be necessary to discharge duly any Lessor's Liens attributable to it in its
trust capacity. Trust Company, in its individual capacity, covenants and agrees
that it will at its own expense take such action as may be necessary to duly
discharge and satisfy in full, promptly, and in any event within 30 days after
the same shall first become known to it, any Lessor's Liens attributable to it
in its individual capacity which may arise at any time after the date of this
Agreement.
(c) Indemnity for Lessor's Liens. Trust Company, in its individual
----------------------------
capacity, agrees to indemnify and hold harmless the Lessee, the Owner
Participant and the Owner Trustee from and against any loss, cost, expense or
damage which may be suffered by the Lessee, the Owner Participant or the Owner
Trustee as a result of the failure of Trust Company to discharge and satisfy any
Lessor's Liens attributable to it in its individual capacity, as described in
Section 5.03(b) hereof.
(d) Securities Act. None of Trust Company, the Owner Trustee or any
--------------
Person authorized by either of them to act on its behalf has directly or
indirectly offered or sold or will directly or indirectly offer or sell any
interest in the Lessor's Estate, or in any similar security relating to the
Lessor's Estate, or in any security the offering of which for purposes of the
Securities
26
Act of 1933, as amended, would be deemed to be part of the same offering as the
offering of the aforementioned securities to, or solicited any offer to acquire
any of the same from, any Person.
(e) Actions With Respect to Lessor's Estate, Etc. Neither Trust
--------------------------------------------
Company, in its individual capacity, nor the Owner Trustee will take any action
to subject the Lessor's Estate or the trust established by the Trust Agreement,
as debtor, to the reorganization or liquidation provisions of the Bankruptcy
Code or any other applicable bankruptcy or insolvency statute.
(f) Other Business. Owner Trustee will not enter into any business
--------------
or other activity except as contemplated by the Operative Agreements.
(g) Performance of Agreements. Owner Trustee shall perform its
-------------------------
obligations under the Operative Agreements to which it is a party in accordance
with the terms thereof.
Section 5.04. The Lessee's Right of Quiet Enjoyment. Notwithstanding
-------------------------------------
any other provision of any of the Operative Agreements, each other party to this
Agreement agrees that such party or any Person claiming by, through or under
such party will not, so long as no Event of Default shall have occurred and be
continuing and the Lessor has not commenced the exercise remedies set forth in
Section 17 of the Lease, take or cause to be taken any action contrary to the
Lessee's rights under the Lease, including, without limitation, its rights to
possession, use and quiet enjoyment of the Aircraft during the Term, provided
--------
that nothing contained herein shall affect any of the rights of the Lessor under
Section 17 of the Lease upon the occurrence and during the continuance of an
Event of Default.
Section 5.05. Survival of Representations, Warranties and Covenants.
-----------------------------------------------------
Representations, warranties and covenants of the Owner Participant and the Owner
Trustee (in its individual or trust capacity) provided for in this Article 5,
and their respective obligations under any and all of them, shall survive the
delivery of the Aircraft and the expiration or other termination of this
Agreement and the other Operative Agreements.
Section 5.06. Compliance with Trust Agreement, Etc. Each of the Owner
------------------------------------
Participant, Trust Company, and the Owner Trustee agrees with the Lessee that so
long as this Agreement shall be in effect it will (i) comply with all of the
terms of the Trust Agreement applicable to it in its respective capacity, the
noncompliance with which would materially adversely affect any such party and
(ii) not take any action, or cause any action to be taken, to amend, modify or
supplement any other provision of the Trust Agreement in a manner that would
materially adversely affect any such party without the prior written consent of
such party. The Owner Trustee confirms for the benefit of the Lessee that it
will comply with the provisions of Article 2 of the Trust Agreement.
Notwithstanding anything else to the contrary in the Trust Agreement, so long as
the Lease remains in effect, the Owner Participant agrees not to terminate or
revoke the trust created by the Trust Agreement without the consent of the
Lessee.
27
ARTICLE
TAXES
Section 6.01. Lessee's Obligation to Pay Taxes.
--------------------------------
(a) Generally. The Lessee agrees promptly to pay when due, and to
---------
indemnify on an After Tax Basis and hold each Tax Indemnitee harmless from all
license, recording, documentary, registration and other fees and all taxes
(including, without limitation, income, gross receipts, sales, rental, use,
value added, property (tangible and intangible), ad valorem, excise and
-- -------
stamp taxes), fees, levies, imposts, recording duties, duties, charges,
assessments or withholdings of any nature whatsoever, together with any
assessments, penalties, fines, additions to tax or interest thereon
(individually, a "Tax," and collectively called "Taxes"), however imposed or
asserted, by any Federal, state or local government or taxing authority in the
United States, or by any government or taxing authority of a foreign country or
of any political subdivision or taxing authority thereof or by a territory or
possession of the United States or an international taxing authority, in any
such case as relating to or measured by:
(i) the construction, mortgaging, financing, refinancing,
purchase, charter, rental, assignment, presence, overhaul, control,
acceptance, rejection, delivery, nondelivery, transport, location,
ownership, registration, reregistration, deregistration, insuring,
assembly, possession, repossession, operation, use, non-use, condition,
maintenance, repair, improvement, conversion, sale, return, abandonment,
preparation, installation, storage, redelivery, replacement, manufacture,
leasing, subleasing, sub-subleasing, modification, alteration, rebuilding,
importation, transfer of title, transfer of registration, exportation or
other application or disposition of, or the imposition of any Lien (or the
incurrence of any liability to refund or pay over any amount as a result of
any Lien) on, the Aircraft, the Airframe, any Engine or any Part or any
interest therein;
(ii) amounts payable under the Operative Agreements;
(iii) the Aircraft, or the income or other proceeds (y) received
with respect to the Aircraft attributable to the transactions contemplated
by the Operative Agreements or (z) held by the Owner Trustee under the
Trust Agreement or after an Event of Default under the Lease;
(iv) on or with respect to any Operative Agreement, any interest
therein or by reason of the transactions described in or contemplated by
the Operative Agreements.
(b) Exceptions. The indemnity provided for in Section 6.01(a) shall
----------
not extend to any of the following:
(i) With respect to a Tax Indemnitee, Taxes, whether imposed by
withholding or otherwise, based upon, measured by or with respect to the
net or gross
28
income, items of tax preference or minimum tax or excess profits, business
profits, alternative minimum taxes, receipts, capital, franchise, state
value-added net worth (whether, denominated income, excise, capital stock,
business and occupation or doing business taxes) or other similarly-based
taxes (other than taxes that are in the nature of license, sales, use,
foreign value-added, transfer, rental, ad valorem, stamp, property, or
similar taxes) ("Income Taxes") imposed by the United States or by any
state, local or foreign jurisdiction in which such Tax Indemnitee is
subject to tax without regard to the transactions contemplated by the
Operative Agreement, provided, however, that this clause shall not exclude
-------- -------
from the indemnity described in Section 6.01(a) above any such Income Taxes
to be imposed by any jurisdiction (other than the United States or any
state or local taxing authority in any state in the United States) as a
result of (I) the operation, registration, location, presence, or use
of the Aircraft, Airframe, any Engine or any Part thereof, by the Lessee or
any Affiliate thereof or any Sublessee within the jurisdiction of the
taxing authority imposing such Tax, (II) the presence or activities of the
Lessee or any Affiliate thereof or any Sublessee within the jurisdiction of
the taxing authority imposing such Tax, (III) the status of the Lessee or
any Affiliate thereof or any Sublessee as a foreign entity or as an entity
owned in whole or in part by foreign persons, or (IV) the Lessee or any
Affiliate thereof or any Sublessee having made (or having been deemed to
have made) payments to such Tax Indemnitee from the jurisdiction of the
taxing authority imposing such Tax, (it being understood that any such
indemnity for Income Taxes not excluded from the indemnity described in
Section 6.01(a) shall be payable only to the extent of the net harm
incurred by the Tax Indemnitee from such Income Taxes, taking into account
any incremental Tax benefit in another tax jurisdiction resulting from
payment of such Income Taxes);
(ii) Taxes imposed with respect to any period beginning after
the later of (A) the discharge in full of the Lessee's obligation, if any,
to pay Termination Value under and in accordance with the Lease other than
following an Event of Default, (B) the expiration of the Term of the Lease
and return of the Aircraft to Owner Trustee provided no Event of Default is
continuing or (C) the termination of the Lease in accordance with the
applicable provisions of the Lease thereof;
(iii) As to the Owner Trustee, Taxes imposed against the Owner
Trustee upon or with respect to any fees for services rendered in its
capacity as Owner Trustee under the Trust Agreement;
(iv) With respect to any Tax Indemnitee, Taxes resulting from
the willful misconduct or gross negligence of such Tax Indemnitee or a
Related Tax Indemnitee or the breach by any Tax Indemnitee other than with
respect to the Owner Trustee or Owner Participant, of any representation,
warranty or covenant contained in the Operative Agreements or any document
delivered in connection therewith (unless attributable to a breach of
representation, warranty or covenant of the Lessee);
29
(v) Taxes imposed on the Owner Trustee or the Owner
Participant or any successor, assign or Affiliate thereof which became
payable by reason of any voluntary transfer or disposition by such Tax
Indemnitee subsequent to the Delivery Date, including revocation of the
Trust, of any interest in some or all of the Aircraft, Airframe, Engines or
Parts thereof or its interest in the Lessor's Estate or a transfer or
disposition of shares or other interests in the Owner Trustee or the Owner
Participant or a disposition in connection with a bankruptcy or similar
proceedings involving either the Lessor or the Owner Participant or a
transfer or disposition of shares or other interests in the Owner Trustee
or the Owner Participant in each case other than (A) transfers resulting
from a loss, substitution or modification of the Aircraft, Engines or any
Part, (B) transfers pursuant to the Lessor's exercise of remedies in
accordance with Section 17 of the Lease, (C) termination of the Lease upon
the Lessee's exercise of Lessee's options pursuant to Section 14 of the
Lease, or (D) a transfer to Lessee pursuant to Section 13(b) of the Lease;
the parties agree to cooperate to minimize any such Taxes covered by this
provision;
(vi) Taxes subject to indemnification by the Lessee pursuant to
the Tax Indemnity Agreement;
(vii) Taxes imposed on a successor, assign or other transferee
of any interest of such Tax Indemnitee (including, without limitation, a
transferee which is a new lending office of an original Tax Indemnitee) to
the extent that such Taxes would not have been imposed on the original Tax
Indemnitee or exceed the amount of Taxes that would have been imposed and
would have been indemnifiable pursuant to Section 6.01(a) hereof had there
not been a succession, assignment or other transfer by such original Tax
Indemnitee of any such interest of such Tax Indemnitee in the Aircraft or
any Part, any interest in or under any Operative Agreement, or any proceeds
thereunder unless such sale, assignment, transfer or disposition occurs in
connection with the exercise of Lease remedies;
(viii) Taxes imposed by any jurisdiction that would not have been
imposed on the Owner Trustee or the Owner Participant but for the
activities or the status of the Owner Trustee or the Owner Participant in
such jurisdiction unrelated to the transactions contemplated by the
Operative Agreements;
(ix) Any Taxes which have been properly included in the
Purchase Price;
(x) Any Taxes imposed on the Owner Trustee or Owner
Participant which would not have been imposed but for a Lessor's Lien;
(xi) In the case of the Owner Participant, any Taxes relating
to, resulting from, arising out of or in connection with a "prohibited
transaction" within the meaning of Section 406 of ERISA or Section
4975(c)(1) of the Code resulting from the direct or indirect use of assets
of any ERISA Plan to acquire or hold Owner Participant's interest in the
Trust
30
Estate or in the case of any transferee of the Owner Participant referred
to in Section 5.01(c), to purchase the Beneficial Interest pursuant to
Section 5.01(c);
(xii) Other than with respect to the Owner Trustee or the Owner
Participant, Taxes other than Income Taxes that would not have been imposed
but for the existence or status of any trust used to hold title to the
Aircraft;
(xiii) Other than with respect to the Owner Trustee or the Owner
Participant, taxes in the nature of an intangible or similar Tax imposed on
or with respect to the Trust Estate or the Trust Agreement;
(xiv) Taxes that are being contested in accordance with the
provisions hereof; or
(xv) United States withholding Taxes imposed on the Owner
Participant as a result of the Owner Participant not being a U.S. Person.
Section 6.02. After Tax Basis. The amount which the Lessee shall be
---------------
required to pay with respect to any Tax indemnified against under Section 6.01
(an "Indemnifiable Tax") shall be an amount sufficient to restore the Tax
Indemnitee, on an After Tax Basis, to the same position such party would have
been in had such Tax not been incurred, taking into account any tax benefits
recognized by such Tax Indemnitee as a result of the Indemnifiable Tax. If any
Tax Indemnitee actually realizes a tax benefit (whether by credit, deduction or
otherwise), or would have realized such a benefit as to which it has been given
notice if properly claimed, and with respect to Owner Participant, the Owner
Participant has not determined in good faith that claiming such benefit would
have a material adverse impact on the Owner Participant or an Affiliate thereof,
by reason of the payment of any Tax paid or indemnified against by the Lessee,
provided that an Event of Default has not occurred and is not continuing, such
Tax Indemnitee shall promptly pay to the Lessee, to the extent such tax benefit
was not previously taken into account in computing such payment or indemnity,
but not before the Lessee shall have made all payments then due to such Tax
Indemnitee under this Agreement, the Tax Indemnity Agreement and any other
Operative Agreement, an amount equal to the lesser of (x) the sum of such tax
benefit plus any other tax benefit realized by such Tax Indemnitee that would
not have been realized but for any payment made by such Tax Indemnitee pursuant
to this sentence and not already paid to the Lessee, or (y) the amount of the
payment made under Section 6.01 hereof and this Section 6.02 by the Lessee to
such Tax Indemnitee plus the amount of any other payments by the Lessee to such
Tax Indemnitee theretofore required to be made under this Section 6.02 and
Sections 6.01 and 6.05 hereof (and the excess, if any, of the tax benefit over
the applicable amount described in clause (x) over the amount described in
clause (y) above shall be carried forward and applied to reduce pro tanto any
--- -----
subsequent obligations of the Lessee to make payments to such Tax Indemnitee
pursuant to Section 6.01 hereof). If an amount payable by any Tax Indemnitee to
the Lessee pursuant to this Section 6.02 is not paid when due because of the
occurrence and continuation of any Event of Default, such amount shall be
payable by any Tax Indemnitee to the Lessee upon the Lessee's curing all Events
of Default. The Lessee shall reimburse
31
on an After Tax Basis such Tax Indemnitee (subject to Section 6.01(b), but only
insofar as subsections (iv), (vi), (vii), (x), (xi), (xii), (xiii), (xiv) and
(xv) thereof would apply) for any payment of a tax benefit pursuant to the
preceding sentence (or a tax benefit otherwise taken into account in calculating
the Lessee's indemnity obligation hereunder) to the extent that such tax benefit
is subsequently disallowed or reduced.
In determining the order in which any Tax Indemnitee utilizes
withholding or other foreign taxes as a credit against such Tax Indemnitee's
United States income taxes, such Tax Indemnitee shall be deemed to utilize (i)
first, all foreign taxes other than those described in clause (ii) below; and
(ii) then, on a pro rata basis, all foreign taxes with respect to which such Tax
Indemnitee is entitled to obtain indemnification pursuant to an indemnification
provision contained in any lease, loan agreement, or other financing document
(including this Agreement) that is similar to the indemnification provision in
this Article 6.
Section 6.03. Time of Payment. Any amount payable to a Tax
---------------
Indemnitee pursuant to this Article 6 shall be paid promptly, but in any event
within 30 days after receipt of a written demand therefor from such Tax
Indemnitee accompanied by a written statement describing in reasonable detail
the basis for such indemnity and the computation of the amount so payable,
provided that in the case of amounts which are being contested by the Lessee in
--------
good faith or by the Tax Indemnitee in either case pursuant to Section 6.04
hereof, or subject to verification proceedings pursuant to Section 6.11 hereof,
such amount shall be payable within 30 days after the time such contest or
verification proceeding, as the case may be, is finally resolved. In no event
shall any amount be payable under Section 6.01 until five Business Days prior to
the due date for Tax in issue.
Section 6.04. Contests.
--------
(a) Notice of Claim. If a written claim is made against any Tax
---------------
Indemnitee for Taxes with respect to which the Lessee is liable for a payment or
indemnity hereunder, such Tax Indemnitee shall promptly (but in any event within
15 days of receipt thereof) give the Lessee notice in writing of such claim and
shall furnish the Lessee with copies of any written requests for information
sent to such Tax Indemnitee from any taxing authority to the extent relating to
such Taxes with respect to which the Lessee may be required to indemnify
hereunder; provided, however, that the failure of a Tax Indemnitee to give such
-------- -------
notice or furnish such copy shall not terminate any of the rights of such Tax
Indemnitee under this Article 6, except (A) to the extent that the Lessee's
contest rights have been materially and adversely impaired by the failure to
provide such notice or copy or (B) to the extent that such failure results in
the imposition of, or an increase in the amount of, any penalties, interest or
additions to Tax related to the Tax which is the subject of such claim or
proceeding.
(b) Request for Contest. If a written claim shall be made for any
-------------------
Tax, for which the Lessee may be obligated to indemnify pursuant to Section 6.01
hereunder, and under applicable law of the taxing jurisdiction the Lessee is
allowed to contest directly such Tax and the Tax to be contested is not
reflected in a report or return with other Taxes of any Tax Indemnitee, then the
32
Lessee shall be permitted, at its expense and in its own name, or in the name of
such Tax Indemnitee, to contest the imposition of such Tax; provided, however,
-------- -------
that the Lessee shall not be permitted or entitled to contest any Tax unless (A)
such contest will not result in the risk of an imposition of criminal penalties,
(B) the Lessee shall have agreed to pay such Tax Indemnitee on demand and on an
After Tax Basis all costs and expenses that such Tax Indemnitee actually incurs
in connection with contesting such claim (including, without limitation, all
costs, expenses, losses, reasonable legal and accounting fees, disbursements, or
penalties, interest and addition to tax), (C) if such contest shall be conducted
in a manner requiring the payment of the claim in advance, the Lessee shall have
advanced sufficient funds, on an interest free basis, to make the payment
required, and agreed to indemnify the Tax Indemnitee against any additional net
adverse tax consequences on an After Tax Basis to such Tax Indemnitee of such
advance, and (D) if such contest shall be conducted in a manner requiring the
payment of the claim, the Lessee shall have paid the amount required.
If the Lessee shall so request within 30 days after receipt of such
notice from a Tax Indemnitee under this Section 6.04 hereof and with respect to
a Tax for which the Lessee may be obligated to indemnify pursuant to Section
6.01, such Tax Indemnitee shall in good faith at the Lessee's after-tax expense
contest the imposition of such Tax.
If requested by the Lessee, the Tax Indemnitee shall appeal any
adverse administrative or judicial decision, except that the Tax Indemnitee
shall not be required to pursue any appeals to the United States Supreme Court.
If the taxing jurisdiction requires payment of the claim in advance of
contest, such Tax Indemnitee may make a timely request upon Lessee and Lessee
shall advance to such Tax Indemnitee on an interest-free basis the amount of
such Tax (including such amounts payable as interest, penalties or additions to
tax) and shall indemnify the Tax Indemnitee on an After Tax Basis against any
additional net cost to such Tax Indemnitee with respect to such advance.
(c) Declining to Contest; Settlement. (i) Provided no Event of
--------------------------------
Default is continuing (unless the Lessee has bonded or otherwise provided to the
Tax Indemnitee collateral in respect of the Tax subject to such contest, such
bond or collateral to be reasonably satisfactory to such Tax Indemnitee in form
and substance), if, after the Lessee has properly requested a contest in
accordance with this Section 6.04 and Lessee is then complying with the terms of
this Section 6.04, any Tax Indemnitee shall at any time decline to take any
action required under Section 6.04 with respect to such contest, then, if such
failure shall cause the contest to be determined adversely or shall preclude
such contest as a matter of law, the Lessee shall not be obligated to indemnify
such Tax Indemnitee for such Tax (including such amount payable as interest,
penalties or addition to tax) and such Tax Indemnitee shall reimburse the Lessee
for all amounts previously advanced by the Lessee in connection with such
contest (other than costs and expenses of such contest).
(ii) Provided no Event of Default is continuing (unless the
Lessee has bonded or otherwise provided to the Tax Indemnitee collateral in
respect of the Tax subject to such contest, such bond or collateral to be
reasonably satisfactory to such Tax Indemnitee
33
in form and substance), no Tax Indemnitee shall settle a contest of any
indemnified Tax without requesting the Lessee's written consent (which
consent will not be unreasonably withheld, as determined in the Lessee's
good faith judgment). If any Tax Indemnitee shall settle a contest for any
Tax without receiving the Lessee's written consent other than if an Event
of Default is continuing (unless the Lessee has bonded or otherwise
provided to the Tax Indemnitee collateral in respect of the Tax subject to
such contest, such bond or collateral to be reasonably satisfactory to such
Tax Indemnitee in form and substance), then the Lessee shall not be
obligated to indemnify such Tax Indemnitee for such Tax (including such
amount payable as interest, penalties or addition to tax) and the Tax
Indemnitee shall reimburse the Lessee for all amounts previously advanced
with respect to such contest. Notwithstanding the preceding two sentences,
no Tax Indemnitee shall be required to take or continue any action unless
the Lessee shall have agreed to pay the Tax Indemnitee on a current and
After Tax Basis all reasonable fees and expenses (including reasonable
attorney's and accountant's fees) which such Tax Indemnitee may incur as a
result of contesting such Taxes.
(d) Claims Barred. If (A) any Tax Indemnitee fails to give the
-------------
Lessee written notice pursuant to this Section 6.04 of any claim by any
government or taxing authority for any Tax for which the Lessee is obligated
pursuant to this Section 6.01, (B) as a direct result of such failure the
contest of such claim becomes barred by law and (C) the Lessee furnishes, at the
Lessee's expense, an opinion of counsel selected by the Lessee and reasonably
satisfactory to such Tax Indemnitee to the effect that, had the contest of such
claim not become barred by law, a Reasonable Basis, would have existed for
pursuing such contest, such Tax Indemnitee shall be deemed to have waived its
right to any payment by the Lessee that would otherwise be payable by the Lessee
pursuant to this Section 6.01 in respect of such claim.
Section 6.05. Refunds. When a Tax Indemnitee becomes entitled to
-------
receive a refund or credit against Tax of all or any part of any Taxes which the
Lessee shall have paid for such Tax Indemnitee or for which the Lessee shall
have reimbursed or indemnified such Tax Indemnitee, such Tax Indemnitee shall
pay, provided an Event of Default has not occurred and is not continuing, to the
Lessee an amount equal to the amount of such refund or credit less (x) all
payments then due to such Tax Indemnitee under this Article 6, and (y) Taxes
imposed with respect to the accrual or receipt thereof, including interest
received attributable thereto, plus any tax benefit realized by such Tax
Indemnitee as a result of any payment by such Tax Indemnitee made pursuant to
this sentence; provided, however, that such amount shall not be payable (a)
-------- -------
before such time as the Lessee shall have made all payments or indemnities then
due and payable to such Tax Indemnitee under this Article 6 and (b) to the
extent that the amount of such payment would exceed (i) the amount of all prior
payments by the Lessee to such Tax Indemnitee pursuant to this Article 6 less
(ii) the amount of all prior payments by such Tax Indemnitee to the Lessee
pursuant to this Article 6 (any such excess shall be carried forward to reduce
pro tanto any subsequent obligations of the Lessee to make payments to such Tax
--- -----
Indemnitee pursuant to Section 6.01 hereof). If an amount payable by any Tax
Indemnitee to the Lessee pursuant to this Section 6.02 is not paid when due
because of the
34
occurrence and continuation of an Event of Default, such amount shall be payable
by any Tax Indemnitee to the Lessee upon the Lessee's curing all Events of
Default.
Any subsequent loss of such refund or tax benefit shall be treated as
a Tax subject to indemnification under the provisions of this Article 6 (in the
case of any such tax benefit, subject to Section 6.01(b) but only insofar as
subsections (iv), (vi), (vii), (x), (xi), (xii), (xiii), (xiv) and (xv) thereof
would apply).
Section 6.06. Reports. In case any report or return is required to be
-------
made with respect to any Taxes against which the Lessee is or may be obligated
to indemnify the Indemnitees under this Article 6, the Lessee shall, to the
extent it has knowledge thereof, make such report or return, except for any such
report or return that the Tax Indemnitee has notified the Lessee that it intends
to file, in such manner as will show the ownership of the Aircraft in the Owner
Trustee and shall send a copy of the applicable portions of such report or
return to the Tax Indemnitee and the Owner Trustee or will notify the Tax
Indemnitee of such requirement and make such report or return in such manner as
shall be satisfactory to such Tax Indemnitee and the Owner Trustee. The Lessee
will provide such information within the possession or control of the Lessee as
the Tax Indemnitee may reasonably request in writing from the Lessee to enable
the Tax Indemnitee to fulfill its tax filing requirements with respect to the
transactions contemplated by the Operative Agreements (without duplication of
any comparable requirements of the Tax Indemnity Agreement) and any audit
information request arising from any such filing. The Tax Indemnitee will
provide such information within its possession or control as the Lessee may
reasonably require from such Tax Indemnitee to enable the Lessee to fulfill its
tax filing requirements with respect to the transactions contemplated by the
Operative Agreements and any audit information request arising from such filing;
provided that in no event shall any Tax Indemnitee be required to provide copies
--------
of any of its tax returns.
Section 6.07. Survival of Obligations. The representations,
-----------------------
warranties, indemnities and agreements of the Lessee provided for in this
Article 6 and the Lessee's obligations under any and all of them, in each case,
with respect to events or periods prior to the expiration or termination of the
Lease shall survive the expiration or other termination of the Operative
Agreements.
Section 6.08. Payment of Taxes. With respect to any Tax otherwise
----------------
indemnifiable hereunder by the Lessee and applicable to the Aircraft, Airframe,
any Engine or Parts, to the extent permitted by the applicable federal, state,
local or foreign law, the Lessee shall pay such tax directly to the relevant
Taxing authority and file any returns or reports required with respect thereto
to the extent legally entitled to do so in its own name; provided, however, that
-------- -------
the Lessee shall not make any statements or take any action which would indicate
that the Lessee or any Person other than the Owner Trustee or Owner Participant
is the owner of the Aircraft, the Airframe, any Engine or any Part or which
would otherwise be inconsistent with the terms of the Lease or the Tax Indemnity
Agreement and the position thereunder of the Owner Trustee and the Owner
Participant.
35
Section 6.09. Reimbursements by Indemnitees Generally. To the extent
---------------------------------------
the Lessee is required to pay or withhold any Tax imposed on or with respect to
a Tax Indemnitee in respect of the transactions contemplated by the Operative
Agreements, which Tax is not otherwise the responsibility of the Lessee under
the Operative Agreements, or any other written agreements between the Lessee and
such Tax Indemnitee, then such Tax Indemnitee shall pay to the Lessee within 30
days of the Lessee's demand therefor an amount which equals the amount actually
paid by the Lessee with respect to such Taxes.
Section 6.10. Forms. Each Tax Indemnitee agrees to furnish from time
-----
to time to Lessee or to such other person as Lessee may designate, at Lessee's
request, such duly executed and properly completed forms as may be necessary or
appropriate in order to claim any reduction of or exemption from any withholding
or other Tax imposed by any taxing authority, if (x) such reduction or exemption
is available to such Tax Indemnitee, and (y) Lessee has provided such Tax
Indemnitee with any information necessary to complete such form not otherwise
reasonably available to such Tax Indemnitee.
Section 6.11. Verification. At the Lessee's request, the accuracy of
------------
any calculation of amount(s) payable pursuant to this Article 6 shall be
verified by independent public accountants selected by the applicable Tax
Indemnitee and reasonably satisfactory to the Lessee, and such verification
shall bind the applicable Tax Indemnitee and the Lessee. In order, and to the
extent necessary, to enable such independent accountants to verify such amounts,
such Tax Indemnitee shall provide to such independent accountants (for their
confidential use and not to be disclosed to the Lessee or any other person) all
information reasonably necessary for such verification. Verification shall be at
the expense of the Lessee, unless such verification results in an adjustment in
the Lessee's favor of $10,000 or more of the amount of the payment as computed
by such Tax Indemnitee, in which case the verification shall be at the expense
of the Tax Indemnitee.
Section 6.12. Non-Parties. If a Tax Indemnitee is not a party to
-----------
this Agreement, Lessee may require the Tax Indemnitee to agree in writing, in a
form reasonably acceptable to Lessee, to the terms of this Article 6 prior to
making any payment to such Tax Indemnitee hereunder.
ARTICLE 7.
GENERAL INDEMNITY
Section 7.01. Generally.
---------
(a) Indemnity. The Lessee agrees to indemnify each Indemnitee
---------
against and agrees to protect, defend, save and keep harmless each Indemnitee
from and against and in respect of, and will pay on an After Tax Basis, any and
all liabilities, obligations, losses, damages, settlements, penalties, claims,
actions, suits, costs, disbursements and expenses, demands or judgments
(including reasonable legal fees and expenses) of every kind and nature, whether
or not any of the transactions contemplated by this Agreement are consummated
and whether arising
36
before, on or after the Delivery Date (individually, an "Expense," collectively,
"Expenses"), which may be imposed on, incurred or suffered by or asserted
against any Indemnitee, in any way relating to, arising out of or in connection
with, any one or more of the following:
(i) the Aircraft or any Operative Agreement or any transaction
contemplated thereby;
(ii) the operation, possession, use, non-use, maintenance,
storage, overhaul, delivery, non-delivery, control, condition, alteration,
modification, addition, improvement, airworthiness, replacement,
substitution, return, abandonment, redelivery or other disposition, repair
or testing of the Aircraft, Airframe, or any Engine or any engine used in
connection with the Airframe, or any Part thereof by the Lessee, any
sublessee or any other Person whatsoever, whether or not such operation,
possession, use, non-use, maintenance, storage, overhaul, delivery, non-
delivery, control, condition, alteration, modification, addition,
improvement, airworthiness, replacement, substitution, return, abandonment,
redelivery or other disposition, repair or testing is in compliance with
the terms of the Lease, including, without limitation, claims for death,
personal injury or property damage or other loss or harm to any Person
whatsoever, including, without limitation, any passengers, shippers or
other Persons wherever located, claims or penalty relating to any laws,
rules or regulations, including, without limitation, environmental control,
noise and pollution laws, rules or regulation and any Liens in respect of
the Aircraft, any Engine or any Part;
(iii) the manufacture, design, sale, return, purchase,
acceptance, nonacceptance, rejection, delivery, non-delivery, condition,
repair, modification, servicing, rebuilding, airworthiness, registration,
reregistration, deregistration, ownership, financing, import, export,
performance, non-performance, lease, sublease, transfer, merchantability,
fitness for use, alteration, substitution or replacement of any Airframe,
Engine, or Part or other transfer of use or possession, or other
disposition of the Aircraft, the Airframe, any Engine or any Part
including, without limitation, latent and other defects, whether or not
discoverable, tort liability, whether or not arising out of the negligence
of any Indemnitee (whether active, passive or imputed and including strict
liability without fault), and any claims for patent, trademark or copyright
infringement;
(iv) any breach of or failure to perform or observe, or any
other non-compliance with, any condition, covenant or agreement to be
performed, or other obligations of the Lessee under any of the Operative
Agreements, or the falsity or inaccuracy of any representation or warranty
of the Lessee in any of the Operative Agreements (other than
representations and warranties in the Tax Indemnity Agreement) or the
occurrence of any Default or Event of Default;
(v) the enforcement of the terms of the Operative Agreements
(including this Section 7.01(a)); and
37
(vi) interest in the Lessor's Estate or the Trust Agreement or
any similar interest.
(b) Exceptions. The indemnity provided for in Section 7.01(a) shall
----------
not extend to any Expense of any Indemnitee to the extent it:
(i) is attributable to the willful misconduct or gross
negligence of such Indemnitee (other than gross negligence or willful
misconduct imputed to such person by reason of its interest in the Aircraft
or any transaction documents);
(ii) except to the extent fairly attributable to acts or events
occurring prior thereto, is attributable to acts or events (other than the
performance by Lessee of its obligations pursuant to the terms of the
Operative Agreements) which occur after the Aircraft is no longer part of
the Lessor's Estate or, if the Aircraft remains a part of the Lessor's
Estate, after the expiration of the Term (unless the Aircraft is being
returned at such time, in which case after return of physical possession;
provided that if the Lease has been terminated pursuant to Section 17
--------
thereof, the indemnity provided in Section 7.01(a) hereof shall survive for
so long as Lessor shall be exercising remedies under such Section 17), or
to acts or events which occur after return of possession of the Aircraft by
the Lessee in accordance with the provisions of the Lease (subject to the
foregoing proviso if the Lessor has terminated the Lease pursuant to
Section 17 of the Lease);
(iii) other than as expressly provided herein or in the other
Operative Agreements, is a Tax or loss of a Tax benefit, whether or not the
Lessee is required to indemnify therefor pursuant to Article 6 hereof or
pursuant to the Tax Indemnity Agreement;
(iv) is a cost or expense expressly required to be paid by such
Indemnitee or its permitted transferees (and not by the Lessee) pursuant to
this Agreement or any other Operative Agreement and for which the Lessee is
not otherwise obligated to reimburse such Indemnitee, directly or
indirectly pursuant to the terms of this Agreement or such other Operative
Agreement;
(v) is attributable to the incorrectness or breach by such
Indemnitee of its representations or warranties, under any of the Operative
Agreements;
(vi) is attributable to the failure by such Indemnitee to
perform any of its obligations under any of the Operative Agreements except
to the extent such failure was caused by a breach by Lessee of any
representation or warranty or by any failure of Lessee to perform any
obligation under an Operative Agreement;
(vii) is, in the case of the Owner Participant, Lessor's Liens
attributable to the Owner Participant; in the case of the Owner Trustee,
Lessor's Liens to the extent
38
attributable to the Owner Trustee; in the case of Trust Company, Lessor's
Liens to the extent attributable to Trust Company;
(viii) is, in the case of the Owner Participant or the Owner
Trustee, attributable to the offer or sale by such Indemnitee of any
interest in the Aircraft, the Lessor's Estate or the Trust Agreement or any
similar interest (including an offer or sale resulting from bankruptcy or
other proceedings for the relief of debtors in which such Indemnitee is the
debtor), unless in each case such offer or sale shall occur pursuant to the
exercise of remedies under Section 17 of the Lease;
(ix) in the case of the Owner Participant, any Taxes relating
to, resulting from, arising out of or in connection with a "prohibited
transaction" within the meaning of Section 406 of ERISA or Section
4975(c)(1) of the Code;
(x) is attributable to any amendment to any of the Operative
Agreements which is not requested, or consented to, by the Lessee or is not
required or made pursuant to the terms of any of the Operative Agreements;
and
(xi) constitutes the loss of future profits of such Indemnitee
or losses attributable to such Indemnitee's overhead.
(c) Non-Parties. If an Indemnitee is not a party to this Agreement,
-----------
Lessee may require such Indemnitee to agree in writing, in a form reasonably
acceptable to Lessee, to the terms of this Article 7 prior to making any payment
to such Indemnitee under this Article 7.
Section 7.02. Notice and Payment. Each Indemnitee shall give prompt
------------------
written notice to the Lessee of any liability as to which a Responsible Officer
of such Indemnitee has actual knowledge, for which the Lessee is, or may be,
liable under this Article 7; provided, however, that failure to give such notice
-------- -------
shall not terminate any of the rights of an Indemnitee under this Article 7 and
shall not release Lessee from any of its obligations to indemnify such
Indemnitee hereunder, except to the extent that such failure adversely affects
any applicable defense or counterclaim, otherwise increases the amount the
Lessee would have been liable for in the absence of such failure to provide such
notice or adversely affects the ability of Lessee's insurers to defend such
claim.
Section 7.03. Defense of Claims. The Lessee or its insurers shall
-----------------
have the right (in each such case at the Lessee's sole expense) to investigate,
defend (and control the defense of) any such claim for which indemnification is
sought pursuant to this Article 7 and each Indemnitee shall cooperate with the
Lessee or its insurers with respect thereto, provided that, without limiting the
-------- ----
right of the Lessee's insurers to assume and control the defense of or to
compromise, any such claim, the Lessee shall not be entitled to assume and
control the defense of or compromise any such claim (A) during the continuance
of any Specified Default, (B) if an actual or potential material conflict of
interest exists making it advisable in the good faith opinion of such Indemnitee
(on the basis of prevailing standards of professional responsibility) for such
Indemnitee to be represented by separate
39
counsel or if such proceeding involves the potential imposition of criminal
liability on such Indemnitee or (C) if such proceeding will involve any non-de
minimis risk of the sale, forfeiture or loss of, or the creation of any Lien
(other than Permitted Liens) on the Aircraft or the Trust Estate (unless the
Lessee posts a bond or other security reasonably acceptable in form and
substance to such Indemnitee) or involve any risk of criminal liability to such
Indemnitee. Subject to the immediately foregoing sentence, where the Lessee or
the insurers under a policy of insurance maintained by the Lessee undertake the
defense of an Indemnitee with respect to such a claim, no additional legal fees
or expenses of such Indemnitee in connection with the defense of such claim
shall be indemnified hereunder unless the fees or expenses were incurred at the
written request of the Lessee or such insurers. Subject to the requirement of
any policy of insurance applicable to a claim, an Indemnitee may participate at
its own expense at any judicial proceeding controlled by the Lessee or its
insurers pursuant to the preceding provisions, to the extent that such party's
participation does not, in the reasonable opinion of the independent counsel
appointed by the Lessee or its insurers to conduct such proceedings, interfere
with the defense of such claim; and such participation shall not constitute a
waiver of the indemnification provided in this Section 7.03. No Indemnitee shall
enter into any settlement or other compromise with respect to any claim
described in this Section 7.03 without the prior written consent of the Lessee,
unless such Indemnitee waives its right to be indemnified under this Article 7
with respect to such claim. The Lessee shall not enter into any settlement or
compromise with respect to which the Lessee has not agreed to indemnify such
Indemnitee to such Indemnitee's satisfaction or which admits any criminal
violation, gross negligence or willful misconduct on the part of any Indemnitee
without the prior written consent of such Indemnitee.
Section 7.04. Insured Claims. Notwithstanding any other provision of
--------------
this Article 7 to the contrary, in the case of any Expense indemnified by the
Lessee hereunder which is covered by a policy of insurance maintained by the
Lessee (or a Permitted Sublessee) pursuant to Section 9 of the Lease or
otherwise, it shall be a condition of such indemnity with respect to any
particular Indemnitee that such Indemnitee shall reasonably cooperate with the
insurers in the exercise of their rights to investigate, defend or compromise
such claim as may be required to retain the benefits of such insurance with
respect to such claim.
Section 7.05. Subrogation. To the extent that an Expense indemnified
-----------
by the Lessee under this Article 7 is in fact paid in full by the Lessee and/or
an insurer under a policy of insurance maintained by the Lessee, the Lessee
and/or such insurer as the case may be shall be subrogated to the extent of such
payment to the rights and remedies of the Indemnitee on whose behalf such
Expense was paid with respect to the transaction or event giving rise to such
Expense (other than the rights and remedies in respect of insurance policies
maintained by such Indemnitee and other than the rights of the Trust Company or
the Owner Trustee and remedies against the Owner Participant under the Trust
Agreement). Should an Indemnitee receive any refund, in whole or in part, with
respect to any Expense paid in full by the Lessee hereunder, it shall promptly
pay over the amount refunded (but not an amount in excess of the amount Lessee
and/or such insurer has paid to such Indemnitee in respect of such Expense) to
the Lessee.
40
Section 7.06. Information. Subject to Section 7.04, Lessee will
-----------
provide the relevant Indemnitee with such information, not within the control of
such Indemnitee, as is in Lessee's control or is reasonably available to Lessee,
which such Indemnitee may reasonably request, and will otherwise cooperate with
such Indemnitee, so as to enable such Indemnitee to fulfill its obligations
under Section 7.03 and to control or participate in any proceeding to the extent
permitted by Section 7.03. The Indemnitee shall supply Lessee with such
information, not within the control of Lessee, as is in such Indemnitee's
control or is reasonably available to such Indemnitee, which Lessee may
reasonably request to control or participate in any proceeding to the extent
permitted by Section 7.03.
Section 7.07. Survival of Obligations. The indemnities and
-----------------------
agreements of the Lessee provided for in this Article 7 shall survive the
expiration or other termination of this Agreement.
Section 7.08. Effect of Other Indemnities. The Lessee's obligations
---------------------------
under this Article 7 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 this Agreement, or any other document or instrument, and the
Person seeking indemnification from the Lessee pursuant to any provision of this
Agreement may proceed directly against the Lessee without first seeking to
enforce any other right of indemnification.
Section 7.09. Waiver of Certain Claims. The Lessee hereby waives and
------------------------
releases any Expense now or hereafter existing against any Indemnitee arising
out of death or personal injury to personnel of the Lessee, loss or damage to
property of the Lessee, or the loss of use of any property of the Lessee, which
results from or arises out of the condition, use or operation of the Aircraft
during the Term, including, without limitation, any latent or patent defect
whether or not discoverable.
Section 7.10. Certain Limitations. The Lessee does not guarantee and
-------------------
nothing in the general indemnification provisions of this Article 7 shall be
construed as a guarantee (or an indemnification) by the Lessee with respect to
the residual value of the Aircraft or any part thereof.
ARTICLE 8.
TRANSACTION COSTS
Section 8.01. Transaction Costs and Other Costs.
---------------------------------
(a) Transaction Costs. If the transactions contemplated by this
-----------------
Agreement to occur on the Delivery Date are consummated, the Owner Participant
shall pay (or reimburse the Lessee if the Lessee shall have previously made such
payment) all fees and expenses of the following persons relating to the
transactions contemplated hereby, following receipt by the Owner Participant of
appropriate invoices with respect thereto: (i) the reasonable fees and expenses
of counsel for Owner Participant; (ii) the reasonable fees and expenses of the
respective counsel for the
41
Lessee, the Owner Trustee, the Manufacturer, the Engine Manufacturer, the Seller
and the Deficiency Obligor; (iii) the reasonable fees and expenses of special
aviation counsel; (iv) the initial fees and expenses of the Owner Trustee; (v)
the fees and expenses of The Seabury Group LLC (the "Lessee Advisor"); (vi) any
amounts paid in connection with any appraisal report prepared for the Owner
Participant; and (vii) any other amounts approved by the Lessee and the Owner
Participant.
(b) Continuing Expenses. The Lessee agrees to pay, as Supplemental
-------------------
Rent, the continuing fees, expenses and disbursements (including reasonable
counsel fees and expenses) of Trust Company and the Owner Trustee, with respect
to the administration of the Lease and the Lessor's Estate.
(c) Amendments and Supplements. Without limitation of the foregoing,
--------------------------
the Lessee agrees to pay, as Supplemental Rent, to the Owner Trustee and
Owner Participant all costs and expenses (including reasonable legal fees and
expenses) incurred by any of them in connection with any amendment, supplement,
waiver or consent (whether or not entered into) under this Agreement or any
other Operative Agreement or document or instrument delivered pursuant to any of
them, which amendment, supplement, waiver or consent is required by any
provision of any Operative Agreement (including any adjustment pursuant to
Section 3(d) of the Lease) or is requested by the Lessee or necessitated by the
action or inaction of the Lessee; provided, however, that the Lessee shall not
-------- -------
be responsible for fees or expenses incurred in connection with the voluntary
offer, sale or other transfer (whether pursuant to Section 5.01(c) hereof or
otherwise) by the Owner Participant or the Owner Trustee of any interest in the
Aircraft, the Lessor's Estate, the Beneficial Interest or the Trust Agreement or
any similar interest (and the offeror, seller, or transferor shall be
responsible for all such fees and expenses), unless such offer, sale or transfer
shall occur (A) pursuant to the exercise of remedies under Section 17 of the
Lease, or (B) in connection with the termination of the Lease or action or
direction of the Lessee pursuant to Section 8, 13 or 14 of the Lease.
ARTICLE 9.
SUCCESSOR OWNER TRUSTEE
Section 9.01. Appointment of Successor Owner Trustee.
--------------------------------------
(a) Resignation and Removal. The Owner Trustee or any successor
-----------------------
Owner Trustee may resign or may be removed (with the consent of the Lessee) by
the Owner Participant, and a successor Owner Trustee may be appointed and a
Person may become Owner Trustee under the Trust Agreement only in accordance
with the provisions of Section 8.01 of the Trust Agreement and the provisions of
paragraph (b) of this Section 9.01. All reasonable fees and expenses of a
successor Owner Trustee appointed in accordance with Section 8.01 of the Trust
Agreement and the provisions of paragraph (b) of this Section 9.01 and a co-
trustee or separate trustee appointed in accordance with Section 8.02 of the
Trust Agreement shall be at Lessee's sole cost and expense.
42
(b) Conditions to Appointment. The appointment in any manner of a
-------------------------
successor Owner Trustee pursuant to Section 8.01 of the Trust Agreement shall be
subject to the following conditions:
(i) such successor Owner Trustee shall be a Citizen of the
United States;
(ii) such successor Owner Trustee shall be a bank or a trust
company having combined capital, surplus and undivided profits of at least
$100,000,000 or a bank or trust company fully guaranteed by a direct or
indirect parent thereof having a combined capital, surplus and undivided
profits of at least $100,000,000;
(iii) such appointment shall not violate any provisions of the
Transportation Code or any applicable rule or regulation of the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered or create a relationship which would be in violation
of the Transportation Code or any applicable rule or regulation of the
applicable regulatory agency or body of any other jurisdiction in which the
Aircraft may then be registered;
(iv) such successor Owner Trustee shall enter into an agreement
or agreements, in form and substance reasonably satisfactory to the Lessee
and the Owner Participant whereby such successor Owner Trustee confirms
that it shall be deemed a party to this Agreement and each other Operative
Agreement to which the Owner Trustee is a party and agrees to be bound by
all the terms of such documents applicable to the Owner Trustee and makes
the representations and warranties contained in Section 5.03 hereof (except
that it may be duly incorporated, validly existing and in good standing
under the laws of the United States of America or any State thereof); and
(v) all filings of Uniform Commercial Code financing and
continuation statements, filings in accordance with the Transportation Code
and amendments thereto shall be made and all further actions taken in
connection with such appointment as may be necessary in connection with
maintaining the valid and continued registration of the Aircraft in
accordance with the Transportation Code.
ARTICLE 10
LIABILITIES OF THE OWNER PARTICIPANT
Section 10.01. Liabilities of the Owner Participant. The Owner
------------------------------------
Participant shall not have any obligation or duty to the Lessee with respect to
the transactions contemplated by this Agreement, except those obligations or
duties expressly set forth in this Agreement or (to the Lessee only) the Tax
Indemnity Agreement or in any other Operative Agreement to which the Owner
Participant is a party and the Owner Participant shall not be liable for the
performance by any other party hereto of such other party's obligations or
duties hereunder.
43
ARTICLE 11.
OTHER DOCUMENTS
Section 11.01. Consent of Lessee to Other Documents. The Lessee hereby
------------------------------------
consents in all respects to the execution and delivery of the Trust Agreement.
ARTICLE 12
NOTICES
Section 12.01. Notices. Except as otherwise specifically provided
-------
herein, all notices, requests, approvals or consents required or permitted by
the terms hereof shall be in writing (it being understood that the specification
of a writing in certain instances and not in others does not imply an intention
that a writing is not required as to the latter). Any notice shall be effective
when received. Any notice shall either be mailed, certified or registered mail,
return receipt requested with proper first class postage prepaid, or sent in the
form of a telecopy, provided that there is receipt of such notice the next
--------
Business Day from an overnight courier service, or by overnight delivery service
or delivered by hand. Any notice shall be directed to the Lessee, the Lessor,
the Owner Participant or any other party hereto to the respective addresses set
forth below or to such other address or telecopy number as any such party may
designate pursuant to this Section 12.01:
(a) if to the Lessee, to its office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel, telephone (919)
▇▇▇-▇▇▇▇, facsimile (▇▇▇) ▇▇▇-▇▇▇▇; or to such other address as the Lessee shall
from time to time designate in writing to the Lessor and any Owner Participant;
(b) if to the Lessor or the Owner Trustee, to its office at One
▇▇▇▇▇▇ Square, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Corporate Trust Administration, telephone (▇▇▇) ▇▇▇-▇▇▇▇, facsimile
(▇▇▇) ▇▇▇-▇▇▇▇; or to such other address as the Lessor shall from time to time
designate in writing to the Lessee, with a copy to the Owner Participant;
(c) if to the Owner Participant to its office at ▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: General Counsel, telephone
(▇▇▇) ▇▇▇-▇▇▇▇ facsimile (▇▇▇) ▇▇▇-▇▇▇▇; or to such other address as the Owner
Participant shall from time to time designate in writing to the Lessee and the
Owner Trustee;
44
ARTICLE 13.
FINANCING
Section 13.01. Financing. At any time after the Delivery Date, the
---------
Owner Participant may cause the Owner Trustee to assign all or any part of its
interest in the Aircraft and/or the Trust Estate to any lender(s) and/or an
indenture trustee, acting on behalf of one or more lenders, and Lessee hereby
agrees, in connection with any such assignment or contemplated assignment, to
execute and deliver a consent and agreement relating thereto containing
customary covenants, representations and warranties and all such other documents
and instruments (including, without limitation, opinions of counsel and other
ancillary documents), and to cooperate generally and in such other ways, as the
Owner Participant may reasonably request; provided that (i) such lender(s) and
such indenture trustee are reasonably acceptable to Lessee, (ii) such financing
documents include a covenant by such lender(s) and indenture trustee, if any,
pursuant to which such lender(s) and indenture trustee agree on a full recourse
basis that as long as no Event of Default has occurred and is continuing,
Lessee's possession and use of the Aircraft shall not be interrupted by such
lender or indenture trustee or by any Person claiming through or under such
lender(s) or indenture trustee; (iii) no such assignment shall impair the rights
and benefits, or increase the burdens or obligations, of Lessee hereunder or
under the Lease, including, without limitation, obligations with respect to the
payment of Rent or under Section 6.01 or 7.01 hereof; (iv) such financing
documents (including opinions of counsel and other ancillary documents) shall
otherwise be reasonably satisfactory to Lessee; and (v) all out-of-pocket
expenses (including reasonable legal fees and expenses) incurred by Lessee in
connection with such assignment shall be reimbursed by the Owner Participant.
ARTICLE 14.
MISCELLANEOUS
Section 14.01. Counterparts. This Agreement may be executed by the
------------
parties 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.
Section 14.02. No Oral Modifications. Neither this Agreement nor any
---------------------
of its terms may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification is sought. No such written termination, amendment, supplement,
waiver or modification shall be effective unless a signed copy shall have been
delivered to and executed by the Owner Trustee. A copy of each such termination,
amendment, supplement, waiver or modification shall also be delivered to each
other party to this Agreement.
Section 14.03. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
45
Section 14.04. Successors and Assigns. The terms of this Agreement
----------------------
shall be binding upon, and shall inure to the benefit of, the Lessee and its
successors and permitted assigns, the Owner Participant and its successors and
permitted assigns, the Owner Trustee and its successors as Owner Trustee (and
any additional owner trustee appointed) under the Trust Agreement.
Section 14.05. Concerning the Owner Trustee. Trust Company is entering
----------------------------
into this Agreement (except to the extent otherwise expressly indicated), not in
its individual capacity but solely as Owner Trustee under the Trust Agreement,
and except as otherwise expressly provided in this Agreement or in the Lease or
the Trust Agreement, Trust Company shall not be personally liable for or on
account of its statements, representations, warranties, covenants or obligations
under this Agreement; provided, however, that Trust Company accepts the benefits
-------- -------
running to it under this Agreement, and agrees that (except as otherwise
expressly provided in this Agreement or any other Operative Agreement to which
it is a party) it shall be liable in its individual capacity for (a) its own
gross negligence or willful misconduct (whether in its capacity as trustee or in
its individual capacity), (b) any breach of representations and warranties or
any breach of covenants made in its individual capacity pursuant to or in
connection with this Agreement or the other Operative Agreements to which it is
a party, (c) the failure to use ordinary care in receiving, handling and
disbursing funds, (d) Lessor's Liens attributable to it in its individual
capacity, and (e) taxes, fees or other charges on, or based on, or measured by,
any fees, commissions or compensation received by it in connection with the
transactions contemplated by the Operative Agreements.
Section 14.06. Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 14.07. GOVERNING LAW. THIS AGREEMENT IS BEING DELIVERED IN THE
-------------
STATE OF NEW YORK, AND 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, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO
IRREVOCABLY AGREES, ACCEPTS AND SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK IN THE CITY AND COUNTY OF NEW YORK AND OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN CONNECTION WITH ANY
LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO ANY MATTER RELATING TO OR
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.
(c) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO
HEREBY IRREVOCABLY CONSENTS AND AGREES THAT THE SERVICE OF
46
ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE
ADDRESS SET FORTH PURSUANT TO SECTION 12.01. EACH PARTY HERETO AGREES THAT
SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 14.07(c), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON
SUCH PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS
AGENTS TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR
AFFECT IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT
RENDERED IN ANY ACTION OR PROCEEDING BASED THEREON.
(d) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A
DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN
ANY OF THE ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT
THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY
SUCH COURTS.
(e) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO
HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION IN ANY COURT IN ANY JURISDICTION BASED UPON OR ARISING OUT OF OR RELATING
TO THIS AGREEMENT.
Section 14.08. Section 1110 Compliance. The parties hereto agree that
-----------------------
the transactions contemplated by the Operative Agreements are expressly intended
to be, shall be, and should be construed so as to be entitled to the benefits
and protection of Section 1110.
* * *
47
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers as of
the day and year first written above.
MIDWAY AIRLINES CORPORATION,
as Lessee
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
General Counsel
ICX CORPORATION,
as Owner Participant
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
And Treasurer
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, not in its individual
capacity, except as otherwise expressly
provided herein but solely as Owner
Trustee
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
48
APPENDIX A
DEFINITIONS [N586ML]
GENERAL PROVISIONS
The following terms shall have the following meanings for all purposes
of the Operative Agreements (as defined below), unless otherwise defined in an
Operative Agreement or the context thereof shall otherwise require. In the case
of any conflict between the provisions of this Appendix and the provisions of
any Operative Agreement, the provisions of such Operative Agreement shall
control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean such agreements as amended and supplemented from time to
time, and any agreement, instrument or document entered into in substitution or
replacement therefor, and (ii) references to parties to agreements shall be
deemed to include the successors and permitted assigns of such parties.
"Additional Insureds" means the Owner Trustee (in its individual and
-------------------
trust capacities) and the Owner Participant and the directors, officers,
members, employees and agents of each of the foregoing.
"Aeronautical Authority" means as of any time of determination, the
----------------------
FAA or other governmental airworthiness authority or such other Person who shall
be vested with the supervision of or having jurisdiction over the Aircraft or
the Airframe and Engines or engines attached thereto and the registration,
operation or other matters relating to aviation with respect thereto under the
laws of the country in which the Airframe is then registered.
"Affiliate" means, with respect to any specified Person, any other
---------
Person directly or indirectly controlling 50% or more of any class of voting
securities of such Person or otherwise controlling, controlled by or under
common control with such Person. For the purposes of this definition, "control"
(including "controlled by" and "under common control with") shall mean the
power, directly or indirectly, to direct or cause the direction of the
management and policies of such Person whether through the ownership of voting
securities or by contract or otherwise.
"After Tax Basis" means on a basis such that any payment to be
---------------
received or deemed to be received or receivable by a Person shall be
supplemented by a payment or further payments to such Person so that the sum of
such payments, after deduction of all Taxes (taking into account any related
credits or deductions) resulting from the actual or constructive receipt or
accrual of such payments, shall be equal to the payment to be received,
utilizing, for this purpose, the highest marginal rate for each such Tax at
which the recipient is paying tax for such year.
"Aircraft" means the Airframe together with the two (2) Engines,
--------
whether or not any of the Engines may at the time of determination be installed
on the Airframe or installed on any other airframe or on any other aircraft.
"Airframe" means (i) the Canadair Regional Jet Model CL-600-2B19
--------
Series 200ER aircraft (excluding the Engines and any other engines which may
from time to time be installed thereon, but including any and all Parts which
may from time to time be incorporated in, installed on or attached to such
aircraft, and including any and all such Parts removed therefrom so long as
title to such removed Parts remains vested in the Lessor under the terms of
Section 7 of the Lease) originally delivered and leased under the Lease,
identified by national registration number and manufacturer's serial number in
the Lease Supplement executed and delivered on the Delivery Date, so long as a
Replacement Airframe shall not have been substituted therefor pursuant to
Section 8 of the Lease, and (ii) a Replacement Airframe, so long as another
Replacement Airframe shall not have been substituted therefor pursuant to
Section 8 of the Lease.
"Applicable Law" means all applicable laws, treaties, judgments,
--------------
decrees, injunctions, writs and orders of any court, governmental agency or
authority and rules, regulations, orders, directives, licenses and permits of
any governmental body, instrumentality, agency or authority.
"Applicable Rate" has the meaning specified in Exhibit B to the Lease.
---------------
"Bankruptcy Code" means Title 11 of the United States Code, as
---------------
amended, and any successor thereto.
"Basic Rent" means the rent payable on Basic Rent Payment Dates
----------
throughout the Basic Term for the Aircraft pursuant to Section 3(b) of the Lease
and rent payable during any Renewal Term pursuant to Section 13(a) of the Lease.
"Basic Rent Payment Date" means each date listed under the heading
-----------------------
"Basic Rent Payment Date" in Exhibit C to the Lease.
"Basic Term" means the period commencing at the beginning of the day
----------
on the Delivery Date and ending at end of the day on the Expiration Date, or
such earlier date on which the Lease shall be terminated as provided therein.
"Beneficial Interest" means the interest of the Owner Participant
-------------------
under the Trust Agreement.
"Bills of Sale" means the FAA ▇▇▇▇ of Sale and the Warranty ▇▇▇▇ of
-------------
Sale.
"Business Day" means any day other than a Saturday or Sunday or other
------------
day on which commercial banks are authorized or required by law to close in New
York City, Charlotte, North Carolina and Wilmington, Delaware.
"Citizen of the United States" means a citizen of the United States as
----------------------------
defined in (S)40102(a)(15) of the Transportation Code, or any analogous part of
any successor or substituted legislation or regulation at the time in effect.
"Code" means the United States Federal Internal Revenue Code of 1986,
----
as amended from time to time, or any similar legislation of the United States
enacted to supersede, amend, or supplement such Code (and any reference to a
provision of the Code shall refer to any successor provision(s), however
designated).
"Commitment" shall have the meaning given such term in Section 2.01(c)
----------
of the Participation Agreement.
"CRAF Program" has the meaning specified in Section 5(b)(vii) of the
-------------
Lease.
"Default" means any event or condition which, with the lapse of time
-------
or the giving of notice, or both, would constitute an Event of Default.
"Deficiency Agreement" has the meaning given to such term in the
--------------------
recitals of the Participation Agreement.
"Deficiency Obligor" has the meaning given to such term in the
------------------
recitals of the Participation Agreement.
"Delivery Date" means the date on which the Aircraft is delivered and
-------------
sold to the Lessor and leased by the Lessor to the Lessee under the Lease, which
date shall be the date of the initial Lease Supplement.
"Dollars", "Dollar" and "$" means dollars in lawful currency of the
------- ------ -
United States.
"DOT" means the United States Department of Transportation or any
---
successor thereto.
"EBO Date" has the meaning given to such term in Exhibit B to the
--------
Lease.
"EBO Amount" has the meaning given to such term in Exhibit B to the
----------
Lease.
"Engine" means (A) each of the two General Electric CF34-3B1 Series
------
200 engines originally delivered and leased under the Lease, identified by
manufacturer's serial number in the Lease Supplement executed and delivered on
the Delivery Date, so long as a Replacement Engine shall not have been
substituted therefor pursuant to Section 7(e) of the Lease, and (B) a
Replacement Engine, so long as another Replacement Engine shall not have been
substituted therefor pursuant to Section 7(e) of the Lease, whether or not such
engine or Replacement Engine, as the case may be, is from time to time installed
on the Airframe or installed on any other aircraft, and including in each case
all Parts incorporated or installed in or attached thereto and any and all Parts
removed therefrom so long as title to such Parts remains
vested in the Lessor under the terms of Section 7 of the Lease. The term
"Engines" means, as of any date of determination, the two engines each of which
-------
is an Engine on that date.
"Engine Manufacturer" means General Electric Company, a New York
-------------------
corporation.
"Engine Manufacturer's Consent" means the Engine Manufacturer's
-----------------------------
Consent and Agreement [N586ML], dated as of December 10, 1999, from the Engine
Manufacturer.
"Engine Warranty Assignment" means the Engine Warranty Assignment
--------------------------
[N586ML], dated as of December 10, 1999, between Lessee and Owner Trustee.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
-----
any regulations and rulings issued thereunder all as amended and in effect from
time to time.
"ERISA Plan" means, individually or collectively, an employee benefit
----------
plan, as defined in Section 3(3) of ERISA, which is subject to Title I of ERISA
or any applicable regulation thereunder or a plan or individual retirement
account which is subject to Section 4975(c) of the Code;
"Event of Default" has the meaning given to such term in Section 16 of
----------------
the Lease.
"Event of Loss" means any of the following events with respect to the
-------------
Aircraft, the Airframe or any Engine:
(i) any theft, hijacking or disappearance of such property for a
period of 60 consecutive days or more or, if earlier for a period that
extends until the end of the Term;
(ii) destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use for any reason whatsoever;
(iii) any event which results in an insurance settlement with respect
to such property on the basis of an actual, constructive or compromised
total loss;
(iv) with respect to the Airframe only, requisition of use of such
property by any foreign government or purported government or any agency or
instrumentality thereof (other than the Government), for a period in excess
of 180 consecutive days or such shorter period ending on the expiration of
the Term;
(v) with respect to the Airframe only, requisition of use of such
property by the Government for a period extending beyond the Term;
(vi) condemnation, confiscation or seizure of, or requisition of
title of such property by any foreign government or purported government or
any agency or instrumentality thereof or by the Government, for a period in
excess of 60 consecutive days or such shorter period ending on the
expiration of the Term;
(vii) as a result of any law, rule, regulation, order or other action
by the Aeronautical Authority, the use of the Aircraft or Airframe in the
normal course of air transportation shall have been prohibited by virtue of
a condition affecting all Canadair Regional Jet Series 200ER aircraft
equipped with engines of the same make and model as the Engines for a
period of 6 consecutive months (or beyond the end of the Term), unless the
Lessee, prior to the expiration of such 6-month period, shall be diligently
carrying forward all necessary and desirable steps to permit normal use of
the Aircraft and shall within such 6-month period have conformed at least
one Canadair Regional Jet Series 200ER aircraft (but not necessarily the
Aircraft) to the requirements of any such law, rule, regulation, order or
action, and shall be diligently pursuing conformance of the Aircraft in a
non-discriminatory manner provided that, notwithstanding the foregoing, if
such normal use of such property subject to the Lease shall be prohibited
for a period more than 12 consecutive months or, if earlier, at the end of
the Term, an Event of Loss shall be deemed to have occurred; and
(viii) with respect to an Engine only, the requisition or taking of
use thereof by any government, and any divestiture of title or ownership
deemed to be an Event of Loss with respect to an Engine under Section
5(b)(iii) or 5(b)(vi) of the Lease.
The date of such Event of Loss shall be (aa) the 61st day following loss of such
property or its use due to theft or disappearance (or the end of the Term if
earlier); (bb) the date of any destruction, damage beyond economic repair or
rendition of such property permanently unfit for normal use; (cc) the date of
any insurance settlement on the basis of an actual, constructive or compromised
total loss; (dd) the 181st day following requisition of use of such property by
any foreign government or purported government or any agency or instrumentality
thereof referred to in clause (iv) above, or the end of the Term if earlier than
such 181/st/ day; (ee) the 61st day following condemnation, confiscation or
seizure of, or requisition of title of such property by any foreign government
or purported government or any agency or instrumentality thereof referred to in
clause (vi) above or the Government or the end of the Term if earlier than such
61st day; (ff) the last day of the Term in the case of requisition of use of
such property by the Government; and (gg) the last day of the applicable period
referred to in clause (vii) above (or if earlier, the end of the Term). An
Event of Loss with respect to the Aircraft shall be deemed to have occurred if
any Event of Loss occurs with respect to the Airframe. An Event of Loss with
respect to an Engine shall not be an Event of Loss in respect of the Airframe.
"Expenses" has the meaning given to such term in Section 7.01(a) of the
--------
Participation Agreement.
"Expiration Date" means the date specified as such in the Lease Supplement
---------------
executed and delivered on the Delivery Date.
"FAA ▇▇▇▇ of Sale" means (A) the ▇▇▇▇ of sale for the Airframe on AC Form
----------------
8050-2, or such other form as may be approved by the Aeronautical Authority,
executed by the Seller in favor of the Owner Trustee and to be dated the
Delivery Date, and (B) a ▇▇▇▇ of sale for a
Replacement Airframe on AC Form 8050-2, or such other form as may be approved by
the Aeronautical Authority, executed by the seller thereof in favor of the Owner
Trustee.
"Fair Market Rental Value" or "Fair Market Sales Value" of the Airframe or
------------------------ -----------------------
any Engine shall mean the value that would be obtained in an arms'-length
transaction between an informed and willing lessee-user or buyer-user (other
than a lessee currently in possession or a used equipment dealer) under no
compulsion to lease or buy, as the case may be, and an informed and willing
lessor or seller, as the case may be, under no compulsion to lease or sell, as
the same shall be specified by agreement between the Lessor and the Lessee or,
if not agreed to by the Lessor and the Lessee within a period of 15 days after
either party requests a determination, then as specified in an appraisal
prepared and delivered in New York City mutually agreed to by two recognized
independent aircraft appraisers, one of which shall be appointed by the Lessor
and the other of which shall be appointed by the Lessee, or, if such appraisers
cannot agree on such appraisal, an appraisal arrived at by a third independent
recognized appraiser chosen by the mutual consent of the two aircraft
appraisers. If either party should fail to appoint an appraiser within 15 days
of receiving notice of the appointment of an appraiser by the other party, then
such appraisal shall be made by the appraiser appointed by the first party. If
the two appraisers cannot agree on such appraisal and fail to appoint a third
independent recognized aircraft appraiser within 15 days after the appointment
of the second appraiser, then either party may apply to the American Arbitration
Association to make such appointment. The appraisal shall be completed within 30
days of the appointment of the last appraiser appointed. In determining Fair
Market Rental Value or Fair Market Sales Value by appraisal or otherwise, it
will be assumed that the Aircraft, Airframe or Engine is in the condition,
location and overhaul status in which it is required to be returned to the
Lessor pursuant to Section 12 of the Lease and that the Lessee has removed all
Parts which it is entitled to remove pursuant to Section 7 of the Lease and that
the Aircraft is not encumbered by the Lease. Except as otherwise expressly
provided in the Lease, all appraisal costs will be shared equally by the Lessor
and the Lessee; provided that if the Lessee elects not to renew the Lease or
--------
purchase the Aircraft following the conclusion of such appraisal, the Lessee
shall pay all appraisal costs. Notwithstanding the foregoing, for purposes of
Section 17 of the Lease, the "Fair Market Rental Value" or "Fair Market Sales
Value" of the Aircraft, the Airframe or any Engine, shall be determined on an
"as is, where is" basis and shall take into account customary brokerage and
other out-of-pocket fees and expenses which typically would be incurred in
connection with a re-lease or sale of the Aircraft, the Airframe or any Engine.
Any such determination pursuant to Section 17 of the Lease shall be made by a
recognized independent aircraft appraiser selected by Lessor and the costs and
expenses associated therewith shall be borne by Lessee, unless Lessor does not
obtain possession of the Aircraft, Airframe and Engines pursuant to Section 17
of the Lease, in which case an appraiser shall not be appointed and Fair Market
Rental Value and Fair Market Sales Value for purposes of Section 17 of the Lease
shall be zero.
"Fair Market Value Renewal Term" has the meaning given to such term in
------------------------------
Section 13(a) of the Lease.
"Federal Aviation Administration" or "FAA" means the United States Federal
-------------------------------- ---
Aviation Administration and any successor agency or agencies thereto.
"Fixed Renewal Term" has the meaning given to such term in Section 13(a) of
------------------
the Lease.
"Government" means the United States of America or an agency or
----------
instrumentality thereof the obligations of which bear the full faith and credit
of the United States of America.
"Indemnitee" means each of Trust Company, in its individual capacity and as
----------
Owner Trustee, the Owner Participant, and each Affiliate, officer, director,
employee, agent, servant, successor and permitted assigns of any of the
foregoing Persons.
"Lease" means the Lease Agreement [N586ML], dated as of December 10, 1999
-----
between the Owner Trustee and the Lessee.
"Lease Supplement" means any Lease Supplement, substantially in the form of
----------------
Exhibit A to the Lease, entered into between the Lessor and the Lessee for the
purpose of leasing the Aircraft under and pursuant to the terms of the Lease,
including any amendment thereto entered into subsequent to the Delivery Date.
"Lessee" means Midway Airlines Corporation, a Delaware corporation, and its
------
successors and permitted assigns.
"Lessee Documents" means the Operative Agreements to which the Lessee is a
----------------
party.
"Lessor" means First Union Trust Company, National Association, a national
------
banking association, not in its individual capacity but solely as Owner Trustee
under the Trust Agreement, and its successors and permitted assigns.
"Lessor's Cost" has the meaning given to such term in Exhibit B of the
-------------
Lease.
"Lessor's Estate" means all estate, right, title and interest of the Owner
---------------
Trustee in and to the Aircraft, and Engines and the Operative Agreements (other
than the Tax Indemnity Agreement) including, without limitation, all amounts of
Rent, insurance proceeds and requisition, indemnity or other payments of any
kind.
"Lessor's Liens" means Liens against, on or with respect to the Aircraft,
--------------
any Engine, the Lessor's Estate or any part thereof, title thereto or any
interest therein arising as a result of (i) claims against or affecting the
Lessor, in its individual capacity or as Owner Trustee, or the Owner
Participant, in each case not related to the Operative Agreements or the
transactions contemplated thereby, (ii) acts or omissions of the Lessor in its
individual capacity or as Owner Trustee, or of the Owner Participant not
permitted under the terms of the Operative Agreements, (iii) Taxes or Expenses
imposed against the Lessor, in its individual capacity or as Owner Trustee,
Owner Participant, Lessor's Estate or the trust created by the Trust Agreement
which are not required to be indemnified against by the Lessee pursuant to
Articles 6 or 7 of the Participation Agreement (other than pursuant to Section
6.01(b)(x) or 7.01(b)(vii)) and which are not required to be indemnified against
by the Lessee pursuant to the Tax Indemnity Agreement, or (iv) claims against
the Lessor, in its individual capacity or as Owner Trustee, or the Owner
Participant arising from the transfer by the Lessor or the Owner Participant of
its interests in the
Aircraft or any Engine other than a transfer of the Aircraft or any other
portion of the Lessor's Estate pursuant to Section 5(b), 7(b), 7(c), 7(d), 7(e),
8, 12(b), 13(b), 14(a) or 17 of the Lease and other than a transfer pursuant to
the exercise of the remedies set forth in Section 17 of the Lease.
"Lien" means any mortgage, pledge, lien, charge, encumbrance, lease,
----
security interest, claim, or other similar interest of any nature whatsoever.
"Manuals and Technical Records" has the meaning set forth in Section 5(d)
-----------------------------
of the Lease.
"Manufacturer" means Bombardier Inc., a Canadian corporation, and its
------------
successors and permitted assigns.
"Material Adverse Change" means, with respect to any Person, any event,
-----------------------
condition or circumstance that materially and adversely affects such Person's
business or consolidated financial condition.
"Minimum Liability Amount" has the meaning given to such term in Exhibit B
------------------------
to the Lease.
"Net Economic Return" means the Owner Participant's nominal after-tax book
-------------------
yield (utilizing the multiple investment sinking fund method of analysis),
computed through the EBO Date and the Expiration Date on the basis of the same
methodology, constraints and assumptions as were utilized by the initial Owner
Participant in determining Basic Rent percentages and Termination Value
percentages as of the Delivery Date; provided, that, if the initial Owner
--------
Participant shall have transferred its interest, Net Economic Return shall be
calculated as if the initial Owner Participant had retained its interest.
"Non-U.S. Person" means any Person other than a U.S. Person.
---------------
"Officer's Certificate" means as to any company a certificate signed by a
---------------------
Responsible Officer of such company.
"Operative Agreements" means the Participation Agreement, the Trust
--------------------
Agreement, the Deficiency Agreement, the Residual Agreement, the Return
Condition Agreement, the FAA ▇▇▇▇ of Sale, the Warranty ▇▇▇▇ of Sale, the
Purchase Agreement, the Purchase Agreement Assignment, the Engine Warranty
Assignment, the PAA Consent, the Engine Manufacturer's Consent, the Lease, each
Lease Supplement, any Owner Participant Guaranty and the Tax Indemnity
Agreement.
"Owner Participant" means ICX Corporation, an Ohio corporation and its
-----------------
successors and permitted transferees and assigns.
"Owner Participant Guarantor" means the provider of an Owner Participant
---------------------------
Guaranty.
"Owner Participant Guaranty" means any guaranty delivered or to be
--------------------------
delivered to support the obligations of the Owner Participant under the
Operative Agreements in connection with the transfer by the Owner Participant of
the Beneficial Interest.
"Owner Trustee" means the Trust Company, not in its individual capacity
-------------
except as otherwise expressly stated, but solely as trustee under the Trust
Agreement, and its successors and permitted assigns.
"PAA Consent" means the Aircraft Manufacturer's Consent and Agreement
-----------
[N586ML], dated as of December 10, 1999, from the Manufacturer.
"Participation Agreement" means the Participation Agreement [N586ML], dated
-----------------------
as of December 10, 1999, among the Lessee, the Owner Trustee not in its
individual capacity except as otherwise expressly provided therein, but solely
as owner trustee and the Owner Participant.
"Parts" means any and all appliances, parts, instruments, components,
-----
appurtenances, accessories, furnishings, seats, and other equipment of whatever
nature (other than complete Engines or engines and temporary replacement parts
as provided in Section 8 of the Lease and cargo containers) which may from time
to time be incorporated or installed in or attached to any Airframe or any
Engine, exclusive of any items leased by the Lessee from third parties and not
required in the navigation of the Aircraft.
"Past Due Rate" means a rate per annum identified in Exhibit B to the
-------------
Lease.
"Permitted Air Carrier" means (a) any Section 1110 Person and (b) any
---------------------
foreign air carrier that is principally based in any foreign country listed on
Exhibit E to the Lease, except those that do not maintain normal diplomatic
relations with the United States, are involved in internal or external war or
military conflict or is a country with which it would constitute a breach of
applicable U.S. law for the Lessor or Owner Participant to engage directly or
indirectly in business, and provided that in each case, such Person is not the
subject of bankruptcy or similar proceedings.
"Permitted Investments" means (a) direct obligations of the Government, (b)
---------------------
obligations fully guaranteed by the United States of America or any agency or
instrumentality thereof, (c) any mutual fund the portfolio of which is limited
to obligations of the type described in clauses (a) and (b), (d) certificates of
deposit issued by, or bankers' acceptances of, or time deposits or a deposit
account with, any bank, trust company, or national banking association
incorporated or doing business under the laws of the United States of America or
one of the states thereof, having a combined capital and surplus of at least
$500,000,000 and having a rating of "A" or better from the ▇▇▇▇▇ Bank Watch
Service, (e) commercial paper issued by companies in the United States which
directly issue their own commercial paper and which are doing business under the
laws of the United States of America or one of the states thereof and in each
case having a rating assigned to such commercial paper by a nationally
recognized rating organization in the United States of America equal to the
highest rating assigned by such organization, or (f) obligations of the type
described in clauses (a), (b), (d), or (e) above, purchased from any bank, trust
company, or banking association referred to in clause (d) above pursuant to
repurchase agreements
obligating such bank, trust company, or banking association to repurchase any
such obligation not later than 30 days after the purchase of any such
obligation. Unless otherwise specified in writing by the Owner Trustee, all such
Permitted Investments shall mature not later than 30 days from the date of
purchase.
"Permitted Lien" has the meaning given to such term in Section 10 of the
--------------
Lease.
"Permitted Sublessee" means (a) any Permitted Air Carrier, (b) any airframe
-------------------
or engine manufacturer, or Affiliate of such a manufacturer, who is domiciled in
the United States of America or a country listed on Exhibit E to the Lease or
(c) the Government.
"Person" means any individual, sole proprietorship, partnership, joint
------
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, limited liability company or government (federal,
state, local, foreign or any agency, instrumentality, division or body thereof)
or other entity of whatever nature.
"Purchase Agreement" means Bombardier Regional Aircraft Division Purchase
------------------
Agreement No. PA-0393 dated September 17, 1997, as amended, between the Lessee
and the Manufacturer (including all exhibits thereto, together with all letter
agreements entered into that by their terms constitute part of such Purchase
Agreement).
"Purchase Agreement Assignment" means the Purchase Agreement Assignment
-----------------------------
[N586ML], dated as of December 10, 1999, between Lessee and Owner Trustee.
"Purchase Price" means an amount equal to Lessor's Cost.
--------------
"Reasonable Basis" means that a realistic possibility of success, within
----------------
the meaning of ABA Formal Opinion No. 85-352, exists for pursuing such contest.
"Recovery Period" means "Tax Attribute Period" as defined in the Tax
---------------
Indemnity Agreement.
"Related Tax Indemnitee" means any Affiliate of any Tax Indemnitee.
----------------------
"Renewal Term" has the meaning given to such term in Section 13(a) of the
------------
Lease.
"Rent" means Basic Rent and Supplemental Rent, collectively.
----
"Replacement Aircraft" means any Aircraft of which a Replacement Airframe
--------------------
is part.
"Replacement Airframe" means a Canadair Regional Jet Series 200ER series
--------------------
aircraft or a comparable or improved model of such aircraft of the Manufacturer
(except Engines or engines from time to time installed thereon) which shall have
become subject to the Lease in accordance with and pursuant to Section 8
thereof.
"Replacement Closing Date" has the meaning given such term in Section 8(d)
------------------------
of the Lease.
"Replacement Engine" means a General Electric CF34-3B1 Series 200 engine
------------------
(or engine of the same manufacturer of a comparable or an improved model and
suitable for installation and use on the Airframe), which has a value, utility
and remaining useful life at least equal to, and which is in as good operating
condition as, the Engine to be replaced thereby (assuming that such Engine being
replaced was in the condition required to be maintained in accordance with the
Lease), and which shall have become subject to the Lease pursuant to Section
7(e) thereof.
"Residual Agreement" has the meaning given to such term in the recitals of
------------------
the Participation Agreement.
"Responsible Officer" means, with respect to the Owner Trustee, any officer
-------------------
in its Corporate Trust Administration, as the case may be, designated by such
Person to perform obligations under the Operative Agreements, and with respect
to any other party, the President or the Chief Financial Officer or any
corporate officer of a party who, in the normal performance of his or her
operational responsibilities, with respect to the subject matter of any
covenant, agreement or obligation of such party pursuant to any Operative
Agreement, would have responsibility for and knowledge of such matter and the
requirements of any Operative Agreement with respect thereto.
"Return Condition Agreement" means the Return Condition Agreement [N586ML],
--------------------------
dated as of December 10, 1999, between the Manufacturer and the Lessee.
"SEC" means the Securities and Exchange Commission of the United States and
---
any successor agencies or authorities.
"Section 1110" means 11 U.S.C. (S) 1110 or any successor or analogous
------------
section of the federal bankruptcy law in effect from time to time.
"Section 1110 Person" means a Citizen of the United States who is an air
-------------------
carrier holding a valid air carrier operating certificate issued pursuant to 49
U.S.C. ch. 447 for aircraft capable of carrying 10 or more individuals.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Seller" has the meaning given to such term in Exhibit B to the Lease.
------
"Specified Default" means (a) an event or condition described in Section
-----------------
16(a), (f), (g) or (h) of the Lease that, after the giving of notice or lapse of
time, or both, would become an Event of Default, or (b) any Event of Default.
"Sublease" means any sublease agreement between the Lessee and a Permitted
--------
Sublessee as permitted by Section 5(b) of the Lease.
"Supplemental Rent" means all amounts, liabilities, indemnities and
-----------------
obligations which the Lessee assumes or agrees to perform or pay under the Lease
or under the Participation Agreement or Tax Indemnity Agreement or any other
Operative Agreement to the Lessor, the Owner Participant, or others, including
payments of Termination Value, EBO Amount, and amounts calculated by reference
to Termination Value, all other amounts payable under Section 3(c) of the Lease,
and all amounts required to be paid by Lessee under the agreements, covenants,
and indemnities contained in the Lease or in the Participation Agreement or the
Tax Indemnity Agreement or any other Operative Agreement, but excluding Basic
Rent.
"Tax" or "Taxes" has the meaning set forth in Section 6.01(a) of the
--- -----
Participation Agreement.
"Tax Indemnitee" means each of Trust Company, individually and as Owner
--------------
Trustee, the Owner Participant and any Affiliate thereof.
"Tax Indemnity Agreement" means the Tax Indemnity Agreement [N586ML], dated
-----------------------
as of December 10, 1999 between the Lessee and the Owner Participant.
"Term" has the meaning given to such term in Section 3(a) of the Lease.
----
"Termination Date" means each date listed in the column entitled
----------------
"Termination Date" in Exhibit D to the Lease or, during a Renewal Term or
otherwise during any period following the last day of the Term, the second day
of each month.
"Termination Value" means (a) as of any Termination Date during the Basic
-----------------
Term, the amount determined as set forth in Exhibit D to the Lease for that
Termination Date, and (b) during any Renewal Term, the amount for the date
involved, determined in accordance with Section 13(a) of the Lease, in either
case adjusted as required by Section 3(d) of the Lease.
"Transaction Costs" means those costs and expenses set forth in Section
-----------------
8.01(a) of the Participation Agreement.
"Transportation Code" means Title 49 of the United States Code, subtitle
-------------------
VII, as amended and in effect on the date of the Lease or as subsequently
amended, or any successor or substituted legislation at the time in effect and
applicable, and the regulations promulgated pursuant thereto.
"Trust Agreement" means the Trust Agreement [N586ML], dated as of December
---------------
10, 1999, between the Owner Participant and the Trust Company.
"Trust Company" means First Union Trust Company, National Association, a
-------------
national banking association, and its successors and permitted assigns.
"Trust Estate" means the Lessor's Estate.
------------
"Uniform Commercial Code" means the Uniform Commercial Code as in effect
-----------------------
from time to time in any relevant jurisdiction.
"United States", "U.S." or "US" means the United States of America.
------------- ---- --
"U.S. Person" means a Person described in (S) 7701(a)(30) of the Code.
-----------
"Warranty ▇▇▇▇ of Sale" means (A) the full warranty ▇▇▇▇ of sale covering
---------------------
the Aircraft (and specifically referring to each Engine) executed by the Seller
in favor of the Owner Trustee and to be dated the Delivery Date, and (B) a full
warranty ▇▇▇▇ of sale covering a Replacement Aircraft (and specifically
referring to each Engine) executed by the seller thereof in favor of the Owner
Trustee.
Exhibit A to
the Participation Agreement
---------------------------
FORM OF GUARANTY AGREEMENT
[DATE]
Re: Midway Airlines Corporation - One Canadian Regional Jet Series 200 ER
Aircraft Bearing Registration No. [N586ML]
---------------------------------------------------------------------
Ladies and Gentlemen:
Reference is made to that certain Assignment and Assumption Agreement dated
as of _______________ (the "Assignment Agreement") by and between
--------------------
_______________ ("Assignor") and _______________ ("Assignee"). Assignee is a
-------- --------
direct or indirect subsidiary of the undersigned, _____________________, a
____________ ("Guarantor"). Except as otherwise noted herein, all capitalized
---------
terms used herein shall have the respective defined meanings set forth in that
certain Participation Agreement [N586ML] (the "Participation Agreement"), dated
-----------------------
as of December 10, 1999 among (a) Midway Airlines Corporation, a Delaware
corporation ("Lessee"); (b) ICX Corporation, an Ohio corporation ("Owner
------ -----
Participant"); (c) First Union Trust Company, National Association, a national
-----------
banking association, not in its individual capacity, except as expressly
provided therein, but solely as Owner Trustee ("Owner Trustee"); (each of the
-------------
Lessee and the Owner Trustee, together with its successors and permitted
assigns, a "Guaranteed Party").
----------------
In connection with the transactions contemplated by the Assignment
Agreement, Guarantor represents and warrants to, and covenants with, each
Guaranteed Party, as follows:
1. Ownership of Assignee. Assignee is a direct or indirect subsidiary of
---------------------
Guarantor.
2. Representations and Warranties. Guarantor represents and warrants that
------------------------------
Guarantor is duly organized and validly existing in good standing under the laws
of _____________. The execution, delivery and performance of this Guaranty
Agreement are within Guarantor's power and authority, have been duly authorized
by all necessary corporate action on the part of the Guarantor and do not
contravene the charter or the by-laws of Guarantor or any indenture, mortgage,
credit agreement, note, long-term lease or other material agreement to which
Guarantor is a party or by which Guarantor is bound, and this Guaranty Agreement
constitutes a legal, valid and binding obligation of Guarantor, enforceable
against Guarantor in accordance with its terms.
3. Submission to Jurisdiction, Etc. Guarantor hereby agrees to be bound, to the
-------------------------------
same extent Owner Participant is bound, by the provisions of Section 14.07 of
the Participation Agreement, which are incorporated herein by reference as if
fully set forth herein.
4. Undertakings.
------------
(a)Guarantor hereby unconditionally and irrevocably guaranties not merely
as surety but as primary obligor, the due and punctual: (i) performance by
Assignee of all of the obligations of the "Owner Participant" under the
Operative Agreements assumed by Assignee under the Assignment Agreement; (ii)
payment of any and all sums which are payable by the Owner Participant pursuant
to any of' the Operative Agreements which payment obligations were assumed by
Assignee under the Assignment Agreement; and (iii) performance of, observance of
and compliance with all other obligations, covenants and undertakings and
representations and warranties of, or made by, Assignee in the Assignment
Agreement or the Owner Participant contained in or arising under the Operative
Agreements and assumed by Assignee under the Assignment Agreement (such payments
and other obligations referred to in this Section 4(a) hereinafter referred to
as the "Obligations"). Guarantor agrees that it will not use the assets of any
-----------
ERISA Plan to fund its payment obligations hereunder.
(b)Guarantor agrees that this Guaranty Agreement is an unconditional and
absolute guaranty of payment and performance (not merely collectability), that
its undertakings hereunder are not contingent upon any Guaranteed Party bringing
any action against Assignee or resorting to any security and hereby expressly
waives any claim that its undertakings hereunder are so contingent.
(c)Guarantor irrevocably waives promptness, diligence, demand, and all
notices whatsoever as to the Obligations guaranteed hereby, and any other
circumstances which might otherwise constitute a defense available to it, or a
discharge of it (other than the defense of payment or performance), and agrees
that it shall not be required to consent to or receive any notice of any
amendment or modification of, or waiver, consent or extension with respect to,
the Participation Agreement or the other Operative Agreements to which Assignee
is a party that may be made or given as provided herein or otherwise.
(d)Guarantor further agrees to pay all expenses (including, without
limitation, all fees and disbursements of counsel) that may be paid or incurred
by any Guaranteed Party in enforcing any rights with respect to, or collecting,
any or all of the Obligations and/or enforcing any rights with respect to, or
collecting against, the Guarantor under this Guaranty Agreement.
(e)Guarantor understands and agrees that its obligations hereunder shall be
construed as continuing, absolute and unconditional without regard to (i) the
validity, regularity or enforceability of any Operative Agreement, any of the
Obligations or any collateral security therefor or guarantee or right of offset
with respect thereto at any time or from time to time held by any Guaranteed
Party, (ii) any defense, set-off or counterclaim (other than a defense of
payment or performance) that may at any time be available to or be asserted by
the Assignee against any Guaranteed Party, or (iii) any other instances
whatsoever (with or without notice to or knowledge of the Assignee or the
Guarantor) that constitutes, or might be construed to constitute, an equitable
or legal discharge of Assignee for the Obligations, or of Guarantor under this
Guaranty Agreement, in bankruptcy or in any other instance.
5. No Discharge. The obligation of Guarantor hereunder will not be
------------
discharged by: (a) any extension or renewal with respect to any obligation of
Assignee, as Owner Participant, under the Operative Agreements; (b) any
modification of, or amendment or supplement to, any such agreement; (c) any
furnishing or acceptance of additional security or any release of any security;
(d) any waiver, consent or other action or inaction or any exercise or non-
exercise of any right,
remedy or power with respect to Assignee, or any change in the structure of
Assignee; (e) any insolvency, bankruptcy, reorganization, arrangement,
composition, liquidation, dissolution or similar proceedings with respect to
Assignee; (f) except as provided in Section 6 any change in ownership of the
shares of capital stock of Guarantor or Assignee; or (g) any other occurrence
whatsoever, except payment in full of all amounts payable by Assignee, as Owner
Participant, under the Operative Agreements and performance in full of all
Obligations of Assignee, as Owner Participant, in accordance with the terms and
conditions of the Operative Agreements.
6. Transfers. The Guarantor may assign, convey or otherwise transfer its
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obligations hereunder to any other Person (hereinafter referred to as the
"Transferee Guarantor"), provided that (a) the Transferee Guarantor enters into
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an agreement substantially in the form of this Guaranty Agreement and (b) the
Transferee Guarantor meets the requirements of Section 5.01(c) of the
Participation Agreement relating to a "guarantor". If pursuant to Section
5.01(c) of the Participation Agreement or the preceding sentence, a new guaranty
shall be delivered or the obligations of the Guarantor shall be transferred, the
Transferee Guarantor shall deliver an opinion or opinions of counsel
substantively similar to the form of opinion attached to the Participation
Agreement as Exhibit B-3 to the effect that the obligations incurred by the
Transferee Guarantor pursuant hereto constitute the legal, valid, binding and
enforceable obligations of such Transferee Guarantor. Upon the satisfaction by
the Guarantor of the conditions set forth in this Section 6, the Guarantor shall
be released and discharged of any and all further obligations under this
Guaranty Agreement.
7. Reinstatement. Guarantor agrees that this Guaranty Agreement shall be
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automatically reinstated with respect to any payment made prior to the
termination of this Guaranty Agreement by or on behalf of Assignee pursuant to
the Participation Agreement or the other Operative Agreements to which Assignee
is a party if and to the extent that such payment is rescinded or must be
otherwise restored, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise.
8. No Subrogation. Notwithstanding any payment or payments made by
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Guarantor hereunder or any set-off or application of funds of Guarantor by any
Guaranteed Party, Guarantor shall not be entitled to be subrogated to any of the
rights of Guaranteed Party against Assignee or any collateral, security or
guarantee or right of set-off held by any Guaranteed Party for the payment of
the Obligations, nor shall Guarantor seek or be entitled to seek any
reimbursement from the Assignee in respect of payments made by Guarantor
hereunder, until all amounts and performance owing to the Guaranteed Parties by
Assignee on account of the Obligations are paid and performed in full.
9. Severability. Any provision of this Guaranty Agreement that is
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prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
10. Miscellaneous. This Guaranty Agreement shall: (a) be binding upon
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Guarantor, its successors and assigns; (b) inure to the benefit of, and be
enforceable by, the Guaranteed Parties but shall not, and is not intended to,
create rights in any other third parties; (c) not be waived, amended or modified
without the written consent of each of the Guaranteed Parties; (d) be governed
by and
construed in accordance with, the internal laws of the State of New York, and
(e) remain in full force and effect until the earlier of (i) payment in full of
all sums payable by Assignee, as Owner Participant, under the Assignment
Agreement and the Operative Agreements and by Guarantor hereunder, and
performance in full of all other Obligations of Assignee, as Owner Participant,
under the Assignment Agreement and the Operative Agreements and (ii) the
compliance by Guarantor with Section 6. All notices to, requests of, demands on
and other communications with Guarantor shall be made in writing and shall be
personally delivered, sent by facsimile or telecommunication transmission (which
in either case provides written confirmation to the sender of its delivery) or
sent by registered or certified mail, postage prepaid, or by prepaid courier
service to Guarantor at:
_______________________________________________, Attention:____________________,
telephone (___) __________] facsimile [(___)__________].
IN WITNESS WHEREOF, the undersigned has caused this instrument to be duly
executed this ______ day of _________________________.
[GUARANTOR]
By: ___________________________________
Name:
Title:
Exhibit B to
the Participation Agreement
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FORM OF OPINION
[Date]
To Each of the Persons Named
on the Attached Schedule I:
---------------------------
Re: Midway Airlines Corporation - One Canadian Regional Jet Series 200 ER
Aircraft Bearing Registration No. [N586ML]
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Ladies and Gentlemen:
As counsel to ____________________, a __________________ ("Assignee"),
I advise you as follows in connection with the Assignment and Assumption
Agreement dated as of ______________ __, ____ (the "Assignment Agreement")
between Assignee and ______________, a ____________ ("Assignor"), and the
transactions contemplated thereby. Capitalized terms used herein and not defined
herein shall have the respective meanings attributed thereto in the Assignment
Agreement. This opinion is being furnished to you pursuant to the request of
Assignee and Section 5.01(c)(v) of the Participation Agreement.
I have, or an attorney under my supervision has, examined the
Assignment Agreement. I have, or an attorney under my supervision has, also
examined the originals, or certified, conformed, photocopied or telecopied
copies of such corporate records, certificates, instruments and other documents
as I have deemed necessary or appropriate to enable me to render the opinions
expressed herein. In all such examinations, I have assumed the genuineness of
signatures on original documents (other than those of Assignee) and the
conformity to such original documents of all copies submitted to me as
certified, conformed, photocopied or telecopied copies, and as to certificates
and telegraphic and telephonic confirmations given by public officials, I have
assumed the same to have been properly given and to be accurate. As to all
matters of fact material to my opinions, I have, when relevant facts were not
independently established, relied upon statements, representations and
warranties contained in the Assignment Agreement and upon the statements and
certificates furnished to me.
In addition, in rendering the opinions expressed herein I have assumed
that the Assignment Agreement has been duly authorized, executed, authenticated
and delivered by Assignor and constitutes the legal, valid and binding
obligation of Assignor, enforceable against Assignor in accordance with its
terms, Assignor has the requisite power, authority and legal right to enter into
and perform its respective obligations under the Assignment Agreement and the
transactions provided for in the Assignment Agreement are not within the
prohibitions of Section 406 of the Employee Retirement Income Security Act of
1974, as amended or Section 4975 of the Internal Revenue Code of 1986, as
amended.
A. Based upon the foregoing and subject to the limitations expressed in
paragraph B below, I am of the opinion that:
1. Assignee is a ____________ duly organized, validly existing and in good
standing under the laws of [ ] and has full corporate power
and authority to execute, deliver and perform the Assignment Agreement.
2. The Assignment Agreement has been duly authorized, executed and
delivered by Assignee.
3. Neither the execution and delivery of the Assignment Agreement by
Assignee, nor the consummation by Assignee of the transactions contemplated
thereby and by the Operative Agreements, conflicts with, results in a breach of
or violates any of the terms, conditions or provisions of A. the [Certificate]
[Articles] of Incorporation or By-laws of the Assignee, B. to the best of my
knowledge, any order, writ, injunction or decree of any court or governmental
authority against the Assignee or by which the Assignee or any of its properties
is bound or (iii) to the best of my knowledge, any indenture, mortgage or
contract or other material agreement or instrument to which Assignee is a party
or by which it or any of its properties is bound or constitutes a default
thereunder.
4. To the best of my knowledge, there are no actions, suits or proceedings
pending or threatened before any court of administrative agency or arbitrator
which would materially adversely affect the ability of Assignee to perform its
obligations under the Assignment Agreement and the Operative Agreements.
5. The Assignment Agreement constitutes a legal, valid and binding
obligation of Assignee enforceable against Assignee in accordance with the terms
thereof, except as the enforceability thereof may be limited by (a) general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law), (b) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of creditors
generally and (c) public policy considerations (in the case of any indemnity
provisions contained therein).
6. Except for filings with the Federal Aviation Administration, neither the
execution and delivery by Assignee of the Assignment Agreement, nor the
consummation by Assignee of any of the transactions contemplated thereby or by
the Operative Agreements, (a) requires the consent or approval of, the giving of
notice to, or the registration or filing with, or the taking of any action with
respect to, any governmental authority or agency of the United States or (b)
violates any law, governmental rule or regulation of the United States or the
State of [ ].
B. I am qualified to practice law in the State of [ ] and I express
no opinion as to any laws other than the laws of the State of [ ],
the General Corporation Law of the State of [ ] and the federal
laws of the United States of America. I express no opinion herein as to (i) any
federal or state securities laws, (ii) any tax laws or (iii) any aviation law or
other laws, statutes, rules or regulations applicable due to the particular
nature of the equipment subject to the Lease. In addition, no opinion is
expressed as to matters governed by Title 49 of the United States Code, as
amended, or by any other law, statute, rule or regulation or the United States
relating to the acquisition, ownership, registration, use, operation,
maintenance, repair, replacement or sale of or the nature of aircraft. Further,
no opinion is expressed as to title to any part of the Trust Estate. In
addition, I express no opinion as to the perfection or priority of any security
interests or as to the right, title or interest in or to the Trust Estate on the
part of any Person.
This opinion is furnished by me for your sole benefit, and no other
person or entity is entitled to rely on this opinion without my express written
consent. This opinion may not be published or reproduced in any manner or
distributed or circulated to any person or entity without my express written
consent. This opinion is limited to the matters stated herein, and no opinion
is implied or may be inferred beyond the matters expressly stated herein.
Very truly yours,
SCHEDULE I
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Midway Airlines Corporation
ICX Corporation
First Union Trust Company, National Association, as Owner Trustee