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| CONFIDENTIAL: SUBJECT TO RESTRICTIONS ON DISSEMINATION |
| SET FORTH IN SECTION 8 OF THIS AGREEMENT |
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PARTICIPATION AGREEMENT [TN]
Dated as of [ID]
Among
CONTINENTAL AIRLINES, INC.,
Lessee,
REFINE, INC.,
Owner Participant,
XXXXX FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
Not in its individual capacity
except as expressly provided herein,
but solely as owner trustee,
Owner Trustee and Lessor
WILMINGTON TRUST COMPANY,
Not in its individual capacity
except as expressly provided herein,
but solely as Mortgagee, Subordination Agent
under the Intercreditor Agreement, and Pass Through
Trustee under the Pass Through Trust Agreement,
Mortgagee and Loan Participant,
and
EMBRAER-EMPRESA BRASILEIRA DE AERONAUTICA S.A.
Airframe Manufacturer
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One Embraer Model EMB-145 XR Aircraft
Bearing Manufacturer's Serial No. [MSN]
and U.S. Registration No. N[REG]
with Two Xxxxxxx Model AE3007A1E Engines
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CONTENTS
SECTION 1. DEFINITIONS AND CONSTRUCTION.....................................2
SECTION 2. ISSUANCE OF EQUIPMENT NOTES; TERMINATION OF
OBLIGATION TO PARTICIPATE........................................2
2.1 Issuance of Equipment Notes......................................2
2.2 Termination of Obligation to Participate.........................2
SECTION 3. TERMINATION OF EXISTING FINANCING AGREEMENTS;
COMMITMENT TO LEASE AIRCRAFT.....................................2
3.1 Termination of Existing Financing Agreements.....................2
3.2 Commitment to Lease..............................................3
SECTION 4. CLOSING; PROCEDURE FOR PAYMENT; POSTPONEMENT OF
SCHEDULED CLOSING DATE...........................................3
4.1 Closing..........................................................3
4.2 Payment of Proceeds..............................................3
4.3 Postponement of Scheduled Closing Date...........................4
SECTION 5. CONDITIONS PRECEDENT.............................................4
5.1 Conditions Precedent to Obligations of Participants..............4
5.2 Conditions Precedent to Obligations of Owner Trustee.............9
5.3 Conditions Precedent to Obligations of Mortgagee................10
5.4 Conditions Precedent to Obligations of Lessee...................10
5.5 Post-Registration Opinion.......................................11
SECTION 6. REPRESENTATIONS AND WARRANTIES..................................11
6.1 Lessee's Representations and Warranties.........................11
6.2 Owner Participant's Representations and Warranties..............14
6.3 Xxxxx Fargo's Representations and Warranties....................16
6.4 WTC's Representations and Warranties............................19
6.5 Airframe Manufacturer's Representations and Warranties..........22
SECTION 7. COVENANTS, UNDERTAKINGS AND AGREEMENTS..........................24
7.1 Covenants of Lessee.............................................24
7.2 Covenants of Owner Participant..................................25
7.3 Covenants of Xxxxx Fargo and Owner Trustee......................28
7.4 Covenants of WTC................................................30
7.5 Covenants of Note Holders.......................................31
7.6 Agreements......................................................32
SECTION 8. CONFIDENTIALITY.................................................38
SECTION 9. INDEMNIFICATION AND EXPENSES....................................38
9.1 General Indemnity...............................................38
9.2 Expenses........................................................44
9.3 General Tax Indemnity...........................................44
9.4 Payments........................................................54
9.5 Interest........................................................54
9.6 Benefit of Indemnities..........................................54
SECTION 10. ASSIGNMENT OR TRANSFER OF INTERESTS.............................54
10.1 Participants, Owner Trustee and Note Holders....................54
10.2 Effect of Transfer..............................................56
SECTION 11. [RESERVED]......................................................57
SECTION 12. SECTION 1110....................................................57
SECTION 13. CHANGE OF CITIZENSHIP...........................................57
13.1 Generally.......................................................57
13.2 Owner Participant...............................................57
13.3 Owner Trustee...................................................58
13.4 Mortgagee.......................................................58
SECTION 14. CONCERNING OWNER TRUSTEE........................................58
SECTION 15. MISCELLANEOUS...................................................58
15.1 Amendments......................................................58
15.2 Severability....................................................59
15.3 Survival........................................................59
15.4 Reproduction of Documents.......................................59
15.5 Counterparts....................................................59
15.6 No Waiver.......................................................59
15.7 Notices.........................................................60
15.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE................60
15.9 Third-Party Beneficiary.........................................61
15.10 Entire Agreement................................................61
15.11 Further Assurances..............................................62
ANNEX, SCHEDULES AND EXHIBITS
ANNEX A - Definitions
SCHEDULE 1 - Accounts; Addresses
SCHEDULE 2 - Commitments
SCHEDULE 3 - Certain Terms
EXHIBIT A - Opinion of special counsel to Lessee
EXHIBIT B - Opinion of corporate counsel to Lessee
EXHIBIT C-1 - Opinion of corporate counsel to Airframe Manufacturer
EXHIBIT C-2 - Opinion of special counsel to Airframe Manufacturer and Owner
Participant
EXHIBIT D - Opinion of special counsel to Owner Trustee
EXHIBIT E - Opinion of special counsel to Mortgagee
EXHIBIT F - Opinion of special counsel to Seller
EXHIBIT G - Opinion of special counsel in Oklahoma City, Oklahoma
PARTICIPATION AGREEMENT [TN]
PARTICIPATION AGREEMENT [TN], dated as of [ID] (this "Agreement"), among
(a) CONTINENTAL AIRLINES, INC., a Delaware corporation ("Lessee"), (b) REFINE,
INC., a Delaware corporation ("Owner Participant"), (c) XXXXX FARGO BANK
NORTHWEST, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as expressly provided herein, but solely as Owner
Trustee (this and all other capitalized terms used but not defined herein shall
have the respective meanings ascribed thereto in Section 1) (in its capacity as
Owner Trustee, "Owner Trustee" or "Lessor", and in its individual capacity,
"Xxxxx Fargo"), (d) WILMINGTON TRUST COMPANY, a Delaware banking corporation,
not in its individual capacity, except as expressly provided herein, but solely
as Mortgagee (in its capacity as Mortgagee, "Mortgagee" and in its individual
capacity, "WTC"), (e) WILMINGTON TRUST COMPANY, not in its individual capacity,
except as expressly provided herein, but solely as Pass Through Trustee under
the Pass Through Trust Agreement ("Pass Through Trustee"), (f) WILMINGTON TRUST
COMPANY, not in its individual capacity, except as expressly provided herein,
but solely as Subordination Agent under the Intercreditor Agreement
("Subordination Agent"), and (g) EMBRAER-EMPRESA BRASILEIRA DE AERONAUTICA S.A.,
a company organized under the laws of Brazil ("Airframe Manufacturer").
RECITALS
A. Express and Airframe Manufacturer have entered into the Purchase
Agreement, pursuant to which, among other things, Airframe Manufacturer has
agreed to manufacture and sell to Express and Express has agreed to purchase
from Airframe Manufacturer certain aircraft, including the Aircraft.
B. Prior to the date hereof, in connection with the interim financing of
the Aircraft, (i) certain of Express' rights under the Purchase Agreement with
respect to the Aircraft were assigned to Lessor and (ii) the Aircraft was
purchased by Lessor, leased to Lessee pursuant to the Existing Lease and
subleased to Express pursuant to the Existing Sublease.
C. In order to effectuate the long-term financing of the Aircraft, the
parties hereto intend that (i) the Owner Trustee issue, on a non-recourse basis,
pursuant to the Trust Indenture the Equipment Notes to the Pass Through Trustee,
(ii) the Existing Lease be terminated and replaced with the Lease, and the
Aircraft continue to be leased to Lessee and subleased to Express and (iii)
Owner Trustee grant a security interest to Mortgagee in the Aircraft and the
Lease for the benefit of the Note Holders.
D. The parties hereto wish to set forth in this Agreement the terms and
conditions upon and subject to which the aforesaid transactions shall be
effected.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS AND CONSTRUCTION
Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference, and shall be construed and
interpreted in the manner described, in Annex A.
SECTION 2. ISSUANCE OF EQUIPMENT NOTES; TERMINATION OF OBLIGATION TO
PARTICIPATE
2.1 ISSUANCE OF EQUIPMENT NOTES
Subject to the terms and conditions of this Agreement, on the Closing
Date, the Pass Through Trustee shall make a non-recourse secured loan to Owner
Trustee to finance, in part, the Owner Trustee's payment of Lessor's Cost in the
amount in Dollars equal to the Pass Through Trustee's PTT Percentage multiplied
by Lessor's Cost, such loan to be evidenced by one or more Equipment Notes,
dated the Closing Date, issued to the Subordination Agent as the registered
holder on behalf of the Pass Through Trustee for the Pass Through Trust by Owner
Trustee in accordance with this Agreement and the Trust Indenture, in an
aggregate principal amount equal to the Commitment of the Pass Through Trustee.
2.2 TERMINATION OF OBLIGATION TO PARTICIPATE
Notwithstanding any other provision of this Agreement, if the Closing does
not occur on or before the Commitment Termination Date, the Commitment of the
Loan Participant and its obligation to participate in the payment of Lessor's
Cost shall expire and be of no further force and effect; PROVIDED, that the
liability of the Loan Participant that has defaulted in the payment of its
Commitment shall not be released.
SECTION 3. TERMINATION OF EXISTING FINANCING AGREEMENTS;
COMMITMENT TO LEASE AIRCRAFT
3.1 TERMINATION OF EXISTING FINANCING AGREEMENTS
(a) The Existing Lease and Existing Sublease for the Aircraft shall be
terminated in order to be replaced by the Lease and the Express Sublease, and
each of Lessor and Lessee shall take such action to evidence such termination as
Owner Trustee or Mortgagee shall reasonably request, including execution and
delivery of a termination agreement for the Existing Lease and Existing Sublease
in form and substance reasonably acceptable to Owner Trustee and satisfactory
for filing with the FAA, and UCC-3 termination statements with respect to the
termination of the Existing Lease and Existing Sublease.
(b) The Existing Participation Agreement shall be terminated, effective as
of the Closing, and the parties thereto shall have no further obligation
thereunder except for Sections 7, 10 and 11 thereof and for any breach of such
Agreement arising prior to the Closing.
(c) Lessor shall refund to Lessee "Basic Rent" (as defined in the Existing
Lease) paid in advance by Lessee attributable to periods on and after the
Closing Date determined by multiplying such Basic Rent by a fraction, the
numerator of which shall be the number of days remaining in the month in which
the Closing Date occurs (from and including the Closing Date) and the
denominator of which shall be the total number of days in such month.
(d) Airframe Manufacturer shall pay and discharge all applicable sales,
use or similar Taxes, duties or fees assessed or levied by any federal, state,
provincial or local taxing authority as a result of the replacement of the
existing financing agreements with the Operative Agreements and the Express
Sublease or issuance of the Equipment Notes contemplated by this Agreement.
Owner Trustee and Lessee will cooperate in order to minimize Taxes applicable to
the termination of the existing financing agreements or issuance of the
Equipment Notes contemplated by this Agreement.
3.2 COMMITMENT TO LEASE
Subject to the terms and conditions of this Agreement, concurrently with
the issuance of the Equipment Notes, Owner Trustee shall continue the lease of
the Aircraft to Lessee, and Lessee shall continue the lease of the Aircraft from
Owner Trustee, under the Lease.
SECTION 4. CLOSING; PROCEDURE FOR PAYMENT; POSTPONEMENT OF
SCHEDULED CLOSING DATE
4.1 CLOSING
The Closing shall occur at the offices of Xxxxxx Xxxxxxx & Xxxx LLP, Xxx
Xxxxxxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other place as the parties
shall agree, at the time specified pursuant to notice given in accordance with
Section 1 of the Note Purchase Agreement.
4.2 PAYMENT OF PROCEEDS
(a) The Loan Participant agrees, subject to the terms and conditions of
this Agreement, to make the Dollar amount of its Commitment available, by wire
transfer of immediately available funds to the account of WTC, ABA No.
000000000, Account No. 64021-0, reference Continental Lease [TN], at or before
12:00 Noon, New York City time, on the Scheduled Closing Date. All such funds
made available by the Loan Participant to WTC shall, until payment thereof to
Owner Trustee as provided in Section 4.2(c) or return thereof to the Loan
Participant as provided in Section 4.3, be held by WTC in trust for the benefit
of the Loan Participant, as the sole and exclusive property of the Loan
Participant and not as part of the Trust Estate or the Trust Indenture Estate.
(b) Subject to the satisfaction or waiver by the applicable party of the
conditions precedent set forth in Section 5, and simultaneously with the receipt
by the parties hereto of all amounts to be paid to them on the Closing Date
pursuant to this Section 4.2, Owner Trustee shall:
(i) execute the Trust Indenture and the initial Trust Indenture
Supplement and issue the Equipment Notes to the Subordination Agent in
accordance with Section 2.1(b);
(ii) lease the Aircraft to Lessee pursuant to the Lease; and
(iii) take such other action as may be required to be taken by the
Owner Trustee on the Closing Date by the terms of any Operative Agreement.
(c) Subject to the satisfaction or waiver by the applicable party of the
conditions precedent set forth in Section 5, WTC shall pay to the Owner Trustee
the amounts received from the Loan Participants pursuant to Section 4.2(a).
4.3 POSTPONEMENT OF SCHEDULED CLOSING DATE
If for any reason whatsoever the Closing is not consummated on the
Scheduled Closing Date, Airframe Manufacturer may by telephonic notice, given by
5:00 p.m., New York City time (such telephonic notice to be promptly confirmed
in writing by personal delivery or facsimile), on the Scheduled Closing Date to
Lessee, the Loan Participant, Owner Trustee and Mortgagee, designate a Delayed
Closing Date, in which case any funds made available by the Loan Participant
shall be returned on such Scheduled Closing Date and the Loan Participant shall
comply with its obligations under Section 2.02(b) of the Trust Supplement.
SECTION 5. CONDITIONS PRECEDENT
5.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PARTICIPANTS
The obligation of the Loan Participant to make the Dollar amount of its
Commitment available for payment as directed by the Owner Trustee on the Closing
Date and of each Participant to take the other actions required by this
Agreement to be taken by it at the Closing is subject to satisfaction or waiver
by each such Participant, at or prior to the Closing, of the conditions
precedent set forth below in this Section 5.1; PROVIDED, that it shall not be a
condition precedent to the obligation of any Participant that any document be
produced or action taken that is to be produced or taken by such Participant or
by a Person within such Participant's control; PROVIDED, FURTHER, that Sections
5.1.2(iii), (xv) and (xxv) (G) shall not be conditions precedent to the
obligation of Loan Participant, and Section 5.1.5 shall not be a condition
precedent to the obligation of Owner Participant.
5.1.1 NOTICE
Such Participant shall have received the notice described in Section 4.1
or, in the case of a Delayed Closing Date, 4.3, when and as required thereby, or
shall have waived such notice.
5.1.2 DELIVERY OF DOCUMENTS
Such Participant shall, except as noted below, have received executed
counterparts of the following agreements, instruments, certificates or
documents, and each of such counterparts (a) shall have been duly authorized,
executed and delivered by the respective party or parties thereto, (b) shall be
reasonably satisfactory in form and substance to such Participant and (c) shall
be in full force and effect:
(i) the Lease; PROVIDED, that only Mortgagee shall receive the sole
executed chattel paper original thereof;
(ii) Lease Supplement No. 1; PROVIDED, that only Mortgagee shall
receive the sole executed chattel paper original thereof;
(iii) the Tax Indemnity Agreement; PROVIDED, that only Owner
Participant and Lessee shall receive copies of the Tax Indemnity
Agreement;
(iv) the Trust Agreement;
(v) the Trust Indenture;
(vi) the initial Trust Indenture Supplement;
(vii) the Purchase Agreement Assignment;
(viii) the Consent and Agreement;
(ix) the Equipment Notes dated the Closing Date; PROVIDED, that only
the Subordination Agent shall receive the authenticated Equipment Notes;
(x) an excerpted copy of the Purchase Agreement to the extent
relating to Airframe Manufacturer's warranties or related obligations or
any right in the Purchase Agreement assigned to Owner Trustee pursuant to
the Purchase Agreement Assignment; PROVIDED, that only Owner Trustee and
Mortgagee shall receive copies of such agreements (copies of which may be
inspected by Participants and their respective special counsel on the
Closing Date, but after the Closing Date such copies shall be retained by
Owner Trustee and Mortgagee and may be inspected and reviewed by Owner
Participant or Loan Participant or their respective counsel if and only if
there shall have occurred and be continuing a Lease Default or Lease Event
of Default);
(xi) the OP Guaranty;
(xii) the Express Sublease;
(xiii) termination agreements with respect to the Existing Lease and
the Existing Sublease and, in the case of Owner Participant and Lessee,
the Existing Participation Agreement and the "Tax Indemnity Agreement" as
defined in the Existing Lease;
(xiv) the broker's report and insurance certificates required by
Section 11 of the Lease;
(xv) the Satisfaction and Discharge Agreement, dated as of the date
of the Participation Agreement, among the Airframe Manufacturer, Seller
(if other than the Airframe Manufacturer), Owner Participant and Owner
Trustee;
(xvi) (A) a copy of the Certificate of Incorporation and By-Laws of
Lessee and resolutions of the board of directors of Lessee and/or the
executive committee thereof, in each case certified as of the Closing
Date, by the Secretary or an Assistant Secretary of Lessee, duly
authorizing the execution, delivery and performance by Lessee of the
Lessee Operative Agreements required to be executed and delivered by
Lessee on or prior to the Closing Date in accordance with the provisions
hereof and thereof; (B) an incumbency certificate of Lessee, Airframe
Manufacturer, Owner Participant, Xxxxx Fargo and WTC as to the person or
persons authorized to execute and deliver the relevant Operative
Agreements on behalf of such party; and (C) a copy of the Certificate of
Incorporation or Articles of Incorporation and By-Laws and general
authorizing resolutions of the boards of directors (or executive
committees) or other satisfactory evidence of authorization of Airframe
Manufacturer, Owner Participant, Xxxxx Fargo and WTC, certified as of the
Closing Date by the Secretary or an Assistant or Attesting Secretary of
Airframe Manufacturer, Owner Participant, Xxxxx Fargo and WTC,
respectively, which authorize the execution, delivery and performance by
Airframe Manufacturer, Owner Participant, Xxxxx Fargo and WTC,
respectively, of each of the Operative Agreements to which it is a party,
together with such other documents and evidence with respect to it as
Lessee or any Participant may reasonably request in order to establish the
consummation of the transactions contemplated by this Agreement and the
taking of all corporate proceedings in connection therewith;
(xvii) an Officer's Certificate of Lessee, dated as of the Closing
Date, stating that its representations and warranties set forth in this
Agreement are true and correct as of the Closing Date (or, to the extent
that any such representation and warranty expressly relates to an earlier
date, true and correct as of such earlier date);
(xviii) an Officer's Certificate of Xxxxx Fargo, dated as of the
Closing Date, stating that its representations and warranties, in its
individual capacity and as Owner Trustee, set forth in this Agreement are
true and correct as of the Closing Date (or, to the extent that any such
representation and warranty expressly relates to an earlier date, true and
correct as of such earlier date);
(xix) an Officer's Certificate of Owner Participant, dated as of the
Closing Date, stating that its representations and warranties set forth in
this Agreement are true and correct as of the Closing Date (or, to the
extent that any such representation and warranty expressly relates to an
earlier date, true and correct as of such earlier date);
(xx) an Officer's Certificate of WTC, dated as of the Closing Date,
stating that its representations and warranties in its individual capacity
or as Mortgagee, Pass Through Trustee or Subordination Agent, as the case
may be, set forth in this Agreement are true and correct as of the Closing
Date (or, to the extent that any such representation and warranty
expressly relates to an earlier date, true and correct as of such earlier
date);
(xxi) [intentionally omitted];
(xxii) an Officer's Certificate of Airframe Manufacturer, dated as
of the Closing Date, stating that its representations and warranties set
forth in this Agreement are true and correct as of the Closing Date (or,
to the extent that any such representation and warranty expressly relates
to an earlier date, true and correct as of such earlier date);
(xxiii) a copy of the application for registration of the Aircraft
with the FAA in the name of Owner Trustee;
(xxiv) the Financing Statements;
(xxv) the following opinions of counsel, in each case dated the
Closing Date:
(A) an opinion of Xxxxxx Xxxxxxx & Xxxx LLP, special counsel
to Lessee, substantially in the form of Exhibit A;
(B) an opinion of Lessee's Legal Department, substantially in
the form of Exhibit B;
(C) an opinion of (x) corporate counsel to Airframe
Manufacturer, substantially in the form of Exhibit C-1, and (y)
Xxxxxx Xxxxxx Xxxxx Xxxxxxxx, special counsel to Airframe
Manufacturer and the Owner Participant, substantially in the form
of Exhibit C-2;
(D) an opinion of Ray, Xxxxxxx & Xxxxxxx, special counsel to
Owner Trustee, substantially in the form of Exhibit D;
(E) an opinion of Xxxxxxxx, Xxxxxx & Finger, special counsel
to Mortgagee and Loan Participant, substantially in the form of
Exhibit E;
(F) if Seller is not Airframe Manufacturer, an opinion of
Walkers, special counsel to Seller, substantially in the form of
Exhibit F;
(G) an opinion of Xxxxx Xxxxx & Xxxxxx, special counsel in
Oklahoma City, Oklahoma, substantially in the form of Exhibit G;
(xxvi) a copy of a current, valid Standard Certificate of
Airworthiness for the Aircraft duly issued by the FAA;
(xxvii) the Participants and their respective counsel shall have
received copies of such documents and papers as such Participants may
reasonably request, other than (A) in the case of Loan Participant, copies
of the Purchase Agreement, provided that special counsel for Loan
Participant may inspect the Purchase Agreement in connection with the
transactions contemplated hereby or as a basis for such counsel's closing
opinion, and (B) in the case of parties other than Owner Participant and
its special counsel, the Tax Indemnity Agreement.
5.1.3 OTHER COMMITMENTS
The Loan Participant shall have made available the Dollar amount of its
Commitment in accordance with Section 4.
5.1.4 VIOLATION OF LAW
No change shall have occurred after the date of this Agreement in any
applicable Law that makes it a violation of Law for (a) Lessee, any Participant,
Subordination Agent, Owner Trustee or Mortgagee to execute, deliver and perform
the Operative Agreements to which any of them is a party or (b) the Loan
Participant to make the Dollar amount of its Commitment available or to acquire
an Equipment Note or to realize the benefits of the security afforded by the
Trust Indenture.
5.1.5 PERFECTED SECURITY INTEREST
On the Closing Date, after giving effect to the filing of the FAA Filed
Documents and the Financing Statements, Mortgagee shall have received a duly
perfected first priority security interest in all of Owner Trustee's right,
title and interest in the Aircraft and the Lease, subject only to Permitted
Liens.
5.1.6 REPRESENTATIONS, WARRANTIES AND COVENANTS
The representations and warranties of each other party to this Agreement
made, in each case, in this Agreement and in any other Operative Agreement to
which it is a party, shall be true and accurate in all material respects as of
the Closing Date (unless any such representation and warranty shall have been
made with reference to a specified date, in which case such representation and
warranty shall be true and accurate as of such specified date) and each other
party to this Agreement shall have performed and observed, in all material
respects, all of its covenants, obligations and agreements in this Agreement and
in any other Operative Agreement to which it is a party to be observed or
performed by it as of the Closing Date.
5.1.7 NO EVENT OF DEFAULT
On the Closing Date, no event shall have occurred and be continuing, or
would result from the mortgage or lease of the Aircraft, which constitutes a
Lease Default or Lease Event of Default, or an Indenture Default or Indenture
Event of Default.
5.1.8 NO EVENT OF LOSS
On the Closing Date, no Event of Loss with respect to the Airframe or any
Engine shall have occurred and no circumstance, condition, act or event that,
with the giving of notice or lapse of time or both, would give rise to or
constitute an Event of Loss with respect to the Airframe or any Engine shall
have occurred.
5.1.9 TITLE
Owner Trustee shall have good title to the Aircraft, free and clear of
Liens, except (a) the rights of Lessee under the Lease and Lease Supplement No.
1, (b) the Lien created by the Trust Indenture and the initial Trust Indenture
Supplement and (c) other Permitted Liens.
5.1.10 CERTIFICATION
The Aircraft shall have been duly certificated by the FAA as to type and
airworthiness.
5.1.11 SECTION 1110
Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee of
Owner Trustee under the Trust Indenture), shall be entitled to the benefits of
Section 1110 (as currently in effect) with respect to the right to take
possession of the Airframe and Engines and to enforce any of its other rights or
remedies as provided in the Lease in the event of a case under Chapter 11 of the
Bankruptcy Code in which Lessee is a debtor.
5.1.12 FILING
On the Closing Date (a) the FAA Filed Documents shall have been duly filed
for recordation (or shall be in the process of being so duly filed for
recordation) with the FAA in accordance with the Act and (b) each Financing
Statement shall have been duly filed (or shall be in the process of being so
duly filed) in the appropriate jurisdiction.
5.1.13 NO PROCEEDINGS
No action or proceeding shall have been instituted, nor shall any action
be threatened in writing, before any Government Entity, nor shall any order,
judgment or decree have been issued or proposed to be issued by any Government
Entity, to set aside, restrain, enjoin or prevent the completion and
consummation of this Agreement or any other Operative Agreement or the
transactions contemplated hereby or thereby.
5.1.14 GOVERNMENTAL ACTION
All appropriate action required to have been taken prior to the Closing
Date by the FAA, or any governmental or political agency, subdivision or
instrumentality of the United States, in connection with the transactions
contemplated by this Agreement shall have been taken, and all orders, permits,
waivers, authorizations, exemptions and approvals of such entities required to
be in effect on the Closing Date in connection with the transactions
contemplated by this Agreement shall have been issued.
5.2 CONDITIONS PRECEDENT TO OBLIGATIONS OF OWNER TRUSTEE
The obligation of Owner Trustee to execute and deliver the Equipment Notes
on the Closing Date is subject to satisfaction or waiver by Owner Trustee, at or
prior to the Closing, of the conditions precedent set forth below in this
Section 5.2.
5.2.1 NOTICE
Owner Trustee shall have received the notice described in Section 4.1 or,
in the case of a Delayed Closing Date, 4.3, when and as required thereby, or
shall have waived such notice.
5.2.2 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Owner Trustee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Owner Trustee.
5.2.3 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 5.1.4, 5.1.6, 5.1.7 and
5.1.11 shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Owner Trustee.
5.3 CONDITIONS PRECEDENT TO OBLIGATIONS OF MORTGAGEE
The obligation of Mortgagee to authenticate the Equipment Notes on the
Closing Date is subject to the satisfaction or waiver by Mortgagee, at or prior
to the Closing, of the conditions precedent set forth below in this Section 5.3.
5.3.1 NOTICE
Mortgagee shall have received the notice described in Section 4.1 or, in
the case of a Delayed Closing Date, 4.3, when and as required thereby, or shall
have waived such notice.
5.3.2 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Mortgagee,
except as specifically provided therein, unless the failure to receive any such
agreement, instrument, certificate or document is the result of any action or
inaction by Mortgagee.
5.3.3 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 5.1.4, 5.1.6, 5.1.7 and
5.1.11 shall have been satisfied unless the failure of any such condition to be
satisfied is the result of any action or inaction by Mortgagee.
5.4 CONDITIONS PRECEDENT TO OBLIGATIONS OF LESSEE
The obligation of Lessee to lease the Aircraft on the Closing Date and to
take the other actions required by this Agreement to be taken by it at the
Closing is subject to the satisfaction or waiver by Lessee, at or prior to the
Closing, of the conditions precedent set forth below in this Section 5.4.
5.4.1 DOCUMENTS
Executed originals of the agreements, instruments, certificates or
documents described in Section 5.1.2 shall have been received by Lessee, except
as specifically provided therein, and shall be satisfactory to Lessee, unless
the failure to receive any such agreement, instrument, certificate or document
is the result of any action or inaction by Lessee.
5.4.2 SALES TAX
Lessee shall be satisfied that no sales, use, value added, goods and
services or like tax, and no stamp tax duty, is payable with respect to the
transactions to occur at the Closing pursuant to this Agreement to the extent
that Lessee has liability therefor under Section 9.3.
5.4.3 OTHER CONDITIONS PRECEDENT
Each of the conditions set forth in Sections 5.1.3, 5.1.4, 5.1.6, 5.1.7
(as to Indenture Defaults or Indenture Events of Default not constituting Lease
Defaults or Lease Events of Default, respectively), 5.1.8, 5.1.9, 5.1.10,
5.1.11, 5.1.12, 5.1.13 and 5.1.14 shall have been satisfied or waived by Lessee,
unless the failure of any such condition to be satisfied is the result of any
action or inaction by Lessee.
5.5 POST-REGISTRATION OPINION
Promptly upon the registration of the Aircraft and the recordation of the
FAA Filed Documents pursuant to the Act, Airframe Manufacturer will cause Xxxxx
Xxxxx & Xxxxxx, special counsel in Oklahoma City, Oklahoma, to deliver to
Lessee, each Participant, Owner Trustee and Mortgagee a favorable opinion or
opinions addressed to each of them with respect to such registration and
recordation.
SECTION 6. REPRESENTATIONS AND WARRANTIES
6.1 LESSEE'S REPRESENTATIONS AND WARRANTIES
Lessee represents and warrants to each Participant, Airframe Manufacturer,
Subordination Agent, Owner Trustee and Mortgagee that:
6.1.1 ORGANIZATION; QUALIFICATION
Lessee is a corporation duly incorporated, validly existing and in good
standing under the Laws of the State of Delaware and has the corporate power and
authority to conduct the business in which it is currently engaged and to own or
hold under lease its properties and to enter into and perform its obligations
under the Lessee Operative Agreements. Lessee is duly qualified to do business
as a foreign corporation in good standing in each jurisdiction in which the
nature and extent of the business conducted by it, or the ownership of its
properties, requires such qualification, except where the failure to be so
qualified would not give rise to a Material Adverse Change to Lessee.
6.1.2 CORPORATE AUTHORIZATION
Lessee has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by its Certificate of Incorporation or By-Laws) to
authorize the execution and delivery of each of the Lessee Operative Agreements,
and the performance of its obligations thereunder.
6.1.3 NO VIOLATION
The execution and delivery by Lessee of the Lessee Operative Agreements,
the performance by Lessee of its obligations thereunder and the consummation by
Lessee on the Closing Date of the transactions contemplated thereby, do not and
will not (a) violate any provision of the Certificate of Incorporation or
By-Laws of Lessee, (b) violate any Law applicable to or binding on Lessee or (c)
violate or constitute any default under (other than any violation or default
that would not result in a Material Adverse Change to Lessee), or result in the
creation of any Lien (other than as permitted under the Lease) upon the Aircraft
under, any indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, lease, loan or other material agreement, instrument or document
to which Lessee is a party or by which Lessee or any of its properties is bound.
6.1.4 APPROVALS
The execution and delivery by Lessee of the Lessee Operative Agreements,
the performance by Lessee of its obligations thereunder and the consummation by
Lessee on the Closing Date of the transactions contemplated thereby do not and
will not require the consent or approval of, or the giving of notice to, or the
registration with, or the recording or filing of any documents with, or the
taking of any other action in respect of, (a) any trustee or other holder of any
Debt of Lessee and (b) any Government Entity, other than the filing of (x) the
FAA Filed Documents and the Financing Statements (and continuation statements
periodically) and (y) filings, recordings, notices or other ministerial actions
pursuant to any routine recording, contractual or regulatory requirements
applicable to it.
6.1.5 VALID AND BINDING AGREEMENTS
The Lessee Operative Agreements have been duly authorized, executed and
delivered by Lessee and, assuming the due authorization, execution and delivery
thereof by the other party or parties thereto, constitute the legal, valid and
binding obligations of Lessee and are enforceable against Lessee in accordance
with the respective terms thereof, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, receivership, moratorium and other
similar Laws affecting the rights of creditors generally and general principles
of equity, whether considered in a proceeding at law or in equity.
6.1.6 LITIGATION
Except as set forth in Lessee's most recent Annual Report on Form 10-K, as
amended, filed by Lessee with the SEC on or prior to the Closing Date, or in any
Quarterly Report on Form 10-Q or Current Report on Form 8-K (or any amendment
thereof) filed by Lessee with the SEC subsequent to such Form 10-K and on or
prior to the Closing Date, no action, claim or proceeding is now pending or, to
the Actual Knowledge of Lessee, threatened, against Lessee, before any court,
governmental body, arbitration board, tribunal or administrative agency, which
is reasonably likely to be determined adversely to Lessee and if determined
adversely to Lessee would result in a Material Adverse Change.
6.1.7 FINANCIAL CONDITION
The audited consolidated balance sheet of Lessee with respect to Lessee's
most recent fiscal year included in Lessee's most recent Annual Report on Form
10-K, as amended, filed by Lessee with the SEC, and the related consolidated
statements of operations and cash flows for the period then ended have been
prepared in accordance with GAAP and fairly present in all material respects the
financial condition of Lessee and its consolidated subsidiaries as of such date
and the results of its operations and cash flows for such period, and since the
date of such balance sheet, there has been no material adverse change in such
financial condition or operations of Lessee, except for matters disclosed in (a)
the financial statements referred to above or (b) any subsequent Quarterly
Report on Form 10-Q or Current Report on Form 8-K (or any amendment thereof)
filed by Lessee with the SEC on or prior to the date hereof.
6.1.8 REGISTRATION AND RECORDATION
Except for (a) the registration of the Aircraft with the FAA pursuant to
the Act in the name of Owner Trustee, (b) the filing for recordation (and
recordation) of the FAA Filed Documents, (c) the filing of the Financing
Statements (and continuation statements relating thereto at periodic intervals),
(d) the taking of possession and retention by Mortgagee of the original
counterparts of the Lease and Lease Supplement No. 1 and (e) the affixation of
the nameplates referred to in Section 7.1.3 of the Lease, no further action,
including any filing or recording of any document (including any financing
statement in respect thereof under Article 9 of the UCC) is necessary in order
to establish and perfect the right, title or interest of Owner Trustee, and the
Mortgagee's security interest, in the Aircraft and the Lease, as against Lessee
and any other Person, in each case, in any applicable jurisdiction in the United
States.
6.1.9 LOCATION
Lessee's location (as such term is used in Section 9-307 of the UCC) is
Delaware.
6.1.10 NO DEFAULT
No event which, if the Aircraft were subject to the Lease, constitutes a
Lease Event of Default has occurred and is continuing.
6.1.11 NO EVENT OF LOSS
No Event of Loss has occurred with respect to the Airframe or any Engine,
and, to the Actual Knowledge of Lessee, no circumstance, condition, act or event
has occurred that, with the giving of notice or lapse of time or both gives rise
to or constitutes an Event of Loss with respect to the Airframe or any Engine.
6.1.12 COMPLIANCE WITH LAWS
(a) Lessee is a Citizen of the United States and a U.S. Air Carrier.
(b) Lessee holds all licenses, permits and franchises from the appropriate
Government Entities necessary to authorize Lessee to lawfully engage in air
transportation and to carry on scheduled commercial passenger service as
currently conducted, except where the failure to so hold any such license,
permit or franchise would not give rise to a Material Adverse Change to Lessee.
(c) Lessee is not an "investment company" or a company controlled by an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
6.1.13 SECURITIES LAWS
Neither Lessee nor any person authorized to act on its behalf has directly
or indirectly offered any beneficial interest or Security relating to the
ownership of the Aircraft or the Lease or any interest in the Trust Estate and
Trust Agreement, or any of the Equipment Notes or any other interest in or
Security under the Trust Indenture, for sale to, or solicited any offer to
acquire any such interest or Security from, or has sold any such interest or
Security to, any person in violation of the Securities Act.
6.1.14 BROKER'S FEES
No Person acting on behalf of Lessee is or will be entitled to any
broker's fee, commission or finder's fee in connection with the Transactions.
6.1.15 SECTION 1110
Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee under
the Trust Indenture), is entitled to the benefits of Section 1110 (as currently
in effect) with respect to the right to take possession of the Airframe and
Engines and to enforce any of its other rights or remedies as provided in the
Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which
Lessee is a debtor.
6.2 OWNER PARTICIPANT'S REPRESENTATIONS AND WARRANTIES
Owner Participant represents and warrants to Lessee, Loan Participant,
Airframe Manufacturer, Subordination Agent, Owner Trustee and Mortgagee that:
6.2.1 ORGANIZATION, ETC.
Owner Participant is a corporation duly incorporated, validly existing and
in good standing under the Laws of the OP Jurisdiction and has the corporate
power and authority to conduct the business in which it is currently engaged and
to own or hold under lease its properties and to enter into, and perform its
obligations under the Owner Participant Agreements.
6.2.2 CORPORATE AUTHORIZATION
Owner Participant has taken, or caused to be taken, all necessary
corporate action (including, without limitation, the obtaining of any consent or
approval of stockholders required by its Certificate of Incorporation or
By-Laws) to authorize the execution and delivery of each of the Owner
Participant Agreements, and the performance of its obligations thereunder.
6.2.3 NO VIOLATION
The execution and delivery by Owner Participant of the Owner Participant
Agreements, the performance by Owner Participant of its obligations thereunder
and the consummation by Owner Participant on the Closing Date of the
transactions contemplated thereby, do not and will not (a) violate any provision
of the Certificate of Incorporation or By-Laws of Owner Participant, (b) violate
any Law applicable to or binding on Owner Participant or (c) violate or
constitute any default under (other than any violation or default that would not
result in a Material Adverse Change to Owner Participant), or result in the
creation of any Lien (other than as provided for or otherwise permitted in the
Operative Agreements) upon the Trust Estate under, any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract, lease, loan or
other material agreement, instrument or document to which Owner Participant is a
party or by which Owner Participant or any of its properties is bound.
6.2.4 APPROVALS
The execution and delivery by Owner Participant of the Owner Participant
Agreements, the performance by Owner Participant of its obligations thereunder
and the consummation by Owner Participant on the Closing Date of the
transactions contemplated thereby do not and will not require the consent or
approval of, or the giving of notice to, or the registration with, or the
recording or filing of any documents with, or the taking of any other action in
respect of, (a) any trustee or other holder of any Debt of Owner Participant and
(b) any Government Entity, other than the filing of the FAA Filed Documents and
the Financing Statements.
6.2.5 VALID AND BINDING AGREEMENTS
The Owner Participant Agreements have been duly authorized, executed and
delivered by Owner Participant and, assuming the due authorization, execution
and delivery by the other party or parties thereto, constitute the legal, valid
and binding obligations of Owner Participant and are enforceable against Owner
Participant in accordance with the respective terms thereof, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar Laws affecting the rights of
creditors generally and general principles of equity, whether considered in a
proceeding at law or in equity.
6.2.6 CITIZENSHIP
On the Closing Date, Owner Participant is not a Citizen of the United
States, but holds an interest in the Trust Estate such that the Aircraft can be
registered in the United States (without giving consideration to Section 47.9 of
the FAA Regulations or any other provision that could restrict Lessee's use or
operation of the Aircraft).
6.2.7 NO LIENS
On the Closing Date, there are no Lessor Liens attributable to Owner
Participant in respect of all or any part of the Trust Estate.
6.2.8 INVESTMENT BY OWNER PARTICIPANT
Owner Participant's beneficial interest in the Trust Estate has been
acquired by it for its own account, for investment and not with a view to any
resale or distribution thereof, except that, subject to the restrictions on
transfer set forth in Section 10, the disposition by Owner Participant of its
beneficial interest in the Trust Estate shall at all times be within its
control.
6.2.9 ERISA
No part of the funds used by Owner Participant to acquire or hold its
interests in the Trust Estate directly or indirectly constitutes assets of a
Plan.
6.2.10 LITIGATION
There are no pending or, to the Actual Knowledge of Owner Participant,
threatened actions or proceedings against Owner Participant before any court,
governmental body, arbitration board, administrative agency or tribunal which,
if determined adversely to Owner Participant, would materially adversely affect
the ability of Owner Participant to perform its obligations under, or affect the
validity or enforceability of, the Owner Participant Agreements.
6.2.11 SECURITIES LAWS
Neither Owner Participant nor any person Owner Participant has authorized
to act on its behalf has directly or indirectly offered any beneficial interest
in or Security relating to the ownership of the Aircraft or any interest in the
Trust Estate, or any of the Equipment Notes or any other interest in or Security
under the Trust Indenture for sale to, or solicited any offer to acquire any of
the same from, any Person in violation of the registration provisions of the
Securities Act or applicable state securities Laws.
6.2.12 BROKER'S FEES
No Person acting on behalf of Owner Participant is or will be entitled to
any broker's fee, commission or finder's fee in connection with the
Transactions.
6.3 XXXXX FARGO'S REPRESENTATIONS AND WARRANTIES
Xxxxx Fargo represents and warrants (in the case of Section 6.3.13, solely
in its capacity as Owner Trustee) to Lessee, Owner Participant, Airframe
Manufacturer, Loan Participants, Subordination Agent and Mortgagee that:
6.3.1 ORGANIZATION, ETC.
Xxxxx Fargo is a national banking association duly organized, validly
existing and in good standing under the Laws of the United States, holding a
valid certificate to do business as a national banking association with banking
authority to execute and deliver, and perform its obligations under, the Owner
Trustee Agreements.
6.3.2 CORPORATE AUTHORIZATION
Xxxxx Fargo has taken, or caused to be taken, all necessary corporate
action (including, without limitation, the obtaining of any consent or approval
of stockholders required by Law or by its Articles of Association or By-Laws) to
authorize the execution and delivery by Xxxxx Fargo, in its individual capacity
and as Owner Trustee, of each of the Owner Trustee Agreements, and the
performance of its obligations thereunder.
6.3.3 NO VIOLATION
The execution and delivery by Xxxxx Fargo, in its individual capacity and
as Owner Trustee, of the Owner Trustee Agreements, the performance by Xxxxx
Fargo, in its individual capacity and as Owner Trustee, of its obligations
thereunder and the consummation by Xxxxx Fargo in its individual capacity and as
Owner Trustee on the Closing Date of the transactions contemplated thereby, do
not and will not (a) violate any provision of the Articles of Association or
By-Laws of Xxxxx Fargo, (b) violate any Law of the State of Utah or federal
banking Law applicable to or binding on Owner Trustee or Xxxxx Fargo or (c)
violate or constitute any default under (other than any violation or default
that would not result in a Material Adverse Change to Xxxxx Fargo, in its
individual capacity or as Owner Trustee), or result in the creation of any Lien
(other than the lien of the Trust Indenture) upon any property of Xxxxx Fargo,
in its individual capacity and as Owner Trustee, or any of its subsidiaries
under, any indenture, mortgage, chattel mortgage, deed of trust, conditional
sales contract, lease, loan or other material agreement, instrument or document
to which Xxxxx Fargo, in its individual capacity or as Owner Trustee, is a party
or by which Xxxxx Fargo, in its individual capacity or as Owner Trustee, or any
of its properties is or may be bound or affected.
6.3.4 APPROVALS
The execution and delivery by Xxxxx Fargo, in its individual capacity and
as Owner Trustee, of the Owner Trustee Agreements, the performance by Xxxxx
Fargo, in its individual capacity and as Owner Trustee, of its obligations
thereunder and the consummation by Xxxxx Fargo, in its individual capacity and
as Owner Trustee, on the Closing Date of the transactions contemplated thereby
do not and will not require the consent, approval or authorization of, or the
giving of notice to, or the registration with, or the recording or filing of any
documents with, or the taking of any other action in respect of, (a) any trustee
or other holder of any Debt of Xxxxx Fargo or (b) any Government Entity
governing banking and trust powers, other than the filing of the FAA Filed
Documents and the Financing Statements.
6.3.5 VALID AND BINDING AGREEMENTS
The Owner Trustee Agreements have been duly authorized, executed and
delivered by Xxxxx Fargo, in its individual capacity or as Owner Trustee, as the
case may be, and constitute the legal, valid and binding obligations of Xxxxx
Fargo, in its individual capacity and as Owner Trustee, and, assuming the due
authorization, execution and delivery thereof by the other party or parties
thereto, are enforceable against Xxxxx Fargo, in its individual capacity and as
Owner Trustee, in accordance with the respective terms thereof, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar Laws affecting the rights of
creditors generally and general principles of equity, whether considered in a
proceeding at law or in equity.
6.3.6 CITIZENSHIP
On the Closing Date, Xxxxx Fargo is a Citizen of the United States.
6.3.7 LOCATION
The Owner Trustee's location (as such term is used in Section 9-307 of the
UCC) is Utah.
6.3.8 TITLE
On the Delivery Date, Owner Trustee received whatever title to the
Aircraft as was conveyed to it by Seller.
6.3.9 NO LIENS; FINANCING STATEMENTS
On the Closing Date, there are no Lessor Liens attributable to Xxxxx Fargo
or Owner Trustee in respect of all or any part of the Aircraft, Trust Estate or
the Trust Indenture Estate. Except for the Financing Statements and the one or
more UCC-1 financing statements covering the Aircraft and filed for
precautionary purposes by the Owner Trustee in connection with the delivery of
the Aircraft to Lessee under the Existing Lease on the Delivery Date, it has
not, either in its individual capacity or as Owner Trustee, executed any UCC
financing statements relating to the Aircraft or the Lease.
6.3.10 LITIGATION
There are no pending or, to the Actual Knowledge of Xxxxx Fargo,
threatened actions or proceedings against Xxxxx Fargo or Owner Trustee before
any court, governmental body, arbitration board, administrative agency or
tribunal which, if determined adversely to Xxxxx Fargo or Owner Trustee, would
materially adversely affect the ability of Xxxxx Fargo or Owner Trustee to
perform its obligations under, or affect the validity or enforceability of, the
Owner Trustee Agreements.
6.3.11 SECURITIES LAWS
Neither Xxxxx Fargo, nor any person authorized to act on its behalf, has
directly or indirectly offered any beneficial interest or Security relating to
the ownership of the Aircraft or any interest in the Trust Estate or any of the
Equipment Notes or any other interest in or Security under the Trust Indenture
for sale to, or solicited any offer to acquire any such interest or Security
from, or has sold any such interest or Security to, any person other than the
Participants, except for the offering and sale of the Pass Through Certificates.
6.3.12 EXPENSES AND TAXES
There are no Expenses or Taxes that may be imposed on or asserted against
the Trust, the Trust Estate or any part thereof or any interest therein, the
Trust Indenture Estate, Lessee, Owner Participant, Pass Through Trustee,
Subordination Agent, Owner Trustee or Mortgagee (except as to Owner Trustee,
Taxes imposed on the fees payable to Owner Trustee) under the laws of Utah in
connection with the execution, delivery or performance of any Operative
Agreement by Owner Trustee or in connection with the issuance of the Equipment
Notes, which Expenses or Taxes would not have been imposed if Owner Trustee had
not (x) had its principal place of business in, (y) performed (in its individual
capacity or as Owner Trustee) any or all of its duties under the Operative
Agreements in or (z) engaged in any activities unrelated to the transactions
contemplated by the Operative Agreements in, the State of Utah.
6.3.13 PRIOR ACTIVITIES
Owner Trustee has not engaged in any activities except holding title to
the Aircraft and leasing the Aircraft pursuant to the terms of the "Trust
Agreement" (as defined in the Existing Lease) and the Existing Lease,
respectively, and Owner Trustee has not incurred any debt or other financial
obligation, except as expressly provided in the "Trust Agreement" (as defined in
the Existing Lease) and the Existing Lease or such other debt that shall have
been satisfied or discharged in full contemporaneously with the Closing.
6.4 WTC'S REPRESENTATIONS AND WARRANTIES
WTC represents and warrants (with respect to Section 6.4.10, solely in its
capacity as Subordination Agent) to Lessee, Owner Participant, Airframe
Manufacturer, and Owner Trustee that:
6.4.1 ORGANIZATION, ETC.
WTC is a Delaware banking corporation duly organized, validly existing and
in good standing under the Laws of the State of Delaware, holding a valid
certificate to do business as a Delaware banking corporation with banking
authority to execute and deliver, and perform its obligations under, the
Mortgagee Agreements, the Pass Through Trustee Agreements and the Subordination
Agent Agreements.
6.4.2 CORPORATE AUTHORIZATION
WTC has taken, or caused to be taken, all necessary corporate action
(including, without limitation, the obtaining of any consent or approval of
stockholders required by Law or by its Certificate of Incorporation or By-Laws)
to authorize the execution and delivery by WTC, in its individual capacity or as
Mortgagee, Pass Through Trustee or Subordination Agent, as the case may be, of
the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements and the performance of its obligations
thereunder.
6.4.3 NO VIOLATION
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, Pass Through Trustee or Subordination Agent, as the case may be, of
the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements, the performance by WTC, in its individual
capacity or as Mortgagee, Pass Through Trustee or Subordination Agent, as the
case may be, of its obligations thereunder and the consummation on the Closing
Date of the transactions contemplated thereby, do not and will not (a) violate
any provision of the Certificate of Incorporation or By-Laws of WTC, (b) violate
any Law applicable to or binding on WTC, in its individual capacity or (except
in the case of any Law relating to any Plan) as Mortgagee, Pass Through Trustee
or Subordination Agent, or (c) violate or constitute any default under (other
than any violation or default that would not result in a Material Adverse Change
to WTC, in its individual capacity or as Mortgagee, Pass Through Trustee or
Subordination Agent), or result in the creation of any Lien (other than the lien
of the Trust Indenture) upon any property of WTC, in its individual capacity or
as Mortgagee, Pass Through Trustee or Subordination Agent, or any of WTC's
subsidiaries under, any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, lease, loan or other agreement, instrument or
document to which WTC, in its individual capacity or as Mortgagee, Pass Through
Trustee or Subordination Agent, is a party or by which WTC, in its individual
capacity or as Mortgagee, Pass Through Trustee or Subordination Agent, or any of
their respective properties is bound.
6.4.4 APPROVALS
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, Pass Through Trustee or Subordination Agent, as the case may be, of
the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements, the performance by WTC, in its individual
capacity or as Mortgagee, Pass Through Trustee or Subordination Agent, as the
case may be, of its obligations thereunder and the consummation on the Closing
Date by WTC, in its individual capacity or as Mortgagee, Pass Through Trustee or
Subordination Agent, as the case may be, of the transactions contemplated
thereby do not and will not require the consent, approval or authorization of,
or the giving of notice to, or the registration with, or the recording or filing
of any documents with, or the taking of any other action in respect of, (a) any
trustee or other holder of any Debt of WTC or (b) any Government Entity, other
than the filing of the FAA Filed Documents and the Financing Statements.
6.4.5 VALID AND BINDING AGREEMENTS
The Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements have been duly authorized, executed and delivered
by WTC and, assuming the due authorization, execution and delivery by the other
party or parties thereto, constitute the legal, valid and binding obligations of
WTC, in its individual capacity or as Mortgagee, Pass Through Trustee or
Subordination Agent, as the case may be, and are enforceable against WTC, in its
individual capacity or as Mortgagee, Pass Through Trustee or Subordination
Agent, as the case may be, in accordance with the respective terms thereof,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar Laws affecting the
rights of creditors generally and general principles of equity, whether
considered in a proceeding at law or in equity.
6.4.6 CITIZENSHIP
WTC is a Citizen of the United States.
6.4.7 NO LIENS
On the Closing Date, there are no Lessor Liens attributable to WTC in
respect of all or any part of the Trust Estate or the Trust Indenture Estate.
6.4.8 LITIGATION
There are no pending or, to the Actual Knowledge of WTC, threatened
actions or proceedings against WTC, in its individual capacity or as Mortgagee,
Pass Through Trustee or Subordination Agent, before any court, administrative
agency or tribunal which, if determined adversely to WTC, in its individual
capacity or as Mortgagee, Pass Through Trustee or Subordination Agent, as the
case may be, would materially adversely affect the ability of WTC, in its
individual capacity or as Mortgagee, Pass Through Trustee or Subordination
Agent, as the case may be, to perform its obligations under, or affect the
validity or enforceability of, any of the Mortgagee Agreements, the Pass Through
Trustee Agreements or the Subordination Agent Agreements.
6.4.9 SECURITIES LAWS
Neither WTC nor any person authorized to act on its behalf has directly or
indirectly offered any beneficial interest or Security relating to the ownership
of the Aircraft or any interest in the Trust Indenture Estate or any of the
Equipment Notes or any other interest in or Security under the Trust Indenture
for sale to, or solicited any offer to acquire any such interest or Security
from, or has sold any such interest or Security to, any Person other than the
Participants, except for the offering and sale of the Pass Through Certificates.
6.4.10 INVESTMENT
The Equipment Notes to be acquired by the Subordination Agent are being
acquired by it for the account of the Pass Through Trustee, for investment and
not with a view to any resale or distribution thereof, except that, subject to
the restrictions on transfer set forth in Section 10.1.3, the disposition by it
of its Equipment Notes shall at all times be within its control.
6.4.11 TAXES
There are no Taxes payable by the Pass Through Trustee or WTC, as the case
may be, imposed by the State of Delaware or any political subdivision or taxing
authority thereof in connection with the execution, delivery and performance by
the Pass Through Trustee or WTC, as the case may be, of this Agreement or any of
the Pass Through Trustee Agreements (other than franchise or other taxes based
on or measured by any fees or compensation received by any the Pass Through
Trustee or WTC, as the case may be, for services rendered in connection with the
transactions contemplated by the Pass Through Trust Agreement), and there are no
Taxes payable by the Pass Through Trustee or WTC, as the case may be, imposed by
the State of Delaware or any political subdivision thereof in connection with
the acquisition, possession or ownership by the Pass Through Trustee of any of
the Equipment Notes (other than franchise or other taxes based on or measured by
any fees or compensation received by the Pass Through Trustee or WTC, as the
case may be, for services rendered in connection with the transactions
contemplated by the Pass Through Trust Agreement), and, assuming that the trust
created by the Pass Through Trust Agreement will not be taxable as a
corporation, but, rather, will be characterized as a grantor trust under subpart
E, Part I of Subchapter J of the Code or as a partnership under Subchapter K of
the Code, such trust will not be subject to any Taxes imposed by the State of
Delaware or any political subdivision thereof.
6.4.12 CONTROL
WTC is not an Affiliate of the Owner Participant or the Owner Trustee.
6.4.13 BROKER'S FEES
No Person acting on behalf of WTC, in its individual capacity or as
Mortgagee, Pass Through Trustee or Subordination Agent, is or will be entitled
to any broker's fee, commission or finder's fee in connection with the
Transactions.
6.5 AIRFRAME MANUFACTURER'S REPRESENTATIONS AND WARRANTIES
Airframe Manufacturer represents and warrants to Lessee, each Participant,
Subordination Agent, Owner Trustee and Mortgagee that:
6.5.1 ORGANIZATION, ETC.
Airframe Manufacturer is a corporation duly incorporated, validly existing
and in good standing under the Laws of Brazil, and has the corporate power and
authority to conduct the business in which it is currently engaged and to own or
hold under lease its properties and to enter into, and perform its obligations
under the Airframe Manufacturer Agreements. OP Guarantor has a tangible net
worth (exclusive of goodwill) greater than $25,000,000.
6.5.2 CORPORATE AUTHORIZATION
Airframe Manufacturer has taken, or caused to be taken, all necessary
corporate action (including, without limitation, the obtaining of any consent or
approval of stockholders required by its constitutional documents) to authorize
the execution and delivery of each of the Airframe Manufacturer Agreements, and
the performance of its obligations thereunder.
6.5.3 NO VIOLATION
The execution and delivery by Airframe Manufacturer of the Airframe
Manufacturer Agreements, the performance by Airframe Manufacturer of its
obligations thereunder and the consummation by Airframe Manufacturer on the
Closing Date of the transactions contemplated thereby, do not and will not (a)
violate any provision of the constitutional documents of Airframe Manufacturer,
(b) violate any Law applicable to or binding on Airframe Manufacturer or (c)
violate or constitute any default under (other than any violation or default
that would not result in a Material Adverse Change to Airframe Manufacturer), or
result in the creation of any Lien (other than as provided for or otherwise
permitted in the Operative Agreements) upon the Trust Estate under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional sales
contract, lease, loan or other material agreement, instrument or document to
which Airframe Manufacturer is a party or by which Airframe Manufacturer or any
of its properties is bound.
6.5.4 APPROVALS
The execution and delivery by Airframe Manufacturer of the Airframe
Manufacturer Agreements, the performance by Airframe Manufacturer of its
obligations thereunder and the consummation by Airframe Manufacturer on the
Closing Date of the transactions contemplated thereby do not and will not
require the consent or approval of, or the giving of notice to, or the
registration with, or the recording or filing of any documents with, or the
taking of any other action in respect of, (a) any trustee or other holder of any
Debt of Airframe Manufacturer and (b) any Government Entity, other than the
filing of the FAA Filed Documents and the Financing Statements.
6.5.5 VALID AND BINDING AGREEMENTS
The Airframe Manufacturer Agreements have been duly authorized, executed
and delivered by Airframe Manufacturer and, assuming the due authorization,
execution and delivery by the other party or parties thereto, constitute the
legal, valid and binding obligations of Airframe Manufacturer and are
enforceable against Airframe Manufacturer in accordance with the respective
terms thereof, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, receivership, moratorium and other similar Laws
affecting the rights of creditors generally and general principles of equity,
whether considered in a proceeding at law or in equity.
6.5.6 TITLE
On the Closing Date, Lessor shall have good and marketable title to the
Aircraft, free and clear of all claims, Liens and encumbrances of any nature,
except Permitted Liens.
6.5.7 TAXES
Lessor has filed or will cause to be filed all Federal and all material
state, local and foreign tax returns which are required to be filed by it and
have paid or will cause to be paid all Taxes which are due and payable in
connection with the Aircraft.
6.5.8 LITIGATION
There are no pending or, to the Actual Knowledge of Airframe Manufacturer,
threatened actions or proceedings against Airframe Manufacturer before any
court, governmental body, arbitration board, administrative agency or tribunal
which, if determined adversely to Airframe Manufacturer, would materially
adversely affect the ability of Airframe Manufacturer to perform its obligations
under, or affect the validity or enforceability of, the Airframe Manufacturer
Agreements.
6.5.9 SECURITIES LAWS
Neither Airframe Manufacturer nor any person Airframe Manufacturer has
authorized to act on its behalf has directly or indirectly offered any
beneficial interest in or Security relating to the ownership of the Aircraft or
any interest in the Trust Estate, or any of the Equipment Notes or any other
interest in or Security under the Trust Indenture for sale to, or solicited any
offer to acquire any of the same from, any Person in violation of the Securities
Act or applicable state securities Laws.
6.5.10 BROKER'S FEES
No Person acting on behalf of Airframe Manufacturer is or will be entitled
to any broker's fee, commission or finder's fee in connection with the
Transactions, except for the placement agent's fees and commissions payable with
respect to the offering of the Pass Through Certificates and the fees and
expenses of Equity Advisor, which are the sole responsibility of Airframe
Manufacturer.
SECTION 7. COVENANTS, UNDERTAKINGS AND AGREEMENTS
7.1 COVENANTS OF LESSEE
Lessee covenants and agrees with Owner Participant, Loan Participant,
Owner Trustee and Mortgagee as follows:
7.1.1 CORPORATE EXISTENCE; U.S. AIR CARRIER
Lessee shall at all times maintain its corporate existence, except as
permitted by Section 13.2 of the Lease, and shall at all times remain a U.S.
Air Carrier.
7.1.2 NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE
Lessee will give Owner Participant, Owner Trustee and Mortgagee timely
written notice (but in any event within 30 days prior to the expiration of the
period of time specified under applicable Law to prevent lapse of perfection) of
any change of its location (as such term is used in Section 9-307 of the UCC)
from its then present location and will promptly take any action required by
Section 7.1.3(c) as a result of such relocation.
7.1.3 CERTAIN ASSURANCES
(a) Lessee shall duly execute, acknowledge and deliver, or shall cause to
be executed, acknowledged and delivered, all such further agreements,
instruments, certificates or documents, and shall do and cause to be done such
further acts and things, in any case, as Owner Participant, Owner Trustee or
Mortgagee shall reasonably request for accomplishing the purposes of this
Agreement and the other Operative Agreements, PROVIDED THAT any instrument or
other document so executed by Lessee will not expand any obligations or limit
any rights of Lessee in respect of the transactions contemplated by any
Operative Agreement.
(b) Lessee shall promptly take such action with respect to the recording,
filing, re-recording and re-filing of the Lease, the Trust Agreement and the
Trust Indenture and the respective supplements thereto, including, without
limitation, Lease Supplement No. 1 and the initial Trust Indenture Supplement,
as shall be necessary to establish, perfect and protect the interests and rights
of Owner Trustee in and to the Aircraft and under the Lease and the perfection
and priority of the Lien created by the Trust Indenture, and Lessee shall pay
all out-of-pocket costs and expenses thereof to the extent not paid by another
party as Transaction Expenses. Lessee shall furnish to Owner Participant or
Owner Trustee such information (other than with respect to the citizenship of
Owner Participant and Owner Trustee) in Lessee's possession or otherwise
reasonably available to Lessee as may be required to enable Owner Participant or
Owner Trustee to make application for registration of the Aircraft under the Act
(subject to Lessee's rights under Section 7.1.2 of the Lease).
(c) Lessee will cause the FAA Filed Documents, the Financing Statements
and all continuation statements (and any amendments necessitated by any
combination, consolidation or merger pursuant to Section 13.2 of the Lease, or
any change of its location (as such term is used in Section 9-307 of the UCC))
in respect of the Financing Statements to be prepared and, subject only to the
execution and delivery thereof by Owner Trustee and Mortgagee, as applicable,
duly and timely filed and recorded, or filed for recordation, to the extent
permitted under the Act (with respect to the FAA Filed Documents) or the UCC or
similar law of any other applicable jurisdiction (with respect to such other
documents). Lessee hereby authorizes Owner Trustee and/or Mortgagee to prepare
and file any UCC financing statements (including any amendments thereto) and
continuation statements referred to in this Section 7.1.3(c).
(d) If the Aircraft has been registered in a country other than the United
States pursuant to Section 7.1.2 of the Lease, Lessee will furnish to Owner
Trustee, Mortgagee and each Participant annually after such registration,
commencing with the calendar year after such registration is effected, an
opinion of special counsel reasonably satisfactory to Owner Trustee and
Mortgagee stating that, in the opinion of such counsel, either that (i) such
action has been taken with respect to the recording, filing, re-recording and
re-filing of the Operative Agreements and any supplements and amendments thereto
as is necessary to establish, perfect and protect Owner Trustee's and
Mortgagee's respective right, title and interest in and to the Aircraft and the
Operative Agreements, reciting the details of such actions, or (ii) no such
action is necessary to maintain the perfection of such right, title and
interest.
7.1.4 SECURITIES LAWS
Neither Lessee nor any person authorized to act on its behalf will
directly or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or the Lease or any interest in the Trust Estate and
Trust Agreement or any of the Equipment Notes or any other interest in or
Security under the Trust Indenture, for sale to, or solicit any offer to acquire
any such interest or Security from, or sell any such interest or Security to,
any person in violation of the Securities Act or applicable state or foreign
securities Laws.
[7.1.5 ADDITIONAL BASIC RENT PAYMENT
In addition to the provisions of Section 3.2.1 of the Lease, Lessee shall
make a payment of Basic Rent on the [March __, 2004] [Scheduled Expiration Date]
in the amount set forth opposite such date in Schedule 2 to the Lease.][to be
inserted if applicable]
7.2 COVENANTS OF OWNER PARTICIPANT
Owner Participant covenants and agrees with Lessee, and except with
respect to Section 7.2.4, Loan Participant, Owner Trustee and Mortgagee as
follows:
7.2.1 LIENS
Owner Participant (a) will not directly or indirectly create, incur,
assume or suffer to exist any Lessor Lien attributable to it on or with respect
to all or any part of the Trust Estate, the Trust Indenture Estate or the
Aircraft, (b) will, at its own cost and expense, take such action as may be
necessary to discharge any Lessor Lien attributable to Owner Participant on all
or any part of the Trust Estate, the Trust Indenture Estate or the Aircraft.
Owner Participant will hold harmless and indemnify Lessee, Owner Trustee, each
Note Holder, Mortgagee, each of their respective Affiliates, successors and
permitted assigns, the Trust Estate and the Trust Indenture Estate from and
against (i) any and all Expenses, (ii) any reduction in the amount payable out
of the Trust Estate or the Trust Indenture Estate and (iii) any interference
with the possession, operation or other use of all or any part of the Aircraft,
in each case imposed on, incurred by or asserted against any of the foregoing as
a consequence of any such Lessor Lien.
7.2.2 REVOCATION OF TRUST AGREEMENT
(a) Owner Participant will comply with the provisions of the Trust
Agreement applicable to it, and will not terminate or revoke the Trust Agreement
or the trusts created thereunder without the prior written consent of Lessee and
Mortgagee and will not amend, modify or supplement the Trust Agreement, or waive
any of the provisions thereof, if such amendment, modification, supplement or
waiver would have a material adverse effect on Lessee, without the consent of
Lessee, or on Mortgagee or any Note Holder, without the consent of Mortgagee.
(b) Notwithstanding Section 7.2.2(a), Owner Participant may at any time
remove Owner Trustee pursuant to Section 9.1 of the Trust Agreement or terminate
the Trust Agreement pursuant to Section 11.2 of the Trust Agreement.
7.2.3 CHANGE OF SITUS OF OWNER TRUST
If, at any time, any Tax Indemnitee or the Trust Estate becomes subject to
any Taxes for which it is indemnified pursuant to Section 9.3 of this Agreement
and if, as a consequence thereof, Lessee should request that the situs of the
Trust be moved to another state in the United States from the state in which it
is then located, the situs of the Trust may be moved with the written consent of
Owner Participant (which consent shall not be unreasonably withheld) and Owner
Participant will take whatever action may be reasonably necessary to accomplish
such removal; PROVIDED, that, in any event, (a) Lessee shall provide such
additional tax indemnification as Owner Participant and the Note Holders or the
Pass Through Trustee may reasonably request to cover any additional
unindemnified Taxes or loss of Tax benefits described in the assumptions in the
Tax Indemnity Agreement resulting from such change in the situs of the Trust (it
being agreed that if a Lease Event of Default shall have occurred and is then
continuing, it shall not be unreasonable for Owner Participant to withhold its
consent to moving the situs of the Trust, notwithstanding the provision by
Lessee of such additional tax indemnification, unless a Section 1110 Event shall
have occurred and is then continuing), (b) the rights and obligations under the
Operative Agreements of Owner Participant, the Note Holders, Pass Through
Trustee and Mortgagee shall not be adversely affected as a result of the taking
of such action, (c) the Lien of the Trust Indenture on the Trust Indenture
Estate shall not be adversely affected by such action, and Lessee and Owner
Trustee shall execute and deliver such documents as may be necessary or as may
reasonably be requested by Mortgagee to protect and maintain the perfection and
priority of such Lien, (d) Owner Participant, Pass Through Trustee and Mortgagee
shall have received an opinion or opinions of counsel (which counsel is
reasonably satisfactory to Owner Participant, Pass Through Trustee and
Mortgagee) in scope, form and substance reasonably satisfactory to Owner
Participant, Pass Through Trustee and Mortgagee to the effect that (i) the
Trust, as thus removed, shall remain a validly established trust, (ii) any
amendments to the Trust Agreement necessitated by such removal shall have been
duly authorized, executed and delivered by the parties thereto and shall
constitute the valid and binding obligations of such parties, enforceable in
accordance with their terms, (iii) covering such other matters as Owner
Participant, Pass Through Trustee or Mortgagee may reasonably request, (e) if
such removal involves the replacement of Owner Trustee, then Owner Participant,
Pass Through Trustee and Mortgagee shall have received an opinion of counsel to
such successor Owner Trustee in form and substance reasonably satisfactory to
Owner Participant, Pass Through Trustee and Mortgagee covering the matters
described in the opinion delivered pursuant to Section 5.1.2(xxv)(D) and (f)
Lessee shall indemnify and hold harmless Owner Participant, Note Holders, Pass
Through Trustee and Xxxxx Fargo, in its individual capacity and as Owner
Trustee, on a net after-tax basis against any and all reasonable out-of-pocket
costs and expenses including attorneys' fees and disbursements, fees and
expenses of any new owner trustee, registration, recording or filing fees and
taxes incurred by Owner Participant, Note Holders, Pass Through Trustee or Owner
Trustee in connection with such change of situs. Owner Participant agrees with
Lessee that it will not consent to or direct a change in the situs of the Trust
Estate without the prior written consent of Lessee, except that if a Lease Event
of Default shall have occurred and is then continuing, except during a Section
1110 Period, such consent shall not be required.
7.2.4 COMPLIANCE WITH LEASE PROVISIONS
Owner Participant will, solely for the benefit of Lessee, comply with the
express provisions applicable to it contained in the Lease.
7.2.5 SECURITIES ACT
Owner Participant will not directly or indirectly offer any beneficial
interest or Security relating to the ownership of the Aircraft or any interest
in the Trust Estate or any of the Equipment Notes or any other interest in or
Security under the Trust Indenture for sale to, or solicit any offer to acquire
any such interest or Security from, or sell any such interest or Security to,
any Person in violation of the registration provisions of the Securities Act or
applicable state or foreign Securities Laws, provided that the foregoing shall
not be deemed to impose on Owner Participant any responsibility with respect to
any such offer, sale or solicitation by any other party hereto.
7.2.6 REGARDING THE OWNER TRUSTEE
Owner Participant will instruct Owner Trustee to perform its obligations
under each Owner Trustee Agreement.
7.3 COVENANTS OF XXXXX FARGO AND OWNER TRUSTEE
Xxxxx Fargo, in its individual capacity and/or as Owner Trustee, as
provided below, covenants and agrees with Lessee, Owner Participant, each Note
Holder and Mortgagee as follows:
7.3.1 LIENS
Xxxxx Fargo (a) will not directly or indirectly create, incur, assume or
suffer to exist any Lessor Lien attributable to it or Owner Trustee with respect
to all or any part of the Trust Estate, the Trust Indenture Estate or the
Aircraft, (b) will, at its own cost and expense, take such action as may be
necessary to discharge any Lessor Lien attributable to Xxxxx Fargo or Owner
Trustee on all or any part of the Trust Estate, the Trust Indenture Estate or
the Aircraft. Xxxxx Fargo will in its individual capacity hold harmless and
indemnify Lessee, Owner Participant, each Note Holder, Mortgagee, each of their
respective Affiliates, successors and permitted assigns, the Trust Estate and
the Trust Indenture Estate from and against (i) any and all Expenses, (ii) any
reduction in the amount payable out of the Trust Estate or the Trust Indenture
Estate and (iii) any interference with the possession, operation or other use of
all or any part of the Aircraft, in each case imposed on, incurred by or
asserted against any of the foregoing as a consequence of any such Lessor Lien.
7.3.2 OTHER BUSINESS
Owner Trustee will not enter into any business or other activity except as
contemplated by the Operative Agreements.
7.3.3 NOTICE OF CHANGE OF LOCATION
Xxxxx Fargo, in its individual capacity and as Owner Trustee, will give
Lessee, each Participant and Mortgagee 30 days' prior written notice of any
change of its location (as such term is used in Section 9-307 of the UCC) from
its then present location and will promptly take any action required by Section
7.3.8 as a result of such relocation.
7.3.4 SECURITIES ACT
Xxxxx Fargo, in its individual capacity and as Owner Trustee, will not
directly or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or any interest in the Trust Estate or any of the
Equipment Notes or any other interest in or Security under the Trust Indenture
for sale to, or solicit any offer to acquire any such interest or Security from,
or sell any such interest or Security to, any Person in violation of the
registration provisions of the Securities Act or applicable state or foreign
securities Laws, provided that the foregoing shall not be deemed to impose on
Xxxxx Fargo in its individual capacity or as Owner Trustee, any responsibility
with respect to any such offer, sale or solicitation by any other party hereto.
7.3.5 PERFORMANCE OF AGREEMENTS
Owner Trustee shall perform its obligations under the Owner Trustee
Agreements in accordance with the terms thereof.
7.3.6 RELEASE OF LIEN OF TRUST INDENTURE
Owner Trustee, in each instance referred to in the Lease in which a
transfer of any property is required to be made by Owner Trustee to Lessee or
any other Person (other than Mortgagee or Owner Participant), shall, at Lessee's
request and expense, use its reasonable efforts to procure from Mortgagee the
prompt release of the Lien of the Trust Indenture with respect to such property.
7.3.7 NOTICES; DOCUMENTS
In the event any claim with respect to any liabilities is filed against
the Owner Trustee in its capacity as such and Owner Trustee shall have Actual
Knowledge thereof, the Owner Trustee shall promptly notify Lessee and Mortgagee
in writing thereof. Owner Trustee further agrees to provide to Lessee promptly
any documents (including the certificate of aircraft registration) that it
receives from the FAA with respect to the Aircraft.
7.3.8 FILINGS
After the Closing Date, Owner Trustee shall duly execute and deliver to
Lessee all filings and recordings (including, without limitation, all filings
and UCC financing statements under the Act and the UCC and any amendments to UCC
financing statements necessitated by any change of its location (as such term is
used in Section 9-307 of the UCC)), prepared and delivered to it by Lessee
required to perfect Owner Trustee's title to the Aircraft and the liens of and
security interests granted by the Trust Indenture (or to maintain such
perfection) and to make such title, liens and security interests valid and
enforceable. Owner Trustee hereby authorizes the Mortgagee to prepare and file
any UCC financing statements (including any amendments thereto) and continuation
statements referred to in this Section 7.3.8.
7.3.9 TRUST AGREEMENT
Each of Xxxxx Fargo and Owner Trustee hereby (i) agrees with Lessee, Loan
Participant and Mortgagee not to amend, supplement, terminate or otherwise
modify any provision of the Trust Agreement in such a manner as to adversely
affect the rights of any such party without the prior written consent of such
party and (ii) agrees with Lessee, Loan Participant and Mortgagee not to revoke
the trust created by the Trust Agreement so long as the Trust Indenture remains
undischarged or if such revocation would have an adverse effect on the Lessee.
Nothing contained in this Agreement shall impair any right under the Trust
Agreement of Xxxxx Fargo to resign as Owner Trustee in accordance with the
provisions of the Trust Agreement.
7.4 COVENANTS OF WTC
WTC in its individual capacity or as Mortgagee, Pass Through Trustee or
Subordination Agent, as the case may be, covenants and agrees with Lessee, Owner
Participant and Owner Trustee as follows:
7.4.1 LIENS
WTC (a) will not directly or indirectly create, incur, assume or suffer to
exist any Lessor Lien attributable to it on or with respect to all or any part
of the Trust Estate, the Trust Indenture Estate or the Aircraft, (b) will, at
its own cost and expense, promptly take such action as may be necessary to
discharge any Lessor Lien attributable to WTC on all or any part of the Trust
Estate, the Trust Indenture Estate or the Aircraft and (c) will in its
individual capacity hold harmless and indemnify Lessee, Owner Participant, each
Note Holder, Owner Trustee, each of their respective Affiliates, successors and
permitted assigns, the Trust Estate and the Trust Indenture Estate from and
against (i) any and all Expenses, (ii) any reduction in the amount payable out
of the Trust Estate or the Trust Indenture Estate and (iii) any interference
with the possession, operation or other use of all or any part of the Aircraft,
in each case imposed on, incurred by or asserted against any of the foregoing as
a consequence of any such Lessor Lien.
7.4.2 SECURITIES ACT
WTC in its individual capacity or as Mortgagee, Pass Through Trustee or
Subordination Agent, will not offer any beneficial interest or Security relating
to the ownership of the Aircraft or any interest in the Trust Indenture Estate,
or any of the Equipment Notes or any other interest in or Security under the
Trust Indenture for sale to, or solicit any offer to acquire any such interest
or Security from, or sell any such interest or Security to, any Person in
violation of the Securities Act or applicable state or foreign securities Laws,
provided that the foregoing shall not be deemed to impose on WTC any
responsibility with respect to any such offer, sale or solicitation by any other
party hereto.
7.4.3 PERFORMANCE OF AGREEMENTS
WTC, in its individual capacity and as Mortgagee, Pass Through Trustee or
Subordination Agent, as the case may be, shall perform its obligations under the
Mortgagee Agreements, the Pass Through Trustee Agreements and the Subordination
Agent Agreements in accordance with the terms thereof.
7.4.4 WITHHOLDING TAXES
WTC shall indemnify (on an after-tax basis) and hold harmless Lessee,
Lessor and Owner Participant against any United States withholding taxes (and
related interest, penalties and additions to tax) as a result of the failure by
WTC to withhold on payments to any Note Holder if such Note Holder failed to
provide to Mortgagee necessary certificates or forms to substantiate the right
to exemption from such withholding tax.
7.5 COVENANTS OF NOTE HOLDERS
Each Note Holder (including Subordination Agent) as to itself only
covenants and agrees with Lessee, Owner Participant, Owner Trustee and Mortgagee
as follows:
7.5.1 WITHHOLDING TAXES
Such Note Holder (if it is a Non-U.S. Person) agrees to indemnify (on an
after-tax basis) and hold harmless Lessee, Lessor, Owner Participant and
Mortgagee against any United States withholding taxes (and related interest,
penalties and additions to tax) as a result of the inaccuracy or invalidity of
any certificate or form provided by such Note Holder to Mortgagee in connection
with such withholding taxes. Any amount payable hereunder shall be paid within
30 days after receipt by a Note Holder of a written demand therefor.
7.5.2 TRANSFER; COMPLIANCE
(a) Such Note Holder will (i) not transfer any Equipment Note or interest
therein in violation of the Securities Act or applicable state or foreign
securities Law; PROVIDED, that the foregoing provisions of this section shall
not be deemed to impose on such Note Holder any responsibility with respect to
any such offer, sale or solicitation by any other party hereto, and (ii) perform
and comply with the obligations specified to be imposed on it (as a Note Holder)
under each of the Trust Indenture and the form of Equipment Note set forth in
the Trust Indenture.
(b) Except as otherwise required by the terms of Section 2.13 of the Trust
Indenture, each Note Holder will not sell, assign, convey, exchange or otherwise
transfer any Equipment Note or any interest in, or represented by, any Equipment
Note (it being understood that this provision is not applicable to the Pass
Through Certificates) unless the proposed transferee thereof first provides
Lessee and Owner Participant with both of the following:
(i) a written representation and covenant that either (a) no portion
of the funds it uses to purchase, acquire and hold such Equipment Note or
interest directly or indirectly constitutes, or may be deemed under the
Code or ERISA or any rulings, regulations or court decisions thereunder to
constitute, the assets of any Plan or (b) the transfer, and subsequent
holding, of such Equipment Note or interest shall not involve or give rise
to a transaction that constitutes a prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975(c)(1) of the Code
involving Lessee, Owner Participant, Pass Through Trustee, the
Subordination Agent or the proposed transferee (other than a transaction
that is exempted from the prohibitions of such sections by applicable
provisions of ERISA or the Code or administrative exemptions or
regulations issued thereunder); and
(ii) a written covenant that it will not transfer any Equipment Note
or any interest in, or represented by, any Equipment Note unless the
subsequent transferee also makes the representation described in clause
(i) above and agrees to comply with this clause (ii) and the other
covenants of the Note Holders contained in the Operative Agreements.
7.6 AGREEMENTS
7.6.1 OWNER TRUSTEE IS OWNER FOR ALL PURPOSES
Lessee, the Owner Participant and Owner Trustee agree that for all
purposes, after the Closing, Owner Trustee will be the owner of the Aircraft
(except that Owner Participant will be the owner for income tax purposes) and
Lessee will be the lessee thereof. No transfer, by operation of Law or
otherwise, of the beneficial interest of Owner Participant in and to the Trust
Estate shall operate to transfer legal title to any part of the Trust Estate to
any transferee thereof.
7.6.2 COMMENCEMENT OF BANKRUPTCY PROCEEDINGS
Lessee, each Participant, each Note Holder, Xxxxx Fargo, Owner Trustee,
WTC and Mortgagee agree for the benefit of each of the others that it will not
commence or join in any proceeding under the Bankruptcy Code to commence a case
under Section 303 of the Bankruptcy Code against the Trust Estate. Nothing
contained herein shall be deemed to preclude any Participant, any Note Holder,
Xxxxx Fargo, Owner Trustee, WTC or Mortgagee from filing any claim against the
Trust Estate in any case commenced against the Trust Estate or preclude the
exercise of remedies pursuant to, or limit the rights of Mortgagee under, the
Trust Indenture.
7.6.3 CERTAIN BANKRUPTCY MATTERS
If (a) all or any part of the Trust Estate becomes the property of, or
Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (b) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code,
Xxxxx Fargo or Owner Participant is required, by reason of Xxxxx Fargo or Owner
Participant being held to have recourse liability to any Note Holder or
Mortgagee directly or indirectly (other than the recourse liability of Xxxxx
Fargo or Owner Participant under this Agreement, the Trust Indenture or by
separate agreement), to make payment on account of any amount payable as
principal, Make-Whole Amount, if any, interest or other amounts on the Equipment
Notes, and (c) any Note Holder or Mortgagee actually receives any Excess Amount,
as defined below, which reflects any payment by Xxxxx Fargo or Owner Participant
on account of (b) above, then such Note Holder or Mortgagee, as the case may be,
shall promptly refund to Xxxxx Fargo or Owner Participant (whichever shall have
made such payment) such Excess Amount.
For purposes of this Section 7.6.3, "Excess Amount" means the amount by
which such payment exceeds the amount that would have been received by a Note
Holder or Mortgagee if Xxxxx Fargo or Owner Participant had not become subject
to the recourse liability referred to in clause (b) above, and such Note Holder
or Mortgagee receives written notice that such amount is an Excess Amount prior
to its distribution thereof. Nothing contained in this Section 7.6.3 shall
prevent a Note Holder or Mortgagee from enforcing any personal recourse
obligation (and retaining the proceeds thereof) of Xxxxx Fargo or Owner
Participant under this Agreement (other than as referred to in clause (b) above)
or the Trust Indenture (and any exhibits or annexes thereto) or from retaining
any amount paid by Owner Participant under Sections 2.13 or 4.03 of the Trust
Indenture.
7.6.4 QUIET ENJOYMENT; SALE BY OWNER TRUSTEE BINDING
(a) Owner Participant, Pass Through Trustee, Subordination Agent, each
Note Holder, Owner Trustee and Mortgagee agrees as to itself with Lessee that,
so long as no Lease Event of Default shall have occurred and be continuing, such
Person shall not (and shall not permit any Affiliate or other Person claiming
by, through or under it to) interfere with Lessee's rights in accordance with
the Lease to the quiet enjoyment, possession and use of the Aircraft during the
Term.
(b) Any assignment, sale, transfer or other conveyance of the Aircraft by
Owner Trustee made pursuant to the terms of this Agreement or the Lease shall
bind Owner Participant and shall be effective to transfer or convey all right,
title and interest of Owner Trustee and Owner Participant in and to the
Aircraft. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency or regularity of such assignment, sale,
transfer or conveyance, or as to the application of any sale or other proceeds
with respect thereto by Owner Trustee, as regards Owner Participant.
7.6.5 RELEASE OF LIEN OF TRUST INDENTURE
Each of Lessee, Lessor and Mortgagee agrees that in each instance referred
to in the Lease in which a transfer of any property is required to be made by
Lessor to Lessee or any other Person (other than Mortgagee), Mortgagee shall,
upon request of Lessor and compliance with the applicable provisions of the
Lease and Trust Indenture, promptly execute (at Lessee's cost and expense) such
instruments as Lessor or Lessee may reasonably request to evidence the release
of the Lien of the Trust Indenture with respect to such property.
7.6.6 NON-RECOURSE
Loan Participant and Mortgagee agree that (a) obligations of Owner Trustee
under the Trust Indenture or any other Operative Agreement and with respect to
the Equipment Notes shall be non-recourse to Owner Participant and to Xxxxx
Fargo and (b) they will look solely to the income and proceeds from the Trust
Estate and the Trust Indenture Estate to the extent available for distribution
to Note Holder or Mortgagee as provided in the Trust Indenture and that neither
Owner Participant nor Xxxxx Fargo will be personally liable to Loan Participant
or Mortgagee for any amounts payable by Owner Trustee under the Trust Indenture
or any other Operative Agreement; PROVIDED, HOWEVER, that the foregoing is not
intended nor shall it be construed to limit any recourse liability of Owner
Participant or Xxxxx Fargo to the extent that such liability is expressly set
forth in this Agreement or in any of the Operative Agreements or arises by
reason of the breach of any representation or warranty or covenant given by such
Person (in the case of Xxxxx Fargo, in its individual capacity).
7.6.7 OTHER DOCUMENTS; AMENDMENT
(a) Each of the Owner Participant and the Owner Trustee hereby agrees with
Lessee, the Loan Participant, and the Mortgagee not to amend, supplement or
otherwise modify any provision of the Trust Agreement in a manner that could
materially adversely affect such party without the prior written consent of such
party (including without limitation in the case of such agreement with Lessee,
Section 4.2.5 of the Trust Agreement). Notwithstanding the foregoing, so long as
the Lease has not been terminated or expired, each Participant, the Mortgagee
and the Owner Trustee hereby agree for the benefit of Lessee that without the
consent of Lessee they will not amend, supplement or otherwise modify (i)
Article III, Article IX or Sections 2.02 (third paragraph), 2.05 or 3.06 (second
sentence) of the Trust Indenture, (ii) any provision of any Operative Agreement
that will affect the stated principal amount of or premium or interest on the
Equipment Notes or (iii) any other provision of the Trust Indenture or Equipment
Notes in a manner that could materially adversely affect Lessee. Mortgagee and
Owner Trustee agree promptly to furnish to Lessee copies of any supplement,
amendment, waiver or modification of any of the Operative Agreements to which
Lessee is not a party. Loan Participant agrees that it will not take any action
in respect of the Trust Indenture Estate except through the Mortgagee pursuant
to the Trust Indenture or as otherwise permitted by the Trust Indenture.
(b) Owner Trustee agrees to join with Lessee to the extent that action on
its part is necessary or appropriate (i) to cause the following to be duly
accomplished in accordance with applicable United States federal Law by the time
the Aircraft is delivered under this Agreement and the Lease: (A) the
application for registration of the Aircraft in the name of Owner Trustee and
(B) all related action necessary in order for Lessee to have temporary or
permanent authority to operate the Aircraft as contemplated by the Lease and
(ii) forthwith upon delivery of the Aircraft under this Agreement and the Lease,
to cause all necessary documents to be duly filed for recording in accordance
with applicable United States federal Law.
7.6.8 CONSENTS
Owner Participant, Pass Through Trustee, Subordination Agent, Owner
Trustee and Mortgagee each covenants and agrees, for the benefit of Lessee, that
it shall not unreasonably withhold its consent to any consent or approval
requested of it or of Owner Trustee or Mortgagee under the terms of any of the
Operative Agreements which by its terms is not to be unreasonably withheld.
7.6.9 INSURANCE
Each of Owner Participant, the Pass Through Trustee, the Subordination
Agent and the Owner Trustee agrees not to obtain or maintain insurance for its
own account as permitted by Section 11.2 of the Lease if such insurance would
limit or otherwise materially adversely affect the coverage of any insurance
required to be obtained or maintained by Lessee pursuant to Section 11 and Annex
D of the Lease.
7.6.10 EXTENT OF INTEREST OF NOTE HOLDERS
A Note Holder shall not, as such, have any further interest in, or other
right with respect to, the Trust Estate or the Trust Indenture Estate when and
if the principal and Make-Whole Amount, if any, of and interest on the Equipment
Note held by such Holder, and all other sums, then due and payable to such
Holder hereunder and under any other Operative Agreement, shall have been paid
in full.
7.6.11 FOREIGN REGISTRATION
Each Participant, Owner Trustee and Mortgagee hereby agree, for the
benefit of Lessee but subject to the provisions of Section 7.1.2 of the Lease:
(a) that Lessee shall be entitled to register the Aircraft or cause the
Aircraft to be registered in a country other than the United States subject to
compliance with the following:
(i) each of the following requirements is satisfied:
(A) such registration shall be made only after the Tax
Attribute Period, unless Lessee prepays on a lump sum
basis calculated pursuant to Section 5(f) of the Tax
Indemnity Agreement any liability due under the Tax
Indemnity Agreement as a result of such registration
based upon the assumption that such registration
would continue for the remainder of the term of the
Permitted Sublease described in clause (C) below,
PROVIDED, that notwithstanding the foregoing, such
registration may be made during the taxable year in
which the seventh anniversary of the Delivery Date
occurs so long as the Aircraft is not "used
predominantly outside the United States" within the
meaning of Section 168(g) of the Code during such
taxable year;
(B) no Lease Event of Default shall have occurred and be
continuing at the time of such registration;
(C) such proposed change of registration is made in
connection with a Permitted Sublease to a Permitted Air
Carrier; and
(D) such country is a Permitted Country with which the
United States then maintains normal diplomatic
relations.
(ii) the Owner Trustee, Owner Participant and Mortgagee shall have
received an opinion, in form and substance reasonably satisfactory to the
Owner Participant (subject to customary exceptions), of counsel reasonably
satisfactory to the Owner Participant and Mortgagee addressed to each such
party to the effect that:
(A) such country would recognize the Owner Trustee's title
to, ownership interest in and right to possession of,
the Aircraft;
(B) the obligations of Lessee, and the rights and remedies
of Owner Trustee, under the Lease are valid, binding and
enforceable under the laws of such country (or the laws
of the country to which the laws of such country would
refer as the applicable governing law);
(C) after giving effect to such change in registration,
the Lien of the Trust Indenture on the Owner
Trustee's right, title and interest in and to the
Aircraft and the Lease shall continue as a valid and
duly perfected first priority security interest and
all filing, recording or other action necessary to
protect the same shall have been accomplished (or, if
such opinion cannot be given at the time of such
proposed change in registration because such change
in registration is not yet effective, (1) the opinion
shall detail what filing, recording or other action
is necessary and (2) Owner Trustee and the Mortgagee
shall have received a certificate from Lessee that
all possible preparations to accomplish such filing,
recording and other action shall have been done, and
such filing, recording and other action shall be
accomplished and a supplemental opinion to that
effect shall be delivered to Owner Trustee and the
Mortgagee on or prior to the effective date of such
change in registration;
(D) it is not necessary, solely as a consequence of such
change in registration and without giving effect to
any other activity of Owner Trustee, the Owner
Participant or the Mortgagee (or any Affiliate
thereof), as the case may be, for Owner Trustee, the
Owner Participant or the Mortgagee to qualify to do
business in such country as a result of such
reregistration;
(E) there is no tort liability of the owner or lessor or
mortgagee of an aircraft not in possession thereof
under the laws of such country (it being agreed that,
in the event such latter opinion cannot be given in a
form satisfactory to the Owner Participant and
Mortgagee, such opinion shall be waived if insurance
reasonably satisfactory to the Owner Participant and
Mortgagee is provided to cover such risk); and
(F) unless Lessee shall have agreed to provide insurance
reasonably satisfactory to Owner Participant and
Mortgagee covering the risk of requisition of use of
the Aircraft by the government of such country (so
long as the Aircraft is registered under the laws of
such country), the laws of such country require fair
compensation by the government of such country
payable in currency freely convertible into Dollars
and freely removable from such country (without
license or permit, unless Lessee prior to such
proposed reregistration has obtained such license or
permit) for the taking or requisition by such
government of such use.
(b) In addition, as a condition precedent to any change in registration
Lessee shall have given to Lessor and Mortgagee assurances reasonably
satisfactory to each of them:
(i) to the effect that the provisions of Section 11 of the Lease
have been complied with after giving effect to such change of
registration; and
(ii) of the payment by Lessee of all reasonable out-of-pocket
expenses at no after-tax cost to any Participant of
Lessor, each Participant and Mortgagee in connection with
such change of registry, including, without limitation
(1) the reasonable fees and disbursements of counsel to
Lessee, Lessor and Mortgagee, (2) any filing or recording
fees, Taxes or similar payments incurred in connection
with the change of registration of the Aircraft and the
creation and perfection of the security interest therein
in favor of Mortgagee for the benefit of Note Holders,
(3) all costs and expenses incurred in connection with any
filings necessary to continue in the United States the
perfection of the security interest in the Aircraft and
the Lease in favor of Mortgagee for the benefit of Note
Holders and (4) costs in connection with the calculation
of the lump sum payment described in clause (i)(A) of this
Section 7.6.11.
7.6.12 OTHER COMMERCIAL RELATIONS UNAFFECTED
Notwithstanding anything to the contrary set forth in any Operative
Agreement:
(a) Except as set forth in the Purchase Agreement Assignment, nothing
contained in the Operative Agreements shall constitute or be deemed to be a
waiver by Lessee of any rights, remedies or claims it may have against Airframe
Manufacturer or Engine Manufacturer or any subcontractor or supplier of either;
and the Operative Agreements do not and shall not be construed or deemed to
create any rights, waivers, immunities or indemnities in favor of Airframe
Manufacturer, Engine Manufacturer or any subcontractor or supplier of either
with respect to any such rights, remedies or claims of Lessee; and
(b) The Airframe Manufacturer, by its execution and delivery of the
Consent and Agreement, shall not be deemed to have waived any rights, remedies
or claims which Airframe Manufacturer (or any subcontractor or supplier of
Airframe Manufacturer) may have against Lessee; and the Operative Agreements do
not and shall not be construed or deemed to create any rights, waivers,
immunities or indemnities in favor of Lessee with respect to any such rights,
remedies or claims of Airframe Manufacturer (or any subcontractor or supplier of
Airframe Manufacturer).
7.6.13 INTEREST IN CERTAIN ENGINES
Each Participant, Owner Trustee, and Mortgagee agree, for the benefit of
each of the lessor, conditional seller, mortgagee or secured party of any
airframe or engine leased to, or purchased by, Lessee or any Permitted Sublessee
subject to a lease, conditional sale, trust indenture or other security
agreement that it will not acquire or claim, as against such lessor, conditional
seller, mortgagee or secured party, any right, title or interest in any engine
as the result of such engine being installed on the Airframe at any time while
such engine is subject to such lease, conditional sale, trust indenture or other
security agreement and owned by such lessor or conditional seller or subject to
a trust indenture or security interest in favor of such mortgagee or secured
party.
SECTION 8. CONFIDENTIALITY
Lessee, Owner Participant, Note Holders, Owner Trustee, Mortgagee and
Airframe Manufacturer shall keep Annexes B, C and D and Schedules 1, 2, 3 and 4
to the Lease, the Purchase Agreement Assignment and the Tax Indemnity Agreement
confidential and shall not disclose, or cause to be disclosed, the same to any
other Person, except (A) to prospective and permitted transferees of Lessee's,
Owner Participant's, a Note Holder's, Liquidity Provider's, Owner Trustee's,
Mortgagee's or other Indenture Indemnitee's interest or their respective counsel
or special counsel, independent insurance brokers, auditors, or other agents who
agree to hold such information confidential, (B) to Lessee's, Owner
Participant's, a Note Holder's, Liquidity Provider's, Pass Through Trustee's,
Owner Trustee's, Mortgagee's or other Indenture Indemnitee's counsel or special
counsel, independent insurance brokers, auditors, or other agents, Affiliates or
investors who agree to hold such information confidential, (C) as may be
required by any statute, court or administrative order or decree, legal process
or governmental ruling or regulation, including those of any applicable
insurance regulatory bodies (including, without limitation, the National
Association of Insurance Commissioners), federal or state banking examiners,
Internal Revenue Service and state and local income tax auditors or any stock
exchange, (D) with respect to Lessee and Owner Participant, by mutual agreement
of such parties, (E) with respect to a Note Holder or Pass Through Trustee, to a
nationally recognized rating agency for the purpose of obtaining a rating on the
Equipment Notes or the Pass Through Certificates or to support an NAIC rating
for the Equipment Notes or the Pass Through Certificates or (F) such other
Persons as are reasonably deemed necessary by the disclosing party in order to
protect the interests of such party or for the purposes of enforcing such
documents by such party; PROVIDED, that any and all disclosures permitted by
clauses (C), (D), (E) or (F) above shall be made only to the extent necessary to
meet the specific requirements or needs of the Persons making such disclosures.
Notwithstanding the foregoing, or any provision to the contrary in any of the
Operative Agreements, and subject to compliance with applicable federal or state
securities laws, Lessee, Owner Participant, Note Holders, Owner Trustee,
Mortgagee and Airframe Manufacturer, together with any employee, representative
or other agent of such parties, is expressly authorized to disclose to any and
all persons immediately upon commencement of discussions, without limitation of
any kind, the tax structure and tax treatment (as such terms are defined under
Treasury Regulation ss. 1.6011-4(c)) of the transactions contemplated by the
Operative Agreements and all materials of any kind (including opinions or other
tax analyses) that are provided to it relating to such tax structure and tax
treatment.
SECTION 9. INDEMNIFICATION AND EXPENSES
9.1 GENERAL INDEMNITY
9.1.1 INDEMNITY
If the Closing occurs, Lessee shall indemnify, protect, defend and hold
harmless each Indemnitee from, against and in respect of, and shall pay on a net
after-tax basis, any and all Expenses of any kind or nature whatsoever that may
be imposed on, incurred by or asserted against any Indemnitee, relating to,
resulting from, or arising out of or in connection with, any one or more of the
following:
(a) The Operative Agreements, the Pass Through Agreements, or the
enforcement of any of the terms of any of the Operative Agreements or the Pass
Through Agreements;
(b) The Aircraft, the Airframe, any Engine or any Part, including, without
limitation, with respect thereto, (i) the manufacture, design, purchase,
acceptance, nonacceptance or rejection, ownership, registration, reregistration,
deregistration, delivery, nondelivery, lease, sublease, assignment, possession,
use or non-use, operation, maintenance, testing, repair, overhaul, condition,
alteration, modification, addition, improvement, storage, airworthiness,
replacement, repair, sale, substitution, return, abandonment, redelivery or
other disposition of the Aircraft, any Engine or any Part, (ii) any claim or
penalty arising out of violations of applicable Laws by Lessee (or any Permitted
Sublessee), (iii) tort liability, whether or not arising out of the negligence
of any Indemnitee (whether active, passive or imputed), (iv) death or property
damage of passengers, shippers or others, (v) environmental control, noise or
pollution and (vi) any Liens in respect of the Aircraft, any Engine or any Part;
(c) The offer, sale, or delivery of any Equipment Notes, Pass Through
Certificates or any interest therein or represented thereby; and
(d) Any breach of or failure to perform or observe, or any other
noncompliance with, any covenant or agreement or other obligation to be
performed by Lessee under any Lessee Operative Agreement or any Pass Through
Agreement or the falsity of any representation or warranty of Lessee in any
Lessee Operative Agreement or any Pass Through Agreement other than in the Tax
Indemnity Agreement.
9.1.2 EXCEPTIONS
Notwithstanding anything contained in Section 9.1.1, Lessee shall not be
required to indemnify, protect, defend and hold harmless any Indemnitee pursuant
to Section 9.1.1 in respect of any Expense of such Indemnitee:
(a) For any Taxes or a loss of Tax benefit, whether or not Lessee is
required to indemnify therefor pursuant to Section 9.3 or the Tax Indemnity
Agreement; PROVIDED, HOWEVER, this Section 9.1.1(a) shall not apply to any taxes
taken into account in making any payment on a net after tax basis;
(b) Except to the extent attributable to acts or events occurring prior
thereto, acts or events (other than acts or events related to the performance or
failure to perform by Lessee of its obligations pursuant to the terms of the
Lessee Operative Agreements) that occur after the earlier of: (i) with respect
to the Airframe, any Engine or any Part, the return of possession (it being
understood that the date of the placement of the Aircraft in storage as provided
in Section 5 of the Lease constitutes the date of return of the Aircraft under
the Lease) of such Airframe, Engine or Part pursuant to the terms of and in
compliance with the Lease (other than pursuant to Section 15 thereof, in which
case Lessee's liability under this Section 9.1 shall survive for so long as
Lessor or Mortgagee shall be entitled to exercise remedies under such Section
15) or (ii) the termination of the Term in accordance with the Lease;
(c) To the extent attributable to any Transfer (voluntary or involuntary)
by or on behalf of such Indemnitee of any Equipment Note or interest therein,
except (i) for out-of-pocket costs and expenses incurred as a result of any such
Transfer pursuant to the exercise of remedies under any Operative Agreement
resulting from a Lease Event of Default and (ii) as otherwise required by the
terms of Section 2.13 of the Trust Indenture;
(d) To the extent attributable to any Transfer (voluntary or involuntary)
by or on behalf of Owner Participant of any interest in the Aircraft, or the
Trust Estate except for costs and expenses incurred as a result of such
Transfer, if such Transfer arises directly from a Lease Event of Default that
shall have occurred and be continuing;
(e) To the extent attributable to the gross negligence or willful
misconduct of such Indemnitee or any related Indemnitee (as defined below)
(other than gross negligence or willful misconduct imputed to such person by
reason of its interest in the Aircraft or any Operative Agreement);
(f) In the case of Xxxxx Fargo, to the extent attributable to matters
enumerated in the proviso to Section 14;
(g) To the extent attributable to the incorrectness or breach of any
representation or warranty of such Indemnitee or any related Indemnitee
contained in or made pursuant to any Operative Agreement or any Pass Through
Agreement;
(h) To the extent attributable to the failure by such Indemnitee or any
related Indemnitee to perform or observe any agreement, covenant or condition on
its part to be performed or observed in any Operative Agreement or any Pass
Through Agreement;
(i) To the extent attributable to the offer or sale by such Indemnitee or
any related Indemnitee of any interest in the Aircraft, the Equipment Notes, the
Pass Through Certificates, the Trust Estate or the Trust Agreement or any
similar interest, in violation of the Securities Act or other applicable
federal, state or foreign securities Laws (other than any offer or sale thereof
caused by the acts or omissions of Lessee);
(j) (i) With respect to any Indemnitee (other than Mortgagee), to the
extent attributable to the failure of the Mortgagee to distribute funds received
and distributable by it in accordance with the Trust Indenture, (ii) with
respect to any Indemnitee (other than the Owner Trustee), to the extent
attributable to the failure of the Owner Trustee to distribute funds received
and distributable by it in accordance with the Trust Agreement, (iii) with
respect to any Indemnitee (other than the Subordination Agent), to the extent
attributable to the failure of the Subordination Agent to distribute funds
received and distributable by it in accordance with the Intercreditor Agreement,
(iv) with respect to any Indemnitee (other than the Pass Through Trustee), to
the extent attributable to the failure of the Pass Through Trustee to distribute
funds received and distributable by it in accordance with the Pass Through Trust
Agreement, (v) with respect to any Indemnitee (other than the Escrow Agent), to
the extent attributable to the failure of the Escrow Agent to pay funds received
and payable by it in accordance with any Escrow Agreement, (vi) with respect to
any Indemnitee (other than the Paying Agent), to the extent attributable to the
failure of the Paying Agent to distribute funds received and distributable by it
in accordance with any Escrow Agreement, (vii) to the extent attributable to the
failure of the Depositary to pay funds payable by it in accordance with any
Deposit Agreement, (viii) with respect to Mortgagee, to the extent attributable
to the negligence or willful misconduct of Mortgagee in the distribution of
funds received and distributable by it in accordance with the Trust Indenture,
(ix) with respect to Owner Trustee, to the extent attributable to the negligence
or willful misconduct of Owner Trustee in the distribution of funds received and
distributable by it in accordance with the Trust Agreement, (x) with respect to
the Subordination Agent, to the extent attributable to the negligence or willful
misconduct of the Subordination Agent in the distribution of funds received and
distributable by it in accordance with the Intercreditor Agreement, (xi) with
respect to the Pass Through Trustee, to the extent attributable to the
negligence or willful misconduct of the Pass Through Trustee in the distribution
of funds received and distributable by it in accordance with the Pass Through
Trust Agreement, (xii) with respect to the Escrow Agent, to the extent
attributable to the negligence or willful misconduct of the Escrow Agent in the
payment of funds received and payable by it in accordance with any Escrow
Agreement, and (xiii) with respect to the Paying Agent, to the extent
attributable to the negligence or willful misconduct of the Paying Agent in the
distribution of funds received and distributable by it in accordance with any
Escrow Agreement.
(k) Other than during the continuation of a Lease Event of Default, to the
extent attributable to the authorization or giving or withholding of any future
amendments, supplements, waivers or consents with respect to any Operative
Agreement or Pass Through Agreement other than such as have been requested by
Lessee or as are required by or made pursuant to the terms of the Operative
Agreements or Pass Through Agreements (unless such requirement results from the
actions of an Indemnitee not required by or made pursuant to the Operative
Agreements or the Pass Through Agreements);
(l) To the extent attributable to any amount which any Indemnitee
expressly agrees to pay or such Indemnitee expressly agrees shall not be paid by
or be reimbursed by Lessee;
(m) To the extent that it is an ordinary and usual operating or overhead
expense;
(n) With respect to the Owner Participant or the Owner Trustee, or any
related Indemnitee, to the extent attributable to the deregistration of the
Aircraft under the Act as a result of Owner Participant's or Owner Trustee's (or
any related Indemnitee of either) not being a Citizen of the United States as a
result of any act (other than reregistration of the Aircraft pursuant to Section
7.1.2 of the Lease) of Owner Participant or Owner Trustee, or any related
Indemnitee of either of the foregoing (not taken at the request of the Lessee);
(o) For any Lessor Lien attributable to such Indemnitee or any related
Indemnitee;
(p) If another provision of an Operative Agreement or a Pass Through
Agreement specifies the extent of Lessee's responsibility or obligation with
respect to such Expense, to the extent arising from other than failure of Lessee
to comply with such specified responsibility or obligation;
(q) To the extent it is a Transaction Expense;
(r) To the extent constituting principal, Make-Whole Amount or interest on
the Equipment Notes attributable solely to an Event of Default not constituting
a Lease Event of Default; or
(s) To the extent incurred by or asserted against an Indemnitee as a
result of any "prohibited transaction", within the meaning of Section 406 of
ERISA or Section 4975(c)(1) of the Code; or
(t) To the extent not included in the definition of Supplemental Rent as a
result of the provisions of clause (e) of such definition.
For purposes of this Section 9.1, a Person shall be considered a "related"
Indemnitee with respect to an Indemnitee if such Person is an Affiliate or
employer of such Indemnitee, a director, officer, employee, agent, or servant of
such Indemnitee or any such Affiliate or a successor or permitted assignee of
any of the foregoing.
9.1.3 SEPARATE AGREEMENT
This Agreement constitutes a separate agreement with respect to each
Indemnitee and is enforceable directly by each such Indemnitee.
9.1.4 NOTICE
If a claim for any Expense that an Indemnitee shall be indemnified against
under this Section 9.1 is made, such Indemnitee shall give prompt written notice
thereof to Lessee. Notwithstanding the foregoing, the failure of any Indemnitee
to notify Lessee as provided in this Section 9.1.4, or in Section 9.1.5, shall
not release Lessee from any of its obligations to indemnify such Indemnitee
hereunder, except to the extent that such failure results in an additional
Expense to Lessee (in which event Lessee shall not be responsible for such
additional Expense) or materially impairs Lessee's ability to contest such
claim.
9.1.5 NOTICE OF PROCEEDINGS; DEFENSE OF CLAIMS;
LIMITATIONS
(a) In case any action, suit or proceeding shall be brought against any
Indemnitee for which Lessee is responsible under this Section 9.1, such
Indemnitee shall notify Lessee of the commencement thereof and Lessee may, at
its expense, participate in and to the extent that it shall wish (subject to the
provisions of the following paragraph), assume and control the defense thereof
and, subject to Section 9.1.5(c), settle or compromise the same.
(b) Lessee or its insurer(s) shall have the right, at its or their
expense, to investigate or, if Lessee or its insurer(s) shall agree in writing
not to dispute liability to the Indemnitee giving notice of such action, suit or
proceeding under this Section 9.1.5 for indemnification hereunder or under any
insurance policies pursuant to which coverage is sought, control the defense of,
any action, suit or proceeding, relating to any Expense for which
indemnification is sought pursuant to this Section 9.1, and each Indemnitee
shall cooperate with Lessee or its insurer(s) with respect thereto; PROVIDED,
that Lessee shall not be entitled to control the defense of any such action,
suit, or proceeding or compromise any such Expense (i) during the continuance of
any Lease Event of Default arising under Section 14.1 of the Lease, (ii) if such
proceedings would entail a material risk of the sale, forfeiture or loss of the
Aircraft or (iii) if such proceedings would entail a risk of criminal liability
or greater than de minimis risk of material civil penalties being imposed on
such Indemnitee. In connection with any such action, suit or proceeding being
controlled by Lessee, such Indemnitee shall have the right to participate
therein, at its sole cost and expense, with counsel reasonably satisfactory to
Lessee; PROVIDED, that such Indemnitee's participation does not, in the
reasonable opinion of the independent counsel appointed by the Lessee or its
insurers to conduct such proceedings, interfere with the defense of such case.
(c) In no event shall any Indemnitee enter into a settlement or other
compromise with respect to any Expense without the prior written consent of
Lessee, which consent shall not be unreasonably withheld or delayed, unless such
Indemnitee waives its right to be indemnified with respect to such Expense under
this Section 9.1.
(d) In the case of any Expense indemnified by the Lessee hereunder which
is covered by a policy of insurance maintained by Lessee pursuant to Section 11
of the Lease, at Lessee's expense, each Indemnitee agrees to cooperate with the
insurers in the exercise of their rights to investigate, defend or compromise
such Expense as may be required to retain the benefits of such insurance with
respect to such Expense.
(e) If an Indemnitee is not a party to this Agreement, Lessee may require
such Indemnitee to agree in writing to the terms of this Section 9 and Section
15.8 prior to making any payment to such Indemnitee under this Section 9.
(f) Nothing herein shall be deemed to be an assumption by Lessee of
obligations of Owner Trustee with respect to, or a guarantee by Lessee of, any
amounts payable by Owner Trustee upon Equipment Notes or a guarantee of any
residual value of the Aircraft.
(g) Nothing contained in this Section 9.1.5 shall be deemed to require an
Indemnitee to contest any Expense or to assume responsibility for or control of
any judicial proceeding with respect thereto.
9.1.6 INFORMATION
Lessee will provide the relevant Indemnitee with such information not
within the control of such Indemnitee, as is in Lessee's control or is
reasonably available to Lessee, which such Indemnitee may reasonably request and
will otherwise cooperate with such Indemnitee so as to enable such Indemnitee to
fulfill its obligations under Section 9.1.5. The Indemnitee shall supply Lessee
with such information not within the control of Lessee, as is in such
Indemnitee's control or is reasonably available to such Indemnitee, which Lessee
may reasonably request to control or participate in any proceeding to the extent
permitted by Section 9.1.5.
9.1.7 EFFECT OF OTHER INDEMNITIES; SUBROGATION; FURTHER
ASSURANCES
Upon the payment in full by Lessee of any indemnity provided for under
this Agreement, Lessee, without any further action and to the full extent
permitted by Law, will be subrogated to all rights and remedies of the person
indemnified (other than with respect to any of such Indemnitee's insurance
policies or in connection with any indemnity claim such Indemnitee may have
under Section 5.03 or 7.01 of the Trust Indenture or Section 5.3 or 7 of the
Trust Agreement) in respect of the matter as to which such indemnity was paid.
Each Indemnitee will give such further assurances or agreements and cooperate
with Lessee to permit Lessee to pursue such claims, if any, to the extent
reasonably requested by Lessee and at Lessee's expense.
9.1.8 REFUNDS
If an Indemnitee receives any refund, in whole or in part, with respect to
any Expense paid by Lessee hereunder, it will promptly pay the amount refunded
(but not an amount in excess of the amount Lessee or any of its insurers has
paid in respect of such Expense) over to Lessee unless a Lease Event of Default
shall have occurred and be continuing, in which case such amounts shall be paid
over to Owner Trustee (or, so long as the Trust Indenture shall not have been
discharged, to Mortgagee) to hold as security for Lessee's obligations under the
Lessee Operative Agreements or, if requested by Lessee, applied to satisfy such
obligations.
9.2 EXPENSES
9.2.1 TRANSACTION EXPENSES
Owner Participant shall pay all Transaction Expenses (which shall exclude
the ongoing fees, disbursements and expenses of Mortgagee and the Owner
Trustee), up to an aggregate amount equal to the Expense Limit. Airframe
Manufacturer shall pay all Transaction Expenses in excess of the Expense Limit
and the ongoing fees, disbursements and expenses of Mortgagee and the Owner
Trustee, provided that if Airframe Manufacturer shall fail to make any payment
when due of the ongoing fees, disbursements and expenses of Mortgagee or Owner
Trustee, Lessee shall make such payment if so requested by Mortgagee or Owner
Trustee, as applicable, in which case Airframe Manufacturer shall be obligated
to immediately reimburse Lessee for any payment made by Lessee pursuant to this
sentence. Lessee shall have no liability or obligation with respect to
Transaction Expenses, except as provided in the preceding sentence.
9.2.2 PAYMENT OF OTHER EXPENSES
Lessee will be responsible for the fees and charges of its counsel
incurred in connection with the preparation, execution and delivery of the
Operative Agreements. All out-of-pocket costs and expenses of Lessee (including,
without limitation, reasonable attorney's fees and charges) incurred in
performance of Sections 7.1.3(a), (b) and (c) (other than with respect to the
first parenthetical of Section 7.1.3(c)) to the extent constituting Transaction
Expenses, shall be paid pursuant to Section 9.2.1 and, otherwise, shall be paid
by Airframe Manufacturer. Airframe Manufacturer shall pay all costs and expenses
incurred by it in connection with the Operative Agreements.
9.3 GENERAL TAX INDEMNITY
9.3.1 GENERAL
Except as provided in Section 9.3.2, Lessee agrees that each payment of
Rent paid by Lessee pursuant to the Lease, and any other payment or indemnity
paid by Lessee to a Tax Indemnitee under any Operative Agreement, shall be free
of all withholdings or deductions with respect to Taxes of any nature (other
than U.S. federal withholding taxes on, based on or measured by gross or net
income), and in the event that Lessee shall be required by applicable law to
make any such withholding or deduction for any such payment (x) Lessee shall
make all such withholdings or deductions, (y) the amount payable by Lessee shall
be increased so that after making all required withholdings or deductions such
Tax Indemnitee receives (at no after-Tax cost to the Tax Indemnitee) the same
amount that it would have received had no such withholdings or deductions been
made, and (z) Lessee shall pay the full amount withheld or deducted to the
relevant Taxing Authority in accordance with applicable law. Lessee further
agrees that, in the event it is required to withhold from any payment of Basic
Rent, Termination Value, Stipulated Loss Value (and amounts determined by
reference thereto), or amounts payable upon exercise of Lessee's purchase option
pursuant to Section 17.3 of the Lease, any Tax imposed upon Owner Participant or
Owner Trustee (including any withholding Tax based on income or receipts of
Owner Participant or Owner Trustee) and such Tax is excluded from
indemnification pursuant to Section 9.3.2, Lessee shall pay such additional
amount, if any, required so that the total amount paid by Lessee (after making
all required withholdings) is equal to (assuming timely payment of the Equipment
Notes prior to the relevant Payment Date) the aggregate principal amount of
scheduled installments due on the Equipment Notes outstanding on the relevant
Payment Date, together with accrued and unpaid interest, due on the Equipment
Notes; Owner Participant or Owner Trustee, as the case may be, shall reimburse
Lessee for any such additional amounts within two Business Days after demand
therefor. Except as provided in Section 9.3.2 and whether or not any of the
transactions contemplated hereby are consummated, Lessee shall pay, indemnify,
protect, defend and hold each Tax Indemnitee harmless from all Taxes imposed by
any Taxing Authority that may from time to time be imposed on or asserted
against any Tax Indemnitee or the Aircraft, the Airframe, any Engine or any Part
or any interest in any of the foregoing (whether or not indemnified against by
any other Person), upon or with respect to the Operative Agreements or the
transactions or payments contemplated thereby, including but not limited to any
Tax imposed upon or with respect to (x) the Aircraft, the Airframe, any Engine,
any Part, any Operative Agreement (including without limitation any Equipment
Notes) or any data or any other thing delivered or to be delivered under an
Operative Agreement, (y) the purchase, manufacture, acceptance, rejection, sale,
transfer of title, return, ownership, mortgaging, delivery, transport, charter,
rental, lease, re-lease, sublease, assignment, possession, repossession,
presence, use, condition, storage, preparation, maintenance, modification,
alteration, improvement, operation, registration, transfer or change of
registration, reregistration, repair, replacement, overhaul, location, control,
the imposition of any Lien (other than a Lessor Lien), financing, refinancing
requested by the Lessee, abandonment or other disposition of the Aircraft, the
Airframe, any Engine, any Part, any data or any other thing delivered or to be
delivered under an Operative Agreement, or (z) rent, interest, fees or any other
income, proceeds, receipts or earnings, whether actual or deemed, arising upon,
in connection with, or in respect of, any of the Operative Agreements (including
the property or income or other proceeds with respect to property held as part
of the Trust Estate) or the transactions contemplated thereby.
9.3.2 CERTAIN EXCEPTIONS
The provisions of Section 9.3.1 shall not apply to, and Lessee shall have
no liability hereunder for, Taxes:
(a) imposed on a Tax Indemnitee by the federal government of the United
States or any Taxing Authority of any jurisdiction within the United States in
which such Tax Indemnitee is incorporated or maintains its principal place of
business or is otherwise subject to Taxes of such type as a result of
transactions or activities by such Tax Indemnitee or its Affiliates that are
independent of the transactions and activities contemplated by the Operative
Agreements (i) on, based on, or measured by, gross or net income or gross or net
receipts, including capital gains taxes, excess profits taxes, minimum taxes
from tax preferences, alternative minimum taxes, branch profits taxes,
accumulated earnings taxes, personal holding company taxes, succession taxes and
estate taxes, and any withholding taxes on, based on or measured by gross or net
income or receipts or (ii) on, or with respect to, or measured by, capital or
net worth or in the nature of a franchise tax or a tax for the privilege of
doing business (other than, in the case of clause (i) or (ii), sales, use,
license or property Taxes, Taxes in the nature of sales or use taxes, value
added taxes imposed in lieu of any of the foregoing, airport excise taxes or any
excise taxes imposed in the nature of or in lieu of any of the foregoing and
other than, in the case of clause (ii), any doing business taxes imposed by a
taxing authority in any jurisdiction (other than the jurisdiction within which
such Tax Indemnitee is incorporated or maintains its principal place of
business) if such doing business taxes attributable to the transactions
contemplated by the Operative Agreements were subject to indemnity pursuant to
the provisions of this clause 9.3.2(a) (without regard to this parenthetical)
solely as a result of the usage or location of the Aircraft in such jurisdiction
by a Lessee Person when such Tax Indemnitee was not incorporated or doing
business or otherwise subject to Taxes of such type in such jurisdiction, if in
a subsequent taxable period such Indemnitee becomes subject to Taxes of such
type as a result of activities or transactions other than those contemplated by
the Operative Agreements, to the extent that such taxes (and in an amount no
more than the amount of such Taxes that) would have continued to be imposed
solely as a result of the usage or location of the Aircraft by a Lessee Person
in such jurisdiction in the absence of any additional nexus between such Tax
Indemnitee and such jurisdiction);
(b) imposed as a result of the replacement of the existing financing
agreements with the Operative Agreements and the Express Sublease or the
issuance of the Equipment Notes;
(c) on, or with respect to, or measured by, any trustee fees, commissions
or compensation received by Owner Trustee, Pass Through Trustee, Subordination
Agent or Mortgagee;
(d) on the Trust or the Trust Estate that result from treatment of the
Trust or the Trust Estate as an entity, such as a corporation, separate and
apart from the Owner Participant;
(e) that are being contested as provided in Section 9.3.4 hereof, for so
long as such contest is continuing;
(f) imposed on any Tax Indemnitee to the extent that such Taxes result
from the gross negligence or willful misconduct of such Tax Indemnitee, a
related Tax Indemnitee or any Affiliate thereof;
(g) imposed on or with respect to a Tax Indemnitee (including the
transferee in those cases in which the Tax on transfer is imposed on, or is
collected from, the transferee) as a result of a transfer or other disposition
(including a deemed transfer or disposition) by such Tax Indemnitee or a related
Tax Indemnitee (or, in the case of the Owner Participant, by Owner Trustee
(unless requested by the Lessee), or, in the case of Taxes imposed on a
transferee, by the transferor) of any interest in the Aircraft, the Airframe,
any Engine or any Part, the Rent (other than the assignment of Rent to the
Mortgagee pursuant to the Trust Indenture), the Trust, the Trust Estate, the
Trust Indenture Estate, the Lease or any interest arising under the Operative
Agreements or any Equipment Note or a transfer or disposition (including a
deemed transfer or disposition) of any interest in a Tax Indemnitee (other than
(A) a substitution or replacement of the Aircraft, the Airframe, any Engine or
any Part by a Lessee Person that is treated for Tax purposes as a transfer or
disposition, (B) a transfer pursuant to an exercise of remedies upon a Lease
Event of Default that shall have occurred and have been continuing, or (C) a
transfer to Lessee pursuant to Section 17.3 of the Lease);
(h) except with respect to gross-ups, imposed subsequent to (and not in
respect of) a transfer or other disposition described in paragraph (g) above and
not described in the last parenthetical of such paragraph (g) and in excess of
those that would have been imposed had there not been a transfer or other
disposition by or to such Tax Indemnitee or a related Tax Indemnitee described
in paragraph (g) above;
(i) imposed on the Owner Participant and indemnified by Lessee pursuant to
the Tax Indemnity Agreement;
(j) imposed with respect to any period after the expiration or earlier
termination of the Term and, if required pursuant to the terms of the Lease, the
return of possession of the Aircraft to Lessor or placement in storage at the
request of Lessor in accordance with the Lease (provided that this exclusion (j)
shall not apply to Taxes imposed after such period arising as a result of events
occurring prior to such expiration or earlier termination);
(k) consisting of any interest, penalties or additions to tax imposed on a
Tax Indemnitee resulting from a failure of such Tax Indemnitee or a related Tax
Indemnitee to file any return properly and timely, unless such failure shall be
caused by the failure of Lessee to fulfill its obligations, if any, under
Section 9.3.6 with respect to such return, PROVIDED that if any such return is
required to be filed in a jurisdiction outside the United States, which return
would not have been required to be filed in the absence of the transactions
contemplated under the Operative Agreements or Lessee's transactions or
activities in such jurisdiction, this exclusion shall not apply if (A) Lessee
has not informed the Tax Indemnitee in writing of the need to file such return
at least 30 days prior to the due date thereof (or such shorter period as would
reasonably allow the Tax Indemnitee to file such return if, under the
circumstances, the Lessee could not have reasonably informed the Tax Indemnitee
of the need to file at least 30 days prior to the due date thereof), or (B) the
Tax Indemnitee had determined in good faith that such filing would subject it or
any Affiliate to adverse consequences in such jurisdiction for which it had not
been (and would not have been) indemnified;
(l) resulting from, or that would not have been imposed but for, any
Lessor Liens arising as a result of claims against, or acts or omissions of, or
otherwise attributable to such Tax Indemnitee or a related Tax Indemnitee;
(m) imposed on any Tax Indemnitee as a result of the breach by such Tax
Indemnitee or a related Tax Indemnitee of any covenant of such Tax Indemnitee or
any Affiliate thereof contained in any Operative Agreement or the inaccuracy of
any representation or warranty by such Tax Indemnitee or any Affiliate thereof
in any Operative Agreement;
(n) in the nature of an intangible or similar Tax (i) upon or with respect
to the value or principal amount of the interest of Loan Participant or any Note
Holder in any Equipment Note or the loan evidenced thereby or (ii) upon or with
respect to the value of the interest of the Owner Participant in the Trust
Estate or the Trust, in each case only if such Taxes are in the nature of
franchise Taxes or result from the Tax Indemnitee doing business in the taxing
jurisdiction and are imposed because of the place of incorporation or the
activities unrelated to the transactions contemplated by the Operative
Agreements in the taxing jurisdiction of such Tax Indemnitee;
(o) that are included in Lessor's Cost and paid to the appropriate Taxing
Authority;
(p) imposed on a Tax Indemnitee by a Taxing Authority of a jurisdiction
outside the United States within which such Tax Indemnitee is incorporated or
maintains its principal place of business or to the extent that such Taxes would
not have been imposed but for a connection between the Tax Indemnitee or a
related Tax Indemnitee and such jurisdiction imposing such Tax unrelated to the
transactions contemplated by the Operative Agreements; or
(q) Taxes relating to ERISA or Section 4975 of the Code.
For purposes hereof, a Tax Indemnitee and any other Tax Indemnitees that
are successors, assigns, agents, servants or Affiliates of such Tax Indemnitee
shall be related Tax Indemnitees.
9.3.3 PAYMENT
(a) Lessee's indemnity obligation to a Tax Indemnitee under this Section
9.3 shall equal the amount which, after taking into account any Tax imposed upon
the receipt or accrual of the amounts payable under this Section 9.3 and any tax
benefits actually recognized by such Tax Indemnitee as a result of the
indemnifiable Tax (including, without limitation, any benefits recognized as a
result of an indemnifiable Tax being utilized by such Tax Indemnitee as a credit
against Taxes not indemnifiable under this Section 9.3), shall equal the amount
of the Tax indemnifiable under this Section 9.3. The loss, disallowance or
recapture of such tax benefits taken into account by such Tax Indemnitee shall
be treated as a Tax subject to indemnity under this Section 9.3.1 without regard
to the provisions of Section 9.3.2 (other than Section 9.3.2(f)).
(b) At Lessee's request, the computation of the amount of any indemnity
payment owed by Lessee or any amount owed by a Tax Indemnitee to Lessee pursuant
to this Section 9.3 shall be verified and certified by an independent public
accounting firm selected by such Tax Indemnitee and reasonably satisfactory to
Lessee. Such verification shall be binding. The costs of such verification
(including the fee of such public accounting firm) shall be borne by Lessee
unless such verification shall result in an adjustment in Lessee's favor of 5%
or more of the net present value (computed using a discount rate equal to the
Debt Rate, compounded semiannually) of the payment as computed by such Tax
Indemnitee, in which case the costs shall be paid by such Tax Indemnitee.
(c) Each Tax Indemnitee shall provide Lessee with such certifications,
information and documentation as shall be in such Tax Indemnitee's possession
and as shall be reasonably requested by Lessee to minimize any indemnity payment
pursuant to this Section 9.3; provided, that notwithstanding anything to the
contrary contained herein, no Tax Indemnitee shall be required to provide Lessee
with any Tax returns.
(d) Each Tax Indemnitee shall promptly forward to Lessee any written
notice, xxxx or advice received by it from any Taxing Authority concerning any
Tax for which it seeks indemnification under this Section 9.3. Lessee shall pay
any amount for which it is liable pursuant to this Section 9.3 directly to the
appropriate Taxing Authority if legally permissible or upon demand of a Tax
Indemnitee, to such Tax Indemnitee within 30 days of such demand (or, if a
contest occurs in accordance with Section 9.3.4, within 30 days after a Final
Determination (as defined below)), but in no event more than two Business Days
prior to the date the Tax to which such amount payable hereunder relates is due.
If requested by a Tax Indemnitee in writing, Lessee shall furnish to the
appropriate Tax Indemnitee the original or a certified copy of a receipt for
Lessee's payment of any Tax paid by Lessee or such other evidence of payment of
such Tax as is acceptable to such Tax Indemnitee. Lessee shall also furnish
promptly upon written request such data as any Tax Indemnitee may reasonably
require to enable such Tax Indemnitee to comply with the requirements of any
taxing jurisdiction unless such data is not reasonably available to Lessee or,
unless such data is specifically requested by a Taxing Authority, is not
customarily furnished by domestic air carriers under similar circumstances. For
purposes of this Section 9.3, a "Final Determination" shall mean (i) a decision,
judgment, decree or other order by any court of competent jurisdiction that
occurs pursuant to the provisions of Section 9.3.4, which decision, judgment,
decree or other order has become final and unappealable (by law or by Lessee
hereunder), (ii) a closing agreement or settlement agreement entered into in
accordance with Section 9.3.4 that has become binding and is not subject to
further review or appeal (absent fraud, misrepresentation, etc.), or (iii) the
termination of administrative proceedings and the expiration of the time for
instituting a claim in a court proceeding.
(e) If any Tax Indemnitee shall actually realize a tax savings by reason
of any Tax paid or indemnified by Lessee pursuant to this Section 9.3 (whether
such tax savings shall be by means of a foreign tax credit, depreciation or cost
recovery deduction or otherwise) and such savings is not otherwise taken into
account in computing such payment or indemnity, such Tax Indemnitee shall pay to
Lessee (within 30 days after the realization of such tax savings) an amount
equal to the lesser of (i) the amount of such tax savings, plus any additional
tax savings recognized as the result of any payment made pursuant to this
sentence, when, as, if, and to the extent, realized or (ii) the amount of all
payments (other than in respect of contest costs) pursuant to this Section 9.3
by Lessee to such Tax Indemnitee (less any payments previously made by such Tax
Indemnitee to Lessee pursuant to this Section 9.3.3 (e)) (and the excess, if
any, of the amount described in clause (i) over the amount described in clause
(ii) shall be carried forward and applied to reduce pro tanto any subsequent
obligations of Lessee to make payments to such Tax Indemnitee pursuant to this
Section 9.3); provided, that such Tax Indemnitee shall not be required to make
any payment pursuant to this sentence so long as a Lease Event of Default of a
monetary nature has occurred and is continuing. If a tax benefit is later
disallowed or denied, the disallowance or denial shall be treated as a Tax
indemnifiable under Section 9.3.1 without regard to the provisions of Section
9.3.2 (other than Section 9.3.2 (f)). Each such Tax Indemnitee shall in good
faith use reasonable efforts in filing its tax returns and in dealing with
Taxing Authorities to seek and claim any such tax benefit.
(f) For purposes of this Section 9.3, items of foreign Tax of any Tax
Indemnitee shall be deemed to be utilized by such Tax Indemnitee as credits or
deductions for any taxable year in accordance with the following priorities:
(x) First, all utilizable foreign Taxes (taking into account the
limitations of Section 904(d) of the Code) other than those described in clause
(y) below;
(y) Second, all utilizable foreign Taxes (taking into account the
limitations of Section 904(d) of the Code) arising out of the transactions
contemplated by the Operative Agreements and other equipment leasing
transactions to the extent such Tax Indemnitee is indemnified or held harmless
for such Taxes by the Lessee or a lessee on a pari passu basis.
9.3.4 CONTEST
(a) If a written claim is made against a Tax Indemnitee for Taxes with
respect to which Lessee could be liable for payment or indemnity hereunder, or
if a Tax Indemnitee makes a determination that a Tax is due for which Lessee
could have an indemnity obligation hereunder, such Tax Indemnitee shall promptly
give Lessee notice in writing of such claim (provided, that failure to so notify
Lessee shall not relieve Lessee of its indemnity obligations hereunder unless
such failure to notify forecloses Lessee's rights to require a contest of such
claim) and shall take no action with respect to such claim without the prior
written consent of Lessee for 30 days following the receipt of such notice by
Lessee; provided, that, in the case of a claim made against a Tax Indemnitee, if
such Tax Indemnitee shall be required by law to take action prior to the end of
such 30-day period, such Tax Indemnitee shall, in such notice to Lessee, so
inform Lessee, and such Tax Indemnitee shall take no action for as long as it is
legally able to do so (it being understood that a Tax Indemnitee shall be
entitled to pay the Tax claimed and xxx for a refund if (i)(A) the failure to so
pay the Tax would result in substantial penalties (unless immediately reimbursed
by Lessee) and the act of paying the Tax would not materially prejudice the
right to contest or (B) the failure to so pay would result in criminal penalties
and (ii) such Tax Indemnitee shall take any action so required in connection
with so paying the Tax in a manner that, in its good faith opinion, is the least
prejudicial to the pursuit of the contest). In addition, such Tax Indemnitee
shall (provided, that Lessee shall have agreed to keep such information
confidential other than to the extent necessary in order to contest the claim)
furnish Lessee with copies of any requests for information from any Taxing
Authority relating to such Taxes with respect to which Lessee may be required to
indemnify hereunder. If requested by Lessee in writing within 30 days after its
receipt of such notice, such Tax Indemnitee shall, at the expense of Lessee
(including, without limitation, all reasonable costs, expenses and reasonable
attorneys' and accountants' fees and disbursements), in good faith contest (or,
if permitted by applicable law to be contested by the Lessee in its own name,
allow Lessee to contest) through appropriate administrative and judicial
proceedings the validity, applicability or amount of such Taxes by (I) resisting
payment thereof, (II) not paying the same except under protest if protest is
necessary and proper or (III) if the payment is made, using reasonable efforts
to obtain a refund thereof in an appropriate administrative and/or judicial
proceeding. If requested to do so by Lessee, the Tax Indemnitee shall appeal any
adverse administrative or judicial decision, except that the Tax Indemnitee
shall not be required to pursue any appeals to the United States Supreme Court.
If and to the extent the Tax Indemnitee is able to separate the contested issue
or issues from other issues arising in the same administrative or judicial
proceeding that are unrelated to the transactions contemplated by the Operative
Agreements without, in the good faith judgment of such Tax Indemnitee, adversely
affecting such Tax Indemnitee, such Tax Indemnitee shall permit Lessee to
contest such matter in its own name, if permitted by applicable law, and shall
provide to Lessee (at Lessee's cost and expense) such information or data that
is in such Tax Indemnitee's control or possession that is reasonably necessary
to conduct such contest (other than such Tax Indemnitee's federal income tax
returns), and Lessee shall keep such Tax Indemnitee reasonably informed
concerning the progress of such contest and shall provide such Tax Indemnitee
with copies of all submissions and judicial and administrative proceedings. In
the case of a contest controlled by a Tax Indemnitee, such Tax Indemnitee shall
consult with Lessee in good faith regarding the manner of contesting such claim
and shall keep Lessee reasonably informed regarding the progress of such
contest. A Tax Indemnitee shall not fail to take any action expressly required
by this Section 9.3.4 (including, without limitation, any action regarding any
appeal of an adverse determination with respect to any claim) or settle or
compromise any claim without the prior written consent of the Lessee (except as
contemplated by Section 9.3.4(b) or (c)).
(b) Notwithstanding the foregoing, in no event shall a Tax Indemnitee be
required to pursue any contest (or to permit Lessee to pursue any contest)
unless (i) Lessee shall have agreed to pay such Tax Indemnitee on demand all
reasonable costs and expenses incurred by such Tax Indemnitee in connection with
contesting such Taxes, including, without limitation, all reasonable out of
pocket costs and expenses and reasonable attorneys' and accountants' fees and
disbursements, (ii) if such contest shall involve the payment of the claim,
Lessee shall advance the amount thereof (to the extent indemnified hereunder)
plus interest, penalties and additions to tax with respect thereto that are
required to be paid prior to the commencement of such contest on an
interest-free and after-Tax basis to such Tax Indemnitee (and such Tax
Indemnitee shall promptly pay to the Lessee any net realized tax benefits
resulting from such advance including any tax benefits resulting from making
such payment), (iii) such Tax Indemnitee shall have reasonably determined that
the action to be taken will not result in any material risk of forfeiture, sale
or loss of the Aircraft (unless Lessee shall have made provisions to protect the
interests of any such Tax Indemnitee and the Owner Participant in a manner
reasonably satisfactory to such Tax Indemnitee and the Owner Participant)
(provided, that such Tax Indemnitee agrees to notify Lessee in writing promptly
after it becomes aware of any such risk), (iv) no Lease Event of Default shall
have occurred and be continuing unless Lessee has provided adequate security for
its obligations hereunder by advancing to such Tax Indemnitee before proceeding
or continuing with such contest, the amount of the Tax being contested, plus any
interest and penalties and an amount estimated in good faith by such Tax
Indemnitee for expenses, and (v) prior to commencing any judicial action
controlled by Lessee, Lessee shall have acknowledged its liability for such
claim hereunder, provided that Lessee shall not be bound by its acknowledgment
if the Final Determination articulates conclusions of law and fact that
demonstrate that Lessee has no liability for the contested amounts hereunder.
Notwithstanding the foregoing, if any Tax Indemnitee shall release, waive,
compromise or settle any claim which may be indemnifiable by Lessee pursuant to
this Section 9.3 without the written permission of Lessee, Lessee's obligation
to indemnify such Tax Indemnitee with respect to such claim (and all directly
related claims and claims based on the outcome of such claim) shall terminate,
subject to Section 9.3.4(c), and subject to Section 9.3.4(c), such Tax
Indemnitee shall repay to Lessee any amount previously paid or advanced to such
Tax Indemnitee with respect to such claim (other then contest costs), plus
interest at the rate that would have been payable by the relevant Taxing
Authority with respect to a refund of such Tax.
(c) Notwithstanding anything contained in this Section 9.3, a Tax
Indemnitee will not be required to contest the imposition of any Tax and shall
be permitted to settle or compromise any claim without Lessee's consent if such
Tax Indemnitee (i) shall waive its right to indemnity under this Section 9.3
with respect to such Tax (and any directly related claim and any claim the
outcome of which is determined based upon the outcome of such claim), (ii) shall
pay to Lessee any amount previously paid or advanced by Lessee pursuant to this
Section 9.3 (other than contest costs) with respect to such Tax, plus interest
at the rate that would have been payable by the relevant Taxing Authority with
respect to a refund of such Tax, and (iii) shall agree to discuss with Lessee
the views or positions of any relevant Taxing Authority with respect to the
imposition of such Tax.
9.3.5 REFUND
If any Tax Indemnitee shall receive a refund of, or be entitled to a
credit against other liability for, all or any part of any Taxes paid,
reimbursed or advanced by Lessee, such Tax Indemnitee shall pay to Lessee within
30 days of such receipt an amount equal to the lesser of (a) the amount of such
refund or credit plus any net tax benefit (taking into account any Taxes
incurred by such Tax Indemnitee by reason of the receipt of such refund or
realization of such credit) actually realized by such Tax Indemnitee as a result
of any payment by such Tax Indemnitee made pursuant to this sentence (including
this clause (a)) and (b) such tax payment, reimbursement or advance by Lessee to
such Tax Indemnitee theretofore made pursuant to this Section 9.3 (and the
excess, if any, of the amount described in clause (a) over the amount described
in clause (b) shall be carried forward and applied to reduce pro tanto any
subsequent obligation of Lessee to make payments to such Tax Indemnitee pursuant
to this Section 9.3). If, in addition to such refund or credit, such Tax
Indemnitee shall receive (or be credited with) an amount representing interest
on the amount of such refund or credit, such Tax Indemnitee shall pay to Lessee
within 30 days of such receipt or realization of such credit that proportion of
such interest that shall be fairly attributable to Taxes paid, reimbursed or
advanced by Lessee prior to the receipt of such refund or realization of such
credit. If any such refund or credit or any interest thereon for which a Tax
Indemnitee shall have paid Lessee is later recaptured, denied, disallowed or
reduced, such recapture, denial, disallowance or reduction shall be treated as a
Tax indemnifiable under Section 9.3.1 without regard to the provisions of
Section 9.3.2 (other than Section 9.3.2(f)).
9.3.6 TAX FILING
If any report, return or statement is required to be filed with respect to
any Tax which is subject to indemnification under this Section 9.3, Lessee shall
timely file the same (except for any such report, return or statement which a
Tax Indemnitee has timely notified the Lessee in writing that such Tax
Indemnitee intends to file or which a Tax Indemnitee is required by law to file
in its own name); provided, that the relevant Tax Indemnitee shall furnish
Lessee with any information in such Tax Indemnitee's possession or control that
is reasonably necessary to file any such return, report or statement and is
reasonably requested in writing by Lessee (it being understood that the Tax
Indemnitee shall not be required to furnish copies of its actual tax returns,
although it may be required to furnish relevant information contained therein).
Lessee shall either file such report, return or statement and send a copy of
such report, return or statement to such Tax Indemnitee, and Owner Trustee if
the Tax Indemnitee is not Owner Trustee, or, where Lessee is not permitted to
file such report, return or statement, or if the same is required by law to be
filed in the Tax Indemnitee's own name, it shall notify such Tax Indemnitee in
writing of such requirement and prepare and deliver such report, return or
statement to such Tax Indemnitee in a manner satisfactory to such Tax Indemnitee
within a reasonable time prior to the time such report, return or statement is
to be filed.
9.3.7 FORMS
Each Tax Indemnitee agrees to furnish from time to time to Lessee or
Mortgagee or to such other person as Lessee or Mortgagee may designate, at
Lessee's or Mortgagee's request, such duly executed and properly completed forms
as may be necessary or appropriate in order to claim any reduction of or
exemption from any withholding or other Tax imposed by any Taxing Authority, if
(x) such reduction or exemption is available to such Tax Indemnitee, (y) Lessee
has provided such Tax Indemnitee with any information necessary to complete such
form not otherwise reasonably available to such Tax Indemnitee, and (z) if such
return is required to be filed in a jurisdiction outside the United States, the
Tax Indemnitee has not made a good faith determination that such filing would
subject it or any Affiliate to any adverse consequences in such jurisdiction for
which it has not been (and would not have been) indemnified.
9.3.8 NON-PARTIES
If a Tax Indemnitee is not a party to this Agreement, Lessee may require
the Tax Indemnitee to agree in writing, in a form reasonably acceptable to
Lessee, to the terms of this Section 9.3 and Section 15.8 prior to making any
payment to such Tax Indemnitee under this Section 9.3.
9.3.9 SUBROGATION
Upon payment of any Tax by Lessee pursuant to this Section 9.3 to or on
behalf of a Tax Indemnitee, Lessee, without any further action, shall be
subrogated to any claims that such Tax Indemnitee may have relating thereto.
Such Tax Indemnitee shall cooperate with Lessee (to the extent such cooperation
does not result in any unreimbursed cost, expense or liability to such Tax
Indemnitee) to permit Lessee to pursue such claims.
9.3.10 FOREIGN TAX ON LOAN PAYMENTS
If an Owner Participant is incorporated or organized, or maintains a place
of business or conducts activities (other than any activities of the Owner
Participant resulting from its participation in the transactions contemplated by
the Operative Agreements or resulting from any activities of Lessee in such
jurisdiction) in a country other than the United States or in a territory,
possession or commonwealth of the United States (within the meaning of the tax
law of that foreign jurisdiction) and if as a result thereof any foreign Taxes
(including withholding Taxes) are imposed on Pass Through Trustee, Pass Through
Trust, or any Note Holder, then Owner Participant shall reimburse Lessee for any
payments Lessee is required to make to or on behalf of Pass Through Trustee,
Pass Through Trust, or any Note Holder under this Section 9.3 as a result of the
imposition of such Taxes. The amount payable by Owner Participant to Lessee
shall be an amount which, after taking into account any such Taxes, any Tax
imposed upon the receipt or accrual by Lessee of such payment by Owner
Participant and any tax benefits or tax savings realized by Lessee with respect
to the payment of such withholding Tax or the payment hereunder, shall equal the
amount of Lessee's payment to or on behalf of such Pass Through Trustee, Pass
Through Trust or Note Holder.
9.4 PAYMENTS
Any payments made pursuant to Section 9.1 and Section 9.3 shall be due on
the 60th day after demand is made to the indemnifying party therefor (other than
any payments for which a different time is provided under Section 9.3.3 hereof)
and shall be made directly to the relevant Indemnitee or Tax Indemnitee or to
Lessee, in immediately available funds at such bank or to such account as
specified by such Indemnitee or Tax Indemnitee or Lessee, as the case may be, in
written directives to the payor, or, if no such direction shall have been given,
by check of the payor payable to the order of, and mailed to, such Indemnitee or
Tax Indemnitee or Lessee, as the case may be, by certified mail, postage
prepaid, at its address as set forth in this Agreement.
9.5 INTEREST
If any amount, payable by Lessee, any Indemnitee or any Tax Indemnitee
under Section 9.1 or 9.3 is not paid when due, the person obligated to make such
payment shall pay on demand, to the extent permitted by Law, to the person
entitled thereto, interest on any such amount for the period from and including
the due date for such amount to but excluding the date the same is paid, at the
Payment Due Rate. Such interest shall be paid in the same manner as the unpaid
amount in respect of which such interest is due.
9.6 BENEFIT OF INDEMNITIES
The obligations of Lessee in respect of all indemnities, obligations,
adjustments and payments in Section 9.1 or 9.3 are expressly made for the
benefit of, and shall be enforceable by, the Indemnitee or Tax Indemnitee
entitled thereto, without declaring the Lease to be in default or taking other
action thereunder, and notwithstanding any provision of the Trust Indenture.
SECTION 10. ASSIGNMENT OR TRANSFER OF INTERESTS
10.1 PARTICIPANTS, OWNER TRUSTEE AND NOTE HOLDERS
10.1.1 OWNER PARTICIPANT
(a) Owner Participant shall not Transfer any or all of its right, title or
interest in the Trust Estate or the Trust Agreement and to this Agreement
unless:
(i) The Transferee shall have full power, authority and legal right
to execute and deliver and to perform the obligations of Owner Participant
under this Agreement and the other Owner Participant Agreements and shall
provide reasonably satisfactory evidence of such power and authority to
Lessee, Owner Trustee and Mortgagee;
(ii) The Transferee shall enter into one or more legal, valid,
binding and enforceable agreements effective to confirm that such
Transferee agrees to be bound by all the terms of, and to undertake all of
the obligations arising after such transfer of, the transferring Owner
Participant contained in the Owner Participant Agreements and in which it
makes representations and warranties substantially the same as those
contained in Section 6.2 of this Participation Agreement;
(iii) Lessee shall not be obligated to pay any greater amount or
incur any greater obligation than that which it would have been obliged to
pay or incur under the Lease or other Lessee Operative Agreement if no
transfer or assignment had taken place, and the terms and conditions of
the Lease and the other Lessee Operative Agreements insofar as they relate
to the rights and obligations of Lessee or the Loan Participants shall not
be altered;
(iv) Owner Participant shall deliver to Lessee, Owner Trustee and
Mortgagee an opinion of counsel reasonably satisfactory to each of them
(which, if the Transferee is an Affiliate of the Owner Participant, may be
in-house counsel to such Owner Participant) to the effect that such
agreement or agreements referred to in Section 10.1.1(a)(ii) and, if
applicable, 10.1.1(a)(vi) are legal, binding and enforceable in accordance
with its or their terms and that such transfer will not violate applicable
securities laws, the Act or any other applicable Law and is in accordance
with this Section 10.1.1;
(v) The Transferee is a Citizen of the United States (it being
understood that the existence of any such requirement is to be determined
without giving consideration to Section 47.9 of the FAA Regulations or any
other provision that would restrict Lessee's use or operation of the
Aircraft), or shall use a voting powers trust or similar arrangement in
order to hold an interest in the Trust Estate such that the Aircraft can
be registered in the United States (without giving consideration to
Section 47.9 of the FAA Regulations or any other provision that would
restrict Lessee's use or operation of the Aircraft);
(vi) The Transferee shall be one person and shall be either (A) a
Permitted Institution or (B) any other person (other than, without
Lessee's consent, a commercial air carrier, a commercial aircraft
operator, a freight forwarder or an Affiliate of any of the foregoing) the
obligations of which under the Owner Participant Agreements are guaranteed
by a Permitted Institution in any case, pursuant to a written guaranty, in
form and substance reasonably satisfactory to Lessee, Owner Trustee and
Mortgagee; and
(vii) The Transferee shall be a "U.S. Person" as defined in Section
7701(a)(30) of the Code (or any successor provision thereto).
(b) Owner Participant shall give written notice to Lessee, Mortgagee and
Owner Trustee at least 10 days prior to any such Transfer, specifying the name
and address of the proposed Transferee, and providing financial statements of
the proposed Transferee evidencing satisfaction of the requirements described in
Section 10.1.1(a)(vi)(A) or (B) above.
(c) Any fees, charges and expenses, including the reasonable legal fees,
charges and expenses incurred by Lessee, Owner Participant, Mortgagee, any Note
Holder or Owner Trustee in connection with any Transfer by Owner Participant
permitted by this Section 10.1.1, or by the Transferee in any such case, will be
paid for by Owner Participant.
10.1.2 OWNER TRUSTEE
Owner Trustee may transfer its interests in the Trust Agreement pursuant
to Section 9 thereof.
10.1.3 NOTE HOLDERS
Subject to Section 7.5.2 hereof and Section 2.07 of the Trust Indenture,
any Note Holder may, at any time and from time to time, Transfer or grant
participations in all or any portion of the Equipment Notes and/or all or any
portion of its beneficial interest in its Equipment Notes and the Trust
Indenture Estate to any person (it being understood that the sale or issuance of
Pass Through Certificates by the Pass Through Trustee shall not be considered a
Transfer or participation); provided, that any participant in any such
participations shall not have any direct rights under the Operative Agreements
or any Lien on all or any part of the Aircraft or Trust Indenture Estate and
neither Lessee, Lessor, nor Owner Participant shall have any increased liability
or obligations as a result of any such participation. In the case of any such
Transfer, the Transferee, by acceptance of Equipment Notes in connection with
such Transfer, shall be deemed to be bound by all of the covenants of Note
Holders contained in the Operative Agreements.
10.2 EFFECT OF TRANSFER
Upon any Transfer in accordance with Section 10.1.1, 10.1.2 or 10.1.3
(other than any Transfer by any Note Holder, to the extent it only grants
participations in Equipment Notes or in its beneficial interest therein),
Transferee shall be deemed an "Owner Participant," "Owner Trustee" or a "Note
Holder," respectively, for all purposes of this Agreement and the other
Operative Agreements and, in the case of a Transferee of any Participant or Note
Holder, shall be deemed to have paid its ratable portion of Lessor's Cost
previously made by Owner Participant or Loan Participant, respectively, making
such conveyance and represented by the interest being conveyed, and each
reference herein to Owner Participant, Owner Trustee or Note Holder,
respectively, shall thereafter be deemed a reference to such Transferee for all
purposes, and the transferring Owner Participant, Owner Trustee, Loan
Participant or Note Holder shall be released (except, in the case of Owner
Participant, to the extent of any guaranty provided by it under Section
10.1.1(a)(vi)) from all of its liabilities and obligations under this Agreement
and any other Operative Agreements to the extent such liabilities and
obligations arise after such Transfer and, in each case, to the extent such
liabilities and obligations are assumed by the Transferee; PROVIDED, that such
transferring Owner Participant, Owner Trustee or Note Holder (and its respective
Affiliates, successors, assigns, agents, servants, representatives, directors
and officers) will continue to have the benefit of any rights or indemnities
under any Operative Agreement vested or relating to circumstances, conditions,
acts or events prior to such Transfer.
SECTION 11. [RESERVED]
SECTION 12. SECTION 1110
It is the intention of each of Lessee, Owner Participant, Loan
Participant, the Note Holders (such intention being evidenced by each of their
acceptance of an Equipment Note), Owner Trustee and Mortgagee that Owner
Trustee, as lessor under the Lease (and Mortgagee as assignee of Owner Trustee
under the Trust Indenture), shall be entitled to the benefits of Section 1110 in
the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a
debtor. Lessee shall at all times be certificated and registered to the extent
necessary to entitle Owner Trustee to the rights afforded to lessors of aircraft
equipment under Section 1110 of the Bankruptcy Code.
SECTION 13. CHANGE OF CITIZENSHIP
13.1 GENERALLY
Without prejudice to the representations, warranties or covenants
regarding the status of any party hereto as a Citizen of the United States:
(a) Each of Lessee, Xxxxx Fargo and WTC agrees that it will, immediately
upon obtaining knowledge of any facts that would cast doubt upon its continuing
status as a Citizen of the United States and promptly upon public disclosure of
negotiations in respect of any transaction which would or might adversely affect
such status, notify in writing all parties hereto of all relevant matters in
connection therewith; and
(b) Owner Participant agrees that, in the event its status is to change or
has changed as a Citizen of the United States, or it makes public disclosure of
circumstances as a result of which it believes that such status is likely to
change, it will notify all the other parties to this Participation Agreement of
(i) such change in status promptly after obtaining Actual Knowledge thereof or
(ii) such belief as soon as practicable after such public disclosure but in any
event within ten Business Days after such public disclosure.
13.2 OWNER PARTICIPANT
Owner Participant agrees, solely for the benefit of Lessee and the Note
Holders that if, during such time as the Aircraft is registered in the United
States, (a) it shall not be a Citizen of the United States and (b) the Aircraft
shall be, or would therefore become, ineligible for registration in the name of
Owner Trustee under the Act and regulations then applicable thereunder (without
giving consideration to Section 47.9 of the FAA Regulations or any other
provision that may restrict Lessee's use or operation of the Aircraft), then
Owner Participant shall as soon as is reasonably practicable, but in any event
within 30 days after obtaining Actual Knowledge of such ineligibility and of
such loss of citizenship, (y) effect voting trust or other similar arrangements
(in which case any provisions contained in the Operative Agreements restricting
Owner Participant's or Owner Trustee's ability to amend the Trust Agreement
shall not apply to the extent necessary to permit the use of such a voting trust
or other similar arrangement) or take any other action as may be necessary to
prevent any deregistration or maintain the United States registration of the
Aircraft or (z) transfer in accordance with the terms of this Agreement all its
right, title and interest in and to this Agreement, the Trust Estate and the
Trust Agreement in accordance with Section 10.1.
13.3 OWNER TRUSTEE
Upon Xxxxx Fargo giving any notice in accordance with Section 13.1(a),
Owner Trustee shall, subject to Section 9.1.1 of the Trust Agreement, resign as
Owner Trustee. Upon its receipt of such notice, Owner Participant shall as
promptly as practicable appoint a Citizen of the United States as successor
Owner Trustee pursuant to Section 9.1 of the Trust Agreement.
13.4 MORTGAGEE
Upon WTC giving any notice in accordance with Section 13.1(a), Mortgagee
shall (if and so long as such citizenship is necessary under the Act as in
effect at such time or, if it is not necessary, if and so long as Mortgagee's
citizenship could have any adverse effect on Lessee, any Participant or any Note
Holder), subject to Section 8.02 of the Trust Indenture, resign as Mortgagee
promptly upon its ceasing to be such a citizen.
SECTION 14. CONCERNING OWNER TRUSTEE
It is understood and agreed that, except as otherwise expressly provided
herein or in the Trust Agreement or the Trust Indenture, Owner Trustee is
entering into this Agreement solely in its capacity as trustee as provided in
the Trust Agreement and not in its individual capacity and in no case whatsoever
will it be liable or accountable in its individual capacity for any of the
statements, representations, warranties, agreements or obligations of Owner
Trustee hereunder, or for any loss in respect thereof, as to all of which the
parties agree to look solely to the Trust Estate; PROVIDED, that nothing in this
Section 14 shall be deemed to limit in scope or substance the personal liability
of Xxxxx Fargo (a) to Owner Participant as expressly set forth in the Trust
Agreement, (b) in respect of the representations, warranties and agreements of
Xxxxx Fargo expressly made as such herein or in any other Operative Agreement to
which it is a party, and (c) for the consequences of its own gross negligence,
willful misconduct, and, in receiving, handling or remitting of funds only, its
willful misconduct or simple negligence as a trustee.
SECTION 15. MISCELLANEOUS
15.1 AMENDMENTS
No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to amend, supplement, waive, modify, discharge,
terminate or otherwise vary and is signed by the party against which the
enforcement of the amendment, supplement, waiver, modification, discharge,
termination or variance is sought. Each such amendment, supplement, waiver,
modification, discharge, termination or variance shall be effective only in the
specific instance and for the specific purpose for which it is given. No
provision of this Agreement shall be varied or contradicted by oral
communication, course of dealing or performance or other manner not set forth in
an agreement, document or instrument in writing and signed by the party against
which enforcement of the same is sought.
15.2 SEVERABILITY
If any provision hereof shall be held invalid, illegal or unenforceable in
any respect in any jurisdiction, then, to the extent permitted by Law, (a) all
other provisions hereof shall remain in full force and effect in such
jurisdiction and (b) such invalidity, illegality or unenforceability shall not
affect the validity, legality or enforceability of such provision in any other
jurisdiction. If, however, any Law pursuant to which such provisions are held
invalid, illegal or unenforceable may be waived, such Law is hereby waived by
the parties hereto to the full extent permitted, to the end that this Agreement
shall be deemed to be a valid and binding agreement in all respects, enforceable
in accordance with its terms.
15.3 SURVIVAL
The indemnities set forth herein shall survive the delivery or return of
the Aircraft, the Transfer of any interest of Owner Participant in this
Agreement, the Trust Estate and the Trust Agreement, the Transfer of any
interest by any Note Holder of its Equipment Note and the expiration or other
termination of this Agreement or any other Operative Agreement.
15.4 REPRODUCTION OF DOCUMENTS
This Agreement, all annexes, schedules and exhibits hereto and all
agreements, instruments and documents relating hereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed and (b) financial statements, certificates and other information
previously or hereafter furnished to any party hereto, may be reproduced by such
party by any photographic, photostatic, microfilm, micro-card, miniature
photographic or other similar process, and such party may destroy any original
documents so reproduced. Any such reproduction shall be as admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by such party in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction likewise is
admissible in evidence.
15.5 COUNTERPARTS
This Agreement and any amendments, waivers, consents or supplements hereto
may be executed in any number of counterparts (or upon separate signature pages
bound together into one or more counterparts), each of which when so executed
shall be deemed to be an original, and all of which counterparts, taken
together, shall constitute one and the same instrument.
15.6 NO WAIVER
No failure on the part of any party hereto to exercise, and no delay by
any party hereto in exercising, any of its respective rights, powers, remedies
or privileges under this Agreement or provided at Law, in equity or otherwise
shall impair, prejudice or constitute a waiver of any such right, power, remedy
or privilege or be construed as a waiver of any breach hereof or default
hereunder or as an acquiescence therein nor shall any single or partial exercise
of any such right, power, remedy or privilege preclude any other or further
exercise thereof by it or the exercise of any other right, power, remedy or
privilege by it. No notice to or demand on any party hereto in any case shall,
unless otherwise required under this Agreement, entitle such party to any other
or further notice or demand in similar or other circumstances or constitute a
waiver of the rights of any party hereto to any other or further action in any
circumstances without notice or demand.
15.7 NOTICES
Unless otherwise expressly permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers and other
communications required or permitted to be made, given, furnished or filed
hereunder shall be in writing (it being understood that the specification of a
writing in certain instances and not in others does not imply an intention that
a writing is not required as to the latter), shall refer specifically to this
Agreement or other applicable Operative Agreement, and shall be personally
delivered, sent by facsimile or telecommunication transmission (which in either
case provides written confirmation to the sender of its delivery), sent by
registered mail or certified mail, return receipt requested, postage prepaid, or
sent by overnight courier service, in each case to the respective address, or
facsimile number set forth for such party in Schedule 1, or to such other
address, facsimile or other number as each party hereto may hereafter specify by
notice to the other parties hereto. Each such notice, request, demand,
authorization, direction, consent, waiver or other communication shall be
effective when received or, if made, given, furnished or filed (a) by facsimile
or telecommunication transmission, when confirmed, or (b) by registered or
certified mail, three Business Days after being deposited, properly addressed,
with the U.S. Postal Service.
15.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE
(a) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF NEW YORK.
(b) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS
ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
IN THE CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING
WITH RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH
THIS AGREEMENT.
(c) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES TO THE
SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY OF
THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE BY
MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT THE
ADDRESS SET FORTH PURSUANT TO SECTION 15.7. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 15.8(C), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH
PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS
TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT
IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED
IN ANY ACTION OR PROCEEDING BASED THEREON.
(d) TO THE EXTENT THAT ANY PARTY HERETO HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY OF THE ABOVE-NAMED COURTS OR FROM ANY LEGAL
PROCESS THEREIN, SUCH PARTY HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED
BY APPLICABLE LAW, SUCH IMMUNITY, AND EACH PARTY HERETO HEREBY IRREVOCABLY
WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY
WAY OF MOTION, AS A DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING
BROUGHT HEREUNDER IN ANY OF THE ABOVE-NAMED COURTS, (I) THE DEFENSE OF SOVEREIGN
IMMUNITY, (II) THAT IT OR ANY OF ITS PROPERTY IS IMMUNE FROM THE ABOVE DESCRIBED
LEGAL PROCESS AND (III) THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT
THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY
SUCH COURTS.
(e) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION BASED UPON OR
ARISING OUT OF OR RELATING TO THIS AGREEMENT.
15.9 THIRD-PARTY BENEFICIARY
This Agreement is not intended to, and shall not, provide any person not a
party hereto (other than each Indemnitee, which is an intended third party
beneficiary with respect to the provisions of Section 9.1 as provided in Section
9.1.3, and the other persons referred to in Section 7.6.13, who are intended
third party beneficiaries of such Section) with any rights of any nature
whatsoever against any of the parties hereto and no person not a party hereto
(other than each Indemnitee, with respect to the provisions of Section 9.1 as
provided in Section 9.1.3, and the other persons referred to in Section 7.6.13,
with respect to such Section) shall have any right, power or privilege in
respect of any party hereto, or have any benefit or interest, arising out of
this Agreement.
15.10 ENTIRE AGREEMENT
This Agreement, together with the other Operative Agreements, on and as of
the date hereof, constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof, and all prior or contemporaneous
understandings or agreements, whether written or oral, among any of the parties
hereto with respect to such subject matter are hereby superseded in their
entireties (except that the Indemnity Agreement shall not be superseded).
15.11 FURTHER ASSURANCES
Each party hereto shall execute, acknowledge and deliver or shall cause to
be executed, acknowledged and delivered, all such further agreements,
instruments, certificates or documents, and shall do and cause to be done such
further acts and things, in any case, as any other party hereto shall reasonably
request in connection with the administration of, or to carry out more
effectively the purposes of, or to better assure and confirm into such other
party the rights and benefits to be provided under this Agreement and the other
Operative Agreements.
[This space intentionally left blank]
IN WITNESS WHEREOF, each of the parties has caused this Participation
Agreement to be duly executed and delivered as of the day and year first above
written.
CONTINENTAL AIRLINES, INC.,
Lessee
By
----------------------------------------
Name:
Title:
REFINE, INC.,
Owner Participant
By
----------------------------------------
Name:
Title:
XXXXX FARGO BANK NORTHWEST,
NATIONAL ASSOCIATION,
not in its individual capacity, except
as expressly provided herein, but
solely as Owner Trustee
By
----------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except
as expressly provided herein, but
solely as Mortgagee
By
----------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as expressly
provided herein, but solely as Pass
Through Trustee under the Pass Through
Trust Agreement for the Continental
Airlines Pass Through Trust, 2003-ERJ1
By
----------------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as expressly
provided herein, but solely as
Subordination Agent
By
----------------------------------------
Name:
Title:
EMBRAER-EMPRESA BRASILEIRA DE AERONAUTICA
S.A.,
Airframe Manufacturer
By
----------------------------------------
Name:
Title:
---------------------------------
| ANNEX A-DEFINITIONS [TN] |
---------------------------------
ANNEX A
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Agreement, unless otherwise expressly provided, a
reference to:
(i) each of "Lessee," "Lessor," "Loan Participant," "Owner Trustee,"
"Owner Participant," "Mortgagee," "Note Holder" or any other person
includes, without prejudice to the provisions of any Operative Agreement,
any successor in interest to it and any permitted transferee, permitted
purchaser or permitted assignee of it;
(ii) words importing the plural include the singular and words
importing the singular include the plural;
(iii) any agreement, instrument or document, or any annex, schedule or
exhibit thereto, or any other part thereof, includes, without prejudice to
the provisions of any Operative Agreement, that agreement, instrument or
document, or annex, schedule or exhibit, or part, respectively, as
amended, modified or supplemented from time to time in accordance with its
terms and in accordance with the Operative Agreements, and any agreement,
instrument or document entered into in substitution or replacement
therefor;
(iv) any provision of any Law includes any such provision as amended,
modified, supplemented, substituted, reissued or reenacted prior to the
Closing Date, and thereafter from time to time;
(v) the words "Agreement," "this Agreement," "hereby," "herein,"
"hereto," "hereof" and "hereunder" and words of similar import when used
in any Operative Agreement refer to such Operative Agreement as a whole
and not to any particular provision of such Operative Agreement;
(vi) the words "including," "including, without limitation,"
"including, but not limited to," and terms or phrases of similar import
when used in any Operative Agreement, with respect to any matter or thing,
mean including, without limitation, such matter or thing; and
(vii) a "Section," an "Exhibit," an "Annex" or a "Schedule" in any
Operative Agreement, or in any annex thereto, is a reference to a section
of, or an exhibit, an annex or a schedule to, such Operative Agreement or
such annex, respectively.
(b) Each exhibit, annex and schedule to each Operative Agreement is
incorporated in, and shall be deemed to be a part of, such Operative Agreement.
(c) Unless otherwise defined or specified in any Operative Agreement, all
accounting terms therein shall be construed and all accounting determinations
thereunder shall be made in accordance with GAAP.
(d) Headings used in any Operative Agreement are for convenience only and
shall not in any way affect the construction of, or be taken into consideration
in interpreting, such Operative Agreement.
(e) For purposes of each Operative Agreement, the occurrence and
continuance of a Lease Default or Lease Event of Default referred to in Section
14.5 of the Lease shall not be deemed to prohibit the Lessee from taking any
action or exercising any right that is conditioned on no Lease Event of Default,
Bankruptcy Default or Lease Default having occurred and be continuing if a
Section 1110 Event shall have occurred and is then continuing.
DEFINED TERMS
"ACT" means part A of subtitle VII of title 49, United States Code.
"ACTUAL KNOWLEDGE" means (a) as it applies to Owner Trustee or Mortgagee,
as the case may be, actual knowledge of a responsible officer in the Corporate
Trust Department (in the case of Owner Trustee) or the Corporate Trust Office
(in the case of Mortgagee) and (b) as it applies to Owner Participant, Airframe
Manufacturer or Lessee, actual knowledge of a Vice President or more senior
officer of Owner Participant, Airframe Manufacturer or Lessee, respectively, or
any other officer of Owner Participant, Airframe Manufacturer or Lessee,
respectively, having responsibility for the transactions contemplated by the
Operative Agreements; PROVIDED that each of Lessee, Owner Participant, Owner
Trustee, Mortgagee and Airframe Manufacturer shall be deemed to have "Actual
Knowledge" of any matter as to which it has received notice from Lessee, Owner
Participant, any Note Holder, Owner Trustee or Mortgagee, such notice having
been given pursuant to Section 15.7 of the Participation Agreement.
"ADDITIONAL INSURED" is defined in Section D of Annex D to the Lease.
"AFFILIATE" means, with respect to any person, any other person directly
or indirectly controlling, controlled by or under common control with such
person. For purposes of this definition, "control" means the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such person, whether through the ownership of voting securities or by contract
or otherwise and "controlling," "controlled by" and "under common control with"
have correlative meanings.
"AIRCRAFT" means, collectively, the Airframe and Engines.
"AIRCRAFT XXXX OF SALE" means the full warranty xxxx of sale covering the
Aircraft delivered by Seller to Owner Trustee on the Delivery Date.
"AIRCRAFT DOCUMENTS" means all technical data, manuals and log books, and
all inspection, modification and overhaul records and other service, repair,
maintenance and technical records that are required by the FAA (or the relevant
Aviation Authority) to be maintained with respect to the Aircraft, Airframe,
Engines or Parts; and such term shall include all additions, renewals, revisions
and replacements of any such materials from time to time made, or required to be
made, by the FAA (or other Aviation Authority) regulations, and in each case in
whatever form and by whatever means or medium (including, without limitation,
microfiche, microfilm, paper or computer disk) such materials may be maintained
or retained by or on behalf of Lessee (PROVIDED, that all such materials shall
be maintained in the English language).
"AIRFRAME" means (a) the aircraft (excluding Engines or engines from time
to time installed thereon) manufactured by Airframe Manufacturer and identified
by Airframe Manufacturer's model number, United States registration number and
Airframe Manufacturer's serial number set forth in Lease Supplement No. 1 and
any Replacement Airframe and (b) any and all Parts incorporated or installed in
or attached or appurtenant to such airframe, and any and all Parts removed from
such airframe, unless title to such Parts shall not be vested in Lessor in
accordance with Section 8.1 and Annex C of the Lease. Upon substitution of a
Replacement Airframe under and in accordance with the Lease, such Replacement
Airframe shall become subject to the Lease and shall be the "Airframe" for all
purposes of the Lease and the other Operative Agreements and thereupon the
Airframe for which the substitution is made shall no longer be subject to the
Lease, and such replaced Airframe shall cease to be the "Airframe."
"AIRFRAME MANUFACTURER" means Embraer-Empresa Brasileira de Aeronautica
S.A., a Brazilian corporation.
"AIRFRAME MANUFACTURER AGREEMENTS" means, collectively, the Participation
Agreement, the Purchase Agreement, the Consent and Agreement and the OP
Guaranty.
"AMORTIZATION AMOUNT" means, with respect to any Equipment Note, as of any
Payment Date, the amount determined by multiplying the percentage set forth
opposite such Date on the Amortization Schedule by the Original Amount of such
Equipment Note.
"AMORTIZATION SCHEDULE" means, with respect to each Equipment Note, the
amortization schedule for such Equipment Note delivered pursuant to Section 2.02
of the Trust Indenture.
"APPRAISER" means a firm of internationally recognized, independent
aircraft appraisers.
"AVERAGE LIFE DATE" for any Equipment Note shall be the date which follows
the time of determination by a period equal to the Remaining Weighted Average
Life of such Equipment Note. "Remaining Weighted Average Life" on a given date
with respect to any Equipment Note shall be the number of days equal to the
quotient obtained by dividing (a) the sum of each of the products obtained by
multiplying (i) the amount of each then remaining scheduled payment of principal
of such Equipment Note by (ii) the number of days from and including such
determination date to but excluding the date on which such payment of principal
is scheduled to be made, by (b) the then outstanding principal amount of such
Equipment Note.
"AVIATION AUTHORITY" means the FAA or, if the Aircraft is permitted to be,
and is, registered with any other Government Entity under and in accordance with
Section 7.1.2 of the Lease, such other Government Entity.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, 11 U.S.C.
Sec. 101 ET SEQ.
"BANKRUPTCY DEFAULT" means a Lease Event of Default under Section 14.5 of
the Lease.
"BASE LEASE TERM" means the period beginning on and including the Closing
Date and ending on the Scheduled Expiration Date, or such earlier date on which
the Term terminates in accordance with the provisions of the Lease.
"BASIC PASS THROUGH TRUST AGREEMENT" means the Pass Through Trust
Agreement, dated September 25, 1997, between Lessee and Pass Through Trustee, as
such agreement may be supplemented, amended or modified, but does not include
any Trust Supplement.
"BASIC RENT" means the rent payable for the Aircraft pursuant to Section
3.2.1 of the Lease.
"BENEFICIAL OWNER" when used in relation to an Equipment Note means a
Person that, by reason of direct ownership, contract, share ownership or
otherwise, has the right to receive or participate in receiving, directly or
indirectly, payments of principal, interest or Make-Whole Amount in respect of
such Equipment Note; provided that a Person shall not be deemed to be a
Beneficial Owner of an Equipment Note solely because another Person in which
such a Person owns common stock or other equity securities is a registered
holder or Beneficial Owner of such Equipment Note unless such Person is an
Affiliate of such other Person.
"BILLS OF SALE" means the FAA Xxxx of Sale and the Aircraft Xxxx of Sale.
"BUSINESS DAY" means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized or required by law to close in New York,
New York, Houston, Texas, Wilmington, Delaware, or Salt Lake City, Utah.
"CASH EQUIVALENTS" means the following securities (which shall mature
within 90 days of the date of purchase thereof): (a) direct obligations of the
U.S. Government; (b) obligations fully guaranteed by the U.S. Government; (c)
certificates of deposit issued by, or bankers' acceptances of, or time deposits
or a deposit account with, Owner Trustee, Mortgagee or any bank, trust company
or national banking association incorporated or doing business under the laws of
the United States or any state thereof having a combined capital and surplus and
retained earnings of at least $500,000,000 and having a rate of "C" or better
from the Thomson BankWatch Service; or (d) commercial paper of any issuer doing
business under the Laws of the United States or one of the states thereof and in
each case having a rating assigned to such commercial paper by Standard & Poor's
Rating Services or Xxxxx'x Investors Service, Inc. equal to A1 or higher.
"CHANGE IN TAX LAW" means any change or proposed change in the Code or the
regulations promulgated thereunder or any change in the interpretation of the
Code or such regulations in a decision by the United States Supreme Court, the
United States Tax Court, the United States Claims Court or any of the United
States Courts of Appeal or District Courts, or any issuance of an Internal
Revenue Ruling, Revenue Procedure or administrative pronouncement by the
Internal Revenue Service or the Department of the Treasury.
"CITIZEN OF THE UNITED STATES" is defined in Section 40102(a)(15) of the
Act and in the FAA Regulations.
"CLOSING" means the occurrence of the following concurrent events: (i)
execution, authentication and delivery of the Equipment Notes in accordance with
the Participation Agreement; (ii) payment of the Commitments of the Loan
Participants to Owner Trustee; (iii) lease of the Aircraft by Owner Trustee to
Lessee pursuant to the Lease; and (iv) completion of the other events
contemplated by the Participation Agreement to occur at the Closing.
"CLOSING DATE" means the Business Day specified in Lease Supplement No. 1
as the Closing Date, which shall be the date on which the Closing occurs.
"CODE" means the Internal Revenue Code of 1986, as amended; PROVIDED, that
when used in relation to a Plan, "Code" shall mean the Internal Revenue Code of
1986 and any regulations and rulings issued thereunder, all as amended and in
effect from time to time.
"COMMITMENT" means, for any Loan Participant, the amount of its commitment
set forth in Schedule 2 to the Participation Agreement.
"COMMITMENT TERMINATION DATE" is defined in Schedule 3 to the
Participation Agreement.
"CONSENT AND AGREEMENT" means the Manufacturer Consent and Agreement [TN],
dated as of even date with the Participation Agreement, of Airframe
Manufacturer.
"CONTINUOUS STAY PERIOD" is defined in Section 4.04(a) of the Trust
Indenture.
"CORPORATE TRUST DEPARTMENT" or "TRUST OFFICE" means the principal
corporate trust office of Owner Trustee located from time to time at Owner
Trustee's address for notices under the Participation Agreement or such other
office at which Owner Trustee's corporate trust business shall be administered
which Owner Trustee shall have specified by notice in writing to Lessee,
Mortgagee and each Note Holder.
"CORPORATE TRUST OFFICE" means the principal office of Mortgagee located
at Mortgagee's address for notices under the Participation Agreement or such
other office at which Mortgagee's corporate trust business shall be administered
which Mortgagee shall have specified by notice in writing to Lessee, Owner
Trustee and each Note Holder.
"CRAF" means the Civil Reserve Air Fleet Program established pursuant to
10 U.S.C. ss. 9511-13 or any similar substitute program.
"DEBT" means any liability for borrowed money, or any liability for the
payment of money in connection with any letter of credit transaction or any
other liabilities evidenced or to be evidenced by bonds, debentures, notes or
other similar instruments.
"DEBT RATE" means the rate per annum specified under the heading "Interest
Rate" in Schedule I to the Trust Indenture.
"DEFAULT" means any event or condition that with the giving of notice or
the lapse of time or both would become an Event of Default.
"DELAYED CLOSING DATE" means a delayed Closing Date notified to Lessee,
each Participant, Owner Trustee and Mortgagee by Airframe Manufacturer pursuant
to Section 4.3 of the Participation Agreement, which delayed Closing Date shall
be a Business Day not later than the Commitment Termination Date.
"DELIVERY DATE" means the date on which the Aircraft was leased to Lessee
by Lessor, as lessor, under the Existing Lease.
"DEPOSIT AGREEMENT" means the Deposit Agreement between the Depositary and
the Escrow Agent, dated as of the Issuance Date, which relates to the Pass
Through Trust, PROVIDED that, for purposes of any obligation of Lessee, no
amendment, modification or supplement to, or substitution or replacement of,
such Deposit Agreement shall be effective unless consented to by Lessee.
"DEPOSITARY" means Citibank, N.A., as Depositary under the Deposit
Agreement.
"DOLLARS," "UNITED STATES DOLLARS" or "$" means the lawful currency of the
United States.
"DOT" means the Department of Transportation of the United States or any
Government Entity succeeding to the functions of such Department of
Transportation.
"ELIGIBLE ACCOUNT" means an account established by and with an Eligible
Institution at the request of the Mortgagee, which institution agrees, for all
purposes of the UCC including Article 8 thereof, that (a) such account shall be
a "securities account" (as defined in Section 8-501 of the UCC), (b) all
property (other than cash) credited to such account shall be treated as a
"financial asset" (as defined in Section 8-102(9) of the UCC), (c) the Mortgagee
shall be the "entitlement holder" (as defined in Section 8-102(7) of the UCC) in
respect of such account, (d) it will comply with all entitlement orders issued
by the Mortgagee to the exclusion of the Lessee and the Owner Trustee, and (e)
the "securities intermediary jurisdiction" (under Section 8-110(e) of the UCC)
shall be the State of New York.
"ELIGIBLE INSTITUTION" means the corporate trust department of (a)
Wilmington Trust Company, acting solely in its capacity as a "securities
intermediary" (as defined in Section 8-102(14) of the UCC), or (b) a depository
institution organized under the laws of the United States of America or any one
of the states thereof or the District of Columbia (or any U.S. branch of a
foreign bank), which has a long-term unsecured debt rating from Moody's and
Standard & Poor's of at least A-3 or its equivalent.
"ENFORCEMENT DATE" is defined in Section 4.03 of the Trust Indenture.
"ENGINE" means (a) each of the engines manufactured by Engine Manufacturer
and identified by Engine Manufacturer's model number and Engine Manufacturer's
serial number set forth in Lease Supplement No. 1, and any Replacement Engine,
in any case whether or not from time to time installed on such Airframe or
installed on any other airframe or aircraft, and (b) any and all Parts
incorporated or installed in or attached or appurtenant to such engine, and any
and all Parts removed from such engine, unless title to such Parts shall not be
vested in Lessor in accordance with Section 8.1 and Annex C of the Lease. Upon
substitution of a Replacement Engine under and in accordance with the Lease,
such Replacement Engine shall become subject to the Lease and shall be an
"Engine" for all purposes of the Lease and the other Operative Agreements and
thereupon the Engine for which the substitution is made shall no longer be
subject to the Lease, and such replaced Engine shall cease to be an "Engine."
"ENGINE MANUFACTURER" means Rolls-Royce Company, formerly known as Xxxxxxx
Engine Company, Inc., a Delaware corporation.
"EQUIPMENT NOTE REGISTER" is defined in Section 2.07 of the Trust
Indenture.
"EQUIPMENT NOTES" means and includes any equipment notes issued under the
Trust Indenture in the form specified in Section 2.01 thereof (as such form may
be varied pursuant to the terms of the Trust Indenture) and any Equipment Note
issued under the Trust Indenture in exchange for or replacement of any Equipment
Note.
"EQUITY ADVISOR" has the meaning provided in Schedule 3 to the
Participation Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974 and any
regulations and rulings issued thereunder all as amended and in effect from time
to time.
"ESCROW AGENT" means Xxxxx Fargo Bank Northwest, National Association, as
Escrow Agent under the Escrow Agreement.
"ESCROW AGREEMENT" means the Escrow and Paying Agent Agreement, among the
Escrow Agent, the Paying Agent, certain initial purchasers of the Pass Through
Certificates named therein and the Pass Through Trustee, dated as of the
Issuance Date, which relates to the Pass Through Trust, PROVIDED that, for
purposes of any obligation of Lessee, no amendment, modification or supplement
to, or substitution or replacement of, such Escrow Agreement shall be effective
unless consented to by Lessee.
"EVENT OF DEFAULT" is defined in Section 4.02 of the Trust Indenture.
"EVENT OF LOSS" means, with respect to the Aircraft, Airframe or any
Engine, any of the following circumstances, conditions or events with respect to
such property, for any reason whatsoever:
(a) the destruction of such property, damage to such property beyond
economic repair or rendition of such property permanently unfit for
normal use by Lessee;
(b) the actual or constructive total loss of such property or any damage
to such property, or requisition of title or use of such property,
which results in an insurance settlement with respect to such
property on the basis of a total loss or constructive or compromised
total loss;
(c) any theft, hijacking or disappearance of such property for a period
of 180 consecutive days or more or, if earlier, the end of the Term;
(d) any seizure, condemnation, confiscation, taking or requisition
(including loss of title) of such property by any Government Entity
or purported Government Entity (other than a requisition of use by
the U.S. Government) for a period exceeding 180 consecutive days or,
if earlier, at the end of the Term;
(e) any seizure, condemnation, confiscation, taking or requisition of
use of such property by the U.S. Government that continues until the
last day of the Term, PROVIDED that no such Event of Loss shall
exist if Lessor shall have elected not to treat such event as an
Event of Loss pursuant to Section 10.6 of the Lease; and
(f) as a result of any law, rule, regulation, order or other action by
the Aviation Authority or by any Government Entity of the government
of registry of the Aircraft or by any Government Entity otherwise
having jurisdiction over the operation or use of the Aircraft, the
use of such property in the normal course of Lessee's business of
passenger air transportation is prohibited for a period of 180
consecutive days, unless Lessee, prior to the expiration of such 180
day period, shall have undertaken and shall be diligently carrying
forward such steps as may be necessary or desirable to permit the
normal use of such property by Lessee, but in any event if such use
shall have been prohibited for a period of 720 days, provided that
no Event of Loss shall be deemed to have occurred if such
prohibition has been applicable to Lessee's (or a Permitted
Sublessee's) entire U.S. fleet of such property and Lessee (or a
Permitted Sublessee), prior to the expiration of such 720-day
period, shall have conformed at least one unit of such property in
its fleet to the requirements of any such law, rule, regulation,
order or other action and commenced regular commercial use of the
same in such jurisdiction and shall be diligently carrying forward,
in a manner which does not discriminate against such property in so
conforming such property, steps which are necessary or desirable to
permit the normal use of such property by Lessee, but in any event
if such use shall have been prohibited for a period of three years
or such use shall be prohibited at the expiration of the Term.
"EXCLUDED PAYMENTS" means (i) indemnity payments paid or payable by Lessee
to or in respect of Owner Participant, or Owner Trustee in its individual
capacity, their respective Affiliates, successors and permitted assigns and
their directors, officers, employees, servants and agents pursuant to Section 9
of the Participation Agreement or any corresponding payments under the Lease,
(ii) proceeds of public liability insurance paid or payable as a result of
insurance claims made, or losses suffered, by Owner Trustee in its individual
capacity or by Owner Participant, that are payable directly to Owner Trustee in
its individual capacity, or Owner Participant, respectively, for their own
account, (iii) proceeds of insurance maintained with respect to the Aircraft by
Owner Participant or any Affiliate thereof for its or their own account or
benefit (whether directly or through Owner Trustee) and permitted under Section
11.2 of the Lease, (iv) all payments required to be made under the Tax Indemnity
Agreement by Lessee whether or not denominated as Supplemental Rent, (v) any
amount payable to the Owner Participant by any transferee as the purchase price
of the Owner Participant's interest in the Trust Estate, (vi) any interest that
pursuant to the Operative Agreements may from time to time accrue in respect of
any of the amounts described in clauses (i) through (v) above, (vii) proceeds of
any right to enforce the payment of any amount described in clauses (i) through
(vi) above (PROVIDED, that the rights referred to in this clause (vii) shall not
be deemed to include the exercise of any remedies provided for in the Lease
other than the right to xxx for specific performance of any covenant to make
such payment or to xxx for damages in respect of the breach of any such
covenant) and (viii) any right to exercise any election or option or make any
decision or determination, or to give or receive any notice, consent, waiver or
approval, or to take any other action in respect of, but in each case, only to
the extent relating to, any Excluded Payments.
"EXISTING LEASE" has the meaning provided in Schedule 3 to the
Participation Agreement.
"EXISTING PARTICIPATION AGREEMENT" has the meaning provided in Schedule 3
to the Participation Agreement.
"EXISTING SUBLEASE" means the Aircraft Sublease Agreement, dated the date
of the Existing Participation Agreement, between Lessee and Express relating to
the Aircraft.
"EXPENSE LIMIT" has the meaning provided in Schedule 3 to the
Participation Agreement.
"EXPENSES" means any and all liabilities, obligations, losses, damages,
settlements, penalties, claims, actions, suits, costs, expenses and
disbursements (including, without limitation, reasonable fees and disbursements
of legal counsel, accountants, appraisers, inspectors or other professionals,
and costs of investigation).
"EXPRESS" means ExpressJet Airlines, Inc., a Delaware corporation.
"EXPRESS SUBLEASE" means the Permitted Sublease, dated as of the date of
the Participation Agreement, between Lessee and Express relating to the
Aircraft.
"FAA" means the Federal Aviation Administration of the United States or
any Government Entity succeeding to the functions of such Federal Aviation
Administration.
"FAA XXXX OF SALE" means a xxxx of sale for the Aircraft on AC Form 8050-2
(or such other form as may be approved by the FAA) delivered to Owner Trustee on
the Delivery Date by Seller.
"FAA FILED DOCUMENTS" means the Lease, Lease Supplement No. 1, the Express
Sublease, the Trust Indenture, the Trust Agreement, the initial Trust Indenture
Supplement, the FAA Xxxx of Sale, the Termination Agreements and an application
for registration of the Aircraft with the FAA in the name of Owner Trustee.
"FAA REGULATIONS" means the Federal Aviation Regulations issued or
promulgated pursuant to the Act from time to time.
"FAIR MARKET RENTAL VALUE" means the fair market rental value in Dollars
for the Aircraft that would apply in an arm's-length transaction between an
informed and willing lessee under no compulsion to lease, and an informed and
willing lessor under no compulsion to lease, the Aircraft, for the applicable
Renewal Lease Term, assuming that (a) the Aircraft has been maintained in
accordance with, and is in the condition required by, the Lease, (b) payments of
rent would be made semiannually, and (c) the Aircraft would be leased during any
such Renewal Term on the same terms and conditions as are set forth in the Lease
with respect to the Base Lease Term.
"FAIR MARKET SALES VALUE" means the fair market sales value in Dollars for
the Aircraft that would apply in an arm's-length transaction between an informed
and willing buyer under no compulsion to buy, and an informed and willing seller
under no compulsion to sell, the Aircraft, in a transaction that would close on
or about the relevant time of determination, assuming (except as otherwise
provided in Section 15.4 of the Lease) that (a) the Aircraft has been maintained
in accordance with, and is in the condition required by, the Lease and (b) the
Aircraft would be delivered to such informed and willing buyer in the return
condition required by the Lease.
"FINANCING STATEMENTS" means, collectively, (a) UCC-1 financing statements
(i) covering the Trust Indenture Estate, by Owner Trustee, as debtor, showing
Mortgagee as secured party, for filing in Utah and each other jurisdiction that,
in the opinion of Mortgagee, is necessary to perfect its Lien on the Trust
Indenture Estate and (ii) covering the Lease and the Aircraft, as a
precautionary matter, by Lessee, as lessee, showing Owner Trustee as lessor and
Mortgagee as assignee of Owner Trustee, for filing in Delaware and each other
jurisdiction that, in the opinion of Owner Trustee and Mortgagee, is reasonably
desirable and (b) UCC-3 financing statements evidencing the termination of the
Existing Lease and the Existing Sublease, for filing in Delaware and each other
jurisdiction that, in the opinion of Owner Trustee and Mortgagee, is reasonably
desirable.
"GAAP" means generally accepted accounting principles as set forth in the
statements of financial accounting standards issued by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants, as
such principles may at any time or from time to time be varied by any applicable
financial accounting rules or regulations issued by the SEC and, with respect to
any person, shall mean such principles applied on a basis consistent with prior
periods except as may be disclosed in such person's financial statements.
"GOVERNMENT ENTITY" means (a) any federal, state, provincial or similar
government, and any body, board, department, commission, court, tribunal,
authority, agency or other instrumentality of any such government or otherwise
exercising any executive, legislative, judicial, administrative or regulatory
functions of such government or (b) any other government entity having
jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"INDEMNITEE" means (i) Xxxxx Fargo and Owner Trustee, (ii) WTC and
Mortgagee, (iii) each separate or additional trustee appointed pursuant to the
Trust Agreement or the Trust Indenture, (iv) each Participant, (v) the Trust
Estate and the Trust Indenture Estate, (vi) each Affiliate of the persons
described in clauses (i) through (iv), inclusive, (vii) the respective
directors, officers, employees, agents and servants of each of the persons
described in clauses (i) through (iv) inclusive and in clause (vi), (viii) the
successors and permitted assigns of the persons described in clauses (i) through
(iv), inclusive, and in clauses (vi) and (vii) and (ix) the Pass Through
Indemnitees; provided that the Pass Through Indemnitees are Indemnitees only for
purposes of Section 9.1 of the Participation Agreement. If any Indemnitee is
Airframe Manufacturer or Engine Manufacturer or any subcontractor or supplier of
either thereof, such Person shall be an Indemnitee only in its capacity as Owner
Participant, Loan Participant or Note Holder.
"INDEMNITY AGREEMENT" means the agreement, dated as of December 3, 2003,
between Lessee and Airframe Manufacturer, which states that it is the Indemnity
Agreement for purposes of the Pass Through Certificates.
"INDENTURE AGREEMENTS" means the Participation Agreement, the Lease, the
Purchase Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Bills of Sale and any other contract, agreement or instrument
from time to time assigned or pledged under the Trust Indenture.
"INDENTURE DEFAULT" means any condition, circumstance, act or event that,
with the giving of notice, the lapse of time or both, would constitute an
Indenture Event of Default.
"INDENTURE EVENT OF DEFAULT" means any one or more of the conditions,
circumstances, acts or events set forth in Section 4.02 of the Trust Indenture.
"INDENTURE INDEMNITEE" means (i) WTC and the Mortgagee, (ii) each separate
or additional trustee appointed pursuant to the Trust Indenture, (iii) the
Subordination Agent, (iv) the Liquidity Provider, (v) the Pass Through Trustee,
(vi) the Paying Agent, (vii) the Escrow Agent and (viii) each of the respective
directors, officers, employees, agents and servants of each of the persons
described in clauses (i) through (vii) inclusive above.
"INTERCREDITOR AGREEMENT" means that certain Intercreditor Agreement among
the Pass Through Trustee, the Liquidity Provider and the Subordination Agent,
dated as of the Issuance Date, PROVIDED that, for purposes of any obligation of
Lessee, no amendment, modification or supplement to, or substitution or
replacement of, such Intercreditor Agreement shall be effective unless consented
to by Lessee.
"IRS" means the Internal Revenue Service of the United States or any
Government Entity succeeding to the functions of such Internal Revenue Service.
"ISSUANCE DATE" means [ID].
"LAW" means (a) any constitution, treaty, statute, law, decree,
regulation, order, rule or directive of any Government Entity, and (b) any
judicial or administrative interpretation or application of, or decision under,
any of the foregoing.
"LEASE" or "LEASE AGREEMENT" means the Lease Agreement [TN], dated as of
even date with the Participation Agreement, between Owner Trustee and Lessee.
"LEASE DEFAULT" means any condition, circumstance, act or event that, with
the giving of notice, the lapse of time or both, would constitute a Lease Event
of Default.
"LEASE EVENT OF DEFAULT" means any one or more of the conditions,
circumstances, acts or events set forth in Section 14 of the Lease.
"LEASE SUPPLEMENT" means a supplement to the Lease, in the form of Exhibit
A to the Lease.
"LEASE SUPPLEMENT NO. 1" means the initial Lease Supplement, dated
the Closing Date.
"LESSEE" means Continental Airlines, Inc., a Delaware corporation.
"LESSEE OPERATIVE AGREEMENTS" means the Participation Agreement, the
Lease, Lease Supplement No. 1, the Express Sublease, the Termination Agreement
with respect to the Existing Sublease and the Tax Indemnity Agreement.
"LESSEE PERSON" means Lessee, any sublessee, assignee, successor or other
user or person in possession of the Aircraft, Airframe or an Engine during the
Term with or without color of right, or any Affiliate of any of the foregoing
(excluding any Tax Indemnitee or any related Tax Indemnitee with respect
thereto, or any person using or claiming any rights with respect to the
Aircraft, Airframe or an Engine directly by or through any of the persons in
this parenthetical, but not excluding any Person claiming directly or indirectly
through or under the Lease).
"LESSOR" means Owner Trustee in its capacity as lessor under the Lease.
"LESSOR LIEN" means, with respect to any person and in respect of any
property (including, without limitation, the Trust Estate, the Trust Indenture
Estate, the Aircraft, Airframe, Engines, Parts or Aircraft Documents) or any
payments, any Lien on such property or payments which (a) arises from claims
against such person (if such person is a trustee, whether in its individual
capacity or in its capacity as a trustee) not related to any of the transactions
contemplated by the Operative Agreements, (b) results from acts or omissions of
such person (if such person is a trustee, whether in its individual capacity or
in its capacity as a trustee) in violation of such person's obligations under
any of the terms of the Operative Agreements, or not related to the transactions
contemplated by the Operative Agreements, (c) is imposed as a result of Taxes
against such person (if such person is a trustee, whether in its individual
capacity or in its capacity as a trustee) or any of its Affiliates not required
to be indemnified by Lessee under the Participation Agreement, or (d) claims
against such person arising out of any transfer by such person of its interest
in the Aircraft, the Trust Estate or the Operative Agreements, other than a
Transfer permitted by the terms of the Operative Agreements or pursuant to the
exercise of remedies set forth in Section 15 of the Lease.
"LESSOR'S COST" means the amount paid by Owner Trustee to Airframe
Manufacturer to purchase the Aircraft pursuant to the Purchase Agreement, and is
designated by Dollar amount in Schedule 3 to the Participation Agreement.
"LIEN" means any mortgage, pledge, lien, charge, claim, encumbrance, lease
or security interest affecting the title to or any interest in property.
"LIQUIDITY FACILITY" means the Revolving Credit Agreement between the
Subordination Agent, as borrower, and the Liquidity Provider, dated as of the
Issuance Date, PROVIDED that, for purposes of any obligation of Lessee, no
amendment, modification or supplement to, or substitution or replacement of,
such Liquidity Facility shall be effective unless consented to by Lessee.
"LIQUIDITY PROVIDER" means Citibank, N.A., as Liquidity Provider (as such
term is defined in the Intercreditor Agreement) under the Liquidity Facility, or
any successor thereto.
"LOAN PARTICIPANT" mean, until the Closing shall have been consummated,
the Pass Through Trustee, and after the Closing shall have been consummated,
each Note Holder.
"LOSS PAYMENT DATE" means the date on which payment is due pursuant to
Section 10.1.2(a)(i) of the Lease.
"MAINTENANCE PROGRAM" is defined in Annex C to the Lease.
"MAJORITY IN INTEREST OF NOTE HOLDERS" means as of a particular date of
determination, the holders of a majority in aggregate unpaid Original Amount of
all Equipment Notes outstanding as of such date (excluding any Equipment Notes
held by Owner Trustee, Lessee, or Owner Participant or any Affiliate of any such
party or any interests of Owner Trustee or Owner Participant therein by reason
of subrogation pursuant to Section 4.03 of the Trust Indenture (unless all
Equipment Notes then outstanding shall be held by Owner Trustee, Lessee, Owner
Participant or any Affiliate of any thereof)); PROVIDED that for the purposes of
directing any action or casting any vote or giving any consent, waiver or
instruction hereunder any Note Holder of an Equipment Note or Equipment Notes
may allocate, in such Note Holder's sole discretion, any fractional portion of
the principal amount of such Equipment Note or Equipment Notes in favor of or in
opposition to any such action, vote, consent, waiver or instruction.
"MAKE-WHOLE AMOUNT" means, with respect to any Equipment Note, an amount
(as determined by an independent investment banker of national standing) equal
to the excess, if any, of (a) the present value of the remaining scheduled
payments of principal and interest to maturity of such Equipment Note computed
by discounting such payments on a semiannual basis on each Payment Date
(assuming a 360-day year of twelve 30-day months) using a discount rate equal to
the Treasury Yield over (b) the outstanding principal amount of such Equipment
Note plus accrued interest to the date of determination. For purposes of
determining the Make-Whole Amount, "Treasury Yield" means, at the date of
determination with respect to any Equipment Note, the sum of (i) 50 basis points
and (ii) the interest rate (expressed as a decimal and, in the case of United
States Treasury bills, converted to a bond equivalent yield) determined to be
the per annum rate equal to the semi-annual yield to maturity for United States
Treasury securities maturing on the Average Life Date of such Equipment Note and
trading in the public securities markets either as determined by interpolation
between the most recent weekly average yield to maturity for two series of
United States Treasury securities, trading in the public securities markets, (A)
one maturing as close as possible to, but earlier than, the Average Life Date of
such Equipment Note and (B) the other maturing as close as possible to, but
later than, the Average Life Date of such Equipment Note, in each case as
published in the most recent H.15(519) or, if a weekly average yield to maturity
for United States Treasury securities maturing on the Average Life Date of such
Equipment Note is reported on the most recent H.15(519), such weekly average
yield to maturity as published in such H.15(519). "H.15(519)" means the weekly
statistical release designated as such, or any successor publication, published
by the Board of Governors of the Federal Reserve System. The date of
determination of a Make-Whole Amount shall be the third Business Day prior to
the applicable payment or redemption date and the "most recent H.15(519)" means
the H.15(519) published prior to the close of business on the third Business Day
prior to the applicable payment or redemption date.
"MATERIAL ADVERSE CHANGE" means, with respect to any person, any event,
condition or circumstance that materially and adversely affects such person's
business or consolidated financial condition, or its ability to observe or
perform its obligations, liabilities and agreements under, or affect the
validity or enforceability of the Operative Agreements.
"MORTGAGED PROPERTY" is defined in Section 3.03 of the Trust Indenture.
"MORTGAGEE" means Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely as loan trustee under the
Trust Indenture.
"MORTGAGEE AGREEMENTS" means, collectively, the Participation Agreement,
the Trust Indenture and any Trust Indenture Supplement.
"MORTGAGEE EVENT" means (i) in the event of a reorganization proceeding
involving the Lessee under Chapter 11 of the Bankruptcy Code, (A) the trustee in
such proceeding or the Lessee not assuming or agreeing to perform its
obligations under the Lease, as contemplated under Section 1110, during the
60-day period under Section 1110(a)(2)(A) of the Bankruptcy Code (or such longer
period as may apply under Section 1110(b) of the Bankruptcy Code) or (B) at any
time after agreeing to perform such obligations, such trustee or the Lessee
ceasing to perform such obligations with the result that the Continuous Stay
Period comes to an end or (ii) either the Equipment Notes shall have become due
and payable pursuant to Section 4.04(b) of the Trust Indenture or Mortgagee has
taken action or notified Owner Trustee that it intends to take action to
foreclose the Lien of the Trust Indenture or otherwise commence the exercise of
any significant remedy in accordance with Section 4.04(a) of the Trust
Indenture.
"NET ECONOMIC RETURN" means the Owner Participant's net after-tax yield
utilizing the multiple investment sinking fund method of analysis and aggregate
net after-tax cash flow, computed on the basis of the same methodology and
assumptions as were utilized by the initial Owner Participant in determining
Stipulated Loss Value percentages and Termination Value percentages, as of the
Closing Date.
"NET WORTH" means, for any person, the excess of its total assets over its
total liabilities in accordance with GAAP.
"NON-U.S. PERSON" means any Person other than a United States person, as
defined in Section 7701(a)(30) of the Code.
"NOTE HOLDER" means at any time each registered holder of one or more
Equipment Notes.
"NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement, dated as of
the Issuance Date, among Continental Airlines, Inc., the Subordination Agent,
the Escrow Agent, the Paying Agent and the Pass Through Trustee under the Pass
Through Trust Agreement providing for, among other things, the issuance and sale
of certain equipment notes, PROVIDED that, for purposes of any obligation of
Lessee, no amendment, modification or supplement to, or substitution or
replacement of, such Agreement shall be effective unless consented to by Lessee.
"OBSOLETE PART" is defined in Section D of Annex C to the Lease.
"OFFICER'S CERTIFICATE" means, in respect of any party to the
Participation Agreement, a certificate signed by the Chairman, the President,
any Vice President (including those with varying ranks such as Executive,
Senior, Assistant or Staff Vice President), the Treasurer or the Secretary of
such party.
"OPERATIVE AGREEMENTS" means, collectively, the Participation Agreement,
the Trust Agreement, the Purchase Agreement Assignment, the Consent and
Agreement, the Lease, Lease Supplement No. 1, the Trust Indenture, the initial
Trust Indenture Supplement, the Bills of Sale, the Tax Indemnity Agreement, the
Termination Agreements and the Equipment Notes.
"OPERATIVE INDENTURES" means each of the indentures under which notes have
been issued and purchased by the Pass Through Trustee.
"OP GUARANTOR" means the Airframe Manufacturer.
"OP GUARANTY" means the Guaranty, dated as of the date of the
Participation Agreement, providing, among other things, for the guaranty by the
OP Guarantor of Owner Participant's obligations under the Operative Agreements.
"OP JURISDICTION" is defined in Schedule 3 to the Participation Agreement.
"ORIGINAL AMOUNT," with respect to an Equipment Note, means the stated
original principal amount of such Equipment Note and, with respect to all
Equipment Notes, means the aggregate stated original principal amounts of all
Equipment Notes.
"OWNER PARTICIPANT" means the person executing the Participation Agreement
as "Owner Participant" or, if a second person becomes an "Owner Participant"
pursuant to Section 10.1.1 of the Participation Agreement, both of such persons;
PROVIDED that if an Owner Participant Transfers 100% of its interest to a
successor Owner Participant, such transferring Owner Participant shall
thereafter no longer be considered an "Owner Participant."
"OWNER PARTICIPANT AGREEMENTS" means, collectively, the Participation
Agreement, the Tax Indemnity Agreement and the Trust Agreement.
"OWNER PARTICIPANT'S PERCENTAGE" means the percentage of Lessor's Cost
allocated to the Owner Participant in Schedule 2 to the Participation Agreement.
"OWNER TRUSTEE" means Xxxxx Fargo Bank Northwest, National Association, a
national banking association, not in its individual capacity, except as
expressly provided in any Operative Agreement, but solely as Owner Trustee under
the Trust Agreement.
"OWNER TRUSTEE AGREEMENTS" means, collectively, the Participation
Agreement, the Lease, Lease Supplement No. 1, the Trust Agreement, the Trust
Indenture, the initial Trust Indenture Supplement, the Equipment Notes and the
Purchase Agreement Assignment.
"PARTICIPANTS" means, collectively, Owner Participant and each Loan
Participant and "Participant" means Owner Participant or a Loan Participant,
individually.
"PARTICIPATION AGREEMENT" means the Participation Agreement [TN] dated as
of [ID] among Lessee, Owner Participant, Owner Trustee, the Pass Through
Trustee, Subordination Agent, Mortgagee and Airframe Manufacturer.
"PARTS" means all appliances, parts, components, avionics, landing gear,
instruments, appurtenances, accessories, furnishings, seats and other equipment
of whatever nature (other than (a) Engines or engines, and (b) any items leased
by Lessee from a third party other than Lessor)), that may from time to time be
installed or incorporated in or attached or appurtenant to the Airframe or any
Engine.
"PASS THROUGH AGREEMENTS" means the Pass Through Trust Agreement, the Note
Purchase Agreement, the Deposit Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Liquidity Facility and the Fee Letter (as defined
in the Intercreditor Agreement), provided, that no amendment, modification or
supplement to, or substitution or replacement of, any such Fee Letter shall be
effective for purposes of any obligation of Lessee, unless consented to by
Lessee.
"PASS THROUGH CERTIFICATES" means the pass through certificates issued by
the Pass Through Trust (and any other pass through certificates for which such
pass through certificates may be exchanged).
"PASS THROUGH INDEMNITEES" means (i) the Subordination Agent, the Paying
Agent, the Escrow Agent, the Liquidity Provider and the Pass Through Trustee,
(ii) each Affiliate of a person described in the preceding clause (i), (iii) the
respective directors, trustees, officers, employees, agents and servants of each
of the persons described in the preceding clauses (i) and (ii) and (iv) the
successors and permitted assigns of the persons described in the preceding
clauses (i), (ii) and (iii).
"PASS THROUGH TRUST" means the pass through trust created under the Pass
Through Trust Agreement.
"PASS THROUGH TRUST AGREEMENT" means the Trust Supplement, dated as of the
Issuance Date, by and between the Lessee and Pass Through Trustee, together with
the Basic Pass Through Trust Agreement.
"PASS THROUGH TRUSTEE" means Wilmington Trust Company, a Delaware banking
corporation, in its capacity as trustee under the Pass Through Trust Agreement.
"PASS THROUGH TRUSTEE AGREEMENTS" means the Participation Agreement, the
Pass Through Trust Agreement, the Note Purchase Agreement, the Deposit
Agreement, the Escrow Agreement and the Intercreditor Agreement.
"PAYING AGENT" means Wilmington Trust Company, as Paying Agent under the
Escrow Agreement.
"PAYMENT DATE" means each January 2 and July 2 during the Term, commencing
with July 2, 2004.
"PAYMENT DEFAULT" means the failure by Lessee to pay any amount of Basic
Rent, Renewal Rent, Stipulated Loss Value or Termination Value when due.
"PAYMENT DUE RATE" is defined in Schedule 1 to the Lease.
"PAYMENT PERIOD" means each of the consecutive semiannual periods during
the Term ending on a Payment Date, the first such period commencing on and
including the Closing Date and being longer than semiannual.
"PERMITTED AIR CARRIER" means (i) any Permitted Foreign Air Carrier, (ii)
any person approved in writing by Lessor or (iii) any U.S. Air Carrier.
"PERMITTED COUNTRY" means any country listed on Schedule 5 to the Lease.
"PERMITTED FOREIGN AIR CARRIER" means any air carrier with its principal
executive offices in any Permitted Country and which is authorized to conduct
commercial airline operations and to operate jet aircraft similar to the
Aircraft under the applicable Laws of such Permitted Country.
"PERMITTED GOVERNMENT ENTITY" means (i) the U.S. Government or (ii) any
Government Entity if the Aircraft is then registered under the Laws of the
country of such Government Entity.
"PERMITTED INSTITUTION" means any bank, trust company, insurance company,
financial institution, partnership, limited liability company or corporation
(other than, without Lessee's consent, a commercial air carrier, a commercial
aircraft operator, a freight forwarder or Affiliate of any of the foregoing), in
each case with a combined capital and surplus or net worth of at least
$25,000,000.
"PERMITTED LIEN" means any Lien described in clauses (a) through (f),
inclusive, of Section 6 of the Lease.
"PERMITTED SUBLEASE" means a sublease or sub-sublease permitted under
Section 7.2.7 of the Lease.
"PERMITTED SUBLESSEE" means the sublessee under a Permitted Sublease.
"PERSONS" or "PERSONS" means individuals, firms, partnerships, joint
ventures, trusts, trustees, Government Entities, organizations, associations,
corporations, limited liability companies, government agencies, committees,
departments, authorities and other bodies, corporate or incorporate, whether
having distinct legal status or not, or any member of any of the same.
"PLAN" means any employee benefit plan within the meaning of Section 3(3)
of ERISA, or any plan within the meaning of Section 4975(e)(1) of the Code.
"PRELIMINARY NOTICE" is defined in Section 17.1 of the Lease.
"PREMIUM TERMINATION DATE" means January 13, 2012.
"PTT PERCENTAGE" means, with respect to the Pass Through Trustee, the
percentage of Lessor's Cost allocated to such Pass Through Trustee in Schedule 2
to the Participation Agreement.
"PURCHASE AGREEMENT" means the Purchase Agreement GPJ-003/96 between
Airframe Manufacturer and Express (including all exhibits thereto, together with
all letter agreements entered into that by their terms constitute part of such
Purchase Agreement), to the extent assigned pursuant to the Purchase Agreement
Assignment.
"PURCHASE AGREEMENT ASSIGNMENT" means the Amended and Restated Purchase
Agreement Assignment [TN], dated as of even date with the Participation
Agreement, among Express, Seller (if Seller is not Airframe Manufacturer) and
Owner Trustee.
"PURCHASE DATE" means the last Business Day of the Base Lease Term or any
Renewal Lease Term, as specified in any Purchase Notice.
"PURCHASE NOTICE" is defined in Section 17.3.1 of the Lease.
"QIB" is defined in Section 2.08 of the Trust Indenture.
"REMOVABLE PARTS" is defined in Section D of Annex C to the Lease.
"RENEWAL LEASE TERM" means each two year term for which the Lease is
extended by Lessee, if any, pursuant to the first or second such extensions in
accordance with Section 17 of the Lease.
"RENEWAL NOTICE" is defined in Section 17.2.1 of the Lease.
"RENEWAL RENT" for the Aircraft means the rent payable therefor in respect
of a Renewal Lease Term determined pursuant to Section 17.2.2 of the Lease.
"RENT" means, collectively, Basic Rent, Renewal Rent and Supplemental
Rent.
"REPLACEMENT AIRFRAME" means any airframe substituted for the Airframe
pursuant to Section 10 of the Lease.
"REPLACEMENT ENGINE" means an engine substituted for an Engine pursuant to
the Lease.
"RETURN ACCEPTANCE SUPPLEMENT" means a Return Acceptance Supplement, dated
as of the date the Aircraft is returned to Lessor pursuant to Section 5 of the
Lease, by Lessor and Lessee substantially in the form of Exhibit B to the Lease.
"SCHEDULED CLOSING DATE" means the expected Closing Date notified to
Lessee, each Participant, Owner Trustee and Mortgagee by Airframe Manufacturer
pursuant to Section 4.1 of the Participation Agreement, which expected Closing
Date shall be a Business Day not later than the Commitment Termination Date.
"SCHEDULED EXPIRATION DATE" is defined in Schedule 1 to the Lease.
"SCHEDULED RENEWAL TERM EXPIRATION DATE" means, in the case of the first
Renewal Lease Term, the second anniversary of the Scheduled Expiration Date, and
in the case of the second Renewal Lease Term, the fourth anniversary of the
Scheduled Expiration Date.
"SEC" means the Securities and Exchange Commission of the United States,
or any Government Entity succeeding to the functions of such Securities and
Exchange Commission.
"SECTION 1110" means 11 U.S.C. ss. 1110 of the Bankruptcy Code or any
successor or analogous section of the federal bankruptcy Law in effect from time
to time.
"SECTION 1110 EVENT" means the institution of reorganization proceedings
with respect to Lessee under Chapter 11 of the Bankruptcy Code and thereafter so
long as the Section 1110 Period continues.
"SECTION 1110 PERIOD" means the continuous period of 60 days specified in
Section 1110(a)(2)(A) of the Bankruptcy Code (or such longer period, if any,
agreed to under Section 1110(b) of the Bankruptcy Code), plus an additional
period, if any, commencing with the trustee or debtor-in-possession in such
proceeding agreeing to perform its obligations under the Lease with the approval
of the applicable court and continuing until such time as such trustee or
debtor-in-possession ceases to fully perform its obligations thereunder with the
result that the period during which the Owner Trustee is prohibited from
repossessing the Aircraft under the Lease comes to an end.
"SECURED OBLIGATIONS" is defined in Section 2.06 of the Trust Indenture.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITY" means a "security" as defined in Section 2(1) of the Securities
Act.
"SELLER" is defined in Schedule 3 to the Participation Agreement.
"SIMILAR AIRCRAFT" is defined in Schedule 1 to the Lease.
"SLV RATE" is defined in Schedule 1 to the Lease.
"STIPULATED LOSS VALUE" means, with respect to the Aircraft, (a) during
the Base Lease Term, the amount determined by multiplying (i) the percentage set
forth in Schedule 3 to the Lease (as adjusted from time to time in accordance
with Section 3.2.3 of the Lease) opposite the Stipulated Loss Value Date by (ii)
Lessor's Cost, (b) during any Renewal Lease Term, the amount determined pursuant
to Section 17.2.3 of the Lease and (c) during any extension of the Term pursuant
to the proviso to the definition of "Term", the Stipulated Loss Value
immediately prior to the commencement of such extension. Notwithstanding
anything to the contrary in any Operative Agreement, Stipulated Loss Value shall
always be sufficient to pay in full, as of the date of payment thereof (assuming
timely payment of the Equipment Notes prior to such date), the aggregate unpaid
principal amount of all Equipment Notes outstanding as of such date, together
with accrued and unpaid interest on all such Equipment Notes as of such date.
"STIPULATED LOSS VALUE DATE" means, for any month, the day in such month
specified in Schedule 3 to the Lease or, if such day is not a Business Day, the
immediately succeeding Business Day.
"SUBORDINATION AGENT" means Wilmington Trust Company, as subordination
agent under the Intercreditor Agreement.
"SUBORDINATION AGENT AGREEMENTS" means the Participation Agreement, the
Liquidity Facility and the Intercreditor Agreement.
"SUPPLEMENTAL RENT" means, without duplication (a) all amounts,
liabilities, indemnities and obligations (other than Basic Rent or Renewal Rent
but including Make-Whole Amount, if any) that Lessee assumes or becomes
obligated to or agrees to pay under any Lessee Operative Agreement to or on
behalf of Lessor or any other person, including, without limitation, payments of
Stipulated Loss Value, Termination Value and payments of indemnities under
Section 9 of the Participation Agreement, but excluding any amount as to which
Lessee is obligated to pay a pro rata share pursuant to clause (e) of this
definition, (b) (i) to the extent not payable (whether or not in fact paid)
under Section 6(a) of the Note Purchase Agreement (as originally in effect or
amended with the consent of the Owner Participant), an amount or amounts equal
to the fees payable to the Liquidity Provider under Section 2.03 of the
Liquidity Facility and the related Fee Letter (as defined in the Intercreditor
Agreement) multiplied by a fraction the numerator of which shall be the then
outstanding aggregate principal amount of the Equipment Notes and the
denominator of which shall be the then outstanding aggregate principal amount of
all "Equipment Notes" (as defined in the Intercreditor Agreement); (ii) (x) the
amount equal to interest on any Downgrade Advance (other than any Applied
Downgrade Advance) payable under Section 3.07 of the Liquidity Facility minus
Investment Earnings from such Downgrade Advance multiplied by (y) the fraction
specified in the foregoing clause (i); (iii) (x) the amount equal to interest on
any Non-Extension Advance (other than any Applied Non-Extension Advance) payable
under Section 3.07 of the Liquidity Facility minus Investment Earnings from such
Non-Extension Advance multiplied by (y) the fraction specified in the forgoing
clause (i); (iv) if any payment default shall have occurred and be continuing
with respect to interest on any Equipment Notes, (x) the excess, if any, of (1)
an amount equal to interest on any Unpaid Advance, Applied Downgrade Advance or
Applied Non-Extension Advance payable under Section 3.07 of the Liquidity
Facility over (2) the sum of Investment Earnings from any Final Advance plus any
amount of interest at the Payment Due Rate actually payable (whether or not in
fact paid) by Owner Trustee on the overdue scheduled interest on the Equipment
Notes in respect of which such Unpaid Advance, Applied Downgrade Advance or
Applied Non-Extension Advance was made multiplied by (y) a fraction the
numerator of which shall be the then aggregate overdue amounts of interest on
the Equipment Notes (other than interest becoming due and payable solely as a
result of acceleration of any such Equipment Notes) and the denominator of which
shall be the then aggregate overdue amounts of interest on all "Equipment Notes"
(as defined in the Intercreditor Agreement) (other than interest becoming due
and payable solely as a result of acceleration of any such "Equipment Notes");
and (v) Lessee's pro rata share of any other amounts owed to the Liquidity
Provider by the Subordination Agent as borrower under the Liquidity Facility
(other than amounts due as repayment of advances thereunder or as interest on
such advances), except to the extent payable pursuant to clause (i), (ii), (iii)
or (iv) above, in each case, to the extent not paid when due by the Airframe
Manufacturer pursuant to the Fee Letter (as defined in the Intercreditor
Agreement), (c) Lessee's pro rata share of all compensation and reimbursement of
expenses, disbursements and advances payable by Lessee under the Pass Through
Trust Agreement, (d) Lessee's pro rata share of all compensation and
reimbursement of expenses and disbursements payable to the Subordination Agent
under the Intercreditor Agreement except with respect to any income or franchise
taxes incurred by the Subordination Agent in connection with the transactions
contemplated by the Intercreditor Agreement, (e) Lessee's pro rata share of any
amount payable under Section 9.1 (and, if attributable thereto, Section 9.5) of
the Participation Agreement to any Pass Through Indemnitee to the extent such
amount relates to, results from or arises out of or in connection with (i) the
Pass Through Agreements or the enforcement of any of the terms of any of the
Pass Through Agreements, (ii) the offer, sale, or delivery of the Pass Through
Certificates or any interest therein or represented thereby or (iii) any breach
of or failure to perform or observe, or any other noncompliance with, any
covenant or agreement or other obligation to be performed by Lessee under any
Pass Through Agreement or the falsity of any representation or warranty of
Lessee in any Pass Through Agreement and (f) in the event Lessee requests any
amendment to any Operative Agreement or Pass Through Agreement, Lessee's pro
rata share of all reasonable fees and expenses (including, without limitation,
fees and disbursements of counsel) of the Escrow Agents and the Paying Agents in
connection therewith payable by the Pass Through Trustee under the Escrow
Agreement. As used herein, "Lessee's pro rata share" means as of any time a
fraction, the numerator of which is the principal balance then outstanding of
Equipment Notes and the denominator of which is the aggregate principal balance
then outstanding of all "Equipment Notes" (as such term is defined in each of
the Operative Indentures). For purposes of this definition, the terms "Applied
Downgrade Advance", "Applied Non-Extension Advance", "Cash Collateral Account",
"Downgrade Advance", "Final Advance", "Investment Earnings", "Non-Extension
Advance" and "Unpaid Advance" shall have the meanings specified in the Liquidity
Facility.
"TAX ATTRIBUTE PERIOD" is defined in Section 1(e) of the Tax Indemnity
Agreement.
"TAX INDEMNITEE" means (a) Xxxxx Fargo and Owner Trustee, (b) WTC and
Mortgagee, (c) each separate or additional trustee appointed pursuant to the
Trust Agreement or the Trust Indenture, (d) each Participant, (e) the Trust
Estate and the Trust Indenture Estate and (f) the respective successors,
assigns, agents and servants of the foregoing. For purposes of this definition,
the term "Owner Participant" shall include any member of an affiliated group
(within the meaning of Section 1504 of the Code) of which Owner Participant is,
or may become, a member if consolidated, joint or combined returns are filed for
such affiliated group for federal, state or local income tax purposes.
"TAX INDEMNITY AGREEMENT" means the Tax Indemnity Agreement, dated as of
even date with the Participation Agreement, between Lessee and Owner
Participant.
"TAXES" means all license, recording, documentary, registration and other
similar fees and all taxes, levies, imposts, duties, charges, assessments or
withholdings of any nature whatsoever imposed by any Taxing Authority, together
with any penalties, additions to tax, fines or interest thereon or additions
thereto.
"TAXING AUTHORITY" means any federal, state or local government or other
taxing authority in the United States, any foreign government or any political
subdivision or taxing authority thereof, any international taxing authority or
any territory or possession of the United States or any taxing authority
thereof.
"TERM" means the term, commencing on the Closing Date, for which the
Aircraft is leased pursuant to Section 3 of the Lease, and shall include the
Base Lease Term and, if applicable, any Renewal Lease Term; PROVIDED that if at
the scheduled end of the Term the Aircraft or Airframe is being used, or was
within six (6) months prior thereto being used, by the U.S. Government pursuant
to CRAF, the Term shall be deemed extended for the period necessary to
accommodate usage of the Aircraft or Airframe pursuant to CRAF plus six months
thereafter, and Lessee shall be obligated to pay Basic Rent with respect to any
such period of extension at a rate equal to the Basic Rent paid during the Base
Lease Term or the applicable Renewal Lease Term, whichever shall have ended
immediately prior to such extension.
"TERMINATION AGREEMENTS" means, collectively, the termination agreement
with respect to the Existing Lease and the termination agreement with respect to
the Existing Sublease, in each case delivered pursuant to Section 5.1.2(xiii) of
the Participation Agreement.
"TERMINATION DATE" means any Payment Date on which the Lease shall
terminate in accordance with Section 9 of the Lease.
"TERMINATION VALUE" means, with respect to the Aircraft, the amount
determined by multiplying (a) the percentage set forth in Schedule 4 to the
Lease (as adjusted from time to time in accordance with Section 3.2.3 of the
Lease) opposite the applicable Payment Date by (b) Lessor's Cost.
Notwithstanding anything to the contrary in any Operative Agreement, Termination
Value shall always be sufficient to pay in full, as of the date of payment
thereof (assuming timely payment of the Equipment Notes prior to such date), the
aggregate unpaid principal amount of all Equipment Notes outstanding as of such
date, together with accrued and unpaid interest on all such Equipment Notes as
of such date.
"THRESHOLD AMOUNT" is defined in Schedule 1 to the Lease.
"TRANSACTIONS" means the transactions contemplated by the Participation
Agreement and the other Operative Agreements to occur on the Closing Date.
"TRANSACTION EXPENSES" means (a) all costs and expenses incurred by Owner
Participant, the Pass Through Trustee, the Subordination Agent, Owner Trustee
and Mortgagee in connection with the preparation, execution and delivery of the
Operative Agreements (including, without limitation, the reasonable fees and
expenses of counsel for such parties), (b) all costs and expenses for the
recording or filing of any documents, certificates or instruments in accordance
with any Operative Agreement, including, without limitation, the FAA Filed
Documents and the Financing Statements, (c) the OP Pro Rata Share of (i) the
placement fees and expenses attributable to the offering and sale of the Pass
Through Certificates and (ii) all costs and expenses incurred by the Pass
Through Trustee, the Subordination Agent, Owner Trustee and Mortgagee in
connection with the preparation, execution and delivery of the Pass Through
Agreements (including, without limitation, the reasonable fees and expenses of
counsel for such parties), (d) the reasonable fees and disbursements of special
counsel in Oklahoma City, Oklahoma, in connection with the Closing, and (e) all
initial and ongoing fees, disbursements and expenses of Owner Trustee and
Mortgagee. For purposes of the foregoing, "OP PRO RATA SHARE" shall mean a
fraction, the numerator of which shall be one and the denominator of which shall
be the number of aircraft financed under the Note Purchase Agreement.
"TRANSFER" means the transfer, sale, assignment or other conveyance of all
or any interest in any property, right or interest.
"TRANSFEREE" means a person to which any Owner Participant, Owner Trustee
or any Loan Participant or Note Holder purports or intends to Transfer any or
all of its right, title or interest in the Trust Estate or in its Equipment Note
and the Trust Indenture Estate, respectively, as described in Section 10.1.1(a),
10.1.2 or 10.1.3 (but excluding participants in any participation referred to in
Section 10.1.3), respectively, of the Participation Agreement.
"TRUST" means the trust created by the Trust Agreement.
"TRUST AGREEMENT" means the Amended and Restated Trust Agreement [TN],
dated as of even date with the Participation Agreement, between Owner
Participant and Owner Trustee.
"TRUST ESTATE" means all estate, right, title and interest of Owner
Trustee in and to the Aircraft, the Lease, any Lease Supplement and the Purchase
Agreement including, without limitation, all amounts of Basic Rent and
Supplemental Rent including, without limitation, insurance proceeds (other than
insurance proceeds payable to or for the benefit of Owner Participant, Note
Holders or WTC) and requisition, indemnity or other payments of any kind for or
with respect to the Aircraft (except amounts owing to Owner Participant, Note
Holders or WTC, or to any of their respective directors, officers, employees,
servants and agents, pursuant to Section 9 of the Participation Agreement).
Notwithstanding the foregoing, "Trust Estate" shall not include any Excluded
Payment.
"TRUST INDENTURE" means the Trust Indenture and Mortgage [TN], dated as of
even date with the Participation Agreement, between Owner Trustee and Mortgagee.
"TRUST INDENTURE ESTATE" is defined in the "Granting Clause" of the Trust
Indenture.
"TRUST INDENTURE SUPPLEMENT" means a Trust Indenture and Mortgage [TN]
Supplement, substantially in the form of Exhibit A to the Trust Indenture, with
appropriate modifications to reflect the purpose for which it is being used.
"TRUST SUPPLEMENT" means an agreement supplemental to the Basic Pass
Through Trust Agreement pursuant to which (i) a separate trust is created for
the benefit of the holders of the Pass Through Certificates, (ii) the issuance
of the Pass Through Certificates representing fractional undivided interests in
such trust is authorized and (iii) the terms of the Pass Through Certificates
are established.
"UCC" means the Uniform Commercial Code as in effect in any applicable
jurisdiction.
"UNITED STATES" or "U.S." means the United States of America; PROVIDED,
that for geographic purposes, "United States" means, in aggregate, the 50 states
and the District of Columbia of the United States of America.
"U.S. AIR CARRIER" means any Person holding an air carrier operating
certificate issued by the Secretary of Transportation pursuant to chapter 447 of
title 49 of the United States Code for aircraft capable of carrying 10 or more
individuals or 6000 pounds or more of cargo, and as to which there is in force
an air carrier operating certificate issued pursuant to Part 121 of the FAA
Regulations, or which may operate as an air carrier by certification or
otherwise under any successor or substitute provisions therefor or in the
absence thereof.
"U.S. PERSON" means any Person described in Section 7701(a)(30) of the
Code.
"U.S. GOVERNMENT" means the federal government of the United States, or
any instrumentality or agency thereof the obligations of which are guaranteed by
the full faith and credit of the federal government of the United States.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, with respect to any specified
Debt, at the time of the determination thereof the number of years obtained by
dividing the then Remaining Dollar-years of such Debt by the then outstanding
principal amount of such Debt. The term "Remaining Dollar-years" shall mean the
amount obtained by (1) multiplying the amount of each then-remaining principal
payment on such Debt by the number of years (calculated at the nearest
one-twelfth) that will elapse between the date of determination of the Weighted
Average Life to Maturity of such Debt and the date of that required payment and
(2) totaling all the products obtained in clause (1) above.
"XXXXX FARGO" means Xxxxx Fargo Bank Northwest, National Association, a
national banking association, not in its capacity as Owner Trustee under the
Trust Agreement, but in its individual capacity.
"WET LEASE" means any arrangement whereby Lessee or a Permitted Sublessee
agrees to furnish the Aircraft, Airframe or any Engine to a third party pursuant
to which the Aircraft, Airframe or Engine shall at all times be in the
operational control of Lessee or a Permitted Sublessee, provided that Lessee's
obligations under this Lease shall continue in full force and effect
notwithstanding any such arrangement.
"WTC" means Wilmington Trust Company, a Delaware banking corporation, not
in its capacity as Mortgagee under the Trust Indenture, but in its individual
capacity.
---------------------------------
| SCHEDULE 1 |
| TO |
| Participation Agreement [TN] |
---------------------------------
ACCOUNTS; ADDRESSES
ACCOUNT FOR PAYMENTS ADDRESS FOR NOTICES
CONTINENTAL JPMorgan Chase Continental Airlines, Inc.
AIRLINES, INC. Xxx Xxxx, Xxx Xxxx 00000 0000 Xxxxx Xxxxxx
Account No.: 000-0-000000 Dept. HQS-FN
ABA#: 021-000021 Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx Xxxxxxxxx Attention: Treasurer
Voice: 000-000-0000 Facsimile: (000) 000-0000
Facsimile: 000-000-0000
Reference: Continental
Lease [TN]
OWNER PARTICIPANT Banco do Brasil S.A. Refine, Inc.
New York Branch c/o CT Corporation
ABA# 000000000 0000 Xxxxxx Xx.
Account No.: 75592-011 Xxxxxxxxxx, XX 00000
Reference: Continental Lease [TN] Facsimile: 000-000-0000
XXXXX FARGO BANK Xxxxx Fargo Bank Northwest, Xxxxx Fargo Bank Northwest,
NORTHWEST, National Association National Association
NATIONAL ABA: 000000000 MAC: U1228-120
ASSOCIATION Cr: Corporate Trust Services 000 Xxxxx Xxxx Xxxxxx,
X/X: 000-00000-00 12th Floor
Ref: Continental Lease [TN] Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Corporate Trust
Services
Facsimile: (000) 000-0000
WILMINGTON TRUST Wilmington Trust Company Wilmington Trust Company
COMPANY, AS Xxxxxxxxxx, Xxxxxxxx 00000 Xxxxxx Square North
MORTGAGEE Account No.: [AC] 0000 Xxxxx Xxxxxx Xxxxxx
ABA #: 031-100092 Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Capital Attention: Corporate Trust
Market Services/ Administration
Xxxxxx X. Xxxxx Facsimile: (000) 000-0000
Reference: Continental
Lease [TN]
WILMINGTON TRUST Wilmington Trust Company Wilmington Trust Company
COMPANY, AS Xxxxxxxxxx, Xxxxxxxx 00000 Xxxxxx Square North
SUBORDINATION Account No.: 64060-0 0000 Xxxxx Xxxxxx Xxxxxx
AGENT ABA #: 031-100092 Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Capital Attention: Corporate Trust
Market Services/ Administration
Xxxxxx X. Xxxxx Facsimile: (000) 000-0000
Reference: Continental
Lease [TN]
WILMINGTON TRUST Wilmington Trust Company Wilmington Trust Company
COMPANY, AS PASS Wilmington, Delaware 19890 Xxxxxx Square North
THROUGH TRUSTEE Account No.: 64021-0 0000 Xxxxx Xxxxxx Xxxxxx
FOR THE 0000-XXX0 XXX #: 031-100092 Xxxxxxxxxx, Xxxxxxxx 00000
PASS THROUGH TRUST Attention: Corporate Capital Attention: Corporate Trust
Market Services/ Administration
Xxxxxx X. Xxxxx Facsimile: (000) 000-0000
Reference: Continental
Lease [TN]
EMBRAER-EMPRESA Banco do Brasil S.A. EMBRAER-Empresa
XXXXXXXXXX XX Xx. Xxxxxx X'Xxxxx, 000 Brasileira de Aeronautica
AERONAUTICA S.A. 12245-030, Sao Xxxx dos X.X.
Xxxxxx-SP Brazil Xx. Xxxxxxxxxx Xxxxx
Xxxxx Xxxx: XXXXXXXXXXX Xxxx, 0000
Account No.: 9405-6 12227-901 Sao Xxxx dos
Reference: COEX Lease [TN] Xxxxxx -SP Brazil
Attention: General Counsel
Facsimile: (00-000)000-0000
---------------------------------
| SCHEDULE 2 |
| TO |
| Participation Agreement [TN] |
---------------------------------
COMMITMENTS
PARTICIPANT PERCENTAGE OF LESSOR'S DOLLAR AMOUNT
----------- COST -------------
----------------------
PASS THROUGH TRUSTEE LOAN PARTICIPANT'S
PTT PERCENTAGE
2003-ERJ1 [PTT]% $[DA]
TOTAL $[TDA]
---------------------------------
| SCHEDULE 3 |
| TO |
| Participation Agreement [TN] |
---------------------------------
CERTAIN TERMS
DEFINED TERM DEFINITION
[OMITTED AS CONTAINING CONFIDENTIAL FINANCIAL INFORMATION]
