EXHIBIT A-1 to
Note Purchase Agreement
FORM OF LEASED AIRCRAFT PARTICIPATION AGREEMENT
================================================================================
PARTICIPATION AGREEMENT
Dated as of _______
Among
ATLAS AIR, INC.,
Lessee,
[ ],
Owner Participant,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
Not in its individual capacity
except as expressly provided herein,
but solely as Owner Trustee
and
WILMINGTON TRUST COMPANY,
Not in its individual capacity
except as expressly provided herein,
but solely as Mortgagee under the Trust
Indenture, Subordination Agent under the
Intercreditor Agreement and Pass Through Trustee
under each of the Pass Through Trust Agreements
----------------------------
One Boeing Model 747-47UF Aircraft
Bearing Manufacturer's Serial No.
and U.S. Registration No. ______
================================================================================
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS AND CONSTRUCTION.......................................2
SECTION 2. PARTICIPATION IN LESSOR'S COST; ISSUANCE OF EQUIPMENT
NOTES; TERMINATION OF OBLIGATION TO PARTICIPATE .................3
2.1 Participation in Lessor's Cost.....................................3
2.2 Nature of Obligations of Participants..............................3
2.3 Termination of Obligation to Participate...........................3
SECTION 3. COMMITMENT TO LEASE AIRCRAFT.......................................4
SECTION 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST;
POSTPONEMENT OF SCHEDULED DELIVERY DATE ..........................4
4.1 Notices of Scheduled Delivery Date.................................4
4.2 Payment of Lessor's Cost...........................................4
4.3 Postponement of Scheduled Delivery Date............................5
4.4 Closing ...........................................................6
SECTION 5. CONDITIONS PRECEDENT...............................................6
5.1 Conditions Precedent to Obligations of Participants................6
5.2 Conditions Precedent to Obligations of Owner Trustee..............14
5.3 Conditions Precedent to Obligations of Mortgagee..................15
5.4 Conditions Precedent to Obligations of Lessee.....................15
5.5 Post-Registration Opinion.........................................16
SECTION 6. REPRESENTATIONS AND WARRANTIES....................................17
6.1 Lessee's Representations and Warranties...........................17
6.2 Owner Participant's Representations and Warranties................21
6.3 First Security's Representations and Warranties...................24
6.4 WTC's Representations and Warranties..............................27
SECTION 7. COVENANTS, UNDERTAKINGS AND AGREEMENTS............................31
7.1 Covenants of Lessee...............................................31
7.2 Covenants of Owner Participant....................................33
7.3 Covenants of First Security and Owner Trustee.....................36
7.4 Covenants of WTC..................................................38
7.5 Covenants of Note Holders.........................................40
7.6 Agreements .......................................................41
-i-
Page
SECTION 8. CONFIDENTIALITY...................................................49
SECTION 9. INDEMNIFICATION AND EXPENSES......................................50
9.1 General Indemnity.................................................50
9.2 Expenses .........................................................58
9.3 General Tax Indemnity.............................................59
9.4 Payments .........................................................72
9.5 Interest .........................................................72
9.6 Benefit of Indemnities............................................72
SECTION 10. ASSIGNMENT OR TRANSFER OF INTERESTS..............................73
10.1 Participants, Owner Trustee and Note Holders.....................73
10.2 Effect of Transfer...............................................78
SECTION 11 REFUNDING AND CERTAIN OTHER MATTERS..............................79
11.1 Refunding Generally..............................................79
11.2 Limitations on Obligation to Refund..............................81
11.3 Execution of Certain Documents...................................81
11.4 ERISA .......................................................... 81
11.5 Consent to Optional Redemptions..................................82
SECTION 12. SECTION 1110 ....................................................82
SECTION 13 CHANGE OF CITIZENSHIP............................................82
13.1 Generally .......................................................82
13.2 Owner Participant................................................83
13.3 Owner Trustee....................................................83
13.4 Mortgagee .......................................................83
SECTION 14. CONCERNING OWNER TRUSTEE.........................................84
SECTION 15. MISCELLANEOUS ...................................................84
15.1 Amendments ......................................................84
15.2 Severability ....................................................85
15.3 Survival ........................................................85
15.4 Reproduction of Documents........................................85
15.5 Counterparts ....................................................86
15.6 No Waiver .......................................................86
15.7 Notices ........................................................ 86
15.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE.................87
15.9 Third-Party Beneficiary..........................................88
15.10 Entire Agreement................................................88
15.11 Further Assurances..............................................88
ANNEX, SCHEDULES AND EXHIBITS
ANNEX A - Definitions
-ii-
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 - Opinion of corporate counsel to Airframe Manufacturer
EXHIBIT D - Opinion of special counsel to Owner Trustee
EXHIBIT E - Opinion of special counsel to Mortgagee and the
Loan Participants
EXHIBIT F - Opinion of special counsel to Owner
Participant
EXHIBIT G-1- Opinion of special counsel in Oklahoma City, Oklahoma EXHIBIT G-2-
Opinion of special counsel in Oklahoma City, Oklahoma EXHIBIT H - Form of
Assignment and Assumption Agreement EXHIBIT I - Form of Opinion EXHIBIT J - Form
of Guaranty Agreement
-iii-
PARTICIPATION AGREEMENT
PARTICIPATION AGREEMENT, dated as of , (this "Agreement"), among (a) ATLAS
AIR, INC., a Delaware corporation ("Lessee"), (b) [ ] ("Owner Participant"), (c)
FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national banking association, not
in its individual capacity, except as expressly provided herein, but solely as
Owner Trustee (this and all other capitalized terms used but not defined herein
shall have the respective meanings ascribed thereto in Section 1) (in its
capacity as Owner Trustee, "Owner Trustee" or "Lessor," and in its individual
capacity, "First Security"), (d) WILMINGTON TRUST COMPANY, a Delaware banking
corporation, not in its individual capacity, except as expressly provided
herein, but solely as Mortgagee under the Trust Indenture (in its capacity as
Mortgagee, "Mortgagee" and in its individual capacity, "WTC"), (e) WILMINGTON
TRUST COMPANY, not in its individual capacity, except as expressly provided
herein, but solely as Pass Through Trustee under each of the Pass Through Trust
Agreements, (each, a "Pass Through Trustee") and (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").
RECITALS
A. Owner Participant and First Security, concurrently herewith, are
entering into the Trust Agreement, pursuant to which, among other things, Owner
Trustee agrees to hold the Trust Estate for the use and benefit of Owner
Participant upon and subject to the terms and conditions set forth therein.
B. Lessee and Airframe Manufacturer have entered into the Purchase
Agreement, pursuant to which, among other things, Airframe Manufacturer has
agreed to manufacture and sell to Lessee and Lessee has agreed to purchase from
Airframe Manufacturer, certain aircraft, including the Aircraft.
C. On the Delivery Date, Lessee and Owner Trustee will enter into the
Purchase Agreement Assignment, pursuant to which, among other things, Lessee
will assign to Owner Trustee its right to purchase the Aircraft from Airframe
Manufacturer upon and subject to the terms and conditions set forth in the
Purchase Agreement and the Purchase Agreement Assignment.
-2-
D. Pursuant to each of the Pass Through Trust Agreements, on the Issuance
Date the Pass Through Trusts were created and the Pass Through Certificates were
issued and sold.
E. Pursuant to the Note Purchase Agreement, each Pass Through Trustee has
agreed to use a portion of the proceeds from the issuance and sale of the Pass
Through Certificates issued by each Pass Through Trust to purchase from the
Owner Trustee, on behalf of the related Pass Through Trust, the Equipment Note
bearing the same interest rate as the Pass Through Certificates issued by such
Pass Through Trust.
F. Owner Trustee and Mortgagee, concurrently with the execution and
delivery hereof, have entered into the Trust Indenture for the benefit of the
Note Holders, pursuant to which, among other things, Owner Trustee agrees (1) to
issue Equipment Notes, in the amounts and otherwise as provided in the Trust
Indenture, the proceeds of which will be used to pay a portion of Lessor's Cost
and (2) to mortgage, pledge and assign to Mortgagee all of Owner Trustee's
right, title and interest in the Trust Indenture Estate to secure the Secured
Obligations, including, without limitation, Owner Trustee's obligations under
the Equipment Notes.
G. On the Delivery Date, Lessor and Lessee will enter into the Lease,
pursuant to which, among other things, Lessor shall lease the Aircraft to Lessee
and Lessee shall lease the Aircraft from Lessor upon and subject to the terms
and conditions set forth therein.
H. 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.
-3-
SECTION 2. PARTICIPATION IN LESSOR'S COST; ISSUANCE OF EQUIPMENT NOTES;
TERMINATION OF OBLIGATION TO PARTICIPATE
2.1 Participation in Lessor's Cost
Subject to the terms and conditions of this Agreement, on the Delivery
Date, Owner Participant and each Pass Through Trustee shall participate in the
payment of Lessor's Cost as follows:
(a) Owner Participant shall participate in the payment of
Lessor's Cost for the Aircraft by making an equity investment in the
beneficial ownership of the Aircraft in the amount in Dollars equal to
Owner Participant's Percentage multiplied by Lessor's Cost; and
(b) Each Pass Through Trustee shall make a non-recourse
secured loan to Owner Trustee to finance, in part, the Owner Trustee's
payment of Lessor's Cost in the amount in Dollars equal to such Pass
Through Trustee's PTT Percentage multiplied by Lessor's Cost, such loan
to be evidenced by one or more Equipment Notes, dated the Delivery
Date, issued to the Subordination Agent as the registered holder on
behalf of each such Pass Through Trustee for the related Pass Through
Trust by Owner Trustee in accordance with this Agreement and the Trust
Indenture, in an aggregate principal amount equal to the Commitment of
each such Pass Through Trustee.
2.2 Nature of Obligations of Participants
The obligations hereunder of each Participant are several, and not joint,
and a Participant shall have no obligation to make available to Owner Trustee
any portion of any amount not paid hereunder by any other Participant. The
failure by any Participant to perform its obligations hereunder shall not affect
the obligations of Lessee toward the other Participants, except to the extent
provided in Section 5.4.
2.3 Termination of Obligation to Participate
Notwithstanding any other provision of this Agreement, if the Closing does
not occur on or before the Commitment Termination Date, the Commitment of each
Participant and its obligation to participate in the payment of Lessor's Cost
shall expire and be of no further force and effect; provided, that
-4-
the liability of any Participant that has defaulted in the payment of its
Commitment shall not be released.
SECTION 3. COMMITMENT TO LEASE AIRCRAFT
Subject to the terms and conditions of this Agreement, concurrently with
the issuance of the Equipment Notes on the Delivery Date, Owner Trustee shall
purchase and accept delivery of the Aircraft under and pursuant to the Purchase
Agreement and the Purchase Agreement Assignment, and thereupon Owner Trustee
shall lease the Aircraft to Lessee, and Lessee shall lease the Aircraft from
Owner Trustee, under the Lease.
SECTION 4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST; POSTPONEMENT
OF SCHEDULED DELIVERY DATE
4.1 Notices of Scheduled Delivery Date
Without limiting its obligations to the Loan Participants under Section
1(b) of the Note Purchase Agreement, Lessee agrees to give Participants, Owner
Trustee, and Mortgagee at least one Business Day's written notice of the
Scheduled Delivery Date, which notice shall set forth Lessor's Cost and the
amount of each Participant's Commitment. Each Participant agrees that making
available its respective Commitment shall constitute a waiver of such notice.
Owner Trustee and Mortgagee shall be deemed to have waived such notice if WTC
shall have received from each Participant funds in the full amount of its
respective Commitment.
4.2 Payment of Lessor's Cost
(a) Each Participant agrees, subject to the terms and conditions
of this Agreement, to make the Dollar amount of its respective
Commitment available, by wire transfer of immediately available funds
to WTC's account no. [ ] at Wilmington Trust Company, Wilmington,
Delaware ABA # 000000000 (contact: Xxxxxx X. Xxxxx), reference Atlas
Lease, at or before 12:00 Noon, New York City time, on the Scheduled
Delivery Date. All such funds made available by each Participant to
WTC shall, until payment thereof to Airframe Manufacturer as provided
in Section 4.2(b)(ii) or return thereof to the respective Participant
as provided in Section 4.3.2, be held by WTC in trust for the benefit
of the respective Participant, as
-5-
the sole and exclusive property of the respective Participant and not
as part of the Trust Estate or the Trust Indenture Estate.
(b) Subject to the satisfaction, or waiver by the applicable
party, of the conditions precedent set forth in Section 5, and
simultaneously with the receipt by the parties hereto of all amounts
to be paid to them on the Delivery Date pursuant to this Section 4.2,
Owner Trustee shall:
(i) purchase, take title to, and accept delivery of, the
Aircraft;
(ii) in consideration of the transfer of title to the Aircraft to
Owner Trustee, direct WTC to pay the funds made available to WTC
hereunder by the Participants to Airframe Manufacturer, which payments
in the aggregate shall be equal to Manufacturer's Purchase Price, by
wire transfer of immediately available funds to Airframe
Manufacturer's account set forth in Schedule 1;
(iii) execute an application for registration of the Aircraft
with the FAA and Lease Supplement No. 1, in each case with respect to
the Aircraft;
(iv) execute the Trust Indenture and the initial Trust Indenture
Supplement and issue the Equipment Notes to the Subordination Agent in
accordance with Section 2.1(b);
(v) lease the Aircraft to Lessee, pursuant to the Lease; and
(vi) take such other action as may be required to be taken by the
Owner Trustee on the Delivery Date by the terms of any Operative
Agreement.
4.3 Postponement of Scheduled Delivery Date
4.3.1 Postponement
If for any reason whatsoever the Closing is not consummated on the
Scheduled Delivery Date, Lessee may, subject to the provisions of Section 1(e)
of the Note Purchase Agreement, 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 Delivery Date
-6-
to each Participant, Owner Trustee and Mortgagee, designate a Delayed Delivery
Date, in which case each Participant shall comply with its obligations under
Section 4.2(a) on such Delayed Delivery Date.
4.3.2 Return of Funds
WTC shall on the Scheduled Delivery Date or the Delayed Delivery Date
promptly return to each Participant that makes funds available to it in
accordance with Section 4.2(a) such funds, together with interest or income
earned thereon, if the Closing fails to occur on the Scheduled Delivery Date or
Delayed Delivery Date, as applicable, provided that any funds made available by
the Loan Participant shall be returned on such Scheduled Delivery Date.
4.4 Closing
The Closing shall occur at the offices of Xxxxxx Xxxxxx & Xxxxxxx, 00 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or such other place as the parties shall
agree.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions Precedent to Obligations of Participants
The obligation of each Participant to make the Dollar amount of its
respective Commitment available for payment as directed by the Owner Trustee on
the Delivery Date is subject to satisfaction or waiver by each such Participant,
on or prior to the Delivery Date, 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
(xxiii) (H) shall not be conditions precedent to the obligation of Loan
Participant and Sections 5.1.15 and 5.1.16 shall not be conditions 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 Delivery
-7-
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 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 and the Engine Consent and
Agreement;
(ix) the Equipment Notes dated the Delivery 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 or Engine Manufacturer's
respective 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
Delivery Date, but after the Delivery
-8-
Date such copies shall be retained by Owner Trustee and Mortgagee and
may be inspected and reviewed by Owner Participant or Loan Participant
or their respective counsel if and only if there shall have occurred
and be continuing a Lease Default or Lease Event of Default);
(xi) the Bills of Sale;
(xii) an invoice from Airframe Manufacturer to Owner Trustee in
respect of the Aircraft in the amount of Lessor's Cost of the
Aircraft;
(xiii) an appointment of authorized representatives by Owner
Trustee to accept delivery of the Aircraft, and an acceptance thereof
by such representatives in each case, dated the Delivery Date;
(xiv) the broker's report and insurance certificates required by
Section 11 of the Lease;
(xv) an appraisal or appraisals from an Appraiser, which
appraisal or appraisals shall be reasonably satisfactory in form and
substance to Owner Participant; provided, that only Owner Participant
and Lessee shall receive copies of such appraisal or appraisals;
(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
Delivery 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 Delivery Date in accordance with the
provisions hereof and thereof; (B) an incumbency certificate of
Lessee, Owner Participant, First Security and WTC as to the person or
persons authorized to execute and deliver the relevant Operative
Agreements on behalf of such party; and (C) a copy of the Certificate
of Incorporation or Articles of Incorporation and By-Laws and general
authorizing resolutions of the boards of directors (or executive
committees) or other satisfactory evidence of authorization of Owner
Participant, First Security and WTC, certified as of the Delivery Date
by the Secretary or an Assistant or Attesting Secretary of Owner
Participant, First Security and WTC,
-9-
respectively, which authorize the execution, delivery and performance
by Owner Participant, First Security and WTC, respectively, of each of
the Operative Agreements to which it is a party, together with such
other documents and evidence with respect to it as Lessee or any
Participant may reasonably request in order to establish the
consummation of the transactions contemplated by this Agreement and
the taking of all corporate proceedings in connection therewith;
(xvii) an Officer's Certificate of Lessee, dated as of the
Delivery Date, stating that its representations and warranties set
forth in this Agreement are true and correct as of the Delivery Date
(or, to the extent that any such representation and warranty expressly
relates to an earlier date, true and correct as of such earlier date);
(xviii) an Officer's Certificate of First Security, dated as of
the Delivery Date, stating that its representations and warranties, in
its individual capacity and as Owner Trustee, set forth in this
Agreement are true and correct as of the Delivery Date (or, to the
extent that any such representation and warranty expressly relates to
an earlier date, true and correct as of such earlier date);
(xix) an Officer's Certificate of Owner Participant, dated as of
the Delivery Date, stating that its representations and warranties set
forth in this Agreement are true and correct as of the Delivery Date
(or, to the extent that any such representation and warranty expressly
relates to an earlier date, true and correct as of such earlier date);
(xx) an Officer's Certificate of WTC, dated as of the Delivery
Date, stating that its representations and warranties, in its
individual capacity or as Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, set forth in this Agreement
are true and correct as of the Delivery Date (or, to the extent that
any such representation and warranty expressly relates to an earlier
date, true and correct as of such earlier date);
(xxi) an application for registration of the Aircraft with the
FAA in the name of Owner Trustee; provided, that only special counsel
in Oklahoma City, Oklahoma shall receive the sole executed copy
thereof for filing with the FAA;
(xxii) the Financing Statements;
-10-
(xxiii) the following opinions of counsel, in each case dated the
Delivery Date:
(A) an opinion of Xxxxxx Xxxxxx & Xxxxxxx, 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 corporate counsel to Airframe
Manufacturer, substantially in the form of Exhibit C;
(D) an opinion of Ray, Xxxxxxx & Xxxxxxx, special counsel to
Owner Trustee, substantially in the form of Exhibit D;
(E) an opinion of Morris, James, Hitchens & Xxxxxxxx,
special counsel to Mortgagee and the Loan Participants,
substantially in the form of Exhibit E;
(F) an opinion of , special counsel to Owner Participant,
substantially in the form of ___________ Exhibit F;
(G) an opinion of Xxxxx & Xxxxxxx, special counsel in
Oklahoma City, Oklahoma, substantially in the form of Exhibit
G-1; and
(H) an opinion of ___________, special tax counsel to Owner
Participant, with respect to certain tax consequences of the
transactions contemplated hereby; provided, that only Owner
Participant shall receive such opinion;
(xxiv) a copy of a current, valid Standard Certificate of
Airworthiness for the Aircraft duly issued by the FAA;
(xxv) 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 any Loan
Participant, excerpted copies of the Purchase Agreement, provided that
special counsel for any 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.
-11-
5.1.3 Other Commitments
Each other Participant shall have made available the Dollar amount of its
Commitment as directed by Owner Trustee 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) any Participant
to make the Dollar amount of its Commitment available or, in the case of any
Loan Participant, to acquire an Equipment Note or to realize the benefits of the
security afforded by the Trust Indenture.
5.1.5 Tax Law Change
In respect of Owner Participant, no Adverse Change in Tax Law shall have
been enacted, promulgated or issued on or prior to the Delivery Date. Owner
Participant agrees to consider promptly, and to consult with Lessee concerning
any such Adverse Change in Tax Law and to advise Lessee and Loan Participant
promptly if Owner Participant determines that an Adverse Change in Tax Law which
has been enacted or promulgated or, if proposed, has a substantial likelihood of
becoming effective, would cause Owner Participant to elect not to close with
respect to the Aircraft. At any time on or before the Delivery Date, Owner
Participant may notify Lessee and Loan Participant that Owner Participant elects
not to close as a result of the enactment, promulgation or issuance of any
Adverse Change in Tax Law on or before the Delivery Date, specifying such
Adverse Change in Tax Law; and failure to give such notice on or before the
Delivery Date shall preclude Owner Participant from not closing with respect to
such Aircraft as a result of any Adverse Change in Tax Law.
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 Delivery Date (unless any such representation and warranty shall have been
made with reference to a specified date, in which case such representation and
warranty shall be true and
-12-
accurate as of such specified date) and each other party to this Agreement shall
have performed and observed, in all material respects, all of its covenants,
obligations and agreements in this Agreement and in any other Operative
Agreement to which it is a party to be observed or performed by it as of the
Delivery Date.
5.1.7 No Event of Default
On the Delivery Date, no event shall have occurred and be continuing, or
would result from the sale, mortgage or lease of the Aircraft, which constitutes
a Lease Default or Lease Event of Default, or a Default or Event of Default.
5.1.8 No Event of Loss
No Event of Loss with respect to the Airframe or any Engine shall have
occurred and no circumstance, condition, act or event that, with the giving of
notice or lapse of time or both, would give rise to or constitute an Event of
Loss with respect to the Airframe or any Engine shall have occurred.
5.1.9 Title
Owner Trustee shall have good title (subject to filing and recordation of
the FAA Xxxx of Sale with the FAA) to the Aircraft, free and clear of Liens,
except (a) the rights of Lessee under the Lease and Lease Supplement No. 1, (b)
the Lien created by the Trust Indenture and the initial Trust Indenture
Supplement, (c) the beneficial interest of Owner Participant created by the
Trust Agreement, (d) Liens permitted by clause (d) (solely for taxes not yet
due) of Section 6 of the Lease and (e) Liens permitted by clause (e) (solely for
amounts not yet due) of Section 6 of the Lease.
5.1.10 Certification
The Aircraft shall have been duly certificated by the FAA as to type and
airworthiness in accordance with the terms of the Purchase Agreement.
5.1.11 Section 1110
Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee of
Owner Trustee under the Trust Indenture), shall be entitled to the benefits of
Section 1110 (as currently in effect) with respect to the right to take
possession of the Airframe and Engines as provided in the Lease in the event of
a
-13-
case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor.
5.1.12 Filing
On the Delivery 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 Delivery
Date by the FAA, or any governmental or political agency, subdivision or
instrumentality of the United States, in connection with the transactions
contemplated by this Agreement shall have been taken, and all orders, permits,
waivers, authorizations, exemptions and approvals of such entities required to
be in effect on the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been issued.
5.1.15 Note Purchase Agreement
The conditions precedent to the obligations of the Loan Participants and
the other requirements relating to the Aircraft and the Equipment Notes set
forth in the Note Purchase Agreement shall have been satisfied.
5.1.16 Perfected Security Interest
On the Delivery 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
-14-
interest in the Aircraft and the Lease, subject only to Permitted Liens.
5.1.17 No Lessee Material Adverse Change
Since , , there shall not have been any event, condition or circumstance
that could materially and adversely affect Lessee's business or consolidated
financial condition or its ability to observe or perform its obligations,
liabilities and agreements under the Lessee Operative Agreements.
5.2 Conditions Precedent to Obligations of Owner Trustee
The obligation of Owner Trustee to direct the WTC to apply the Commitments
to pay Lessor's Cost on the Delivery Date is subject to satisfaction or waiver
by Owner Trustee, on or prior to the Delivery Date, 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 Delivery 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.
-15-
5.3 Conditions Precedent to Obligations of Mortgagee
The obligation of Mortgagee to authenticate the Equipment Notes on the
Delivery Date is subject to the satisfaction or waiver by Mortgagee, on or prior
to the Delivery Date, 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 Delivery 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 Delivery Date is
subject to the satisfaction or waiver by Lessee, on or prior to the Delivery
Date, of the conditions precedent set forth below in this Section 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.
-16-
5.4.2 Sales Tax
Lessee shall be satisfied that no sales, use, value added, goods and
services or like tax, and no stamp tax duty, is payable with respect to the
delivery of the Aircraft on the Delivery Date to the extent that Lessee has
liability therefor under Section 9.3.
5.4.3 Other Conditions Precedent
Each of the conditions set forth in Sections 5.1.3 (as to all
Participants), 5.1.4, 5.1.5, 5.1.6, 5.1.7 (as to Defaults or 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.
5.4.4 Tax Law Change
No Adverse Change in Tax Law shall have been enacted, promulgated or
proposed on or prior to the Delivery Date. Lessee agrees to consider promptly,
and to consult with Owner Participant concerning, any such Adverse Change in Tax
Law and to advise Owner Participant and Loan Participant promptly if Lessee
determines that an Adverse Change in Tax Law which has been enacted or
promulgated or, if proposed, has a substantial likelihood of becoming effective,
would cause Lessee to elect not to close the transactions contemplated by the
Lease and this Agreement. At any time on or before the Delivery Date, Lessee may
notify Owner Participant and Loan Participant that Lessee elects not to close
the transactions contemplated by the Lease and this Agreement as a result of the
enactment, promulgation or proposal of any Adverse Change in Tax Law on or
before the Delivery Date, specifying such Adverse Change in Tax Law.
5.5 Post-Registration Opinion
Promptly upon the registration of the Aircraft and the recordation of the
FAA Filed Documents pursuant to the Act, Lessee will cause Xxxxx & Xxxxxxx,
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.
-17-
SECTION 6. REPRESENTATIONS AND WARRANTIES
6.1 Lessee's Representations and Warranties
Lessee represents and warrants to each Participant, 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 Delivery 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.
-18-
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 Delivery 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 Delivery Date, or in
any Quarterly Report on Form 10-Q or Current Report on Form 8-K filed by Lessee
with the SEC subsequent to such Form 10-K and on or prior to the Delivery 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 Les-
-19-
see'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 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 placards 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 jurisdictions in the
United States.
6.1.9 Chief Executive Office
The chief executive office (as such term is defined in Article 9 of the
UCC) of Lessee is located at 000 Xxxxxxx Xxxxx, Xxxxxx, Xxxxxxxx 00000.
6.1.10 No Default
No event which, if the Aircraft were subject to the Lease, would constitute
a Lease Default or Lease Event of Default has occurred and is continuing.
-20-
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 would give
rise to or constitute 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 commercial air
cargo service as currently conducted, except where the failure to so
hold any such license, permit or franchise would not give rise to a
Material Adverse Change to 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 or any applicable
state securities laws.
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, except for
fees payable to Lessee's Advisor, if any.
-21-
6.1.15 Section 1110
Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee under
the Trust Indenture), is entitled to the benefits of Section 1110 (as currently
in effect) with respect to the right to take possession of the Airframe and
Engines as provided in the Lease in the event of a case under Chapter 11 of the
Bankruptcy Code in which Lessee is a debtor.
6.2 Owner Participant's Representations and Warranties
Owner Participant represents and warrants to Lessee, Loan Participant,
Subordination Agent, Owner Trustee and Mortgagee that:
6.2.1 Organization, Etc.
Owner Participant is a corporation duly incorporated, validly existing and
in good standing under the Laws of the OP Jurisdiction, has the corporate power
and authority to conduct the business in which it is currently engaged and to
own or hold under lease its properties and to enter into, and perform its
obligations under the Owner Participant Agreements, and has a tangible Net Worth
(exclusive of goodwill) greater than $75,000,000.
6.2.2 Corporate Authorization
Owner Participant has taken, or caused to be taken, all necessary corporate
action (including, without limitation, the obtaining of any consent or approval
of stockholders required by its Certificate of Incorporation or By-Laws) to
authorize the execution and delivery of each of the Owner Participant
Agreements, and the performance of its obligations thereunder.
6.2.3 No Violation
The execution and delivery by Owner Participant of the Owner Participant
Agreements, the performance by Owner Participant of its obligations thereunder
and the consummation by Owner Participant on the Delivery 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
-22-
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 Delivery 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 Delivery Date, Owner Participant is a Citizen of the United States.
6.2.7 No Liens
-23-
On the Delivery Date, there are no Lessor Liens attributable to Owner
Participant in respect of all or any part of the Trust Estate.
6.2.8 Investment by Owner Participant
Owner Participant's beneficial interest in the Trust Estate is being
acquired by it for its own account, for investment and not with a view to any
resale or distribution thereof, except that, subject to the restrictions on
transfer set forth in Section 10, the disposition by Owner Participant of its
beneficial interest in the Trust Estate shall at all times be within its
control.
6.2.9 ERISA
No part of the funds to be used by Owner Participant to acquire or hold its
interests in the Trust Estate to be acquired by it under this Agreement directly
or indirectly constitutes assets of a Plan.
6.2.10 Litigation
There are no pending or, to the Actual Knowledge of Owner Participant,
threatened actions or proceedings against Owner Participant before any court,
governmental body, arbitration board, administrative agency or tribunal which,
if determined adversely to Owner Participant, would materially adversely affect
the ability of Owner Participant to perform its obligations under the Owner
Participant Agreements.
6.2.11 Securities Laws
Neither Owner Participant nor any person Owner Participant has authorized
to act on its behalf has directly or indirectly offered any beneficial interest
in or Security relating to the ownership of the Aircraft or any interest in the
Trust Estate, or any of the Equipment Notes or any other interest in or Security
under the Trust Indenture for sale to, or solicited any offer to acquire any of
the same from, any Person in violation of the 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.
-24-
6.3 First Security's Representations and Warranties
First Security represents and warrants to Lessee, Owner Participant, Loan
Participant, Subordination Agent and Mortgagee that:
6.3.1 Organization, Etc.
First Security is a national banking association duly organized, validly
existing and in good standing under the Laws of the United States, holding a
valid certificate to do business as a national banking association with banking
authority to execute and deliver, and perform its obligations under, the Owner
Trustee Agreements.
6.3.2 Corporate Authorization
First Security has taken, or caused to be taken, all necessary corporate
action (including, without limitation, the obtaining of any consent or approval
of stockholders required by Law or by its Articles of Association or By-Laws) to
authorize the execution and delivery by First Security, in its individual
capacity and as Owner Trustee, of each of the Owner Trustee Agreements, and the
performance of its obligations thereunder.
6.3.3 No Violation
The execution and delivery by First Security, in its individual capacity
and as Owner Trustee of the Owner Trustee Agreements, the performance by First
Security, in its individual capacity and as Owner Trustee, of its obligations
thereunder and the consummation by First Security in its individual capacity and
as Owner Trustee on the Delivery Date of the transactions contemplated thereby,
do not and will not (a) violate any provision of the Articles of Association or
By-Laws of First Security, (b) violate any Law of the State of Utah or federal
banking law applicable to or binding on Owner Trustee or First Security
governing its banking and trust powers or (c) violate or constitute any default
under(other than any violation or default that would not result in a Material
Adverse Change to First Security, in its individual capacity or as Owner
Trustee), or result in the creation of any Lien (other than the Lien of the
Trust Indenture) upon any property of First Security, in its individual capacity
and as Owner Trustee, or any of its subsidiaries under, any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract, lease, loan or
other material agreement, instrument or document
-25-
to which First Security, in its individual capacity and as Owner Trustee, is a
party or by which First Security, in its individual capacity and as Owner
Trustee, or any of its properties is or may be bound or affected in any material
respect.
6.3.4 Approvals
The execution and delivery by First Security, in its individual capacity
and as Owner Trustee, of the Owner Trustee Agreements, the performance by First
Security, in its individual capacity and as Owner Trustee, of its obligations
thereunder and the consummation by First Security, in its individual capacity
and as Owner Trustee, on the Delivery Date of the transactions contemplated
thereby do not and will not require the consent, approval or authorization of,
or the giving of notice to, or the registration with, or the recording or filing
of any documents with, or the taking of any other action in respect of, (a) any
trustee or other holder of any Debt of First Security or (b) any Government
Entity governing its 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 First Security, in its individual capacity or as Owner Trustee, as
the case may be, and constitute the legal, valid and binding obligations of
First Security, in its individual capacity and as Owner Trustee, and, assuming
the due authorization, execution and delivery thereof by the other party or
parties thereto, are enforceable against First Security, in its individual
capacity and as Owner Trustee, in accordance with the respective terms thereof,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar Laws affecting the
rights of creditors generally and general principles of equity, whether
considered in a proceeding at law or in equity.
6.3.6 Citizenship
On the Delivery Date, First Security is a Citizen of the United States.
-26-
6.3.7 Chief Executive Office
The chief executive office (as such term is defined in Article 9 of the
UCC) of Owner Trustee is located at 00 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx
00000.
6.3.8 Title
On the Delivery Date, Owner Trustee shall have received whatever title to
the Aircraft as was conveyed to it by Airframe Manufacturer.
6.3.9 No Liens; Financing Statements
On the Delivery Date, there are no Lessor Liens attributable to First
Security or Owner Trustee in respect of all or any part of the Aircraft, Trust
Estate or the Trust Indenture Estate. Except for the Financing Statements, it
has not, either in its individual capacity or as Owner Trustee, executed any UCC
financing statements relating to the Aircraft or the Lease.
6.3.10 Litigation
There are no pending or, to the Actual Knowledge of First Security,
threatened actions or proceedings against First Security or Owner Trustee before
any court, governmental body, arbitration board, administrative agency or
tribunal which, if determined adversely to First Security, would materially
adversely affect the ability of First Security or Owner Trustee to perform its
obligations under the Owner Trustee Agreements.
6.3.11 Securities Laws
Neither First Security, nor any person authorized to act on its behalf, has
directly or indirectly offered any beneficial interest or Security relating to
the ownership of the Aircraft or any interest in the Trust Estate or any of the
Equipment Notes or any other interest in or security under the Trust Indenture
for sale to, or solicited any offer to acquire any such interest or security
from, or has sold any such interest or security to, any person other than the
Participants, except for the offering and sale of the Pass Through Certificates.
-27-
6.3.12 Expenses and Taxes
There are no Expenses or Taxes that may be imposed on or asserted against
the Trust, the Trust Estate or any part thereof or any interest therein, the
Trust Indenture Estate, Lessee, Owner Participant, any Pass Through Trustee,
Subordination Agent, Owner Trustee or Mortgagee (except, as to Owner Trustee,
Taxes imposed on the fees payable to Owner Trustee) under the laws of the State
of Utah in connection with the execution, delivery or performance of any
Operative Agreement by Owner Trustee or in connection with the issuance of the
Equipment Notes, which Expenses or Taxes would not have been imposed if Owner
Trustee had not (x) had its principal place of business in, (y) performed (in
its individual capacity or as Owner Trustee) any or all of its duties under the
Operative Agreements in or (z) engaged in any activities unrelated to the
transactions contemplated by the Operative Agreements in, the State of Utah.
6.4 WTC's Representations and Warranties
WTC represents and warrants (with respect to Section 6.4.10, solely in its
capacity as Subordination Agent) to Lessee, Owner Participant 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, as a Pass Through Trustee or as 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.
-28-
6.4.3 No Violation
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, as a Pass Through Trustee or as Subordination Agent, as the case may
be, of the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements, the performance by WTC, in its individual
capacity or as Mortgagee, as a Pass Through Trustee or as Subordination Agent,
as the case may be, of its obligations thereunder and the consummation on the
Delivery 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, as a Pass
Through Trustee or as Subordination Agent, or (c) violate or constitute any
default under (other than any violation or default that would not result in a
Material Adverse Change to WTC, in its individual capacity or as Mortgagee, as a
Pass Through Trustee or as Subordination Agent), or result in the creation of
any Lien (other than the Lien of the Trust Indenture) upon any property of WTC,
in its individual capacity or as Mortgagee, as a Pass Through Trustee or as
Subordination Agent, or any of WTC's subsidiaries under, any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract, lease,
loan or other agreement, instrument or document to which WTC, in its individual
capacity or as Mortgagee, as a Pass Through Trustee or as Subordination Agent,
is a party or by which WTC, in its individual capacity or as Mortgagee, as a
Pass Through Trustee or as Subordination Agent, or any of their respective
properties is bound or may be affected in any material respect.
6.4.4 Approvals
The execution and delivery by WTC, in its individual capacity or as
Mortgagee, as a Pass Through Trustee or as Subordination Agent, as the case may
be, of the Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements, the performance by WTC, in its individual
capacity or as Mortgagee, as a Pass Through Trustee or as Subordination Agent,
as the case may be, of its obligations thereunder and the consummation on the
Delivery Date by WTC, in its individual capacity or as Mortgagee, as a Pass
Through Trustee or as Subordination Agent, as the case may be, of the
transactions contemplated thereby do not and will not require the consent,
approval or authorization of, or the giving of notice to, or the registration
with, or the recording or filing of any documents with, or the taking of any
other action in re-
-29-
spect of, (a) any trustee or other holder of any Debt of WTC or (b) any
Government Entity, other than the filing of the FAA Filed Documents and the
Financing Statements.
6.4.5 Valid and Binding Agreements
The Mortgagee Agreements, the Pass Through Trustee Agreements and the
Subordination Agent Agreements have been duly authorized, executed and delivered
by WTC and, assuming the due authorization, execution and delivery by the other
party or parties thereto, constitute the legal, valid and binding obligations of
WTC, in its individual capacity or as Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, and are enforceable against WTC, in its
individual capacity or as Mortgagee, a Pass Through Trustee or Subordination
Agent, as the case may be, in accordance with the respective terms thereof,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other similar Laws affecting the
rights of creditors generally and general principles of equity, whether
considered in a proceeding at law or in equity.
6.4.6 Citizenship
WTC is a Citizen of the United States.
6.4.7 No Liens
On the Delivery Date, there are no Lessor Liens attributable to WTC in
respect of all or any part of the Trust Estate or the Trust Indenture Estate.
6.4.8 Litigation
There are no pending or, to the Actual Knowledge of WTC, threatened actions
or proceedings against WTC, in its individual capacity or as Mortgagee, a Pass
Through Trustee or Subordination Agent, before any court, administrative agency
or tribunal which, if determined adversely to WTC, in its individual capacity or
as Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may be,
would materially adversely affect the ability of WTC, in its individual capacity
or as Mortgagee, a Pass Through Trustee or Subordination Agent, as the case may
be, to perform its obligations under any of the Mortgagee Agreements, the Pass
Through Trustee Agreements or the Subordination Agent Agreements.
-30-
6.4.9 Securities Laws
Neither WTC nor any person authorized to act on its behalf has directly or
indirectly offered any beneficial interest or Security relating to the ownership
of the Aircraft or any interest in the Trust Indenture Estate or any of the
Equipment Notes or any other interest in or security under the Trust Indenture
for sale to, or solicited any offer to acquire any such interest or security
from, or has sold any such interest or security to, any Person other than the
Participants, except for the offering and sale of the Pass Through Certificates.
6.4.10 Investment
The Equipment Notes to be acquired by the Subordination Agent are being
acquired by it for the account of the Pass Through Trustees, for investment and
not with a view to any resale or distribution thereof, except that, subject to
the restrictions on transfer set forth in Section 10.1.3, the disposition by it
of its Equipment Notes shall at all times be within its control.
6.4.11 Taxes
There are no Taxes payable by any Pass Through Trustee or WTC, as the case
may be, imposed by the State of Delaware or any political subdivision or taxing
authority thereof in connection with the execution, delivery and performance by
such Pass Through Trustee or WTC, as the case may be, of this Agreement or any
of the Pass Through Trustee Agreements (other than franchise or other taxes
based on or measured by any fees or compensation received by any such Pass
Through Trustee or WTC, as the case may be, for services rendered in connection
with the transactions contemplated by any of the Pass Through Trust Agreements),
and there are no Taxes payable by any Pass Through Trustee or WTC, as the case
may be, imposed by the State of Delaware or any political subdivision thereof in
connection with the acquisition, possession or ownership by any such Pass
Through Trustee of any of the Equipment Notes (other than franchise or other
taxes based on or measured by any fees or compensation received by any such Pass
Through Trustee or WTC, as the case may be, for services rendered in connection
with the transactions contemplated by any of the Pass Through Trust Agreements),
and, assuming that the trusts created by the Pass Through Trust Agreements will
not be taxable as corporations, but, rather, will be classified as grantor
trusts under subpart E, Part I of Subchapter J of the Code or as a partnership
under Subchapter K of the Code, and assuming that the as-
-31-
sets of the trusts will be treated as held for investment purposes as provided
in each Pass Through Trust Agreement, such trusts will not be subject to any
taxes (including, without limitation, net or gross income, tangible or
intangible property, net worth, capital, franchise or doing business tax) fee or
other governmental charge under the laws of the State of Delaware or any
political subdivision thereof;
6.4.12 Control
WTC is not an Affiliate of the Owner Participant or the Owner Trustee.
6.4.13 Broker's Fees
No Person acting on behalf of WTC, in its individual capacity or as
Mortgagee, any Pass Through Trustee or Subordination Agent, is or will be
entitled to any broker's fee, commission or finder's fee in connection with the
Transactions.
SECTION 7. COVENANTS, UNDERTAKINGS AND AGREEMENTS
7.1 Covenants of Lessee
Lessee covenants and agrees, at its own cost and expense, with Owner
Participant, Loan Participants, Owner Trustee and Mortgagee as follows:
7.1.1 Corporate Existence; U.S. Air Carrier
Lessee shall at all times maintain its corporate existence, except as
permitted by Section 13.2 of the Lease, and shall at all times remain a U.S. Air
Carrier.
7.1.2 Notice of Change of Chief Executive Office
Lessee will give Owner Participant, Owner Trustee and Mortgagee timely
written notice (but in any event within 30 days prior to the expiration of the
period of time specified under applicable Law to prevent lapse of perfection) of
any relocation of its chief executive office (as such term is defined in Article
9 of the UCC) from its then present location and will promptly take any action
required by Section 7.1.3(c) as a result of such relocation.
-32-
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 commercially reasonable 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 refiling 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. 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) and
shall pay or cause to be paid all out-of-pocket costs and expenses
thereof (including, without limitation, reasonable attorneys' fees and
disbursements).
(c) Lessee, at its sole cost and expense, will cause the FAA
Filed Documents, the Financing Statements and all continuation
statements (and any amendments necessitated by any combination,
consolidation or merger pursuant to Section 13.2 of the Lease, or any
relocation of its chief executive office) in respect of the Financing
Statements to be prepared and, subject only to the execution and
delivery thereof by Owner Trustee and Mortgagee, as applicable, duly
and timely filed and recorded, or filed for recordation, to the extent
permitted under the Act (with respect to the FAA Filed Documents) or
the UCC or similar
-33-
law of any other applicable jurisdiction (with respect to such other
documents).
(d) If the Aircraft has been registered in a country other than
the United States pursuant to Section 7.1.2 of the Lease, Lessee will
furnish to Owner Trustee, Mortgagee and each Participant annually
after such registration, commencing with the calendar year after such
registration is effected, an opinion of special counsel reasonably
satisfactory to Owner Participant and Mortgagee stating that, in the
opinion of such counsel, either that (i) such action has been taken
with respect to the recording, filing, rerecording and refiling of the
Operative Agreements and any supplements and amendments thereto as is
necessary to establish, perfect and protect Owner Trustee's and
Mortgagee's respective right, title and interest in and to the
Aircraft and the Operative Agreements, reciting the details of such
actions, or (ii) no such action is necessary to maintain the
perfection of such right, title and interest.
7.1.4 Securities Laws
Neither Lessee nor any person authorized to act on its behalf will directly
or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or the Lease or any interest in the Trust Estate and
Trust Agreement or any of the Equipment Notes or any other interest in or
security under the Trust Indenture, for sale to, or solicit any offer to acquire
any such interest or security from, or sell any such interest or security to,
any person in violation of the Securities Act or applicable state or foreign
securities Laws.
7.2 Covenants of Owner Participant
Owner Participant covenants and agrees with Lessee, and, except with
respect to Section 7.2.4, Loan Participants, 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, promptly take such action as may be necessary
to discharge any Lessor Lien attributable to
-34-
Owner Participant on all or any part of the Trust Estate, the Trust Indenture
Estate or the Aircraft and (c) 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 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 relocation; provided, that, in any event, (a) Lessee shall provide such
additional tax indemnification as Owner Participant and the Note Holders or the
Pass Through Trustees may reasonably request to cover any additional
unindemnified Taxes or loss of Tax benefits described in the assumptions in the
Tax Indemnity Agreement resulting from such change in the situs of the Trust,
(b) the rights and obliga-
-35-
tions under the Operative Agreements of Owner Participant, the Note Holders,
Pass Through Trustees and Mortgagee shall not be adversely affected as a result
of the taking of such action, (c) the Lien of the Trust Indenture on the Trust
Indenture Estate shall not be adversely affected by such action, and Lessee and
Owner Trustee shall execute and deliver such documents as may reasonably be
requested by Mortgagee to protect and maintain the perfection and priority of
such Lien, (d) Owner Participant, Pass Through Trustees and Mortgagee shall have
received an opinion or opinions of counsel (which counsel is reasonably
satisfactory to Owner Participant, Pass Through Trustees and Mortgagee) in
scope, form and substance reasonably satisfactory to Owner Participant, Pass
Through Trustees and Mortgagee to the effect that (i) the Trust, as thus
relocated, shall remain a validly established trust, (ii) any amendments to the
Trust Agreement necessitated by such relocation shall have been duly authorized,
executed and delivered by the parties thereto and shall constitute the valid and
binding obligations of such parties, enforceable in accordance with their terms,
(iii) covering such other matters as Owner Participant, Pass Through Trustees or
Mortgagee may reasonably request, (e) if such relocation involves the
replacement of Owner Trustee, then Owner Participant, Pass Through Trustees and
Mortgagee shall have received an opinion of counsel to such successor Owner
Trustee in form and substance reasonably satisfactory to Owner Participant, Pass
Through Trustees and Mortgagee covering the matters described in the opinion
delivered pursuant to Section 5.1.2(xxiii)(D) and (f) Lessee shall indemnify and
hold harmless Owner Participant, Note Holders, Pass Through Trustees and First
Security, in its individual capacity and as Owner Trustee, on a net after-tax
basis against any and all reasonable out-of-pocket costs and expenses including
attorneys' fees and disbursements, fees and expenses of any new owner trustee,
registration, recording or filing fees and taxes incurred by Owner Participant,
Note Holders, Pass Through Trustees or Owner Trustee in connection with such
change of situs. Owner Participant agrees with Lessee that it will not consent
to or direct a change in the situs of the Trust Estate without the prior written
consent of Lessee.
7.2.4 Compliance with Lease Provisions
Owner Participant will, solely for the benefit of Lessee, comply with the
provisions expressly applicable to it contained in the Lease.
-36-
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 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 cause Owner Trustee to perform its obligations under
each Owner Trustee Agreement.
7.3 Covenants of First Security and Owner Trustee
First Security, in its individual capacity and/or as Owner Trustee, as
provided below, covenants and agrees with Lessee, Owner Participant, each Note
Holder and Mortgagee as follows:
7.3.1 Liens
First Security (a) will not directly or indirectly create, incur, assume or
suffer to exist any Lessor Lien attributable to it or Owner Trustee with respect
to all or any part of the Trust Estate, the Trust Indenture Estate or the
Aircraft, (b) will, at its own cost and expense, promptly take such action as
may be necessary to discharge any Lessor Lien attributable to First Security or
Owner Trustee on all or any part of the Trust Estate, the Trust Indenture Estate
or the Aircraft and (c) will personally 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 imposed on, incurred by or asserted against any of the
foregoing as a consequence of any such Lessor Lien.
-37-
7.3.2 Other Business
Owner Trustee will not enter into any business or other activity except as
contemplated by the Operative Agreements.
7.3.3 Notice of Change of Chief Executive Office
First Security, in its individual capacity and as Owner Trustee, will give
Lessee, each Participant and Mortgagee 30 days' prior written notice of any
relocation of its chief executive office (as such term is defined in Article 9
of the UCC) from its then present location and will promptly take any action
required by Section 7.3.8 as a result of such relocation.
7.3.4 Securities Act
First Security, in its individual capacity and as Owner Trustee, will not
directly or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or any interest in the Trust Estate or any of the
Equipment Notes or any other interest in or security under the Trust Indenture
for sale to, or solicit any offer to acquire any such interest or security from,
or sell any such interest or security to, any Person in violation of the
Securities Act or applicable state or foreign securities Laws, provided that the
foregoing shall not be deemed to impose on First Security in its individual
capacity or as Owner Trustee, any responsibility with respect to any such offer,
sale or solicitation by any other party hereto.
7.3.5 Performance of Agreements
Owner Trustee shall perform its obligations under the Owner Trustee
Agreements in accordance with the terms thereof.
7.3.6 Release of Lien of Trust Indenture
-38-
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 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 Delivery Date, Owner Trustee shall duly execute and deliver to
Lessee all filings and recordings (including, without limitation, all filings
and UCC financing statements under the Act and the UCC and any amendments to UCC
financing statements necessitated by any relocation of its chief executive
office), prepared and delivered to it by Lessee required to perfect Owner
Trustee's title to the Aircraft and the liens of and security interests granted
by the Trust Indenture (or to maintain such perfection) and to make such title,
liens and security interests valid and enforceable.
7.3.9 Trust Agreement
Each of First Security and Owner Trustee hereby (i) agrees with Lessee,
Loan Participants 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 Participants and Mortgagee not to revoke
the trust created by the Trust Agreement so long as the Trust Indenture remains
undischarged or if such revocation would have an adverse effect on the Lessee.
Nothing contained in this Agreement shall impair any right under the Trust
Agreement of First Security to resign as Owner Trustee in accordance with the
provisions of the Trust Agreement.
7.4 Covenants of WTC
WTC in its individual capacity or as Mortgagee, each Pass Through Trustee
or Subordination Agent, as the case may be, covenants and agrees with Lessee,
Owner Participant and Owner Trustee as follows:
-39-
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 personally 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, imposed on, incurred
by or asserted against any of the foregoing as a consequence of any such Lessor
Lien.
7.4.2 Securities Act
WTC in its individual capacity or as Mortgagee, a Pass Through Trustee or
Subordination Agent, will not offer any beneficial interest or Security relating
to the ownership of the Aircraft or any interest in the Trust Indenture Estate,
or any of the Equipment Notes or any other interest in or security under the
Trust Indenture for sale to, or solicit any offer to acquire any such interest
or security from, or sell any such interest or security to, any Person in
violation of the Securities Act or applicable state or foreign securities Laws,
provided that the foregoing shall not be deemed to impose on WTC any
responsibility with respect to any such offer, sale or solicitation by any other
party hereto.
7.4.3 Performance of Agreements
WTC, in its individual capacity and as Mortgagee, a Pass Through Trustee or
Subordination Agent, as the case may be, shall perform its obligations under the
Indenture Agreements, the Pass Through Trustee Agreements and the Subordination
Agent Agreements in accordance with the terms thereof.
7.4.4 Withholding Taxes
WTC shall indemnify (on an after-tax basis) and hold harmless Lessee,
Lessor and Owner Participant against any United States withholding taxes (and
related interest, penal-
-40-
ties 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 or Section 11 hereof, 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:
-41-
(i) a written representation and covenant that either (a) no
portion of the funds it uses to purchase, acquire and hold such
Equipment Note or interest directly or indirectly constitutes, or
may be deemed under the Code or ERISA or any rulings, regulations
or court decisions thereunder to constitute, the assets of any
Plan or (b) the transfer, and subsequent holding, of such
Equipment Note or interest shall not involve or give rise to a
transaction that constitutes a prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975(c)(1) of the Code
involving Lessee, Owner Participant, a Pass Through Trustee, the
Subordination Agent or the proposed transferee (other than a
transaction that is exempted from the prohibitions of such
sections by applicable provisions of ERISA or the Code or
administrative exemptions or regulations issued thereunder); and
(ii) a written covenant that it will not transfer any
Equipment Note or any interest in, or represented by, any
Equipment Note unless the subsequent transferee also makes the
representation described in clause (i) above and agrees to comply
with this clause (ii).
7.6 Agreements
7.6.1 Owner Trustee Is Owner and Lessor for All Purposes
Lessee, the Owner Participant and Owner Trustee agree that for all
purposes, after the Closing, Owner Trustee will be the owner and lessor of the
Aircraft (except that Owner Participant will be the owner and lessor for income
tax purposes) and Lessee will be the lessee thereof. No transfer, by operation
of Law or otherwise, of the beneficial interest of Owner Participant in and to
the Trust Estate shall operate to transfer legal title to any part of the Trust
Estate to any transferee thereof.
7.6.2 Commencement of Bankruptcy Proceedings
Lessee, each Participant, each Note Holder, First Security, Owner Trustee,
WTC and Mortgagee agree for the benefit of each of the others that it will not
commence or join in any proceeding under the Bankruptcy Code to commence a case
under Section 303 of the Bankruptcy Code against the Trust Estate. Nothing
contained herein shall be deemed to preclude any Participant, any Note Holder,
First Security, Owner Trustee, WTC
-42-
or Mortgagee from filing any claim against the Trust Estate in any case
commenced against the Trust Estate.
7.6.3 Certain Bankruptcy Matters
If (a) all or any part of the Trust Estate becomes the property of, or
Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (b) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code,
First Security or Owner Participant is required, by reason of First Security or
Owner Participant being held to have recourse liability to any Note Holder or
Mortgagee directly or indirectly (other than the recourse liability of First
Security or Owner Participant under this Agreement, the Trust Indenture or by
separate agreement), to make payment on account of any amount payable as
principal, Make-Whole Amount, if any, interest or other amounts on the Equipment
Notes, and (c) any Note Holder or Mortgagee actually receives any Excess Amount,
as defined below, which reflects any payment by First Security or Owner
Participant on account of (b) above, then such Note Holder or Mortgagee, as the
case may be, shall promptly refund to First Security or Owner Participant
(whichever shall have made such payment) such Excess Amount.
For purposes of this Section 7.6.3, "Excess Amount" means the
amount by which such payment exceeds the amount that would have been received by
a Note Holder or Mortgagee if First Security or Owner Participant had not become
subject to the recourse liability referred to in clause (b) above. Nothing
contained in this Section 7.6.3 shall prevent a Note Holder or Mortgagee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of First Security or Owner Participant under this Agreement (other than as
referred to in clause (b) above) or the Trust Indenture (and any exhibits or
annexes thereto) or from retaining any amount paid by Owner Participant under
Sections 2.13 or 4.03 of the Trust Indenture.
7.6.4 Quiet Enjoyment; Sale by Owner Trustee Binding
(a) Owner Participant, each Pass Through Trustee, Subordination Agent,
each Note Holder, Owner Trustee and Mortgagee each 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
or any Permitted Sub-
-43-
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 the Trust Indenture, including payment of all amounts then due and
payable to each Liquidity Provider as Supplemental Rent, 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
Each Loan Participant and Mortgagee agrees that (a) obligations of Owner
Trustee under the Trust Indenture or any other Operative Agreement and with
respect to the Equipment Notes shall be non-recourse to Owner Participant and to
First Security and (b) they will look solely to the income and proceeds from the
Trust Estate and the Trust Indenture Estate to the extent available for
distribution to Note Holder or Mortgagee as provided in the Trust Indenture and
that neither Owner Participant nor First Security will be personally liable to
Loan Participant or Mortgagee for any amounts payable by Owner Trustee under the
Trust Indenture or any other Operative Agreement; provided, however, that the
foregoing is not intended nor shall it be construed to limit any recourse
liability of Owner Participant or First Security to the extent that such
liability is expressly set forth in this Agreement or in any of the Operative
Agreements or arises by reason of the breach of any
-44-
representation or warranty or covenant given by such Person (in the case of
First Security, in its individual capacity).
7.6.7 Other Documents; Amendment
(a) 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 Section 2.05
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 would adversely affect Lessee. Mortgagee
and Owner Trustee agree to promptly furnish to Lessee copies of any
supplement, amendment, waiver or modification of any of the Operative
Agreements to which Lessee is not a party; provided that Mortgagee or Owner
Trustee, as the case may be, has in its possession a copy of such
supplement, amendment, waiver or modification. Each Loan Participant agrees
that it will not take any action in respect of the Trust Indenture Estate
except through the Mortgagee pursuant to the Trust Indenture or as
otherwise permitted by Trust Indenture or other Operative Agreement.
(b) Owner Trustee agrees to join with Lessee to the extent that action
on the part of Owner Trustee 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
Each of Owner Participant, each Pass Through Trustee, Subordination Agent,
Owner Trustee and Mortgagee covenants and agrees, for the benefit of Lessee,
that it shall not unreasonably withhold its consent to any consent or approval
requested
-45-
of it or of Owner Trustee or Mortgagee under the terms of any of the
Operative Agreements which by its terms is not to be unreasonably withheld.
7.6.9 Insurance
Each of Owner Participant, the Pass Through Trustees, the Subordination
Agent and the Owner Trustee agrees not to obtain or maintain insurance for its
own account as permitted by Section 11.2 of the Lease if such insurance would
limit or otherwise 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 Note Holder, and all other sums, then due and payable to such
Note Holder hereunder and under any other Operative Agreement, shall have been
paid in full.
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 close of
the Tax Attribute Period, unless Lessee prepays to the Owner
Participant on a lump sum basis any indemnity 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;
-46-
(B) no Lease Event of Default shall have occurred and be
continuing at the time of such registration;
(C) such proposed change of registration is made in
connection with a Permitted Sublease to a Permitted Air Carrier;
(D) such country is a Permitted Country with which the
United States then maintains normal diplomatic relations or, if
Taiwan, the United States then maintains diplomatic relations at
least as good as those in effect on the Delivery Date;
(ii) the Owner Trustee and Mortgagee shall have received an
opinion of counsel (subject to customary exceptions) reasonably
satisfactory to the Owner Participant addressed to each such party as
to the effect that:
(A) such country would recognize the Owner Trustee's
ownership interest in 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 jurisdiction (or the laws of
the jurisdiction to which the laws of such jurisdiction would
refer as the applicable governing law);
(C) after giving effect to such change in registration, the
Lien of the Trust Indenture on the Owner Trustee's right, title
and interest in and to the Aircraft and the Lease shall continue
as a valid and duly perfected first priority security interest
and all filing, recording or other action necessary to protect
the same shall have been accomplished (or, if such opinion cannot
be given at the time of such proposed change in registration
because such change in registration is not yet effective, (1) the
opinion shall detail what filing, recording or other action is
necessary and (2) the 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 the Owner Trustee
-47-
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 the Owner Trustee, the Owner Participant or the
Mortgagee (or any Affiliate thereof), as the case may be, for the
Owner Trustee, the Owner Participant or the Mortgagee to qualify
to do business in such jurisdiction as a result of such
reregistration in order to exercise any rights or remedies with
respect to the Aircraft pursuant to the Lease;
(E) there is no tort liability of the owner or lessor of an
aircraft not in possession thereof under the laws of such
jurisdiction (it being agreed that, in the event such opinion
cannot be given in a form satisfactory to the Owner Participant,
such opinion shall be waived if insurance reasonably satisfactory
to the Owner Participant is provided to cover such risk); and
(F) unless Lessee shall have agreed to provide insurance
covering the risk of requisition of use of the Aircraft by the
government of such country (so long as the Aircraft is registered
under the laws of such country), the laws of such country require
fair compensation by the government of such country payable in
currency freely convertible into Dollars and freely removable
from such country (without license or permit, unless 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
will have been complied with after giving effect to such change of
registration;
(ii) of the payment by Lessee of all reasonable out-of-pocket
expenses of Lessor, each Participant and Mortgagee in connection with
such change of registry, including,
-48-
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, and (3) all costs and expenses incurred in connection
with any filings necessary to continue in the United States the
perfection of the security interest in the Aircraft and the Lease in
favor of Mortgagee for the benefit of Note Holders; and
(iii) to the effect that the tax and other indemnities in favor
of each person named as an indemnitee under any other Operative
Agreement afford each such person substantially the same protection as
provided prior to such change of registration (or Lessee shall have
agreed upon additional indemnities that, together with such original
indemnities, in the reasonable judgment of Lessor and Mortgagee,
afford such protection).
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) None of Airframe Manufacturer, by its execution and delivery of
the Consent and Agreement, and Engine Manufacturer, by its execution and
delivery of the Engine Consent and Agreement, shall be deemed to have
waived any rights, remedies or claims which Airframe Manufacturer or Engine
Manufacturer (or any subcontractor or supplier of either), as the case may
be, 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
-49-
rights, remedies or claims of Airframe Manufacturer or Engine Manufacturer
(or any subcontractor or supplier of either).
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 and Mortgagee shall
keep Annexes B, C and D and Schedules 1, 2, 3 and 4 to the Lease, the
Participation Agreement, the Purchase Agreement Assignment and the Tax Indemnity
Agreement confidential and shall not disclose, or cause to be disclosed, the
same to any Person, except (A) to prospective and permitted transferees of
Lessee's, Owner Participant's, a Note Holder's, a Liquidity Provider's, Owner
Trustee's, Mortgagee's or other Indenture Indemnitee's interest or their
respective counsel or special counsel, independent insurance brokers, auditors,
or other agents who agree to hold such information confidential, (B) to
Lessee's, Owner Participant's, a Note Holder's, a Liquidity Provider's, a Pass
Through Trustee's, Owner Trustee's, Mortgagee's or other Indenture Indemnitee's
counsel or special counsel, independent insurance brokers, auditors, or other
agents, Affiliates or investors who agree to hold such information confidential,
(C) as may be required by any statute, court or administrative order or decree,
legal process or governmental ruling or regulation, including those of any
applicable insurance regulatory bodies (including, without limitation, the
National Association of Insurance Commissioners ("NAIC")), federal or state
banking examiners, Internal Revenue Service auditors or any stock exchange, (D)
with respect to Lessee and Owner Participant, by mutual agreement of such
parties, (E) with respect to a Note Holder or any Pass
-50-
Through Trustee, to a nationally recognized rating agency for the purpose of
obtaining a rating on the Equipment Notes or the Pass Through Trust Certificates
or to support an NAIC rating for the Equipment Notes or (F) such other Persons
as are reasonably deemed necessary by the disclosing party in order to protect
the interests of such party or for the purposes of enforcing such documents by
such party; provided, that any and all disclosures permitted by clauses (C),
(D), (E) or (F) above shall be made only to the extent necessary to meet the
specific requirements or needs of the Persons making such disclosures.
SECTION 9. INDEMNIFICATION AND EXPENSES
9.1 General Indemnity
9.1.1 Indemnity
Whether or not any of the transactions contemplated hereby are consummated,
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) en-
-51-
vironmental control, noise or pollution and (vi) any Liens in respect of
the Aircraft, any Engine or any Part;
(c) The offer, sale, or delivery of any Equipment Notes, Pass Through
Certificates or any interest therein or represented thereby; and
(d) Any breach of or failure to perform or observe, or any other
noncompliance with, any covenant or agreement or other obligation to be
performed by Lessee under any Lessee Operative Agreement or any Pass
Through Agreement or the falsity of any representation or warranty of
Lessee in any Lessee Operative Agreement or any Pass Through Agreement
other than in the Tax Indemnity Agreement.
9.1.2 Exceptions
Notwithstanding anything contained in Section 9.1.1, Lessee shall not be
required to indemnify, protect, defend and hold harmless any Indemnitee pursuant
to Section 9.1.1 in respect of any Expense of such Indemnitee:
(a) For any Taxes or a loss of Tax benefit, whether or not Lessee is
required to indemnify therefor pursuant to Section 9.3 or the Tax Indemnity
Agreement;
(b) Except to the extent attributable to acts or events occurring
prior thereto, acts or events (other than acts or events related to the
performance by Lessee of its obligations pursuant to the terms of the
Lessee Operative Agreements) that occur after the earliest of: (i) with
respect to the Airframe, any Engine or any Part, the return of possession
(it being understood that the date of the placement of the Aircraft in
storage as provided in Section 5 of the Lease constitutes the date of
return of the Aircraft under the Lease) of such Airframe, Engine or Part
pursuant to the terms of and in compliance with the Lease (other than
pursuant to Section 15 thereof, in which case Lessee's liability under this
Section 9.1 shall survive for so long as Lessor 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
-52-
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 or Section 11 hereof;
(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 out-of-pocket costs and expenses
incurred as a result of such Transfer, if, at the time of such Transfer, a
Lease Event of Default shall have occurred and be continuing;
(e) To the extent attributable to the gross negligence or willful
misconduct of such Indemnitee or any related Indemnitee (as defined below)
(other than gross negligence or willful misconduct imputed to such person
by reason of its interest in the Aircraft or any Operative Agreement);
(f) In the case of First Security, to the extent attributable to
matters enumerated in the proviso to Section 14;
(g) To the extent attributable to the incorrectness or breach of any
representation or warranty of such Indemnitee or any related Indemnitee
contained in or made pursuant to any Operative Agreement or any Pass
Through Agreement;
(h) To the extent attributable to the failure by such Indemnitee or
any related Indemnitee to perform or observe any agreement, covenant or
condition on its part to be performed or observed in any Operative
Agreement or any Pass Through Agreement;
(i) To the extent attributable to the offer or sale by such Indemnitee
or any related Indemnitee of any interest in the Aircraft, the Equipment
Notes, the Pass Through Trust 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
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 distribut-
-53-
able by it in accordance with the Trust Indenture, (ii) with respect to any
Indemnitee (other than the Owner Trustee), to the extent attributable to
the failure of the Owner Trustee to distribute funds received and
distributable by it in accordance with the Trust Agreement, (iii) with
respect to any Indemnitee (other than the Subordination Agent), to the
extent attributable to the failure of the Subordination Agent to distribute
funds received and distributable by it in accordance with the Intercreditor
Agreement, (iv) with respect to any Indemnitee (other than the Pass Through
Trustees), to the extent attributable to the failure of a Pass Through
Trustee to distribute funds received and distributable by it in accordance
with the Pass Through Trust Agreements, (v) with respect to 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 Trustees, to the extent attributable to the negligence or
willful misconduct of a Pass Through Trustee in the distribution of funds
received and distributable by it in accordance with the Pass Through Trust
Agreements, (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
-54-
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 such 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 such Expense is a loss of future profits of, a
cost or expense unreasonably incurred by, or an ordinary and usual
operating or overhead expense of, such Indemnitee;
(n) 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) With respect to 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 Trustee or any related Indemnitee not being a Citizen
of the United States as a result of any act (other than re-registration of
the Aircraft pursuant to Section 7.1.2 of the Lease) of the Owner Trustee
or any related Indemnitee (not taken at the request of the Lessee);
(p) For any Lessor Lien attributable to such Indemnitee or any related
Indemnitee;
-55-
(q) 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 Lessee has complied with such
specified responsibility or obligation;
(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;
(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) For any loss attributable to, arising from or in connection with
any inspections or inspection rights arising from or in connection with any
of the Operative Documents or the Transactions.
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.
-56-
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 not to
dispute liability to the Indemnitee giving notice of such action, suit or
proceeding under this Section 9.1.5 for indemnification hereunder or under
any insurance policies pursuant to which coverage is sought, control the
defense of, any action, suit or proceeding, relating to any Expense for
which indemnification is sought pursuant to this Section 9.1, and each
Indemnitee shall cooperate with Lessee or its insurer(s) with respect
thereto; provided, that Lessee shall not be entitled to control the defense
of any such action, suit, proceeding or compromise any such Expense during
the continuance of any Lease Event of Default arising under Section 14.1 of
the Lease. 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. Any
settlement or compromise without such consent of Lessee shall be deemed a
waiver by such Indemnitee of 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,
-57-
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 Article VII of the Trust Indenture or Section 5.3 or 7 of the Trust
Agreement) in re-
-58-
spect 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 Invoices and Payment
Each of the Owner Trustee, Mortgagee, the Owner Participant, Lessee, the
Pass Through Trustees, and the Subordination Agent shall promptly submit to
Lessee for its prompt approval (which shall not be unreasonably withheld) copies
of invoices in reasonable detail of the Transaction Expenses for which it is
responsible for providing information as they are received (but in no event
later than the 90th day after the Delivery Date). If so submitted and approved,
the Owner Participant agrees promptly, but in any event no later than the 105th
day after the Delivery Date, to pay (but not in excess of [ ]% of Lessor's Cost)
Transaction Expenses. Notwithstanding the foregoing, Lessee at its sole option
shall have the right to pay directly any and all Transaction Expenses. Lessee
shall be obligated to pay directly any and all Transaction Expenses which are in
excess of [ ]% of Lessor's Cost. If Owner Participant shall fail to pay any
Transaction Expense that it is obligated to pay hereunder, Lessee shall pay such
Transaction Expense. Any such payment by Lessee shall not affect Owner
Participant's obligations or Lessee's rights against Owner Participant for its
failure to make any such payment.
-59-
9.2.2 Payment of Other Expenses
Lessee shall pay (i) the ongoing fees and expenses of Owner Trustee and
Mortgagee, and (ii) all reasonable out-of-pocket costs and expenses (including
the reasonable fees and disbursements of counsel) incurred by any Participant
attributable to (A) any transfer of title to the Aircraft or any Engine
contemplated by Section 4.5 of the Lease or (B) any waiver, amendment or
modification of any Operative Agreement to the extent requested by Lessee.
9.2.3 Payments if Transactions Do Not Close
In the event that the transaction contemplated by this Agreement fails to
close as a result of the Owner Participant's failure to comply with its
obligations under this Agreement or any breach of a representation or warranty
of Owner Participant made in or pursuant to any Operative Agreement,
notwithstanding any other rights and remedies that the parties hereto shall have
against Owner Participant, the Owner Participant will be responsible for all of
its fees and expenses, including but not limited to the fees, expenses and
disbursements of its special counsel and the fees of the Appraiser referred to
in Section 5.1.2(xv).
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, state or local 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 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, Stipulated Loss
Value (and amounts determined by reference thereto), and amounts payable upon
exer-
-60-
cise 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.
-61-
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 or governmental subdivision of the
United States or therein (including any state or local Taxing Authority)
(i) on, based on, or measured by, gross or net income or gross or net
receipts, including capital gains taxes, excess profits taxes, minimum
taxes from tax preferences, alternative minimum taxes, branch profits
taxes, accumulated earnings taxes, personal holding company taxes,
succession taxes and estate taxes, and any withholding taxes on, based on
or measured by gross or net income or receipts or (ii) on, or with respect
to, or measured by, capital or net worth or in the nature of a franchise
tax or a tax for the privilege of doing business (other than, in the case
of clause (i) or (ii), sales, use, license or property Taxes);
(b) imposed on a Tax Indemnitee by any Taxing Authority or
governmental subdivision thereof or therein outside of the United States
(including any Taxing Authority in or of a territory, possession or
commonwealth of the United States) (i) on, based on, or measured by, gross
or net income or gross or net receipts, including capital gains taxes,
excess profits taxes, minimum taxes from tax preferences, alternative
minimum taxes, branch profits taxes, accumulated earnings taxes, personal
holding company taxes, succession taxes and estate taxes, and any
withholding taxes on, based on or measured by gross or net income or
receipts or (ii) on, or with respect to, or measured by, capital or net
worth or in the nature of a franchise tax or a tax for the privilege of
doing business (other than, in the case of clause (i) or (ii), (A) sales,
use, license or property Taxes, or (B) any Taxes imposed by any Taxing
Authority (other than a Taxing Authority within whose jurisdiction such Tax
Indemnitee is incorporated or organized or maintains its principal place of
business) if such Tax Indemnitee would not have been subject to Taxes of
such type by such jurisdiction but for (I) the location, use or operation
of the Aircraft, the Airframe, any Engine or any Part thereof by a Lessee
Person within the jurisdiction of the Taxing Authority imposing such Tax,
or (II) the activities of any Lessee Person (except for activities of a
Lessee Person that is not an
-62-
Affiliate, successor or assign of the Lessee, which activities are
unrelated to the transactions contemplated by the Operative Agreements) in
such jurisdiction, including, but not limited to, use of any other aircraft
by Lessee in such jurisdiction, (III) the status of any Lessee Person as a
foreign entity or as an entity owned in whole or in part by foreign
persons, (IV) Lessee having made (or having been deemed to have made)
payments to such Tax Indemnitee from the relevant jurisdiction or (V) in
the case of the Pass Through Trustees, any Participant or any related Tax
Indemnitee, the Lessee being incorporated, organized, maintaining a place
of business or conducting activities in such jurisdiction);
(c) on, or with respect to, or measured by, any trustee fees,
commissions or compensation received by 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;
(f) imposed on any Tax Indemnitee to the extent that such Taxes result
from the gross negligence or willful misconduct of such Tax Indemnitee or
any Affiliate thereof;
(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, or, in the case of Taxes imposed on a
transferee, by the transferor) of any interest in the Aircraft, the
Airframe, any Engine or any Part, the Rent (other than the assignment of
Rent to the Loan Trustee pursuant to the Trust Indenture), the Trust, the
Trust Estate, the Trust Indenture Estate, the Lease or any interest arising
under the Operative Agreements or any Equipment Note or a transfer or
disposition (including a deemed transfer or disposition) of any interest in
a Tax Indemnitee (other than (A) a substitution or
-63-
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) Taxes in excess of those that would have been imposed had there
not been a transfer or other disposition by or to such Tax Indemnitee or a
related Tax Indemnitee described in paragraph (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 payments by Lessee under the Operative Agreements
after such period);
(k) consisting of any interest, penalties or additions to tax imposed
on a Tax Indemnitee as a result of (in whole or in part) failure of such
Tax Indemnitee or a related Tax Indemnitee to file any return properly and
timely, unless such failure shall be caused by the failure of Lessee to
fulfill its obligations, if any, under Section 9.3.6 with respect to such
return;
(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;
-64-
(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 is 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 to the extent that such Taxes would
not have been imposed but for a connection between the Tax Indemnitee or a
related Tax Indemnitee and such jurisdiction imposing such Tax unrelated to
the transactions contemplated by the Operative Agreements; or
(q) Taxes relating to ERISA or Section 4975 of the Code.
For purposes hereof, a Tax Indemnitee and any other Tax Indemnitees that
are successors, assigns, agents, servants or Affiliates of such Tax Indemnitee
shall be related Tax Indemnitees.
9.3.3 Payment
(a) Lessee's indemnity obligation to a Tax Indemnitee under this
Section 9.3 shall equal the amount which, after taking into account any Tax
imposed upon the receipt or accrual of the amounts payable under this
Section 9.3 and any tax benefits actually recognized by such Tax Indemnitee
as a result of the indemnifiable Tax (including, without limitation, any
benefits recognized as a result of an indemnifiable Tax being utilized by
such Tax Indemnitee as a credit against Taxes not indemnifiable under this
Section 9.3), shall equal the amount of the Tax indemnifiable under this
Section 9.3.
(b) At Lessee's request, the computation of the amount of any
indemnity payment owed by Lessee or any
-65-
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 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 one Business Day prior to the date the Tax to which such amount
payable hereunder relates is due. If requested by a Tax Indemnitee in
writing, 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
-66-
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, (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 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 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.
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
-67-
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 effectively
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
prior to the end of such 30-day period if (i)(A) the failure to so pay the
Tax would result in substantial penalties (unless immediately reimbursed by
Lessee) and the act of paying the Tax would not materially prejudice the
right to contest or (B) the failure to so pay would result in criminal
penalties and (ii) such Tax Indemnitee shall take any action so required in
connection with so paying the Tax in a manner that 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,
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
-68-
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 control the conduct
of any such proceeding and shall provide to Lessee (at Lessee's cost and
expense) with such information or data that is in such Tax Indemnitee's
control or possession that is reasonably necessary to conduct such contest.
In the case of a contest controlled by a Tax Indemnitee, such Tax
Indemnitee shall consult with 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 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 in a manner reasonably satisfactory to such Tax Indemnitee)
(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
-69-
and be continuing unless Lessee has provided security for its obligations
hereunder by advancing to such Tax Indemnitee before proceeding or
continuing with such contest, the amount of the Tax being contested, plus
any interest and penalties and an amount estimated in good faith by such
Tax Indemnitee for expenses, and (v) prior to commencing any judicial
action controlled by 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, 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 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 re-
-70-
ceipt an amount equal to the lesser of (a) the amount of such refund or
credit plus any net tax benefit (taking into account any Taxes incurred by such
Tax Indemnitee by reason of the receipt of such refund or realization of such
credit) actually realized by such Tax Indemnitee as a result of any payment by
such Tax Indemnitee made pursuant to this sentence (including this clause (a))
and (b) such tax payment, reimbursement or advance by Lessee to such Tax
Indemnitee theretofore made pursuant to this Section 9.3 (and the excess, if
any, of the amount described in clause (a) over the amount described in clause
(b) shall be carried forward and applied to reduce pro tanto any subsequent
obligation of Lessee to make payments to such Tax Indemnitee pursuant to this
Section 9.3). If, in addition to such refund or credit, such Tax Indemnitee
shall receive (or be credited with) an amount representing interest on the
amount of such refund or credit, such Tax Indemnitee shall pay to Lessee within
30 days of such receipt or realization of such credit that proportion of such
interest that shall be fairly attributable to Taxes paid, reimbursed or advanced
by Lessee prior to the receipt of such refund or realization of such credit.
9.3.6 Tax Filing
If any report, return or statement is required to be filed with respect to
any Tax which is subject to indemnification under this Section 9.3, Lessee shall
timely file the same (except for any such report, return or statement which a
Tax Indemnitee has timely notified the Lessee in writing that such Tax
Indemnitee intends to file, or for which such 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, it shall notify such Tax
Indemnitee of such requirement and prepare and deliver such report, return or
statement to such Tax Indemnitee in a manner satisfactory to such Tax Indemnitee
within a reasonable time prior to the time such report, return or statement is
to be filed.
-71-
9.3.7 Forms
Each Tax Indemnitee agrees to furnish from time to time to Lessee or Loan
Trustee or to such other person as Lessee or Loan Trustee may designate, at
Lessee's or Loan Trustee's request, such duly executed and properly completed
forms as may be necessary or appropriate in order to claim any reduction of or
exemption from any withholding or other Tax imposed by any Taxing Authority, if
(x) such reduction or exemption is available to such Tax Indemnitee and (y)
Lessee has provided such Tax Indemnitee with any information necessary to
complete such form not otherwise reasonably available to such Tax Indemnitee.
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 or other amount computed by reference to the amount
of any Tax by Lessee pursuant to this Section 9.3 to or on behalf of a Tax
Indemnitee or any Affiliate thereof, Lessee, without any further action, shall
be subrogated to any claims that such Tax Indemnitee or Affiliate may have
relating thereto. Such Tax Indemnitee or Affiliate shall cooperate with Lessee
(to the extent such cooperation does not result in any unreimbursed cost,
expense or liability to such Tax Indemnitee or Affiliate) 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 in, a country other than the United States or
in a territory, possession or commonwealth of the United States (within the
meaning of the tax law of that foreign jurisdiction) and if as a result thereof
any foreign Taxes (including withholding Taxes) are imposed on the Pass Through
Trustees, Pass Through Trusts, or Note Holders, then Owner Participant shall
reimburse Lessee for any payments Lessee is required to make to or on behalf of
any Pass Through Trustee, Pass Through Trust, or Note Holder under this Section
9.3 as a result of the imposition of such Taxes.
-72-
The amount payable by Owner Participant to Lessee shall be an amount which,
after taking into account any such Taxes, any Tax imposed upon the receipt or
accrual by Lessee of such payment by Owner Participant and any tax benefits or
tax savings realized by Lessee with respect to the payment of such withholding
Tax or the payment hereunder, shall equal the amount of Lessee's payment to or
on behalf of such Pass Through Trustee, or Note Holder.
9.4 Payments
Any payments made pursuant to Section 9.1 or 9.3 shall be due on the 60th
day after demand therefor and shall be made directly to the relevant Indemnitee
or Tax Indemnitee or to 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.
-73-
SECTION 10. ASSIGNMENT OR TRANSFER OF INTERESTS
10.1 Participants, Owner Trustee and Note Holders
10.1.1 Owner Participant
(a) During the Term, 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 such transfer is a Transfer of the entire
interest held by Owner Participant, and:
(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 an agreement substantially
in the form of Exhibit H hereto (or otherwise in form and substance
reasonably satisfactory to Lessee and Mortgagee);
(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 this Lease and the other Lessee Operative Agreements
insofar as they relate to the rights and obligations of Lessee or the
Loan Participant shall not be altered;
(iv) Owner Participant shall deliver to Lessee, Owner Trustee and
Mortgagee an opinion of counsel substantially in the form of Exhibit I
hereto (or otherwise in form and substance reasonably satisfactory to
Lessee and Mortgagee) 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 the Act, the
registration provisions of the Securities Act, or any other applicable
Federal law;
(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 provi-
-74-
sion that may 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); and
(vi) The Transferee shall be a single 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.
(b) Owner Participant shall give written notice to Lessee, Mortgagee
and Owner Trustee at least 10 days prior to any such Transfer, specifying
the name and address of the proposed Transferee, and providing financial
statements of the proposed Transferee evidencing satisfaction of the
requirements described in Section 10.1.1(a)(vi)(A) or (B) above.
(c) Any fees, charges and expenses, including the reasonable legal
fees, charges and expenses incurred by Lessee, Owner Participant,
Mortgagee, any Note Holder or Owner Trustee in connection with any Transfer
by Owner Participant permitted by this Section 10.1.1, or by the Transferee
in any such case, will be paid for by Owner Participant.
10.1.2 Owner Trustee
Owner Trustee may transfer its interests in the Trust Agreement pursuant to
Section 9 thereof.
10.1.3 Note Holders
Subject to Section 7.5.2 hereof and Section 2.07 of the Trust Indenture,
any Note Holder may, at any time and from time to time, Transfer or grant
participations in all or any portion of the Equipment Notes and/or all or any
portion of its beneficial interest in its Equipment Notes and the Trust
Indenture Estate to any person (it being understood that the sale or issuance of
Pass Through Certificates by a Pass Through Trustee
-75-
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 Lessee shall not have any increased liability or
obligations as a result of any such participation. In the case of any such
Transfer, the Transferee, by acceptance of Equipment Notes in connection with
such Transfer, shall be deemed to be bound by all of the covenants of Note
Holders contained in the Operative Agreements.
10.1.4 Lessee's Assumption of the Certificates
(a) Subject to compliance by the Lessee with all of its obligations
under the Operative Agreements, each of the Owner Participant, the Owner
Trustee, the Mortgagee, the Pass Through Trustee and the Lessee covenants
and agrees that if the Lessee elects to purchase the Aircraft pursuant to
Section 17.3 of the Lease, then, upon compliance with the applicable
provisions of the Lease and the other Operative Agreements, each of the
parties will execute and deliver appropriate documentation transferring to
Lessee all right, title and interest in and to the Aircraft (including,
without limitation, such bills of sale and other instruments and documents
as Lessee shall reasonably request to evidence (on the public record or
otherwise) such transfer and the vesting in Lessee of all right, title and
interest in and to the Aircraft), such transfer to be without recourse or
warranty (except as to the absence of Lessor's Liens attributable to the
Owner Trustee) but subject to the Lien of the Indenture, and if the Lessee,
in connection with such purchase, elects to assume the obligations of the
Owner Trustee to the Mortgagee and the Note Holders under the Indenture,
the Equipment Notes, and hereunder, then the Lessee shall so notify the
Mortgagee, and each of the parties shall execute and deliver appropriate
documentation permitting the Lessee to assume such obligations on the basis
of full recourse to the Lessee, maintaining for the benefit of the Note
Holders and the other Indenture Indemnitees the security interest in the
Aircraft created by the Indenture, and upon compliance with the provisions
of this Section 10.1.4 releasing the Owner Participant and the Owner
Trustee from all obligations in respect of the Equipment Notes, the
Indenture, this Agreement, and the other Operative Agreements, except any
obligations relating to the period prior to such assumption and take all
such other actions, at the
-76-
Lessee's expense, as are reasonably necessary to permit such assumption of
the Lessee.
(b) In connection with such assumption:
(i) the Lessee shall execute and deliver an instrument (A)
pursuant to which the Lessee irrevocably and unconditionally assumes
and undertakes, with full recourse to the Lessee, to pay, satisfy, and
discharge when and as due (at the stated maturity thereof, by
acceleration or otherwise) the principal of, Make-Whole Amount, if
any, interest, and all other sums owing on all outstanding Equipment
Notes (or on the Lessee's substituted obligations) or otherwise
payable under the Indenture in accordance with their terms, and
punctually to perform and observe all of the covenants and obligations
hereunder and under the Indenture and the Equipment Notes (as the same
may be amended in connection with such assumption) to be performed or
observed by the Owner Trustee, and (B) which contains amendments to
the Trust Indenture, in form and substance as reasonably satisfactory
to the Mortgagee, that incorporate therein such provisions from the
Lease and this Agreement as may be appropriate, including, without
limitation, events of default substantially identical in scope and
effect to those set forth in the Lease and covenants substantially
identical to the covenants of the Lessee hereunder and under the
Lease;
(ii) the instrument referred to in paragraph (i) of this Section
10.1.4(b), any Uniform Commercial Code financing statements relating
thereto, and any other documents which shall be necessary (or
reasonably requested by the Mortgagee) to establish the Lessee's title
to and interest in the Aircraft or to reflect the substitution of the
Lessee for the Owner Trustee under the Operative Agreements or to
continue the perfection of the security interests in the Aircraft and
the other rights, property, and interests included in the Trust
Indenture Estate for the benefit of the Note Holders and the other
Indenture Indemnitees (or the Lessee's substituted obligations) shall
be filed in such form, manner, and places as are necessary or, in the
reasonable opinion of the Indenture Trustee, advisable for such
purpose;
(iii) the Mortgagee shall have received an insurance report dated
the effective date of such assumption of an independent insurance
broker and certificates of insurance, each in form and substance
satisfactory to the Mort-
-77-
gagee, as to the due compliance as of the effective date of such
assumption with the terms of Section 11 of the Lease (as it relates to
the Mortgagee) relating to the insurance with respect to the Aircraft;
(iv) the Mortgagee shall have received evidence that as of the
effectiveness of the assignment on the date of such assumption the
Aircraft is free and clear of all Liens other than the Lien of the
Indenture and other Permitted Liens;
(v) the Mortgagee shall have received a certificate from the
Lessee that no Event of Default exists as of the effective date of
such assumption; and
(vi) the Mortgagee shall have received (A) from counsel for the
Lessee (who may be an attorney in Lessee's legal department) a legal
opinion, in form and substance as reasonably satisfactory to the
Mortgagee: (w) with respect to the compliance of the assumption
contemplated hereby with the terms hereof, (x) with respect to the due
authorization, execution, delivery, validity, and enforceability of
the instrument referred to in paragraph (i) of this Section 10.1.4(b),
(y) with respect to the continued perfection of the first and prior
Lien and security interest in the Aircraft for the benefit of the
Holders of the Equipment Notes and the other Indenture Indemnitees (or
the Lessee's substituted obligations) referred to in paragraph (ii) of
this Section 10.1.4(b), and (z) with respect to the continued
availability of the benefits of Section 1110 of the Bankruptcy Code to
the Mortgagee for the benefit of the Holders with respect to the
Aircraft after giving effect to such assumption, provided, that the
opinion required by subclause (z) need only be given if immediately
prior to such assumption the Owner Trustee should have been entitled
to the benefits of Section 1110 of the Bankruptcy Code, (B) from
counsel to the Mortgagee and special counsel in Oklahoma City, a legal
opinion comparable to the respective opinions delivered on the
Issuance Date or the Delivery Date, as the case may be, with such
changes therein as may be appropriate in light of such assumption, and
(C) in the case of each opinion described in clause (A) or (B) above,
covering such additional matters as the Mortgagee shall reasonably
request.
(c) The Lessee shall pay all reasonable expenses (including reasonable
fees and expenses of counsel) of the Mortgagee, the Owner Trustee, the Pass
Through Trustee,
-78-
the Subordination Agent, each Liquidity Provider and the Owner Participant
in connection with such assumption.
(d) Such assumption may occur only if, the Lessee has (i) provided an
opinion of counsel to the effect that holders of such Equipment Notes will
not recognize income, gain or loss for U.S. federal income tax purposes as
a result of such assumption and will be subject to U.S. federal income tax
on the same amount and in the same manner and at the same time as would
have been the case if such assumption had not occurred or (ii) indemnified
the then existing beneficial owners of certificates against any incremental
U.S. federal income taxes that may be imposed on them as a direct
consequence of such assumption (including any taxes that may be imposed as
a result of the payment of such indemnification).
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.
-79-
SECTION 11. REFUNDING AND CERTAIN OTHER MATTERS
11.1 Refunding Generally
Subject to Sections 11.2 and 11.4, in the event that at any time Lessee
shall have given written notice to Owner Participant, Owner Trustee, and
Mortgagee that Lessee is requesting a voluntary redemption of all, but not less
than all, of the outstanding Equipment Notes (in compliance with the provisions
of Sections 2.11 and 2.12 of the Trust Indenture) by Owner Trustee as part of a
refunding transaction, Owner Participant agrees to negotiate in good faith and
to promptly conclude an agreement with Lessee as to the terms of such refunding
transaction in form and substance reasonably satisfactory to Owner Participant
(including the terms of any debt to be issued in connection with such refunding
transaction and the documentation to be executed in connection therewith), and
after Lessee and Owner Participant shall have concluded such an agreement:
11.1.1 Refunding Certificate
Within 10 Business Days after reaching such agreement, Owner Participant
will deliver to Lessee a Refunding Certificate. Within 10 Business Days of its
receipt of the Refunding Certificate, Lessee may demand a verification pursuant
to Section 3.2.1(d) of the Lease of the information set forth in the Refunding
Certificate. Upon the acceptance by Lessee of the accuracy of the information
set forth in the Refunding Certificate or the determination pursuant to such
verification procedures of the Refunding Information, the appropriate parties
will take the actions specified in Sections 11.1.2 through 11.1.7 below.
11.1.2 Financing Agreements
The appropriate parties will enter into appropriate documentation (which
may include an underwriting agreement or similar private placement agreement)
with the institution or institutions to be named therein providing for (a) the
issuance and sale by Owner Trustee to such institution or institutions on the
Refunding Date of the New Debt and (b) the application of the proceeds of the
sale of the New Debt to the redemption of all such Equipment Notes on the
Refunding Date. Lessee, acting on behalf of Owner Trustee, shall give Mortgagee
at least 20 days revocable prior written notice of the proposed date of the
optional redemption.
-80-
11.1.3 Lease Amendments
As a condition to the closing of the refunding transaction, Lessee and
Owner Trustee will amend the Lease, as contemplated by Section 3.2.1(b) of the
Lease, to provide that (a) Basic Rent in respect of the period from and after
the Refunding Date shall be as provided in the Refunding Information and (b)
amounts payable in respect of Stipulated Loss Value and Termination Value and,
if applicable, the EBO Price and the EBO Date, from and after the Refunding Date
shall be as provided in the Refunding Information.
11.1.4 Security Agreements
Owner Trustee will enter into an agreement to provide for the securing
thereunder of the New Debt in like manner as the Equipment Notes and will enter
into such amendments and supplements to the Trust Indenture (or such new
indenture or other security agreement) and the other Operative Agreements as may
be necessary to effect such refunding.
11.1.5 Expenses
Whether or not such refunding transaction is consummated, Lessee shall pay
or reimburse all of the reasonable out-of-pocket expenses of all parties to such
refunding transaction, including, without limitation, any underwriting or
placement fees and the reasonable fees and expenses of such parties' counsel and
any related loan or commitment fees.
11.1.6 Make Whole Amount
At the closing of such refunding, Owner Trustee shall pay, upon receipt of
the same from Lessee (which Lessee shall pay as Supplemental Rent as a condition
to the closing to the refunding transaction), to the Mortgagee for the account
of each Note Holder, the Make-Whole Amount, if any, payable to such Note Holder
under Section 2.11 of the Trust Indenture.
11.1.7 Return of Equipment Notes
Subject to compliance by Owner Trustee and Lessee with all applicable terms
and conditions for voluntary prepayment under the Trust Indenture and this
Agreement, each Note Holder will transfer to Owner Trustee the Equipment Notes
held by it for cancellation (and Owner Trustee shall cancel the same), against
receipt by such Note Holder of the then-outstanding principal amount of such
Equipment Notes, accrued
-81-
and unpaid interest and Make-Whole Amount, if any, thereon, together with
payment in full of all other amounts then payable to such Note Holder and
Mortgagee hereunder or under the Trust Indenture.
11.2 Limitations on Obligation to Refund
Notwithstanding the foregoing, Owner Participant shall have no obligation
to proceed with any refunding transaction as contemplated by this Section 11:
(a) If such transaction would have, or creates a material risk of, an
adverse tax consequence to Owner Participant unless Lessee agrees to
indemnify Owner Participant against such adverse tax consequence;
(b) Unless Lessee indemnifies Owner Participant for any liability,
obligation (other than the obligation to pay principal and interest and
related payments in respect of the New Debt), cost or expense (including,
without limitation, reasonable attorneys' fees) related to or arising out
of any such refunding transaction;
(c) If a Lease Event of Default shall have occurred and be continuing;
or
(d) If there shall have previously been consummated three refunding
transactions at Lessee's request pursuant to this Section 11.
11.3 Execution of Certain Documents
Lessee, Owner Participant, Owner Trustee and Mortgagee each agree to
execute any document necessary or advisable to implement this Section 11
(including, without limitation, the execution, delivery and/or provision of any
appropriate additional or modified amendment, representation, warranty,
certificate, opinion or other document that may reasonably be requested by
Lessee or any other person).
11.4 ERISA
Owner Participant shall not be obligated to conclude the proposed refunding
transaction unless the agreements utilized to effect such refunding contain an
agreement by the initial holders of the New Debt substantially the same as
Section 7.5.2(b) of this Agreement, except in the case of any refunding
transaction where the New Debt is sold in a public of-
-82-
fering under the Securities Act or a private placement intended for resale
pursuant to Rule 144A under the Securities Act, in which case the holders of the
New Debt shall be subject to the restrictions relating to ERISA substantially
the same as those applicable to the purchasers of the Pass Through Certificates,
as described in the Prospectus Supplement relating to the initial issuance and
sale of the Pass Through Certificates.
11.5 Consent to Optional Redemptions
Each of Owner Participant, Owner Trustee and Mortgagee agrees with Lessee
not to cause an optional redemption of the Equipment Notes without Lessee's
consent except as set forth in Section 2.12 of the Trust Indenture.
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.
SECTION 13. CHANGE OF CITIZENSHIP
13.1 Generally
Without prejudice to the representations, warranties or covenants regarding
the status of any party hereto as a Citizen of the United States:
(a) Each of Lessee, First Security, WTC and Mortgagee agrees that it
will, immediately upon obtaining knowledge of any facts that would cast
doubt upon its continuing status as a Citizen of the United States and
promptly upon public disclosure of negotiations in respect of any
transaction which would or might adversely affect such status, notify in
writing all parties hereto of all relevant matters in connection therewith;
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 circum-
-83-
stances as a result of which it believes that such status is likely to
change, it will notify all the other parties to this Participation
Agreement of (i) such change in status promptly after obtaining Actual
Knowledge thereof or (ii) such belief as soon as practicable after such
public disclosure but in any event within ten Business Days after such
public disclosure.
13.2 Owner Participant
Owner Participant agrees, solely for the benefit of Lessee and the Note
Holders that if, during such time as the Aircraft is registered in the United
States, (a) it shall not be a Citizen of the United States and (b) the Aircraft
shall be, or would therefore become, ineligible for registration in the name of
Owner Trustee under the Act and regulations then applicable thereunder (without
giving consideration to Section 47.9 of the FAA Regulations or any other
provision that may restrict Lessee's use or operation of the Aircraft), then
Owner Participant shall as soon as is reasonably practicable, but in any event
within 30 days after obtaining Actual Knowledge of such ineligibility and of
such loss of citizenship, (y) effect voting trust or other similar arrangements
(in which case any provisions contained in the Operative Agreements restricting
Owner Participant's or Owner Trustee's ability to amend the Trust Agreement
shall not apply to the extent necessary to permit the use of such a voting trust
or other similar arrangement) or take any other action as may be necessary to
prevent any deregistration or maintain the United States registration of the
Aircraft or (z) transfer in accordance with the terms of this Agreement all its
right, title and interest in and to this Agreement, the Trust Estate and the
Trust Agreement in accordance with Section 10.1.
13.3 Owner Trustee
Upon First Security giving any notice in accordance with Section 13.1(a),
Owner Trustee shall, subject to Section 9.1.1 of the Trust Agreement, resign as
Owner Trustee. Upon its receipt of such notice, Owner Participant shall as
promptly as practicable appoint a Citizen of the United States as successor
Owner Trustee pursuant to Section 9.1 of the Trust Agreement.
13.4 Mortgagee
Upon WTC giving any notice in accordance with Section 13.1(a), Mortgagee
shall (if and so long as such citizen-
-84-
ship is necessary under the Act as in effect at such time or, if it is not
necessary, if and so long as Mortgagee's citizenship could have any adverse
effect on Lessee, any Participant or any Note Holder), subject to Section 8.02
of the Trust Indenture, resign as Mortgagee promptly upon its ceasing to be such
a citizen.
SECTION 14. CONCERNING OWNER TRUSTEE
It is understood and agreed that, except as otherwise expressly provided
herein or in the Trust Agreement or the Trust Indenture, Owner Trustee is
entering into this Agreement solely in its capacity as trustee as provided in
the Trust Agreement and not in its individual capacity and in no case whatsoever
will it be liable or accountable in its individual capacity for any of the
statements, representations, warranties, agreements or obligations of Owner
Trustee hereunder, or for any loss in respect thereof, as to all of which the
parties agree to look solely to the Trust Estate; provided, that nothing in this
Section 14 shall be deemed to limit in scope or substance the personal liability
of First Security (a) to Owner Participant as expressly set forth in the Trust
Agreement, (b) in respect of the representations, warranties and agreements of
First Security expressly made as such herein or in any other Operative Agreement
to which it is a party, and (c) for the consequences of its own gross
negligence, willful misconduct, and, in receiving, handling or remitting of
funds only, its willful misconduct or simple negligence as a trustee.
SECTION 15. MISCELLANEOUS
15.1 Amendments
No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to amend, supplement, waive, modify, discharge,
terminate or otherwise vary and is signed by the party against which the
enforcement of the amendment, supplement, waiver, modification, discharge,
termination or variance is sought. Each such amendment, supplement, waiver,
modification, discharge, termination or variance shall be effective only in the
specific instance and for the specific purpose for which it is given. No
provision of this Agreement shall be varied or contradicted by oral
communication, course of dealing or performance or other
-85-
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 representations, warranties, covenants and 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.
-86-
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 (followed by overnight courier service for next
Business Day receipt) or telecommunication transmission (which in either case
provides written confirmation to the sender of its delivery), sent by registered
mail or certified mail, return receipt requested, postage prepaid, or sent by
overnight courier service, in each case to the respective address, or facsimile
number set forth for such party in Schedule 1, or to such other address,
facsimile or other number as each party
-87-
hereto may hereafter specify by notice to the other parties hereto. Each such
notice, request, demand, authorization, direction, consent, waiver or other
communication shall be effective when received or, if made, given, furnished or
filed (a) by facsimile or telecommunication transmission, when confirmed;
provided there is receipt of such notice the next Business Day from an overnight
courier service or (b) by registered or certified mail, three Business Days
after being deposited, properly addressed, with the U.S. Postal Service.
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 THAT 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) 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
-88-
ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN ANY OF THE ABOVE-NAMED
COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM,
THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT THIS AGREEMENT
OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS.
(e) EACH PARTY HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION
BASED UPON OR ARISING OUT OF OR RELATING TO THIS AGREEMENT.
15.9 Third-Party Beneficiary
This Agreement is not intended to, and shall not, provide any person not a
party hereto (other than the Liquidity Provider, the Depositary, the Escrow
Agent and the Paying Agent, each of which is an intended third party beneficiary
with respect to the provisions of Section 9.1) with any rights of any nature
whatsoever against any of the parties hereto and no person not a party hereto
(other than the Liquidity Provider, the Depositary, the Escrow Agent and the
Paying Agent, with respect to the provisions of Section 9.1) 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.
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 commercially reasonable 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.
-89-
[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.
ATLAS AIR, INC.,
Lessee
By:
--------------------------------
Name:
Title:
-------------------------------------,
Owner Participant
By:
--------------------------------
Name:
Title:
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity, except as
expressly provided herein, but
solely as Owner Trustee
By:
--------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
expressly provided herein, but
solely as Mortgagee
By:
--------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
expressly provided herein, but
solely as Pass Through Trustee under the
Pass Through Trust Agreement for the
Atlas Air, Inc. Pass Through Trust, 1999-
By:
--------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
expressly provided herein, but
solely as Pass Through Trustee under the
Pass Through Trust Agreement for the
Atlas Air, Inc. Pass Through Trust, 1999-
By:
--------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
expressly provided herein, but
solely as Pass Through Trustee under the
Pass Through Trust Agreement for the
Atlas Air, Inc. Pass Through Trust, 1999-
By:
--------------------------------
Name:
Title:
WILMINGTON TRUST COMPANY,
not in its individual capacity, except as
expressly provided herein, but
solely as Subordination Agent
By:
--------------------------------
Name:
Title:
Schedule 1 to
Participation Agreement
ACCOUNTS; ADDRESSES
-------------------------------------------------------------------------------------------------------------------
Account for Payments Address For Notices
-------------------------------------------------------------------------------------------------------------------
ATLAS AIR, INC. [ Atlas Air, Inc.
000 Xxxxxxx Xxxxx
Xxxxxx, XX 00000
] Attention: Chief Financial
Officer
Facsimile:
FIRST SECURITY BANK, First Security Bank, First Security Bank,
NATIONAL ASSOCIATION National Association National Association
00 Xxxxx Xxxx Xxxxxx 00 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000 Xxxx Xxxx Xxxx, Xxxx 00000
Account No.: Attention: Corporate Trust
Corporate Trust Department Department
ABA#: Facsimile:
Reference: Atlas Lease
WILMINGTON TRUST COMPANY, AS MORTGAGEE The Chase Manhattan Bank Wilmington Trust Company
Xxx Xxxx, Xxx Xxxx 00000 One Xxxxxx Square
Account No.: 0000 Xxxxx Xxxxxx Xxxxxx
XXX#: Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Atlas Lease Facsimile:
WILMINGTON TRUST COMPANY, AS The Chase Manhattan Bank Wilmington Trust Company
SUBORDINATION AGENT Xxx Xxxx, Xxx Xxxx 00000 One Xxxxxx Square
Account No.: 0000 Xxxxx Xxxxxx Xxxxxx
XXX#: Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Atlas Lease Facsimile:
WILMINGTON TRUST COMPANY, AS PASS The Chase Manhattan Bank Wilmington Trust Company
THROUGH TRUSTEE FOR THE 0000- XXXX Xxx Xxxx, Xxx Xxxx 00000 One Xxxxxx Square
THROUGH TRUST Account No.: 0000 Xxxxx Xxxxxx Xxxxxx
XXX# Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Atlas Lease Facsimile:
WILMINGTON TRUST COMPANY, AS PASS The Chase Manhattan Bank Wilmington Trust Company
THROUGH TRUSTEE FOR THE 0000- XXXX Xxx Xxxx, Xxx Xxxx 00000 One Xxxxxx Square
THROUGH TRUST Account No.: 0000 Xxxxx Xxxxxx Xxxxxx
XXX# Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Atlas Lease Facsimile:
WILMINGTON TRUST COMPANY, AS PASS The Chase Manhattan Bank Wilmington Trust Company
THROUGH TRUSTEE FOR THE 0000- XXXX Xxx Xxxx, Xxx Xxxx 00000 One Xxxxxx Square
THROUGH TRUST Account No.: 0000 Xxxxx Xxxxxx Xxxxxx
XXX# Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Attention: Corporate Trust
Administration Administration
Reference: Atlas Lease Facsimile:
Schedule 2 to
Participation Agreement
COMMITMENTS
PARTICIPANT PERCENTAGE OF LESSOR'S COST DOLLAR AMOUNT
OWNER PARTICIPANT OWNER PARTICIPANT'S PERCENTAGE
PASS THROUGH TRUSTEE LOAN PARTICIPANT'S PTT PERCENTAGE
Tranche A-1 ___%
Tranche B ___%
Tranche C ___%
TOTAL 100%
Schedule 3 to
Participation Agreement
CERTAIN TERMS
DEFINED TERM DEFINITION
Commitment Termination Date
Lessor's Cost
Counsel to the Owner Participant
OP Jurisdiction
Exhibit A
FORM OF OPINION OF SPECIAL COUNSEL TO LESSEE
[ ], 1998
To the Persons Listed
on Schedule I Attached Hereto
Re: Lease of Boeing Model 747-47UF Aircraft
with Manufacturer's Serial Number [ ]
and U.S. Registration Number [ ]
Gentlemen:
We have been requested by Atlas Air, Inc., a Delaware corporation (the
"Company"), to act as special counsel with respect to, and to render this
opinion letter as required by Section 5.1.2(xxiii)(A) of the Participation
Agreement, dated as of [ ], 199[ ] (the "Participation Agreement"), among [ ],
as Owner Participant (the "Owner Participant"), First Security Bank, National
Association ("First Security"), a national banking association, as Owner Trustee
(the "Owner Trustee"), Wilmington Trust Company, a Delaware banking corporation
("WTC"), as Mortgagee under the Trust Indenture, as Subordination Agent under
the Intercreditor Agreement and as Pass Through Trustee under the Pass Through
Trust Agreements and the Company, as Lessee. Capitalized terms used herein and
not otherwise defined herein have the respective meanings given those terms in
the Participation Agreement.
In connection with this opinion letter, we have examined, among other
things, originals or copies certified or otherwise identified to our
satisfaction of the following documents:
(i) Participation Agreement;
(ii) Lease;
(iii) Lease Supplement No. 1;
(iv) ax Indemnity Agreement;
(v) Trust Agreement;
(vi) Trust Indenture;
(vii) Trust Indenture Supplement No. 1;
-2-
(viii) Purchase Agreement Assignment;
(ix) Airframe Manufacturer Consent and Agreement;
(x) Engine Manufacturer Consent and Agreement;
(xi) Forms of the Equipment Notes; and
(xii) Bills of Sale
We have also examined and relied upon such other documents and such other
corporate records, certificates and other statements of governmental officials
and corporate officers and other representatives of the Company as we have
deemed necessary or appropriate for the purposes of this opinion. As to certain
facts material to the opinions expressed herein, we have relied upon
representations and warranties contained in the Operative Agreements. The
opinions expressed herein are subject to the following exceptions, assumptions,
qualifications and limitations:
(A) The opinions set forth below are limited to the laws of the State of
New York, the federal laws of the United States of America and the General
Corporation Law of the State of Delaware, except that we express no opinion with
respect to (i) the laws, regulations or ordinances of any county, town or
municipality or governmental subdivision or agency thereof, (ii) state
securities or blue sky laws or federal securities laws, including the Securities
Act of 1933, as amended, and the Investment Company Act of 1940, (iii) federal
or state tax, antitrust or fraudulent transfer or conveyance laws, (iv) the
Employee Retirement Income Security Act of 1974, as amended, or (v) part A of
subtitle VII of Xxxxx 00, Xxxxxx Xxxxxx Code (the "Federal Aviation Act"), or
any other laws, rules or regulations governing, regulating or relating to the
acquisition, ownership, registration, use or sale of an aircraft, airframe or
aircraft engine or to the particular nature of the equipment to be acquired by
the Owner Trustee. In addition, our opinions are based upon a review of those
laws, statutes, rules and regulations which, in our experience, are normally
applicable to transactions of the type contemplated by the Participation
Agreement.
(B) The opinions set forth in paragraphs 3 and 6 below are subject to (i)
limitations on enforceability arising from applicable bankruptcy, insolvency,
reorganization, moratorium, receivership, fraudulent conveyance, fraudulent
transfer, preferential transfer and similar laws relating to or affecting the
rights and remedies of creditors or lessors generally and the effect of general
principles of equity, including, without limitation, laches and estoppel as
equitable defenses and con-
-3-
cepts of materiality, reasonableness, good faith and fair dealing (regardless of
whether such enforceability is considered or applied in a proceeding in equity
or at law) and considerations of impracticability or impossibility of
performance, and defenses based upon unconscionability of otherwise enforceable
obligations in the context of the factual circumstances under which enforcement
thereof is sought, (ii) the qualification that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought and (iii) the requirements of Section 9-306
of the Uniform Commercial Code of the State of New York (the "UCC") with respect
to the continuation of perfection of a security interest in "proceeds" of
collateral. In addition, certain remedial and procedural provisions of the
Company Documents (as defined in paragraph 2 below) and the Trust Indenture are
or may be unenforceable in whole or in part, but the inclusion of such
provisions does not affect the validity of those agreements and does not, in our
opinion, make the remedies provided in those agreements, or otherwise available
under applicable law, inadequate for the practical realization of the
substantive benefits purported to be provided thereby, except for the economic
consequences resulting from any delay imposed by, or any procedure required by,
applicable laws, rules, regulations and by constitutional requirements. We
express no opinion as to (i) any provision contained in any Operative Agreement
(a) providing for indemnification or exculpation of any Person for such Person's
gross negligence, willful misconduct, recklessness or unlawful conduct or in
respect of liabilities under the Securities Act, (b) providing for late payment
charges or an increase in interest rate upon delinquency in payment or the
occurrence of a default or other specified event but only to the extent such
provision is deemed to constitute a penalty or liquidated damages provision, (c)
as such provision relates to the subject matter jurisdiction of federal courts
or the waiver of inconvenient forum with respect to proceedings in federal
courts, (d) that purports to establish (or may be construed to establish)
evidentiary standards or (e) providing for the waiver of any statutory right or
any broadly or vaguely stated rights or unknown future rights, or any waiver
which is against public policy considerations or (ii) Section 15.8 of the
Participation Agreement or any comparable provision of any other Operative
Agreement. Under certain circumstances the requirement that the provisions of an
Operative Agreement may be modified or waived only in writing or only in a
specific instance and provisions to the effect that failure or delay in
exercising any right, remedy, power and/or privilege will not impair or waive
such right, remedy,
-4-
power and/or privilege may be unenforceable to the extent
that an oral agreement has been effected or a course of dealing has occurred
modifying such provisions. A court may modify or limit contractual agreements
regarding attorneys' fees.
(C) To the extent that our opinions expressed herein involve conclusions as
to the matters set forth in the opinions dated the date hereof of Xxxxx &
Xxxxxxx being delivered to you on the date hereof, we have assumed, without
independent investigation, the correctness of the matters set forth in such
opinions and have relied with your permission on such opinions.
(D) We have assumed the due authorization, execution and delivery of the
Operative Agreements by each of the parties thereto, that each of such parties
(other than the Company) has the power and authority to execute, deliver and
perform each such Operative Agreement and has obtained or made all necessary
consents, approvals, filings and registrations in connection therewith, that
such execution, delivery and performance does not violate its charter, by-laws
or similar instrument, that the Trust Agreement constitutes the valid, binding
and enforceable obligations of the parties thereto and duly creates the trust it
purports to create, that the Owner Trustee for purposes of Section 9-103(3) of
the UCC is located in New York and that, under applicable law, the Owner Trustee
would be deemed to be the owner of the Trust Estate and Trust Indenture Estate,
that First Security has the legal ability to exercise its trust powers with
respect to the Trust Estate in the State of New York, that value has been given
by the Loan Participants to the Owner Trustee under the Trust Indenture, that
the Owner Trustee has rights in the Trust Indenture Estate, that each of First
Security and WTC is duly organized, validly existing and in good standing in its
jurisdiction of organization and qualified to transact business in each other
jurisdiction where such qualification is required.
(E) We have assumed the due authorization, execution and issuance of the
Equipment Notes by the Owner Trustee and the due authentication of the Equipment
Notes by the Mortgagee and the delivery thereof against payment therefor, all in
accordance with the Participation Agreement and the Trust Indenture, and that
the Equipment Notes conform to the forms thereof examined by us.
(F) We have assumed that all signatures on documents examined by us are
genuine, that all persons signing such documents have legal capacity, that all
documents submitted to us as originals are authentic and that all documents
submitted to
-5-
us as copies or specimens conform with the originals, which facts we have not
independently verified.
(G) We express no opinion as to (i) any provision in any Operative
Agreement that is contrary to Section 2A-303, Section 9-311, or Part V of
Article 9, of the UCC, or (ii) whether or not the Lease constitutes a "security
interest" within the meaning of Section 1-201(37) of the UCC. We express no
opinion as to whether or not the Lease constitutes a "Finance Lease" within the
meaning of Section 2A-103(g) of the UCC and we express no opinion as to the
enforceability of any provision of any Operative Agreement which purports to
categorize the Lease as such.
(H) We have not made any examination of, and express no opinion with
respect to (and to the extent relevant have assumed the accuracy and sufficiency
of), (i) descriptions of, the legal or beneficial ownership of, or the title or
condition of title to, the Trust Estate or the Trust Indenture Estate or any
other property covered by any of the Operative Agreements, (ii) except as
expressly set forth in paragraphs 5 and 8 below, the existence, creation,
validity or attachment of any Lien thereon, (iii) except as expressly set forth
in paragraph 5 below, the perfection of any Lien thereon and (iv) the priority
or enforcement of any Lien thereon.
(I) We have assumed the continuous presence in the State of New York of all
collateral constituting "chattel paper" for purposes of the UCC.
(J) In giving an opinion regarding the valid existence and good standing of
the Company, we have relied solely upon certificates of public officials.
(K) In giving the opinion set forth in paragraph 7, we have relied upon a
certificate from an officer of the Company (i) that the Aircraft and Engines
constitute "aircraft equipment" for purposes of the Federal Aviation Act and
(ii) that the Airframe and Engines have not been placed in service prior to
October 22, 1994.
(L) The opinions expressed herein are given as of the date hereof. We
assume no obligation to advise you of any facts or circumstance that may come to
our attention, or any changes in law that may occur after the date hereof, which
may affect the opinion expressed herein.
-6-
Based on and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware.
2. The Company has all necessary corporate power to execute, deliver
and perform its obligations under the Participation Agreement, the Lease,
the Lease Supplement No. 1, the Purchase Agreement Assignment, and the Tax
Indemnity Agreement (collectively, the "Company Documents"). Neither the
execution nor delivery of the Company Documents by the Company nor the
consummation of the transactions contemplated thereby will result in any
violation of (a) its Certificate of Incorporation or By-laws or (b) any
law, governmental rule or regulation known to us to be applicable to, or
binding on, the Company, or which requires the approval of the stockholders
of the Company.
3. Each Company Document constitutes the valid and binding obligation
of the Company and is enforceable against the Company in accordance with
its terms.
4. Except for the matters referred to in clauses (i) through (iv) of
paragraph 5 below, no approval, authorization or other action by or filing
with any governmental authority is required for the execution and delivery
by the Company of the Company Documents or the consummation of the
transactions contemplated thereby to occur at the Closing.
5. Except for (i) the registration of the Aircraft with the FAA
pursuant to the Federal Aviation Act, (ii) the filing and recordation in
accordance with the Federal Aviation Act of the FAA Filed Documents, and
assuming that at the time of such filing no other unrecorded document
relating to the Aircraft has been filed pursuant to the Federal Aviation
Act, (iii) the filing of Financing Statements referred to in Section 5.1.12
of the Participation Agreement, and the filing of periodic continuation
statements with respect thereto, and (iv) the taking of possession by the
Mortgagee of the original counterparts of the Lease and Lease Supplement
No. 1, (a) no further filing or recording of any document is necessary (x)
to establish the Owner Trustee's title to the Airframe and Engines, and (y)
to create a valid security interest in the Owner Trustee's interest as
owner of the Airframe and
-7-
Engines, the Lease and the Lease Supplement No. 1 covering the Aircraft,
the Purchase Agreement (to the extent assigned by the Purchase Agreement
Assignment) and the Purchase Agreement Assignment in favor of the Mortgagee
pursuant to the Trust Indenture and (b) no further filing or recording of
any document in the State of New York or under the Federal Aviation Act is
required to perfect a security interest in the Owner Trustee's interest as
owner of the Airframe and Engines, the Lease and Lease Supplement No. 1
covering the Aircraft, the Purchase Agreement (to the extent assigned by
the Purchase Agreement Assignment) and the Purchase Agreement Assignment in
favor of the Mortgagee pursuant to the Trust Indenture.
6. Each of the Participation Agreement, the Trust Indenture, the Lease
and the Equipment Notes constitutes the valid and binding obligation of
First Security, in its individual capacity (but only to the extent
expressly stated in such document that First Security is entering into such
document in its individual capacity) and otherwise solely as Owner Trustee,
enforceable against First Security in its individual capacity (but only to
the extent expressly stated in such document that First Security is
entering into such document in its individual capacity) and otherwise
solely as Owner Trustee in accordance with its terms.
7. So long as the Company continues to be a "citizen of the United
States", as defined in section 40102 of Title 49 of the United States Code,
holding an air carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49 of the United States
Code for aircraft capable of carrying 10 or more individuals or 6,000
pounds or more of cargo, the Owner Trustee, as lessor under the Lease, and
the Mortgagee, as assignee of Owner Trustee's rights under the Lease
pursuant to the Trust Indenture (upon completion of foreclosure upon its
interest), will be entitled to the benefits of Section 1110 of Title 11 of
the United States Code with respect to the Airframe and Engines delivered
on the date hereof in connection with any case commenced by or against the
Company under Chapter 11 of Title 11 of the United States Code. We call to
your attention that the U.S. District Court for the District of Colorado
recently issued an opinion regarding Section 1110, In re Western Pacific
Airlines, Inc., 219 B.R. 305, (D. Colo. 1998) and 221 B.R. 1 (D. Colo.
1998), which opinion, we are informed, has been appealed to the United
States Court of Appeals for
-96-
the Tenth Circuit. The decision, reversing an order of the bankruptcy
court, held that once a debtor air carrier agrees to perform its
obligations and cures its defaults under an aircraft lease within the
prescribed period in accordance with Section 1110, the lessor under such
lease is not entitled to repossess the aircraft under Section 1110 if the
airline subsequently defaults under such lease. We are of the opinion that
the District Court opinion was incorrectly decided because it is contrary
to prior treatment of this issue by the courts and is contrary to the
intent of Congress in enacting Section 1110. We do not express any opinion
with respect to the outcome of any appeal of this decision.
8. Upon issuance, execution, authentication and delivery of the
Equipment Notes at the Closing, the Trust Indenture creates the security
interest in favor of the Mortgagee, as trustee for the benefit of the
holders of the Equipment Notes, in the Trust Indenture Estate it purports
to create to the extent that the UCC applies to a security interest in such
property.
This opinion may be relied upon by you (and any permitted Transferee under
Section 10.1.1(a) or 10.1.3 of the Participation Agreement) in connection with
the matters set forth
-9-
herein and, without our prior written consent, may not be relied upon for any
other purpose and may not be furnished to any other Person for any purpose.
Very truly yours,
Schedule I
[ ], as Owner Participant
First Security Bank, National Association, not in its individual capacity, but
solely as Owner Trustee
Wilmington Trust Company, not in its individual capacity, but solely as
Mortgagee, Subordination Agent and Pass Through Trustee
Standard & Poor's Ratings Services
FORM OF OPINION OF CORPORATE COUNSEL TO LESSEE
To the Persons Listed
on Schedule I Hereto
Re: Lease of Boeing Model 747-47UF Aircraft
with Manufacturer's Serial Number _____
and U.S. Registration Number
Ladies and Gentlemen:
This opinion letter is being delivered by Atlas Air, Inc., a Delaware
corporation ("Atlas"), through its Legal Department in connection with the
transactions contemplated by the Participation Agreement dated as of _______,
199_, among __________________________, as Owner Participant, First Security
Bank, National Association, a national banking corporation, as Owner Trustee,
Wilmington Trust Company, a Delaware banking corporation, as Mortgagee under the
Trust Indenture, Subordination Agent under the Intercreditor Agreement and as
Pass Through Trustee under the Pass Through Trust Agreements and Atlas, as
Lessee (the "Participation Agreement"). All capitalized terms used herein and
not otherwise defined herein shall have the respective meanings given those
terms in the Participation Agreement. This opinion letter is being furnished to
you pursuant to Section 5.1.2(xxiii)(B) of the Participation Agreement.
In giving the following opinions, members of Atlas's Legal Department or
lawyers retained by Atlas's Legal Department have reviewed the Participation
Agreement and the other Operative Agreements to which Atlas is a party and have
relied upon originals, or copies certified or otherwise identified to our
satisfaction, of such records, documents, certificates and other instruments as
in our judgment are necessary or appropriate to enable us to render the opinions
expressed below. In addition, Atlas's Legal Department has assumed and has not
verified the accuracy as to factual matters of each document reviewed. As used
herein, the phrase "to our knowledge" or words of similar import shall mean to
the actual knowledge of Atlas's Legal Department after reasonable investigation,
but shall not be interpreted to impute knowledge of others (other than members
of Atlas's Legal Department).
-2-
Based on the foregoing, and subject to the assumptions and limitations
contained herein, Atlas's Legal Department is of the opinion that:
(a) Atlas is an "air carrier" within the meaning of Section 40102 of the
Act, operating under a certificate issued pursuant to Chapter 447 of the Act, is
a "citizen of the United States" as such term is defined in Section 40102 of
such Act and holds all authority, necessary licenses and certificates under such
Act and the rules and regulations promulgated thereunder necessary for the
conduct of its business and to perform its obligations under the Participation
Agreement, the Lease, the Lease Supplement No. 1, the Purchase Agreement
Assignment and the Tax Indemnity Agreement (collectively, the "Agreements").
(b) The execution, delivery and performance by Atlas of each of the
Agreements do not, to our knowledge, breach or result in a default under any
indenture, mortgage, deed of trust, credit agreement, conditional sale contract
or other agreement to which Atlas is a party or by which Atlas or its property
may be bound.
(c) The execution, delivery and performance of each of the Agreements has
been duly authorized by all necessary corporate action on the part of Atlas, and
each of the Agreements has been duly executed and delivered by Atlas.
(d) There are no pending or, to our knowledge, threatened actions, suits or
proceedings before any court or administrative agency or arbitrator that
question the validity of any of the Agreements or that would have been required
to be disclosed in Atlas's Annual Report on Form 10-K filed for the year ended
December 31, 1998, on any subsequent Quarterly Report on Form 10-Q or Current
Report on Form 8-K, except such as are therein disclosed.
-3-
The foregoing opinions are limited to the federal law of the United States
of America (other than (i) the Act (except as expressly provided in paragraph
(a) above) or any other laws, rules or regulations governing, regulating or
relating to the acquisition, ownership, registration, use or sale of an
aircraft, airframe or aircraft engine or to the particular nature of the
equipment to be acquired by Atlas, (ii) state securities or blue sky laws, or
federal securities laws, (iii) federal or state tax, antitrust or fraudulent
transfer or conveyance laws, as to which we express no opinion), and the General
Corporation Law of the State of Delaware.
This opinion letter is furnished to you for the purpose indicated above,
and may not be relied upon by any other Person (except any permitted Transferee
under Sections 10.1.1(a) or 10.1.3 of the Participation Agreement) or for any
other purpose without our written consent.
Very truly yours,
ATLAS AIR, INC.
Xxxxx X. Xxxxxxxx, Esq.
Legal Counsel
Schedule I
[ ], as Owner Participant
First Security Bank, National Association, not in its individual capacity, but
solely as Owner Trustee
Wilmington Trust Company, not in its individual capacity, but solely as
Mortgagee, Subordination Agent and Pass Through Trustee
Standard & Poor's Ratings Services
Exhibit C
FORM OF BOEING OPINION
To the Addressees Listed [ ]
in the Attached Schedule
Subject: One Boeing Model 747-47UF Aircraft
Bearing Manufacturer's Serial No. [ ]
Ladies and Gentlemen:
I am an attorney employed by The Boeing Company ("Boeing") and I am
licensed to practice law in the State of Washington, United States of America.
As such, I have represented Boeing in connection with the sale of the Boeing
Model 747-47UF aircraft bearing Manufacturer's Serial No. [ ] (including the
engines installed thereon but excluding equipment furnished by Atlas Air, Inc.
("Atlas") therefor, said aircraft herein called the "Aircraft"), pursuant to
Purchase Agreement No. 2021 between Boeing and Atlas, dated June 6, 1997, as
subsequently amended (the "Purchase Agreement") and as assigned by the Purchase
Agreement and Engine Warranties Assignment between Atlas, as Assignor, and First
Security Bank, National Association, not in its individual capacity but solely
as Owner Trustee under the Trust Agreement dated as of [ ], 199[ ] with [ ] as
Owner Participant, as Assignee (and referred to in the Xxxx of Sale (as
hereinafter defined) and in this opinion as "Buyer").
For the purpose of this opinion, I have examined and relied upon originals,
or copies certified to my satisfaction, of the Purchase Agreement and of the
following documents:
1. The Manufacturer Consent and Agreement to the Purchase Agreement
and Engine Warranties Assignment dated as of [ ], 199[ ] executed by Boeing
(the "Consent and Agreement");
2. The Xxxx of Sale executed by Boeing in favor of Buyer dated as of [
], 199[ ] (the "Xxxx of Sale"); and
3. The FAA Xxxx of Sale executed by Boeing in favor of Buyer dated as
of [ ], 199[ ] (the "FAA Xxxx of Sale").
-2-
I have also examined such other documents and records as I have deemed
relevant or necessary for the purpose of giving this opinion. Based upon such
examination, I am of the opinion that:
(a) Boeing is a corporation duly incorporated, validly existing, and in
good standing under the laws of the State of Delaware.
(b) The Purchase Agreement, the Consent and Agreement, the Xxxx of Sale and
the FAA Xxxx of Sale have been duly authorized, executed and delivered by, and
constitute the legal, valid, and binding obligations of Boeing enforceable
against it in accordance with the respective terms thereof except as may be
limited by bankruptcy, insolvency, reorganization, moratorium, or other similar
laws affecting the enforcement of creditors' rights in general and except as the
enforceability of such obligations may be subject to general principles of
equity.
(c) Boeing has the full power, authority, and legal right to enter into and
perform its obligations under the Purchase Agreement, the Consent and Agreement,
the Xxxx of Sale, and the FAA Xxxx of Sale and Boeing's execution, performance,
and delivery of such documents have been duly authorized by all necessary
corporate action.
(d) Good title to the Aircraft was at the time of delivery to Buyer vested
in Boeing free and clear of all liens, claims, encumbrances, and rights of
others; and good title to the Aircraft has been duly conveyed by Boeing to
Buyer, free and clear of all liens, claims, encumbrances, and rights of others.
(e) Each of the Xxxx of Sale and the FAA Xxxx of Sale constitutes an
effective instrument for the conveyance of good title to the Aircraft to Buyer,
assuming the filing for recordation of the FAA Xxxx of Sale for the Aircraft in
accordance with the provisions of Title 49 of the United States Code, as
amended.
For the purpose of this opinion, I have assumed that Buyer has the power
and authority to accept title to and delivery of the Aircraft and that the
representative acting on behalf of Buyer was duly authorized to accept title to
and delivery of the Aircraft on its behalf.
-3-
With respect to the conclusions set forth herein, I express no opinion as
to any laws other than the laws of the State of Washington, the corporate laws
of the State of Delaware, and the federal laws of the United States.
Very truly yours,
Xxxxxxx X. Xxxxx
Counsel
SCHEDULE
ATLAS AIR, INC.
FIRST SECURITY BANK NATIONAL ASSOCIATION
Not in its individual capacity but solely as Owner Trustee under the
Trust Agreement dated as of [ ], 199[ ] with
[ ] as Owner Participant.
WILMINGTON TRUST COMPANY
Not in its individual capacity but solely as Mortgagee,
Pass Through Trustee and Subordination Agent
[ ]
As Owner Participant
STANDARD & POOR'S RATINGS SERVICES
Exhibit D
FORM OF OPINION OF SPECIAL COUNSEL
TO OWNER TRUSTEE
[ ], 199[ ]
To Each of the Parties Set Forth
in Schedule A Hereto
Re: Lease of One (1) Boeing Model 747-47UF Freighter Aircraft
with Manufacturer's Serial Number [ ] and U.S.
Registration Number [ ] by Atlas Air, Inc.
Dear Sir or Madam:
We have acted as special counsel for First Security Bank, National
Association, a national banking association, in its individual capacity ("First
Security") and in its capacity as trustee (the "Owner Trustee") under Trust
Agreement dated as of [ ], 199[ ] (the "Trust Agreement"), between it and [ ],
as beneficiary (the "Owner Participant"), in connection with the transactions
contemplated by the Participation Agreement (as defined below). Except as
otherwise defined herein, the terms used herein shall have the meanings set
forth in Annex A to Participation Agreement dated as of [ ], 199[ ] among Atlas
Air, Inc., as Lessee, the Owner Participant, First Security, not in its
individual capacity except as provided therein, and as Owner Trustee, and
Wilmington Trust Company, not in its individual capacity except as expressly
provided therein, but solely as Mortgagee under the Trust Indenture,
Subordination Agent under the Intercreditor Agreement and as Pass Through
Trustee under each of the Pass Through Trust Agreements (the "Participation
Agreement"). This opinion is furnished pursuant to Section 5.1.2(xiii)(D) of the
Participation Agreement.
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records and other instruments as
we have deemed necessary or advisable for the purpose of rendering this opinion.
Based upon the foregoing, we are of the opinion that:
-2-
(1) First Security is a national banking association duly organized,
validly existing and in good standing under the laws of the United States, is a
"citizen of the United States" within the meaning of Section 40102(a)(15) of the
Act and has the full power and authority to enter into and perform its
obligations under the Trust Agreement and each other Operative Agreement to
which it, in its individual capacity or as Owner Trustee, as the case may be, is
a party and, as Owner Trustee, to issue, execute, and deliver and perform the
Equipment Notes.
(2) The Owner Trustee is the duly appointed trustee under the Trust
Agreement and the Trust Agreement creates a legal and valid trust under the laws
of the State of Utah; the trust created by the Trust Agreement has been duly
created and exists for the benefit of the Owner Participant, and the Trust
Agreement creates for the benefit of the Owner Participant the rights and
interests in the Trust Estate which the Trust Agreement by its terms purports to
create; and assuming the Trust Agreement was properly authorized, executed and
delivered by the Owner Participant and that the terms of the Trust Agreement are
not in violation of any laws, documents, judgments, regulations or other
provisions applicable to the Owner Participant, the Trust Agreement constitutes,
under the laws of the State of Utah, a legal, valid and binding obligation of
the Owner Participant enforceable against the Owner Participant in accordance
with its terms.
(3) The Trust Agreement, the Participation Agreement, and each other
Operative Agreement to which First Security or the Owner Trustee, as the case
may be, is a party, and the Equipment Notes, have been duly authorized, executed
and delivered by First Security, or the Owner Trustee, as the case may be, and
assuming due authorization, execution and delivery by the other parties thereto
is a legal, valid and binding obligation of First Security, or the Owner
Trustee, as the case may be, enforceable in accordance with their respective
terms.
(4) The execution and delivery by First Security of the Trust Agreement and
the Participation Agreement and the execution and delivery by the Owner Trustee
of the Operative Agreements to which it is a party is not, and the performance
by First Security, or the Owner Trustee, as the case may be, of its respective
obligations under each such agreements will not be, inconsistent with the
articles of association or by-laws of First Security, do not and will not
contravene any federal law or law of the State of Utah, or any rule or
regulation of the State of Utah or the federal governmental rule, or any
judgment or order of which we have knowledge and which is applicable to
-3-
it and do not and will not contravene any provision of, or result in the
creation of any lien upon any property of First Security, or constitute a
default under, any indenture, mortgage, contract or other instrument of which we
have knowledge and to which First Security or the Owner Trustee is a party or by
which either is bound or require the consent or approval of, the giving of
notice to, or the registration with, or the taking of any action in respect of,
or under federal law or the laws of the State of Utah or any subdivision or
agency thereof.
(5) There are no fees, taxes or other charges, except taxes imposed on fees
payable to First Security, required to be paid under the laws, ordinances or
regulations of the State of Utah or any political subdivision thereof,
including, without limitation, Salt Lake City, in connection with the execution,
delivery or performance by the Lessee, Owner Trustee, Mortgagee or any
Participant of the Operative Agreements solely because First Security, or the
Owner Trustee as the case may be, performs certain of its obligations under the
Operative Documents in the State of Utah.
(6) There are no pending or threatened actions or proceedings against or
affecting First Security or the Owner Trustee, as the case may be, before any
court, governmental authority or administrative agency which, if adversely
determined, could materially adversely affect the right, power or ability,
either in its individual capacity or as Owner Trustee, or both, as the case may
be, to enter into or perform its obligations under the Operative Agreements.
(7) The Trust Indenture (or financing statements or other notices with
respect thereto) has been filed for record or recorded with the Division of
Corporations and Commercial Code in the State of Utah and such offices are all
the places in the State of Utah wherein such filing or recordation is necessary
and no other actions or filings are necessary in the State of Utah to perfect
the lien and security interest of the Mortgagee in the Trust Estate as against
creditors of or purchasers from the Owner Trustee or the Lessee, or both.
(8) The Owner Trustee has received such right, title and interest in and to
the Aircraft as was conveyed to the Owner Trustee on the date hereof, subject to
(i) the rights of the Lessee under the Lease and the Lease Supplement; (ii) the
beneficial interest of the Owner Participant in the Aircraft; and (iii) the Lien
created pursuant to the Trust Indenture and the Trust Indenture Supplement; and
to our knowledge there exist no Liens affecting the right, title or interest of
the
-4-
Owner Trustee in and to the Trust Estate resulting from claims against First
Security, not related to the ownership of the Trust Estate or the administration
of the Trust Estate or any other transaction contemplated by the Operative
Agreements.
(9) Assuming that (i) the Aircraft is not physically located in the State
of Utah at the commencement or termination of the Term, (ii) in connection with
any sale of the Aircraft, such Aircraft will not be physically delivered in the
State of Utah to a buyer, and (iii) the trust created by the Trust Agreement is
treated as a grantor trust for federal income tax purposes in accordance with
Sections 671 through 678 of the Internal Revenue Code of 1986, as amended, there
are no fees, taxes or other charges (except taxes imposed on fees payable to the
Owner Trustee) payable to the State of Utah or any political subdivision thereof
in connection with the execution, delivery or performance by the Owner Trustee,
the Mortgagee, the Lessee or any Participant of the Operative Agreements or in
connection with the making by the Owner Participant of its investment in the
Aircraft or its acquisition of the beneficial interest in the Trust Estate or in
connection with the issuance and acquisition of the Equipment Notes, and neither
the Owner Trustee, the Trust Estate nor the trust created by the Trust Agreement
will be subject to any fee, tax or other governmental charge (except taxes on
fees payable to the Owner Trustee) under the laws of the State of Utah or any
political subdivision thereof on, based on or measured by, directly or
indirectly, the gross receipts, net income or value of the Trust Estate by
reason of the creation or continued existence of the trust under the terms of
the Trust Agreement pursuant to the laws of the State of Utah or the Owner
Trustee's performance of its duties under the Trust Agreement within such State.
(10) Neither a Utah court nor a federal court applying Utah law or federal
law, if properly presented with the issue and after having properly considered
such issue, would permit the Owner Participant to terminate the Trust Agreement,
except in accordance with its terms.
(11) Although there is no Utah case directly on point, under the laws of
the State of Utah, so long as the Trust Agreement has not been terminated in
accordance with its terms, creditors of any person that is an Owner Participant,
holders of a lien against the assets of any such person that is an Owner
Participant, such as trustees, receivers or liquidators (whether or not an
insolvency proceeding has been commenced) (collectively the "Creditors") may
acquire valid claims and liens, as to the Trust Estate, only against the rights
of
-5-
such Owner Participant under the Trust Agreement or in the Trust Estate, and
do not have, and may not through the enforcement of such Creditors' rights
acquire, any greater rights than such Owner Participant with respect to the
Trust Agreement or the Trust Estate.
The foregoing opinions are subject to the following assumptions, exceptions
and qualifications:
A. The foregoing opinions are limited to the laws of the State of Utah and
the federal laws of the United States of America governing the banking and trust
powers of First Security and Title 11 of the United States Code entitled
"Bankruptcy". In addition, we express no opinion with respect to (i) federal
securities laws, including the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of
1939, as amended; (ii) the Federal Aviation Act of 1958, as amended (except with
respect to the opinion set forth in paragraph l above concerning the citizenship
of First Security); or (iii) state securities or blue sky laws. Insofar as the
foregoing opinions relate to the legality, validity, binding effect and
enforceability of the documents involved in these transactions, which by their
terms are governed by the laws of a state other than Utah, we have assumed that
such documents constitute legal, valid, binding and enforceable agreements under
the laws of such state, as to which we express no opinion.
B. The foregoing opinions regarding enforceability of any document or
instrument are subject (i) except as otherwise set forth in the opinions in
paragraphs 10 and l1, to applicable bankruptcy, insolvency, moratorium,
reorganization, receivership and similar laws affecting the rights and remedies
of creditors generally, and (ii) general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
We call to your attention that bankruptcy courts are courts in equity with wide
discretion in applying the provisions of the Bankruptcy Code.
C. As to the documents involved in these transactions, we have assumed that
each is a legal, valid and binding obligation of each party thereto, other than
First Security or the Owner Trustee, and is enforceable against each such party
in accordance with their respective terms.
D. The opinion in paragraph l above concerning the citizenship of First
Security is based upon the facts contained
-6-
in an affidavit of First Security, made by its authorized officer, which facts
we have not independently verified.
E. We have assumed that all signatures, other than those of the Owner
Trustee or First Security, on documents and instruments involved in these
transactions are genuine, that all documents and instruments submitted to us as
originals are authentic, and that all documents and instruments submitted to us
conform with the originals, which facts we have not independently verified.
F. We do not purport to be experts in respect of, or express any opinion
concerning laws, rules or regulations applicable to the particular nature of the
equipment involved in these transactions.
G. We have made no investigation of, and express no opinion concerning, the
nature of the title to any part of the equipment involved in these transactions
or the priority of any mortgage or security interest.
H. We have assumed that the Participation Agreement and the transactions
contemplated thereby are not within the prohibitions of Section 406 of the
Employee Retirement Income Security Act of 1974.
I. In addition to any other limitation by operation of law upon the scope,
meaning or purpose of this opinion, this opinion speaks only as of the date
hereof. We have no obligation to advise the recipients of this opinion (or any
third party) of changes of law or fact that may occur after the date hereof,
even though the change may effect the legal analysis, a legal conclusion or any
information contained herein.
-7-
J. The opinions expressed in this letter are solely for the use of the
parties which it is addressed in matters directly related to the Participation
Agreement and the transactions contemplated thereunder and these opinions may
not be relied on by any other persons or for any other purpose without our prior
written approval. The opinions expressed in this letter are limited to the
matters set forth in this letter and no other opinions should be inferred beyond
the matters expressly stated.
Very truly yours,
RAY, XXXXXXX & XXXXXXX
SCHEDULE A
First Security Bank, National Association
Atlas Air, Inc.
Wilmington Trust Company, individually and as
Mortgagee
[ ]
Standard & Poor's Ratings Services
Xxxxx'x Investors Service, Inc.
Exhibit E
FORM OF OPINION OF SPECIAL COUNSEL
TO MORTGAGEE AND LOAN PARTICIPANTS
[ ], 199[ ]
To Each of the Persons
Listed on Schedule A
Attached Hereto
Re: Atlas Air, Inc.
Ladies and Gentlemen:
We have acted as counsel to Wilmington Trust Company, a Delaware banking
corporation ("Wilmington Trust"), in connection with the Trust Indenture and
Mortgage, dated as of [ ], 199[ ] (the "Trust Indenture"), between Wilmington
Trust, as Mortgagee (the "Mortgagee"), and First Security Bank, National
Association (the "Owner Trustee"). Pursuant to the Participation Agreement,
dated as of [ ], 199[ ] (the "Participation Agreement"), among Atlas Air, Inc.,
as Lessee, [ ], as Owner Participant, the Owner Trustee, and Wilmington Trust,
as Mortgagee under the Trust Indenture, Subordination Agent under the
Intercreditor Agreement (as defined in the Participation Agreement), and Pass
Through Trustee (as defined in the Participation Agreement), financing is being
provided for the acquisition of one Boeing Model 747-47UF Aircraft bearing U.S.
Registration Xxxx [ ]. This opinion is furnished pursuant to Section
5.1.2(xxiii)(E) of the Participation Agreement. Capitalized terms used herein
and not otherwise defined are used as defined in the Participation Agreement or
as defined in the Trust Indenture, except that reference herein to any
instrument shall mean such instrument as in effect on the date hereof.
We have examined executed counterparts, forms or copies otherwise
identified to our satisfaction of the following documents:
(a) The Participation Agreement;
-2-
(b) The Trust Indenture and the Trust Indenture Supplement (the documents
in paragraphs (a) and (b) above being collectively referred to as the "Mortgagee
Documents"); and
(c) The Equipment Notes being issued today and authenticated by the
Mortgagee (the "Equipment Notes").
We have also examined originals or copies of such other documents, such
corporate records, certificates and other statements of governmental officials
and corporate officers and other representatives of the corporations or entities
referred to herein and such other instruments as we have deemed necessary or
appropriate for the purposes of this opinion. Moreover, as to certain facts
material to the opinions expressed herein, we have relied upon representations
and warranties contained in the Mortgagee Documents.
Based upon the foregoing and upon an examination of such questions of law
as we have considered necessary or appropriate, and subject to the assumptions,
exceptions and qualifications set forth herein, we advise you that, in our
opinion:
1. Wilmington Trust has been duly incorporated and is validly
existing as a Delaware banking corporation in good standing under the
laws of the State of Delaware, is a citizen of the United States of
America within the meaning of Section 40102(a)(15)(C) of Title 49,
U.S.C., as amended, and has full corporate power, authority and legal
right in its individual capacity, as Mortgagee, Pass Through Trustee,
or Subordination Agent, as the case may be, to execute, deliver and
perform the Mortgagee Documents, and to authenticate the Equipment
Notes.
2. Each of Wilmington Trust, the Mortgagee, the Pass Through
Trustee and the Subordination Agent, as the case may be, has duly
authorized, executed and delivered each Mortgagee Document to which it
is a party; each such document constitutes a legal, valid and binding
obligation of Wilmington Trust, the Mortgagee, the Pass Through Trustee
or the Subordination Agent, as the case may be, enforceable against
Wilmington Trust, the Mortgagee, the Pass Through Trustee or the
Subordination Agent, as the case may be, in accordance with its terms.
3. The execution, delivery and performance by Wilmington
Trust, the Mortgagee, the Pass Through Trustee or the Subordination
Agent, as the case may be, of the Mortgagee Documents to which each is
a party, the authentica-
-3-
tion by the Mortgagee of the Equipment Notes and the consummation by
Wilmington Trust, the Mortgagee, the Pass Through Trustee or the
Subordination Agent, as the case may be, of any of the transactions
contemplated thereby are not in violation of the charter or by-laws of
Wilmington Trust or of any law, governmental rule, or regulation of
the State of Delaware or of any law, governmental rule, or regulation
of the United States of America governing the banking or trust powers
of Wilmington Trust or, to our knowledge, of any indenture, mortgage,
bank credit agreement, note or bond purchase agreement, long-term
lease, license or other agreement or instrument to which it is a party
or by which it is bound or, to our knowledge, of any judgment or order
of the State of Delaware or the United States of America relating to
the banking or trust powers of Wilmington Trust.
4. Neither the execution and delivery by Wilmington Trust, the
Mortgagee, the Pass Through Trustee or the Subordination Agent, as the
case may be, of the Mortgagee Documents to which each is a party, the
authentication of the Equipment Notes, nor the consummation of any of
the transactions by Wilmington Trust, the Mortgagee, the Pass Through
Trustee or the Subordination Agent, as the case may be, contemplated
thereby requires the consent or approval of, the giving of notice to,
the registration with, or the taking of any other action in respect of,
any governmental authority or agency of the State of Delaware or the
United States of America governing the banking or trust powers of
Wilmington Trust or under any Delaware law.
5. There are no taxes, fees or other charges (other than taxes
payable by Wilmington Trust on or measured by any compensation received
by Wilmington Trust for its services as Mortgagee, Subordination Agent
or Pass Through Trustee) payable under the laws of the State of
Delaware or any political subdivision thereof in respect of the
execution and delivery by Wilmington Trust (in its individual capacity,
as Mortgagee, Pass Through Trustee or Subordination Agent, as the case
may be) of the Mortgagee Documents and the Equipment Notes, which
taxes, fees or other charges would not have been imposed if Wilmington
Trust were not a Delaware banking corporation and did not perform its
obligations as Mortgagee under the Trust Indentures in the State of
Delaware.
-4-
6. The Equipment Notes have been duly and validly
authenticated by the Mortgagee in accordance with the Trust Indentures.
7. To the best of our knowledge, there are no proceedings
pending or threatened against or affecting Wilmington Trust, the
Mortgagee, the Pass Through Trustee or the Subordination Agent in any
court or before any governmental authority, agency or arbitration board
or tribunal which, if adversely determined, individually or in the
aggregate, would materially and adversely affect the right, power and
authority of Wilmington Trust, the Mortgagee, the Pass Through Trustee,
or the Subordination Agent, as the case may be, to enter into or
perform its obligations under the Mortgagee Documents to which it is a
party.
The foregoing opinions are subject to the following assumptions, exceptions
and qualifications:
A. The foregoing opinions are limited to the laws of the State of Delaware
and the federal laws of the United States of America governing the banking and
trust powers of Wilmington Trust. In addition, we express no opinion with
respect to (i) federal securities laws, including the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the Investment Company
Act of 1940, as amended, and the Trust Indenture Act of 1939, as amended, (ii)
Part A of Subtitle VII of Title 49 of the United States Code, as amended (except
with respect to the opinion set forth in paragraph l above concerning the
citizenship of Wilmington Trust), (iii) the Federal Communications Act of 1934,
as amended, or (iv) state securities or blue sky laws. Insofar as the foregoing
opinions relate to the validity and enforceability in Delaware of the Mortgagee
Documents which are expressed to be governed by the laws of any state other than
the State of Delaware, we have assumed that such Mortgagee Documents constitute
legal, valid, binding and enforceable documents under such laws (as to which we
express no opinion).
B. The foregoing opinions regarding enforceability of any document are
subject to (i) applicable bankruptcy, insolvency, moratorium, reorganization,
fraudulent conveyance, receivership and similar laws affecting the rights and
remedies of creditors generally, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
-5-
C. We have assumed the due authorization, execution and delivery by each of
the parties thereto (other than Wilmington Trust, the Mortgagee, the Pass
Through Trustee and the Subordination Agent) of the Mortgagee Documents to which
each is a party and that each of such parties has the full power, authority and
legal right to execute and deliver each such document.
D. The opinion set forth in paragraph l above concerning the citizenship of
Wilmington Trust is based upon an affidavit of Wilmington Trust, made by its
Vice President, the facts set forth in which we have not independently verified.
E. We have assumed that all signatures (other than those of Wilmington
Trust, the Mortgagee, the Pass Through Trustee and the Subordination Agent) on
documents and instruments examined by us are genuine, that all documents and
instruments submitted to us as originals are authentic, and that all documents
and instruments submitted to us as copies conform with the originals, which
facts we have not independently verified.
F. We have made no investigation of, and we express no opinion concerning
the priority of any mortgage or security interest.
G. We have assumed that the Participation Agreements and the transactions
contemplated thereby are not within the prohibitions of Section 406 of the
Employee Retirement Income Security Act of 1974.
This opinion may be relied upon by you in connection with the matters set
forth herein. This opinion may also be relied upon by any transferee of a Note
Holder, subject to the understanding that the opinions expressed herein are
rendered as of the date hereof and only with respect to the laws, rules and
regulations in effect as of such date. Otherwise, without our prior written
consent, this opinion may not be relied upon by any person or entity for any
purpose.
Very truly yours,
SCHEDULE A
Lessee
Atlas Air, Inc.
Owner Participant
[ ]
Owner Trustee
First Security Bank, National Association
Mortgagee, Pass Through Trustee and Subordination Agent
Wilmington Trust Company
Standard & Poor's Ratings Services
Exhibit F
FORM OF OPINION OF SPECIAL
COUNSEL TO OWNER PARTICIPANT
[ ], 199[ ]
To Each of the Persons
Listed on Schedule A
Attached Hereto
Re: Acquisition and Lease of one Boeing 747-47UF
Aircraft with FAA Registration Number [ ]
Ladies and Gentlemen:
We have acted as special counsel to [ ], a Delaware corporation (the "Owner
Participant"), in connection with the transactions contemplated by the
Participation Agreement dated as of [ ], 199[ ] (the "Participation Agreement")
among Atlas Air, Inc., as Lessee, [ ], as Owner Participant, First Security
Bank, National Association, as Owner Trustee, and Wilmington Trust Company, as
Mortgagee, Subordination Agent, and Pass Through Trustee. Capitalized terms used
but not defined in this opinion letter shall have the meanings set forth in the
Participant Agreement.
We have examined the Owner Participant Agreements. In our examination, we
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as facsimile, certified or photostatic copies and
the authenticity of the originals of such copies.
The opinions contained in this opinion letter are subject to the following
assumptions, limitations and qualifications:
A. We have assumed (i) the due organization, existence and good standing of
all parties to the Owner Participant Agreements (the "Parties"), (ii) the power
and full legal right of the Parties under all applicable laws and regulations,
without approvals, authorizations, consents or other orders of any public body
or board, to execute, deliver and perform under the Owner Participant
Agreements, (iii) the due authorization, execution and delivery by the Parties
of the Owner Participant Agreements, (iv) that the Parties are not subject to
any judg-
-2-
ment, order, writ, injunction or decree of any court, arbitrator or governmental
agency or instrumentality that prohibits or enjoins the execution, delivery or
performance of any of the Owner Participant Agreements or any of the
transactions contemplated by the Owner Participant Agreements and (v) the
accuracy of the representations set forth in Section 6.2 of the Participation
Agreement.
B. The enforceability of the Owner Participant Agreements against Owner
Participant may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors generally and
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) and, in the case of indemnity
provisions contained therein, as limited by public policy considerations, and
except that certain of the remedial provisions in the Lease and the Trust
Indenture may be limited or rendered unenforceable by applicable laws, which
laws, however, do not in our opinion make the remedies provided in such document
inadequate for the practical realization of the benefits provided thereby.
C. We express no opinion as to the availability of specific performance
and/or injunctive relief or other equitable or provisional remedies in relation
to enforcement of the Owner Participant Agreements.
D. We express no opinion as to the priority of any security interests or as
to title to any part of the Trust Estate.
E. This opinion is given based on states of law, documentation and fact as
they exist on the date hereof and we do not undertake to advise you of any
changes which hereafter may be brought to our attention.
F. The enforcement of any rights of any party is subject to any implied
duty to act reasonably and in good faith.
G. We express no opinions as to matters governed by (i) any Federal or
state securities law, (ii) any Federal or state tax laws, or (iii) the Federal
Aviation Act.
Based on our examination described above, relying upon statements of fact
contained in the documents we have examined and subject to the assumptions,
limitations and qualifications expressed in this letter, we are of the opinion
that:
-3-
1. The Owner Participant Agreements constitute the legal, valid and
binding obligations of Owner Participant, enforceable against Owner
Participant in accordance with their respective terms.
2. Neither the execution and delivery by Owner Participant of the
Owner Participant Agreements nor the consummation of any of the
transactions by Owner Participant contemplated thereby requires the consent
or approval of, the giving of notice to, the registration with, or the
taking of any other action in respect to any governmental authority or
agency of the United States or the State of Delaware (except for filings
pursuant to the Uniform Commercial Code, and except for compliance with the
requirements of the Federal Aviation Act, as to which we express no
opinion).
We are licensed to practice law in the State of New York, and the opinions
set forth in this opinion letter are limited to the application of the laws of
the United States of America and the State of New York to the matters expressly
covered by such opinions. This letter is furnished by us to you on the date
hereof only in connection with the transactions contemplated by the
Participation Agreement and may not be relied upon by any other person or
entity.
Very truly yours,
SCHEDULE 1
First Security Bank, National Association, as Owner Trustee
Atlas Air, Inc., as Lessee
Wilmington Trust Company, as Mortgagee
Wilmington Trust Company, as Subordination Agent
Wilmington Trust Company, as Pass Through Trustee
Standard & Poor's Ratings Services
Exhibit G-1
FORM OF OPINIONS OF SPECIAL COUNSEL
IN OLKLAHOMA CITY, OK
[ ], 199[ ]
To the Addressees Listed on
Exhibit A Attached Hereto
Re: Atlas Air, Inc. (the "Lessee")
Ladies and Gentlemen:
Pursuant to Section 5.1.2(xxiii)(G) of the Participation Agreement dated as
of [ ], 199[ ] (the "Participant Agreement") among the Lessee, [ ] as Owner
Participant (the "Owner Participant"), the Loan Participants named therein (the
"Loan Participants"), First Security Bank, National Association, as Owner
Trustee (the "Owner Trustee") under Trust Agreement dated as of [ ], 199[ ] (the
"Trust Agreement") with the Owner Participant, and Wilmington Trust Company, not
in its individual capacity, except as expressly provided therein but solely as
Mortgagee under the Trust Indenture (the "Mortgagee"), which provides for the
financing of the purchase today by the Owner Trustee of the Boeing model
747-47UF aircraft with manufacturer's serial number [ ] and United States
nationality and registration marks [ ] (the "Aircraft") and four General
Electric model CF6-80C2B1F aircraft engines with manufacturer's serial numbers
_______, _______, _______ and ________ (the "Engines") and the leasing of the
Aircraft and the Engines by the Owner Trustee to the Lessee, this opinion is
rendered with respect to matters arising under that portion of Title 49 of the
United States Code (the "Transportation Code") relating to the recordation of
the instruments hereinafter described and the registration of the Aircraft
pursuant to the Transportation Code. As contemplated by the Participant
Agreement, title to the Aircraft has been conveyed by The Boeing Company to the
Owner Trustee by an AC Form 8050-2 Aircraft Xxxx of Sale dated [ ], 199[ ] (the
"FAA Xxxx of Sale"), the registration of the Aircraft will be accomplished by
the filing with the Federal Aviation Administration (the "FAA") of an AC Form
8050-1 Aircraft Registration Application in the name of the Owner Trustee (the
"Aircraft Registration Application"), the leasing of the Aircraft and the
-2-
Engines is pursuant to Lease Agreement dated as [ ], 199[ ] (the "Lease")
between the Owner Trustee as lessor and the Lessee, as supplemented by Lease
Supplement No. 1 dated [ ], 199[ ] (the "Lease Supplement"), and the creation of
a security interest in the Aircraft and the Engines is pursuant to Trust
Indenture and Mortgage dated as of [ ], 199[ ] (the "Trust Indenture") between
the Owner Trustee and the Mortgagee, as supplemented by Trust Indenture and
Mortgage Supplement dated [ ], 199[ ] (the "Trust Supplement").
Based upon our examination of the above described instruments and of such
records of the FAA as we deemed necessary to render this opinion and as were
made available to us by the FAA, it is our opinion that:
(a) the FAA Xxxx of Sale, the Trust Indenture with the Trust
Supplement attached and the Lease with the Lease Supplement, the Trust
Indenture and the Trust Supplement attached are in due form for
recordation by and have been duly filed for recordation with the FAA
pursuant to and in accordance with the provisions of the
Transportation Code today at ______ P.M., C.D.T., ____ P.M., C.D.T.
and _____ P.M., C.D.T., respectively;
(b) the Aircraft Registration Application, to which were attached
the Affidavits of the Owner Trustee and the Owner Participant required
by Section 47.7(c)(2)(ii) of Part 47 of the Federal Aviation
Regulations, and the Trust Agreement were duly filed with the FAA
today at ______ P.M., C.D.T.;
(c) the Owner Trustee is the owner of legal title to the
Aircraft, and the Aircraft and the Engines are free and clear of all
Liens (as such term is defined in the Lease) except the security
interest created by the Trust Indenture, as supplemented by the Trust
Supplement, and the interests of the parties created by the Lease, as
supplemented by the Lease Supplement;
(d) the Aircraft is eligible for registration in the name of the
Owner Trustee under the Transportation Code, and the Aircraft will be
duly registered by the FAA in the name of the Owner Trustee in due
course pursuant to and in accordance with the provisions of the
Transportation Code;
(e) the rights of the Owner Trustee and the Lessee under the
Lease, as supplemented by the Lease Supplement,
-3-
with respect to the Aircraft and the Engines are perfected;
(f) the Trust Indenture, as supplemented by the Trust Supplement,
constitutes a valid, duly perfected first priority mortgage and
security interest in favor of the Mortgagee in the Aircraft and the
Engines and a valid, duly perfected first priority security interest
in and collateral assignment of all of the right, title and interest
of the Owner Trustee in, to and under the Lease, as supplemented by
the Lease Supplement (insofar as such security interest and collateral
assignment affect an interest covered by the recording system
established by the FAA pursuant to Section 44107 of the Transportation
Code), subject only to the Lease, as supplemented by the Lease
Supplement;
(g) none of the Trust Indenture, the Trust Agreement, the Trust
Supplement, the Lease or the Lease Supplement is required to be
re-filed with the FAA or filed or recorded in any other place within
the United States in order to perfect and maintain the perfection of
the mortgage and security interest in the Aircraft and the Engines or
the security interest in and collateral assignment of the Lease, as
supplemented by the Lease Supplement created by the Trust Indenture,
as supplemented by the Trust Supplement (insofar as such security
interest and collateral assignment affect an interest covered by the
recording system established by the FAA pursuant to Section 44107 of
the Transportation Code) under the applicable laws of any jurisdiction
within the United States;
(h) no other registration of the Aircraft and no filings or
recordings (other than the filings and recordings with the FAA which
have been effected) are necessary to perfect in any jurisdiction
within the United States the Owner Trustee's title to the Aircraft,
the first priority mortgage and security interest created by the Trust
Indenture, as supplemented by the Trust Supplement, in the Aircraft
and the Engines or the first priority security interest and collateral
assignment created by the Trust Indenture, as supplemented by the
Trust Supplement, in all right, title and interest of the Owner
Trustee in and to the Lease, as supplemented by the Lease Supplement
(insofar as such security interest and collateral assignment affect an
interest covered by the recording system established by the FAA
pursuant to Section 44107 of the Transportation Code); and
-4-
(i) no authorization, approval, consent, license or order of, or
registration or filing with, or the giving of notice to the FAA
Aircraft Registry is required for the valid authorization, delivery or
performance of the Lease, the Lease Supplement, the Trust Agreement,
the Trust Indenture and the Trust Supplement except for such
authorizations, approvals, consents, licenses, orders, registrations
and notices as have been affected.
No opinion is herein expressed as to: (i) laws other than the federal laws
of the United States; (ii) the validity or enforceability under local law of the
Trust Indenture, as supplemented by the Trust Supplement; or (iii) the
recognition of the perfection of the mortgage, security interest and collateral
assignment created by the Trust Indenture, as supplemented by the Trust
Supplement, as against third parties in any legal proceedings outside the United
States. In rendering this opinion, we were subject to the accuracy of FAA
personnel in the filing, indexing and recording of instruments filed with the
FAA and in the search for encumbrance cross-reference index cards for the
Engines. Since our examination was limited to records maintained by the FAA
Aircraft Registry, our opinion does not cover liens which are perfected without
the filing of notice thereof with the FAA, such as federal tax liens, liens
arising under Section 1368(a) of Title 29 of the United States Code and
possessory artisans' liens. In rendering this opinion, we have relied upon the
opinion of the Aeronautical Center Counsel dated July 22, 1998 (a copy of which
is attached hereto) and upon the past practice of the FAA which is consistent
with said opinion.
Although this opinion is not addressed to special counsel for the Loan
Participants, special counsel for the Owner Participant or counsel for the
Lessee, they may rely upon it as though addressed to them.
Very truly yours,
XXXXXXX X. XXXXXX XX
For the Firm
EXHIBIT A
Atlas Air, Inc.,
as Lessee
Loan Participants named in the Participation Agreement
First Security Bank, National Association,
as Owner Trustee
[ ]
as Owner Participant
Wilmington Trust Company,
as Mortgagee
Standard & Poor's Ratings Services
Exhibit G-2
___________, 199[ ]
To the Addresses Listed on
Exhibit A Attached Hereto
Re: Atlas Air, Inc. (the "Lessee")
Ladies and Gentlemen:
This letter confirms that the following described instruments were recorded
by the Federal Aviation Administration (the "FAA") on ______________, 199_, and
assigned the Conveyance Numbers noted below:
(a) AC Form 8050-2 Aircraft Xxxx of Sale dated [ ], 199[ ] (the
"FAA Xxxx of Sale") by The Boeing Company to First Security Bank,
National Association, as Owner Trustee (the "Owner Trustee") under the
Trust Agreement dated as of [ ], 199[ ], with [ ] as Owner
Participant, covering the Boeing model 747-47UF aircraft with
manufacturer's serial number [ ] and United States nationality and
registration marks [ ] (the "Aircraft") was recorded as Conveyance No.
P____________;
(b) Trust Indenture and Mortgage dated as of [ ], 199[ ] (the
"Trust Indenture") between the Owner Trustee and Wilmington Trust
Company, not in its individual capacity except as expressly stated
therein but solely as Mortgagee (the "Mortgagee"), to which was
attached the Trust Indenture and Mortgage Supplement dated [ ], 199[ ]
(the "Trust Supplement") of the Owner Trustee covering the Aircraft
and the General Electric model CF6-80C2B1F aircraft engines with
manufacturer's serial numbers ________, ________, _______ and ________
(the "Engines"), was recorded as Conveyance No. P________; and
(c) Lease Agreement dated as of [ ], 199[ ] (the "Lease") between
the Owner Trustee as lessor and the Lessee, to which were attached
Lease Supplement No. 1 dated [ ], 199[ ] (the "Lease Supplement")
covering the Aircraft and the Engines, the Trust
-2-
Indenture and the Trust Supplement, was recorded as Conveyance No.
P____________.
Subsequent to the recordations mentioned above, we examined the records
maintained by the FAA with respect to the Aircraft and the Engines. Based upon
such examination, it is our opinion that:
(a) the FAA Xxxx of Sale, the Trust Indenture with the Trust
Supplement attached and the Lease with the Lease Supplement, the Trust
Indenture and the Trust Supplement attached have been duly recorded by
the FAA pursuant to and in accordance with the provisions of Section
44107 of Title 49 of the United States Code;
(b) the Owner Trustee is the owner of legal title to the
Aircraft;
(c) the Aircraft is duly registered in the name of the Owner
Trustee pursuant to and in accordance with the provisions of Sections
44102 and 44103 of Title 49 of the United States Code; and
(d) the Aircraft and the Engines are free and clear of all Liens
(as such term is defined in Annex A to the Lease) except the security
interest created by the Trust Indenture, as supplemented by the Trust
Supplement, and the interests of the parties created by the Lease, as
supplemented by the Lease Supplement.
This opinion is subject to the same limitations and exceptions as were set
forth in our opinion letter date [ ], 199[ ], covering the Aircraft and the
Engines.
Very truly, yours,
XXXXXXX X. XXXXXX XX
For the Firm
EXHIBIT A
Atlas Air, Inc.,
as Lessee
Loan Participants named in the Participation Agreement
First Security Bank, National Association,
as Owner Trustee
[ ],
as Owner Participant
Wilmington Trust Company,
as Mortgagee
Standard & Poor's Ratings Services
