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EXHIBIT 4.16
*
Doc. No. 1.01
Aircraft N398UA
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PARTICIPATION AGREEMENT
(1994 737 B)
Dated as of September 1, 1994
Among
UNITED AIR LINES, INC.,
Lessee,
MS FINANCING INC.,
Owner Participant,
THE MITSUBISHI TRUST AND BANKING CORPORATION, NEW YORK BRANCH,
Original Loan Participant
FIRST SECURITY BANK OF UTAH,
NATIONAL ASSOCIATION,
Not in its Individual Capacity,
except as expressly provided herein,
but solely as Owner Trustee,
and
STATE STREET BANK AND TRUST COMPANY,
In its Individual Capacity and as Indenture Trustee
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United Air Lines, Inc.
1994 737 B Equipment Trust
One Boeing 737-322 Aircraft
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TABLE OF CONTENTS
Page
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SECTION 1. Certain Definitions; Participations in
Lessor's Cost of the Aircraft............................................................ 2
SECTION 2. Lessee's Notice of Delivery Date......................................................... 3
SECTION 3. Instructions to the Owner Trustee and
Indenture Trustee........................................................................ 6
SECTION 4. Conditions............................................................................... 7
(a) Conditions Precedent to the
Participations in the Aircraft.................................................. 7
(b) Conditions Precedent to the
Obligations of Lessee........................................................... 16
SECTION 5. Confidentiality of Purchase Agreement.................................................... 18
SECTION 6. Extent of Interest of Holders............................................................ 18
SECTION 7. Lessee's Representations, Warranties
and Indemnitees.......................................................................... 19
(a) In General...................................................................... 19
(b) General Tax Indemnity........................................................... 23
(c) General Indemnity............................................................... 34
(d) Withholding..................................................................... 41
SECTION 8. Representations, Warranties and
Covenants................................................................................ 41
SECTION 9. [Intentionally Omitted].................................................................. 62
SECTION 10. Other Documents; Amendment............................................................... 62
SECTION 11. Certain Covenants of Lessee.............................................................. 63
SECTION 12. Owner for Income Tax Purposes............................................................ 64
SECTION 13. Notices; Consent to Jurisdiction......................................................... 64
SECTION 14. Change of Situs of Owner Trust........................................................... 65
SECTION 15. Miscellaneous............................................................................ 66
SECTION 16. Invoices and Payment of Expenses......................................................... 68
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SECTION 17. Optional Prepayment of Certificates...................................................... 68
SECTION 18. Optimization............................................................................. 72
SECTION 19. [Intentionally Omitted].................................................................. 73
SECTION 20. Interim Debt............................................................................. 73
SECTION 21. Payment of Additional Amounts............................................................ 77
SCHEDULES
SCHEDULE I - Names and Addresses
SCHEDULE II - Commitments
SCHEDULE III - Legal Opinions
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PARTICIPATION AGREEMENT
(1994 737 B)
THIS PARTICIPATION AGREEMENT (1994 737 B) dated as of September 1,
1994 among (i) UNITED AIR LINES, INC., a Delaware corporation ("Lessee"), (ii)
MS FINANCING INC., a corporation organized under the laws of Delaware (the
"Owner Participant"), (iii) FIRST SECURITY BANK OF UTAH, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity, except as
expressly provided herein, but solely as Owner Trustee under the Trust Agreement
(the "Owner Trustee"), (iv) THE MITSUBISHI TRUST AND BANKING CORPORATION, NEW
YORK BRANCH, as Original Loan Participant and (v) STATE STREET BANK AND TRUST
COMPANY, a Massachusetts trust company, in its individual capacity and as
Indenture Trustee under the Trust Indenture (the "Indenture Trustee").
WITNESSETH:
WHEREAS, pursuant to the Purchase Agreement between Lessee and the
Manufacturer, the Manufacturer has sold to Lessee, among other things, certain
Boeing 737-322 aircraft, one of which is the subject of this Agreement; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant is entering into the Trust Agreement pursuant
to which Trust Agreement the Owner Trustee agrees, among other things, to hold
the Trust Estate defined in Section 1.01 thereof (the "Trust Estate") for the
use and benefit of the Owner Participant; and
WHEREAS, concurrently with the execution and delivery of this
Agreement,
(i) Lessee and the Owner Trustee are entering into the Owner
Trustee's Purchase Agreement and Assignment (1994 737 B) dated as of
September 1, 1994 (the "Owner Trustee's Purchase Agreement"), whereby
Lessee assigns to the Owner Trustee certain rights and interests of Lessee
under the Purchase Agreement with respect thereto;
(ii) the Manufacturer is executing the Consent and Agreement
(1994 737 B) dated the Delivery Date substantially in the form attached to
the Owner Trustee's Purchase Agreement, with respect to the Owner Trustee's
Purchase Agreement; and
WHEREAS, the Indenture Trustee and the Owner Trustee concurrently with
the execution and delivery of this Agreement are entering into the Trust
Indenture and Security
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[Participation Agreement (1994 737 B)]
Agreement (1994 737 B) dated as of September 1, 1994 pursuant to which the Owner
Trustee agrees, among other things, to issue one or more Certificates as
evidence of the Owner Trustee's indebtedness to the Holders, which Certificates
are to be secured by the mortgage and security interest in the Aircraft created
pursuant to the Trust Indenture by the Owner Trustee in favor of the Indenture
Trustee, and the Owner Trustee shall execute and deliver the Trust Supplement
covering the Aircraft, supplementing the Trust Agreement and the Trust
Indenture; and
WHEREAS, as described in Section 2 hereof, the Owner Trustee and
Lessee are entering into a Lease Agreement (1994 737 B) dated as of September 1,
1994 (the "Lease Agreement" or the "Lease") whereby, subject to the terms and
conditions set forth therein, the Owner Trustee agrees to lease to Lessee, and
Lessee agrees to lease from the Owner Trustee, the Aircraft on the Delivery
Date; and
WHEREAS, certain terms are used herein as defined in Section 1(a)
hereof.
NOW THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
SECTION 1. Certain Definitions; Participations in Lessor's Cost of the
Aircraft. (a) The terms "Lessee," "Owner Participant," "Original Loan
Participant," "Owner Trustee" and "Indenture Trustee" shall have the further
meanings attributed thereto in the Lease Agreement referred to above and, except
as otherwise defined in this Agreement, terms used herein in capitalized form
but not otherwise defined herein shall have the meanings attributed thereto in
the Lease Agreement. The term "Owner Participant Guarantor" shall mean Xxxxxx
Xxxxxxx Group Inc., a Delaware corporation. Unless the context otherwise
requires, any reference herein to any of the Operative Documents refers to such
document as it may be amended from time to time in accordance with its terms and
the terms of each other agreement restricting the amendment thereof.
(b) Subject to the terms and conditions of this Agreement, (i) the
Original Loan Participant agrees to finance, in part, the Owner Trustee's
payment of Lessor's Cost for the Aircraft by making a secured loan to the Owner
Trustee (herein called the "Loan") on a date to be designated pursuant to
Section 2 hereof, but in no event later than September 30, 1994, in the amount
in Dollars equal to the percentage of Lessor's Cost set forth opposite its name
on Schedule II hereto and (ii) the Owner Participant hereby agrees, in
connection with its equity investment in the beneficial ownership of the
Aircraft and the sale of the Aircraft by Lessee to the Owner Trustee pursuant to
the Owner Trustee's Xxxx of Sale, as contemplated hereby, to make its equity
investment in the beneficial ownership of the Aircraft on a date to be
designated as set forth above, but in no event later than September 30, 1994, in
an amount in Dollars equal to the percentage of Lessor's Cost set forth opposite
its name on Schedule II hereto. In the case of the Owner Participant, the amount
of its participation to be made as provided above in the payment of Lessor's
Cost and, in the case of the Original Loan Participant, the Original Amount of
the
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[Participation Agreement (1994 737 B)]
Certificates to be issued to it on the Delivery Date, is hereinafter called such
Participant's "Commitment" for the Aircraft. In case either Participant shall
default in its obligation to make the amount of its Commitment available
pursuant to Section 2 hereof in respect of the Aircraft, the other Participant
shall have no obligation to make any portion of such amount available or to
increase the amount of its Commitment and the obligation of the non-defaulting
Participant shall remain subject to the terms and conditions set forth in this
Agreement.
SECTION 2. Lessee's Notice of Delivery Date. (a) Lessee agrees to give
the Owner Participant, the Owner Trustee, the Original Loan Participant and the
Indenture Trustee at least two Business Days' written notice of the Delivery
Date for the Aircraft, which Delivery Date shall be a Business Day not later
than September 30, 1994, which notice shall specify the amount of Lessor's Cost
and the amount of each Participant's Commitment for the Aircraft. As to each
Participant, the making of its Commitment for such Aircraft available in the
manner required by this Section 2 shall constitute a waiver of such notice. The
Owner Trustee and the Indenture Trustee shall be deemed to have waived such
notice if the Owner Trustee shall have received from the Owner Participant funds
in the full amount of the Owner Participant's Commitment and the proceeds of the
sale of the Certificates in the full amount of the Original Loan Participant's
Commitment.
Subject to the terms and conditions of this Agreement, and
simultaneously with receipt by the parties hereto of all amounts to be paid to
them on the Delivery Date pursuant to this Section 2, Lessee shall transfer
title to and deliver the Aircraft to the Owner Trustee, the Owner Trustee shall
purchase and take title to, and accept delivery of, the Aircraft, and the Owner
Trustee shall lease the Aircraft to Lessee, it being understood that the
transactions described in this Section 2 are simultaneous and mutually
dependent. The Owner Trustee shall issue, and the Indenture Trustee shall
authenticate, the Certificates, in an aggregate principal amount equal to the
Original Loan Participant's Commitment, which shall be delivered simultaneously
to the Original Loan Participant. On the Delivery Date, subject to the terms and
conditions of this Agreement, and in consideration for the transfer of title to
the Aircraft to the Owner Trustee, the following payments shall be made, in each
case in Dollars and in funds immediately available to the recipient: (A) by the
Owner Participant to the Owner Trustee an amount in Dollars equal to the Owner
Participant's Commitment, (B) by the Original Loan Participant to the Owner
Trustee an amount in Dollars equal to such Original Loan Participant's
Commitment and (C) by the Owner Trustee to Lessee the funds made available to it
pursuant to clauses (A) and (B) above, which funds shall aggregate an amount
equal to Lessor's Cost. The payments in clauses (A) and (B) shall be made to the
Owner Trustee's account no. 00000000 at State Street Bank and Trust Company
(Boston, Massachusetts) and the payments in (C) shall be made to the Lessee's
account no. HT0688 at State Street Bank and Trust Company (Boston,
Massachusetts).
Each Participant agrees to make its Commitment available to the Owner
Trustee at or before 11:00 a.m., Boston, Massachusetts time, on the Delivery
Date specified in Lessee's
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[Participation Agreement (1994 737 B)]
notice referred to in the first paragraph of this Section 2 (such specified
Delivery Date being herein called the "Scheduled Delivery Date").
(b) If for any reason whatsoever the closing of the transactions
contemplated hereby is not consummated on the Scheduled Delivery Date, Lessee
may by telephonic notice given by 5:00 p.m., Boston, Massachusetts time, on the
Scheduled Delivery Date to each Participant and the Indenture Trustee designate
a delayed date for such closing (the "Delayed Delivery Date"), not later than
the fifth Business Day after the Scheduled Delivery Date and in no event later
than September 30, 1994, in which event each Participant will keep its funds
available pursuant to this Section 2. In the event that no Delayed Delivery Date
is designated or, if designated, such closing does not occur on the Delayed
Delivery Date, such funds of each Participant shall be promptly returned to it
by the Owner Trustee.
If the closing of the transactions contemplated hereby is not
consummated on the Scheduled Delivery Date, Lessee will reimburse each
Participant which has made its funds available pursuant to this Section 2 for
the loss of the use of its funds by paying to such Participant a sum equal to
interest at the Applicable Rate (as defined below) on the amount of such funds
for the period from and including the Scheduled Delivery Date to but excluding
the Delayed Delivery Date, or, as the case may be, to but excluding the Business
Day on which such Participant's funds are returned if such return is made by
11:00 a.m., Boston, Massachusetts time, or to but excluding the next following
Business Day if such return is not made by such time.
"Applicable Rate" shall mean, with respect to the Owner Participant,
the rate per annum earned on the Owner Participant's funds pursuant to their
investment in accordance with the provisions of the immediately succeeding
paragraph and, with respect to the Original Loan Participant, the rate per annum
borne by the Certificates in respect of which such Original Loan Participant's
Commitment is made available.
First Security Bank of Utah, National Association, agrees that in the
event it has received telephonic notice (to be confirmed promptly in writing)
from Lessee on the Scheduled Delivery Date that the closing of the transactions
contemplated hereby will not be consummated on the Scheduled Delivery Date, it
will, if instructed in the notice from Lessee in regard to the funds received by
it from the Participants, use reasonable efforts to invest, at the risk of
Lessee, the funds received by it from the Participants in obligations of the
United States Government or, obligations guaranteed as to principal and interest
by the United States Government, in each such case having a stated maturity not
later than one year from the date of acquisition. Any such investment may be
made through a repurchase agreement in commercially reasonable form with the
Owner Trustee or a bank or other financial institution having capital, surplus
and undivided profits of at least $100,000,000, provided that title to the
underlying obligations shall pass to the Owner Trustee (in respect of amounts
advanced by the Owner Participant) and the Indenture Trustee (in respect of
amounts advanced by the Original Loan Participant) and that such
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[Participation Agreement (1994 737 B)]
underlying securities shall be segregated in a custodial or trust account of or
for the benefit of the Owner Trustee and the Indenture Trustee, respectively.
Any such obligations purchased by First Security Bank of Utah, National
Association whether directly or through a repurchase agreement, shall be held in
trust by First Security Bank of Utah, National Association for the benefit of
the respective Participant (and not as part of the Trust Estate or the Indenture
Estate). Lessee shall, on the Delayed Delivery Date or the date the funds
furnished by the Participants are required to be returned to the Participants,
as the case may be, reimburse First Security Bank of Utah, National Association
for the benefit of the respective Participant for any losses incurred on such
investments.
All income and profits on the investment of such funds on behalf of
the Owner Participant shall be for the account of the Owner Participant and
funds for the account of the Original Loan Participant not in excess of the
Applicable Rate shall be for the account of the Original Loan Participant (such
income and profits to be credited against Lessee's obligation to reimburse the
Participants for the loss of use of funds made available to First Security Bank
of Utah, National Association) and all other income and profits (in regard
solely to the funds provided by the Original Loan Participant) and all losses on
the investment of such funds shall be for the account of Lessee; and First
Security Bank of Utah, National Association shall not be liable for failure to
invest such funds or for any losses incurred on such investments except for its
own willful misconduct or negligence.
Prior to 11:00 a.m., Boston, Massachusetts time, on the Commencement
Date, the Owner Participant on behalf of the Owner Trustee shall pay to the
Indenture Trustee in immediately available funds an amount equal to the Excess
Amount due on such date.
SECTION 3. Instructions to the Owner Trustee and Indenture Trustee.
Subject to the terms and conditions of this Agreement, the Owner Trustee, upon
its receipt in full of each Participant's Commitment for the Aircraft, as
provided in Section 2 hereof, together with instructions from such Participant
or its special counsel to release such funds to Lessee, shall transfer such
funds to the Lessee and the Owner Trustee shall purchase the Aircraft from
Lessee and lease the Aircraft to Lessee and such action shall constitute,
without further act, authorization and direction by the Owner Participant to the
Owner Trustee:
(a) to pay to Lessee the Lessor's Cost in the manner set forth in
Section 2;
(b) to the extent not previously accomplished by a prior
authorization, to authorize a representative or representatives of the Owner
Trustee (who shall be an employee or employees, or an agent or agents, of Lessee
designated by Lessee) to accept delivery of the Aircraft on the Delivery Date
pursuant to the Owner Trustee's Xxxx of Sale;
(c) to accept from Lessee the Owner Trustee's Xxxx of Sale and the
Owner Trustee's FAA Xxxx of Sale;
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[Participation Agreement (1994 737 B)]
(d) to execute an aircraft registration application, a Lease
Supplement and a Trust Supplement, in each case covering the Aircraft;
(e) to borrow from the Original Loan Participant to finance a portion
of Lessor's Cost and to issue to the Original Loan Participant one or more
Certificates in an aggregate principal amount equal to the amount borrowed
pursuant to the Trust Indenture; and
(f) to take such other action as may be required to be taken by the
Owner Trustee on the Delivery Date by the terms of any Operative Document.
SECTION 4. Conditions. (a) Conditions Precedent to the Participations
in the Aircraft. It is agreed that the respective obligations of the
Participants to participate in the payments of Lessor's Cost are subject to the
satisfaction prior to or on the Delivery Date of the following conditions
precedent, except that paragraphs (iii), (xx), (xxiv) (insofar as it relates to
the Original Loan Participant), (xxv) and (xxvi) shall not be a condition
precedent to the obligation of the Original Loan Participant, and paragraphs
(iv), (x) (insofar as it relates to the Owner Participant), (xiv), (xix)(a) and
(xxvii) shall not be a condition precedent to the obligation of the Owner
Participant:
(i) The Participants shall have received due notice with respect
to such participation pursuant to Section 2 hereof (or shall have waived
such notice either in writing or as provided in Section 2).
(ii) No change shall have occurred after the date of the
execution and delivery of this Agreement in applicable law or regulations
thereunder or interpretations thereof by appropriate regulatory or judicial
authorities which, in the opinion of the Owner Participant or the Original
Loan Participant, as the case may be, would make it a violation of law or
regulations for (x) Lessee, the Indenture Trustee, any Participant or the
Owner Trustee to execute, deliver and perform the Operative Documents to
which any of them is a party or (y) the Original Loan Participant or the
Owner Participant to make its respective Commitment available or, in the
case of the Original Loan Participant, to acquire the Certificates or to
realize the benefits of the security afforded by the Trust Indenture.
(iii) In the case of the Owner Participant, the Original Loan
Participant shall have made available the amount of its Commitment for the
Aircraft in accordance with Section 1 hereof.
(iv) In the case of the Original Loan Participant, the Owner
Participant shall have made available the amount of its Commitment for the
Aircraft in accordance with Section 1 hereof.
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[Participation Agreement (1994 737 B)]
(v) The following documents shall have been duly authorized,
executed and delivered by the respective party or parties thereto, shall
each be satisfactory in form and substance to the Participants and shall be
in full force and effect and executed counterparts, shall have been
delivered to the Participants, and their respective counsel, provided that
only the Original Loan Participant shall receive an executed original of
the Certificates, only the Indenture Trustee, acting on behalf of the
Holders, shall receive the original counterpart of the Lease and the
initial Lease Supplement, only the Owner Participant shall receive a copy
of the Purchase Agreement which shall be delivered to and retained by the
Owner Trustee (the Owner Trustee and the Original Loan Participant and
their respective counsel may inspect the Purchase Agreement prior to the
Delivery Date but thereafter shall not have access to the same unless a
Default or Event of Default under the Lease shall have occurred and be
continuing) and provided further that only Lessee and the Owner Participant
shall receive copies of the Tax Indemnity Agreement:
(1) the Lease;
(2) a Lease Supplement covering the Aircraft and dated the
Delivery Date;
(3) the Tax Indemnity Agreement;
(4) the Trust Agreement;
(5) a Trust Supplement covering the Aircraft and dated the
Delivery Date;
(6) the Owner Trustee's Xxxx of Sale and the Owner Trustee's
FAA Xxxx of Sale;
(7) the Owner Trustee's Purchase Agreement;
(8) an acceptance certificate covering the Aircraft in the
form agreed to by the Participants and Lessee (the "Acceptance
Certificate") duly completed and executed by the Owner Trustee or its
agent, which shall be a representative of Lessee, and by such
representative on behalf of Lessee;
(9) the Trust Indenture;
(10) the Certificates;
(11) the Consent and Agreement;
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[Participation Agreement (1994 737 B)]
(12) the Purchase Agreement; and
(13) the Owner Participant Guaranty Agreement.
(vi) A Uniform Commercial Code financing statement or statements
covering all of the security interests created by or pursuant to the
Granting Clause of the Trust Indenture shall have been executed and
delivered by the Owner Trustee and the Indenture Trustee, and such
financing statement or statements shall have been duly filed in all places
necessary or advisable, and any additional Uniform Commercial Code
financing statements deemed advisable by the Owner Participant or the
Original Loan Participant shall have been executed and delivered by Lessee,
the Indenture Trustee or the Owner Trustee and duly filed.
(vii) Each Participant and the Indenture Trustee shall have
received the following, in each case in form and substance satisfactory to
it, provided that only the Owner Participant shall receive a copy of the
Purchase Agreement which shall be delivered to and retained by the Owner
Trustee (the Owner Trustee and the Original Loan Participant and their
respective counsel may inspect the Purchase Agreement prior to the Delivery
Date but thereafter shall not have access to the same unless a Default or
Event of Default under the Lease shall have occurred and be continuing):
(1) a certified copy of the Certificate of Incorporation and
By-Laws of Lessee and a copy of resolutions of the board of directors
of Lessee or the executive committee thereof, certified by the
Secretary or an Assistant Secretary of Lessee, duly authorizing the
execution, delivery and performance by Lessee of this Agreement, the
Lease, the Owner Trustee's Purchase Agreement, the Tax Indemnity
Agreement and each other document required to be executed and
delivered by Lessee on the Delivery Date in accordance with the
provisions hereof and thereof;
(2) such other documents and evidence with respect to Lessee,
the Manufacturer, the Owner Trustee, the Indenture Trustee, the
Participants and the Owner Participant Guarantor, as the Original Loan
Participant or the Owner Participant, or their respective counsel, may
reasonably request in order to establish the authority of such parties
to consummate the transactions contemplated by this Agreement, the
taking of all corporate proceedings in connection therewith and the
compliance with the conditions herein set forth;
(3) a certificate of Lessee as to the Person or persons
authorized to execute and deliver this Agreement, the other Lessee
Documents, and any other documents to be executed on behalf of Lessee
in connection
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[Participation Agreement (1994 737 B)]
with the transactions contemplated hereby and as to the signature of
such person or persons;
(4) a copy of the Purchase Agreement certified by the
Secretary or an Assistant Secretary of Lessee as being a true and
accurate copy of the same with all amendments attached thereto that
relate to the Manufacturer's warranties or related obligations or any
right in such Purchase Agreement assigned by Lessee to the Owner
Trustee pursuant to the Owner Trustee's Purchase Agreement; and
(5) a copy of the general authorizing resolutions of the
boards of directors (or executive committees) or other satisfactory
evidence of authorization of the Indenture Trustee, the Owner Trustee,
the Owner Participant and the Owner Participant Guarantor, certified
as of the Delivery Date by the Secretary or an Assistant Secretary of
the Indenture Trustee, the Owner Trustee, the Owner Participant and
the Owner Participant Guarantor, respectively, which authorize the
execution, delivery and performance by the Indenture Trustee, the
Owner Trustee, the Owner Participant and the Owner Participant
Guarantor of all of the Operative Documents to which it is a party,
together with such other documents and evidence with respect to the
Indenture Trustee, the Owner Trustee, the Owner Participant and the
Owner Participant Guarantor as either the Original Loan Participant
(or its counsel) or the Owner Participant (or its counsel) may
reasonably request in order to establish the consummation of the
transactions contemplated by this Agreement, the taking of all
corporate proceedings in connection therewith and compliance with the
conditions herein set forth; provided, this clause shall not be a
condition precedent as to any Participant as to documents to be
provided by that Participant.
(viii) All appropriate action required to have been taken by the
Federal Aviation Administration, or any governmental or political agency,
subdivision or instrumentality of the United States, prior to the Delivery
Date 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, and all such orders, permits, waivers,
authorizations, exemptions and approvals shall be in full force and effect
on the Delivery Date.
(ix) On the Delivery Date, the following statements shall be
true, and the Participants and the Indenture Trustee shall have received
evidence satisfactory to each of them to the effect that:
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[Participation Agreement (1994 737 B)]
(1) the Owner Trustee has good and marketable title (subject
to filing and recording of the Owner Trustee's FAA Xxxx of Sale with
the Federal Aviation Administration) to the Aircraft, free and clear
of Liens other than the rights of Lessee under the Lease and Lease
Supplement covering the Aircraft, the mortgage and security interest
created by the Trust Indenture, the rights of the Owner Participant
under the Trust Agreement and the Trust Supplement and Liens permitted
by clause (iii) (solely for Taxes not yet due) of Section 6 of the
Lease;
(2) application for registration of the Aircraft in the name
of the Owner Trustee (together with any required affidavits) and the
Owner Trustee's FAA Xxxx of Sale have been duly filed with the FAA;
(3) the Trust Agreement, the Trust Indenture and the Trust
Supplement and the Lease and the Lease Supplement have been duly filed
with the FAA for recordation;
(4) the Owner Trustee, as lessor under the Lease Agreement,
and the Indenture Trustee, as assignee thereof, is entitled to the
protection of Section 1110 of the Bankruptcy Code in connection with
its right to take possession of the Airframe and Engines in the event
of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a
debtor; and
(5) the Aircraft has been duly certified by the FAA as to
type and airworthiness in accordance with the terms of the Lease and
has a current, valid U.S. standard certificate of airworthiness issued
by the FAA.
(x) On the Delivery Date, (A) the respective representations and
warranties of Lessee, the Owner Participant and the Owner Trustee contained
in Sections 7 and 8 of this Agreement and in the Tax Indemnity Agreement,
and of the Owner Participant Guarantor contained in the Owner Participant
Guaranty Agreement shall be true and accurate as though made on and as of
such date except to the extent that such representations and warranties
relate solely to an earlier date (in which case such representations and
warranties shall be true and accurate on and as of such earlier date), (B)
no event shall have occurred and be continuing, or would result from the
purchase, sale, lease or mortgage of the Aircraft, which constitutes (or
would, with the passage of time or the giving of notice or both,
constitute) an Event of Default as defined in the Lease or the Trust
Indenture, and (C) no event shall have occurred that might have the effect
of materially and adversely affecting the ability of Lessee to carry on its
business as conducted on June 30, 1994 or to perform its obligations under
the Operative Documents except for such matters timely disclosed in press
releases issued by UAL Corporation or Lessee or in public filings,
effective as of the date hereof, with the
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[Participation Agreement (1994 737 B)]
Securities and Exchange Commission under the Securities Exchange Act of
1934, as amended, by UAL Corporation or Lessee;
(xi) The Participants shall have received an opinion addressed
to the Participants, the Indenture Trustee, and the Owner Trustee from (a)
Xxxxxxxxx X. Xxxxx, Vice President-Law and Corporate Secretary for Lessee,
in substantially the form of Schedule III-1(a) hereto and (b) Vedder,
Price, Xxxxxxx & Kammholz, special counsel to the Lessee, in substantially
the form of Schedule III-1(b) hereto.
(xii) The Participants shall have received an opinion addressed
to the Participants, the Owner Trustee, the Indenture Trustee and Lessee
from counsel to the Manufacturer, in substantially the form of Schedule
III-2 hereto.
(xiii) The Participants shall have received an opinion addressed
to the Participants, the Indenture Trustee, the Owner Trustee and Lessee,
from Ray, Xxxxxxx & Xxxxxxx, special counsel for the Owner Trustee, in
substantially the form of Schedule III-3 hereto.
(xiv) The Original Loan Participant shall have received an
opinion addressed to the Indenture Trustee, the Original Loan Participant,
the Owner Trustee and Lessee from (a) Xxxxx Xxxxxxxxxx, special counsel to
the Owner Participant and the Owner Participant Guarantor, in substantially
the form of Schedule III-4(a) hereto and (b) Xxxxxxx Xxxxxxx, Esq., Counsel
to the Owner Participant and Counsel to the Owner Participant Guarantor in
substantially the form of Schedule III-4(b) hereto.
(xv) The Participants shall have received an opinion addressed
to the Participants, the Indenture Trustee, the Owner Trustee and Lessee,
from Xxxxx & Xxxxxxx, P.C., special counsel in Oklahoma City, Oklahoma, in
substantially the form of Schedule III-5 hereto.
(xvi) The Participants shall have received an opinion addressed
to the Participants, the Owner Trustee and Lessee from Xxxxxxx, Xxxx &
Xxxxx, special counsel for the Indenture Trustee, in substantially the form
of Schedule III-6 hereto.
(xvii) [Intentionally Omitted.]
(xviii) The Participants and the Indenture Trustee shall have
received a certificate signed by the President or any Vice President of
Lessee, dated the Delivery Date, addressed to the Participants and the
Indenture Trustee and certifying as to the fulfillment of all conditions in
this Section 4(a) insofar as they relate to Lessee and as to the matters
stated in paragraphs (viii), (x) (insofar as it relates to Lessee), (xxii)
and (xxiii) (to the knowledge of Lessee, except in regard to matters
relating to the
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[Participation Agreement (1994 737 B)]
Participants, Indenture Trustee or the Owner Trustee, in which event such
representation shall be to the knowledge of Lessee without any
investigation whatsoever) of this Section 4(a).
(xix) (a) The Owner Participant shall, by making its Commitment
available as provided in Section 1(b)(ii) of this Agreement, (b) the
Indenture Trustee shall by authenticating the Certificates issued on the
Delivery Date and (c) the Owner Trustee shall, by accepting the Owner
Trustee's Xxxx of Sale and the Owner Trustee's FAA Xxxx of Sale, be
respectively deemed to have reaffirmed as of the Delivery Date the
representations and warranties made by it in Section 8 of this Agreement.
(xx) The Owner Participant shall have received an opinion, in
form and substance reasonably satisfactory to the Owner Participant, from
BK Associates, independent aircraft appraisers, or such other recognized
aircraft appraiser selected by the Owner Participant, to the effect that
(A) the Aircraft will have, at the end of the Basic Term, (i) at least 20%
of its economic life remaining and (ii) a fair market value of at least 20%
of Lessor's Cost (without taking into account any increase or decrease for
inflation or deflation during the Interim Term and the Basic Term and
assuming the Aircraft is in compliance with the provisions of Section 5 of
the Lease); (B) the fair market value of the Aircraft on the Delivery Date
is equal to Lessor's Cost; (C) the EBO Percentage equals or exceeds a
reasonable current estimate of the fair market value (taking into account
inflation and deflation) of the Aircraft on the EBO Date; and (D) on the
Delivery Date, the Aircraft will not require any improvements,
modifications or additions (other than ancillary items of removable
equipment of a kind customarily selected and furnished by purchasers or
lessees of similar aircraft) in order to be rendered complete for its
intended use by the Lessee.
(xxi) The Participants and the Indenture Trustee shall have
received an independent insurance broker's report, and certificates of
insurance, in form and substance reasonably satisfactory to the
Participants, as to the due compliance with the terms of Section 11 of the
Lease relating to insurance with respect to the Aircraft.
(xxii) On the Delivery Date, it shall be true that no Event of
Loss (or event which with the passage of time or the giving of notice or
both would become an Event of Loss) with respect to the Airframe or any
Engine has occurred.
(xxiii) No action or proceeding shall have been instituted nor
shall any governmental action be threatened before any court or
governmental agency, nor shall any order, judgment or decree have been
issued or proposed to be issued by any court or governmental agency at the
time of the Delivery Date to set aside, restrain, enjoin or prevent the
completion and consummation of this Agreement or the transactions
contemplated hereby.
12
16
[Participation Agreement (1994 737 B)]
(xxiv) The respective representations and warranties of the
Indenture Trustee and the Original Loan Participant contained in Section 8
hereof shall be true and accurate as of the Delivery Date as though made on
and as of such date except to the extent that such representations and
warranties relate solely to an earlier date (in which event such
representations and warranties shall have been true and accurate on and as
of such earlier date) and Lessee and each Participant shall have received a
certificate signed by the Chairman of the Board, the President, any Vice
President or any Assistant Vice President of the Indenture Trustee
certifying as to the foregoing matters with respect to the Indenture
Trustee; by making available its Commitment, the Original Loan Participant
shall be deemed to have reaffirmed the representations and warranties made
by it in such Section 8.
(xxv) The Owner Participant shall have received from Xxxxx
Xxxxxxxxxx, special counsel to the Owner Participant, a favorable opinion,
in form and substance satisfactory to the Owner Participant, with respect
to certain income tax aspects of the transactions contemplated by the
Operative Documents.
(xxvi) In the opinion of the Owner Participant and its special
counsel, there shall have been, since September 1, 1994, no actual or
proposed amendment, modification, addition, or change in or to (A) the
provisions of the Code (including for this purpose, any non-Code provisions
of legislation affecting the Code such as transition rules or effective
date provisions), (B) the regulations promulgated under the Code (including
temporary regulations), (C) Internal Revenue Service Revenue Procedures or
Revenue Rulings, or other administrative interpretations, (D) applicable
judicial precedents, (E) any New York state or city taxes or (F) or
Executive Orders of the President of the United States, in each case as in
effect on the date hereof, the effect of which might adversely affect the
Owner Participant's Net Economic Return.
(xxvii) The Original Loan Participant shall have received a copy
of the opinion from BK Associates referred to in (xx) above (without regard
to the form and substance thereof, except that such opinion shall be in
form and substance reasonably satisfactory to the Original Loan Participant
to the effect that the fair market value of the Aircraft on the Delivery
Date is at least equal to Lessor's Cost).
(xxviii) If the Original Loan Participant is required to execute
any form or document in order for payments to it to qualify for exemption
from, or reduction of, withholding tax imposed by the United States
Government in respect to such payments, such Original Loan Participant
shall have executed such form or document (including, without limitation,
United States Internal Revenue Forms 1001, W-8 and/or 4224) and delivered
it to the Indenture Trustee in accordance with applicable regulations to
qualify for such exemption or reduction.
13
17
[Participation Agreement (1994 737 B)]
Promptly upon the registration of the Aircraft and the recording of
the Lease, the Trust Indenture, the Trust Agreement, the Lease Supplement and
the Trust Supplement covering the Aircraft pursuant to the Transportation Code,
Lessee will cause Xxxxx & Xxxxxxx, P.C., special counsel in Oklahoma City,
Oklahoma, to deliver to the Owner Participant, the Indenture Trustee, the
Original Loan Participant, the Owner Trustee and Lessee an opinion as to the due
and valid registration of the Aircraft in the name of the Owner Trustee, the due
recording of the Owner Trustee's FAA Xxxx of Sale, the Trust Indenture, the
Lease Supplement, the Trust Supplement, the Lease and the Trust Agreement and
the lack of filing of any intervening documents with respect to the Aircraft.
(b) Conditions Precedent to the Obligations of Lessee. It is agreed
that the obligations of Lessee (A) to participate in the sale of the Aircraft to
the Owner Trustee, (B) to accept delivery of the Aircraft under the Lease and
(C) to enter into the other Lessee Documents, are all subject to the fulfillment
to the satisfaction of Lessee prior to or on the Delivery Date of the following
conditions precedent:
(i) The conditions specified in Sections 4(a)(iii), 4(a)(iv),
4(a)(viii), 4(a)(xxii), 4(a)(xxiii) and 4(a)(xxviii) hereof shall have been
satisfied, unless such nonsatisfaction is the result of the actions of
Lessee.
(ii) Those documents described in Section 4(a)(v) shall have been
duly authorized, executed and delivered by the respective party or parties
thereto (other than Lessee) in the manner specified in Section 4(a)(v),
shall each be satisfactory in form and substance to Lessee, shall be in
full force and effect on the Delivery Date, and an executed counterpart of
each thereof (other than the Certificates) shall have been delivered to
Lessee or its counsel.
(iii) Lessee shall have received a copy of the general
authorizing resolutions of the boards of directors (or executive
committees) or other satisfactory evidence of authorization of the
Indenture Trustee, the Owner Trustee, the Owner Participant and the Owner
Participant Guarantor, certified as of the Delivery Date by the Secretary
or an Assistant Secretary of the Indenture Trustee, the Owner Trustee, the
Owner Participant and the Owner Participant Guarantor, respectively, which
authorize the execution, delivery and performance by the Indenture Trustee,
the Owner Trustee, the Owner Participant and the Owner Participant
Guarantor of all the Operative Documents to which it is a party, together
with such other documents and evidence with respect to the Indenture
Trustee, the Owner Trustee, the Owner Participant and the Owner Participant
Guarantor as Lessee or its counsel may reasonably request in order to
establish the consummation of the transactions contemplated by this
Agreement, the taking of all corporate proceedings in connection therewith
and compliance with the conditions herein set forth.
14
18
[Participation Agreement (1994 737 B)]
(iv) The respective representations and warranties of the
Participants, the Indenture Trustee and the Owner Trustee contained in
Section 8 hereof and of the Owner Participant Guarantor contained in the
Owner Participant Guaranty Agreement shall be true and accurate as of the
Delivery Date as though made on and as of such date except to the extent
that such representations and warranties relate solely to an earlier date
(in which event such representations and warranties shall have been true
and accurate on and as of such earlier date) and Lessee shall have received
a certificate signed by the Chairman of the Board, the President, any Vice
President or any Assistant Vice President or other authorized
representative of the Indenture Trustee, the Owner Participant and the
Owner Trustee, respectively, certifying as to the foregoing matters with
respect to the Indenture Trustee, the Owner Participant and the Owner
Trustee, respectively.
(v) Lessee shall have received the opinions set forth in
Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi), in each
case addressed to Lessee and dated the Delivery Date.
(vi) No change shall have occurred after the date of the
execution and delivery of this Agreement in applicable law or regulations
thereunder or interpretations thereof by appropriate regulatory authorities
which, in the opinion of Lessee, would make it a violation of law or
regulations for Lessee to enter into any transaction contemplated by the
Operative Documents.
(vii) In the opinion of Lessee and its counsel, there shall have
been, since September 1, 1994, no actual or proposed amendment,
modification, addition or change in or to the Code (including for this
purpose, any non-Code provisions of legislation affecting the Code such as
transition rules or effective date provisions) and the regulations
promulgated under the Code (including temporary regulations), Internal
Revenue Service Revenue Procedures or Revenue Rulings, or other
administrative interpretations, applicable judicial precedents or Executive
Orders of the President of the United States which might give rise to an
indemnity obligation under any of the Operative Documents, or as a result
of which any adjustments to the Lease payments are requested by the Owner
Participant which, in the Lessee's opinion, make the Lease become
uneconomic to the Lessee.
(viii) Lessee shall have received a copy of the opinion from BK
Associates referred to in (xx) of Section 4(a) (without regard to the form
and substance thereof, except that such opinion shall be in form and
substance reasonably satisfactory to Lessee to the effect that the fair
market value of the Aircraft on the Delivery Date is at least equal to
Lessor's Cost).
SECTION 5. Confidentiality of Purchase Agreement. Lessor, the
Participants, and the Indenture Trustee shall keep the Purchase Agreement
confidential and shall not disclose
15
19
[Participation Agreement (1994 737 B)]
the same to any Person, except (A) to prospective and permitted transferees of
Lessor's, the Original Loan Participant's, the Owner Participant's or the
Indenture Trustee's interest who agree to hold such information confidential,
(B) to the aforementioned prospective and permitted transferees', Lessor's, the
Original Loan Participant's, the Owner Participant's or the Indenture Trustee's
counsel or special counsel, independent insurance brokers or other agents who
agree to hold such information confidential, (C) as may be required by any
statute, court or administrative order or decree or governmental ruling or
regulation, including Federal or state banking examiners or tax auditors or (D)
as may be necessary or desirable for purposes of protecting the interest of any
such Person or for enforcement of the Lease by Lessor, the Participants or the
Indenture Trustee; provided, however, that any and all disclosures of all or any
part of the Purchase Agreement which are permitted by (C) or (D) above shall be
made only to the extent necessary to meet the specific requirements or needs of
the Persons to whom such disclosures are hereby permitted.
SECTION 6. Extent of Interest of Holders. No Holder shall have any
further interest in, or other right with respect to, the mortgage and security
interests created by the Trust Indenture when and if the Original Amount of,
Break Amount, if any, and interest on all Certificates held by such Holder and
all other sums payable to such Holder hereunder, under the Trust Indenture and
under such Certificates shall have been paid in full. Each Holder by its
acceptance of a Certificate, agrees that it will look solely to the income and
proceeds from the Indenture Estate to the extent available for distribution to
such Holder as provided in Section 2.03 of the Trust Indenture and that neither
the Owner Participant nor the Owner Trustee shall be personally liable to any
Holder for any amounts payable under the Certificates, the Trust Indenture,
hereunder, or under any other Operative Documents (including, without
limitation, amounts payable as Break Amount, if any), except as expressly
provided in this Agreement or (in the case of the Owner Trustee) in the Trust
Indenture.
SECTION 7. Lessee's Representations, Warranties and Indemnitees. (a)
In General. Lessee represents and warrants that as of the Delivery Date:
(i) Lessee is a corporation duly organized and validly existing
in good standing pursuant to the laws of the State of Delaware; is duly
qualified to do business as a foreign corporation in each jurisdiction in
which its operations or the nature of its business requires, except where
the failure to be so qualified would not have a material adverse effect on
Lessee or its business; is a "citizen of the United States" and an "air
carrier" within the meaning of the Transportation Code operating under
certificates issued under Section 41102 of such Code; holds all material
licenses, certificates, permits and franchises from the appropriate
agencies of the United States of America and/or all other governmental
authorities having jurisdiction, necessary to authorize Lessee to engage in
air transport and to carry on scheduled passenger service, in each case as
presently conducted; has its chief executive office (as such term is
defined in Article 9 of the Uniform Commercial Code) in Elk Grove Township,
Illinois; and has the corporate
16
20
[Participation Agreement (1994 737 B)]
power and authority to conduct its business as it is presently being
conducted, to hold under lease the Aircraft and to enter into and perform
its obligations under the Lessee Documents;
(ii) the execution, delivery and performance by Lessee of the
Lessee Documents will, on the Delivery Date, have been duly authorized by
all necessary corporate action on the part of Lessee, do not require any
stockholder approval, or approval or consent of any trustee or holders of
any indebtedness or obligations of Lessee except such as have been duly
obtained or by the Delivery Date will have been duly obtained, the Lessee
Documents have been duly executed and delivered by Lessee and none of such
Lessee Documents contravenes any law, judgment, governmental rule,
regulation or order binding on Lessee or the certificate of incorporation
or by-laws of Lessee or contravenes the provisions of, or constitutes a
default under, or results in the creation of any Lien (other than Permitted
Liens) upon the property of Lessee under, its certificate of incorporation
or bylaws, or any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract, bank loan or credit agreement or other
agreement or instrument to which Lessee is a party or by which it or its
properties may be bound or affected;
(iii) neither the execution and delivery by Lessee of the Lessee
Documents nor the performance by Lessee of its obligations thereunder
require the consent or approval of, the giving of notice to, or the
registration with, or the taking of any other action in respect of any
federal, state or foreign government authority or agency, except for (A)
the orders, permits, waivers, exemptions, authorizations and approvals of
the regulatory authorities having jurisdiction over the operation of the
Aircraft by Lessee, which orders, permits, waivers, exemptions,
authorizations and approvals have been duly obtained or will on or prior to
the Delivery Date be duly obtained, and will on the Delivery Date be in
full force and effect, (B) the registration of the Aircraft referred to in
Section 4(a)(ix)(2) and (C) any normal periodic and other reporting
requirements under the applicable rules and regulations of the FAA to the
extent required to be given or obtained only after the Delivery Date;
(iv) each of the Lessee Documents will upon execution thereof
constitute legal, valid and binding obligations of Lessee enforceable
against Lessee in accordance with the terms thereof;
(v) there are no pending or threatened actions or proceedings
before any court or administrative agency which individually (or in the
aggregate in the case of any group of related lawsuits) is expected to have
a material adverse effect on the financial condition of Lessee or the
ability of Lessee to perform its obligations under the Lessee Documents;
17
21
[Participation Agreement (1994 737 B)]
(vi) except for (A) the registration of the Aircraft pursuant
to the Transportation Code, (B) the filing for recording pursuant to said
Code of the Trust Agreement, the Lease with the Lease Supplement covering
the Aircraft, the Trust Indenture and the Trust Supplement attached thereto
and made a part thereof, and the Owner Trustee's FAA Xxxx of Sale, (C) the
filing of financing statements (and continuation statements at periodic
intervals) with respect to the security and other interests created by such
documents under the Uniform Commercial Codes of Illinois and Utah (which
financing statements Lessee has caused to be presented in due form for
filing with the appropriate filing office in the States of Illinois and
Utah) and such other states as may be specified in the opinion furnished
pursuant to Section 4(a)(xi) hereof and (D) the taking of possession by the
Indenture Trustee of the original counterparts of the Lease and the Lease
Supplement covering the Aircraft, no further action, including any filing
or recording of any document (including any financing statement in respect
thereof under Article 9 of the Uniform Commercial Code of any applicable
jurisdiction), is necessary or advisable in order to establish and perfect
the Owner Trustee's title to and interest in the Aircraft as against Lessee
and the Indenture Trustee's first priority security interest in the
Aircraft as against the Owner Trustee, and in each case as against any
third parties in any applicable jurisdictions in the United States;
(vii) there has not occurred any event which constitutes a
Default or an Event of Default under the Lease which is presently
continuing and there has not occurred any event which constitutes or would,
with the passage of time or the giving of notice, or both, constitute an
Event of Loss with respect to the Airframe or any Engine;
(viii) the statements of financial position of Lessee as of
December 31, 1993 and June 30, 1994 and the related statements of earnings
and cash flow of Lessee for the year and six months then ended, copies of
which have been furnished to the Participants, fairly present the financial
condition of Lessee as at such dates and the results of operations and cash
flow of Lessee for the periods ended on such dates, in accordance with
generally accepted accounting principles consistently applied (except as
may be stated in the notes thereto), and subject in the case of the June
30, 1994 statements, to normal year-end audit adjustments, and since June
30, 1994, there has been no material adverse change in such condition or
operations, except for such matters timely disclosed in press releases
issued by UAL Corporation or Lessee or in public filings, effective as of
the date hereof, with the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, by UAL Corporation or Lessee;
(ix) the Owner Trustee will receive good and marketable title to
the Aircraft from Lessee free and clear of all Liens, except the rights of
Lessee under the Lease and the Lease Supplement covering the Aircraft, the
Lien of the Trust Indenture, the beneficial interest of the Owner
Participant in the Aircraft, and the Liens permitted by clauses (ii) and
(iii) of Section 6 of the Lease;
18
22
[Participation Agreement (1994 737 B)]
(x) none of the proceeds from the issuance of the Certificates
or from the acquisition by the Owner Participant of its beneficial interest
in the Trust Estate will be used directly or indirectly by Lessee to
purchase or carry any "margin stock" as such term is defined in Regulation
G or U of the Board of Governors of the Federal Reserve System;
(xi) neither Lessee nor anyone acting on behalf of Lessee has
(A) directly or indirectly offered any interest in the Trust Estate for
sale to, or solicited any offer to acquire any of the same from, anyone
other than the Owner Participant, and not more than five (5) other
institutions believed capable of evaluating and bearing the risks of
investment in the transactions contemplated hereby, (B) directly or
indirectly offered any Certificates or any similar security for sale to, or
solicited any offer to acquire any of the same from, anyone other than the
Original Loan Participant and not more than five (5) other institutions
believed capable of evaluating and bearing the risks of investment in the
transactions contemplated hereby, or (C) taken any action which would
require the Certificates to be registered pursuant to the Securities Act of
1933, as amended or (D) filed or published, or caused to be filed or
published, any financing statement or similar statement or notice under the
Uniform Commercial Code in effect in any jurisdiction or any state or local
fraudulent conveyance or analogous statute or ordinance describing any
portion of the Trust Estate, other than filings referred to in Section
4(a)(vi) hereof and such other filings, notices or publications as shall
have been approved by counsel to the Owner Participant and the Original
Loan Participant prior to the filing or publication thereof;
(xii) Lessee is not in default in the performance of any term or
condition of the Owner Trustee's Purchase Agreement, and is not in default
in the performance of any term or condition of the Purchase Agreement which
materially adversely impairs the transactions contemplated hereby;
(xiii) no governmental approval of any kind is required of the
Owner Participant, the Original Loan Participant, the Owner Trustee or the
Indenture Trustee for their respective execution of or performance under
this Agreement or any agreement contemplated hereby solely by reason of any
fact or circumstance peculiar to: (a) Lessee, (b) the nature of the
Aircraft, or (c) Lessee's proposed operations or use of the Aircraft;
(xiv) all sales or use tax then due and for which Lessee is
responsible pursuant to Section 7(b)(i) hereof shall have been paid, other
than such taxes which are being contested by Lessee in good faith and by
appropriate proceedings so long as such proceedings do not involve any
material risk of the sale, forfeiture or loss of the Aircraft;
(xv) the Aircraft has been duly certified by the FAA as to type
and airworthiness;
19
23
[Participation Agreement (1994 737 B)]
(xvi) Owner Trustee, as lessor under the Lease, and the
Indenture Trustee, as assignee thereof, are entitled to the protection of
Section 1110 of the Bankruptcy Code in connection with its right to take
possession of the Airframe and Engines in the event of a case under Chapter
11 of the Bankruptcy Code in which Lessee is a debtor; and
(xvii) neither Lessee nor any subsidiary of Lessee is an
"investment company" or a company "controlled by an investment company"
within the meaning of the Investment Company Act of 1940, as amended.
(b) General Tax Indemnity. (i) Indemnity. Lessee agrees that each
payment of Rent pursuant to the Lease shall be free of all withholding with
respect to Taxes of any nature whatsoever, and in the event that the Lessee
shall be required by applicable law to make any such withholding for any such
payment, (x) Rent payable shall be increased so that after making all required
withholdings the Indemnitee receives an amount equal to the Rent it would have
received had such withholdings not been made, (y) the Lessee shall make such
withholdings and (z) the Lessee shall pay the full amount withheld to the
relevant taxing authority in accordance with applicable law. If for any reason,
the Lessee is required to make any payment to a taxing authority or to any
Indemnitee as a result of the application of the preceding sentence or otherwise
that relates to or is a result of any Tax imposed on or with respect to any
Indemnitee which Tax (in whole or in part) is not the responsibility of the
Lessee under the terms of this Section 7(b), then such Indemnitee shall, within
30 days after receipt of notice of payment of the Tax and appropriate payment
documentation with respect thereto, reimburse the Lessee in accordance with
Section 7(b)(viii). Except as provided in Section 7(b)(ii) hereof, whether or
not any of the transactions contemplated herein are consummated, Lessee shall
pay when due and assume liability for, and protect, save and shall indemnify and
hold harmless each Indemnitee (except that for purposes of this Section 7(b) an
Indemnitee shall not include any Holder other than any Original Loan Participant
and any Person who has purchased a participation in a Certificate held by any
Original Loan Participant) from and against (x) any and all Taxes howsoever
imposed against any Indemnitee, Lessee or all or any part of the Aircraft, the
Airframe, the Engines, the Parts or any part thereof or otherwise by any
federal, state or local government or other taxing authority in the United
States or by any foreign government or any political subdivision or taxing
authority thereof or by any territory or possession of the United States or by
any international authority upon or in connection with, relating to, or measured
by (A) the assembly, manufacture, construction, substitution, improvement,
location, conditioning, installation, financing, refinancing, purchase,
acquisition, acceptance, delivery, nondelivery, transport, ownership,
registration, reregistration, possession, repossession, control, operation, use,
maintenance, repair, replacement, insuring, sale, return, abandonment, storage,
redelivery, leasing, subleasing, modification, rebuilding of, transfer of title
to, transfer of registration of, rejection, importation, mortgaging, exportation
or disposition of, or the imposition of any Lien (or the incurrence of any
liability to refund or pay over any amount as the result of any Lien) on, the
Aircraft, the Airframe, the Engines, the Parts or any part thereof, (B) the
rentals, receipts or earnings from the Aircraft, the Airframe, the Engines, the
Parts or any part thereof, (C) any
20
24
[Participation Agreement (1994 737 B)]
amount paid or payable pursuant to any Operative Documents or any document
related thereto or the property or the income or other proceeds with respect to
any of the property held in the Trust Estate or the Indenture Estate, (D) the
Aircraft, the Airframe, the Engines, the Parts or any part thereof or any
contract relating to the manufacture, construction, acquisition or delivery
thereof, (E) any or all of the Operative Documents, or the issuance of the
Certificates (or the refinancing thereof) and any other documents contemplated
hereby or thereby and amendments and supplements hereto and thereto which have
been approved by Lessee or the execution, delivery, recording or performance of
any thereof or the issuance, acquisition, holding or subsequent transfer
thereof, (F) the payment of the Original Amount of, or interest, Break Amount
on, or other amounts payable with respect to, the Certificates, (G) otherwise
with respect to or in connection with the transactions contemplated by the
Operative Documents, or (H) any change in the Owner Trustee or the situs of the
Trust Estate made pursuant to Sections 8(e) or 14 hereof; and (y) any reasonable
out-of-pocket costs and expenses fairly attributed to any of the foregoing
incurred by any Indemnitee.
(ii) Exclusions from General Tax Indemnity. The provisions of
Section 7(b)(i) shall not apply:
(1) in the case of an Indemnitee which is the Owner
Participant, the Owner Trustee, the Trust Estate, or a successor,
assign, or Affiliate of any thereof, to any Income Tax (as defined in
Section 7(b)(xii) hereof) imposed by (A) the United States Federal
government, (B) any state or local taxing jurisdiction or authority in
the United States or (C) any foreign government or any political
subdivision or taxing authority thereof or by any territory or
possession of the United States or by any international authority
other than (I) with respect to any jurisdiction in which such
Indemnitee is not otherwise doing business or maintaining an office,
any Income Taxes imposed as a result of the operation of the Aircraft
to or in such jurisdiction or the transactions contemplated by the
Operative Documents, or (II) with respect to any jurisdiction in which
such Indemnitee is otherwise doing business or maintaining an office,
any Income Taxes to the extent such Income Taxes exceed the Income
Taxes which would have been due had the Aircraft not been operated to
or in such jurisdiction;
(2) in the case of an Indemnitee which is a Holder or any
successor, assign, or Affiliate thereof, to Income Taxes or transfer
taxes relating to any payments of principal, interest, or Break
Amount, if any, on the Certificates, or to a Holder, imposed by any
government or taxing authority;
(3) to any Tax imposed on an Indemnitee which is the Owner
Participant, the Owner Trustee, or the Trust Estate, or any successor,
assign or Affiliate of any thereof, as a result of a voluntary
transfer or disposition by such
21
25
[Participation Agreement (1994 737 B)]
Indemnitee including, without limitation, the revocation of the trust
created by the Trust Agreement or an involuntary transfer or
disposition relating to bankruptcy or similar proceedings of all or
any portion of its respective equitable or legal ownership interest in
the Aircraft, the Airframe, the Engines, the Parts or any part
thereof, the Trust Estate or the Operative Documents, unless such
transfer or disposition, whether or not voluntary or involuntary,
shall occur, (A) during a period when an Event of Default has occurred
and is continuing under the Lease at the time of transfer or
disposition and such transfer is as a result of such Event of Default,
or (B) in connection with the termination of the Lease or action or
direction of the Lessee pursuant to Sections 7, 8, 9, 10 or 19
thereof;
(4) to any Tax imposed on any Indemnitee which is a Holder,
the Indenture Trustee or the Indenture Estate or any successor, assign
or Affiliate of any thereof, as a result of a voluntary or involuntary
transfer or other disposition of all or any portion of its respective
equitable or legal interests in the Trust Estate or the Indenture
Estate or the Operative Documents unless, in each case, such transfer
or disposition shall occur (A) during a period when a Default or an
Event of Default has occurred and is continuing under the Lease at the
time of transfer or disposition and such transfer or disposition is a
result of such Default or Event of Default, or (B) in connection with
the termination of the Lease or action or direction of the Lessee
pursuant to Sections 7, 8, 9, 10 or 19 thereof;
(5) to any Tax imposed on the Owner Participant, Trust
Estate or Owner Trustee which results from the willful misconduct or
gross negligence of (i) to the extent imposed on the Owner Participant
or Trust Estate, the Owner Participant or (ii) to the extent imposed
on the Owner Trustee, the Owner Trustee;
(6) to any Tax imposed on an Indemnitee which is a Holder,
the Indenture Trustee or the Indenture Estate which results from the
willful misconduct or gross negligence of such Indemnitee;
(7) to any Tax based on or measured by any fees received by
the Owner Trustee or the Indenture Trustee in connection with any
transaction contemplated by the Operative Documents;
(8) so long as no Event of Default or event which, with the
passage of time or the giving of notice or both, would become an Event
of Default, shall be continuing, to any Tax imposed with respect to
(A) any period after the expiration of the Term and, unless purchased
by the Lessee, return of the Airframe and Engines in accordance with
Section 5 of the Lease, (B) the earlier discharge in full of Lessee's
obligation to pay the Stipulated Loss Value or the
22
26
[Participation Agreement (1994 737 B)]
Termination Value and all other amounts due under the Lease or (C)
placement in storage or parking of the Aircraft pursuant to Section
5(d) of the Lease; provided, however, that this Section 7(b)(ii)(8)
shall not apply to any Tax (x) relating to events or conditions
occurring or matters arising upon or prior to such expiration,
discharge, storage or parking, or (y) imposed on or with respect to
any payments of Tax indemnified hereunder which are due after such
expiration, discharge, storage or parking until after such payments
have been made;
(9) in the case of an Indemnitee which is the Indenture
Estate or any Holder, or any successor, assign or Affiliate of either
thereof, to any Tax in the nature of an intangible or similar tax upon
or with respect to the value of the interest of the Indenture Estate
or such Holder, as the case may be, in any of the Certificates imposed
by any government or taxing authority;
(10) to any Tax imposed on or with respect to a transferee
(or subsequent transferee) of an original Indemnitee (A) if such Tax
would not have been required or imposed on or with respect to such
original Indemnitee, or (B) to the extent such Tax exceeds the amount
of Tax that would have been imposed on the original Indemnitee,
provided, however, that the exception in this Section 7(b)(ii)(10)
shall not apply to any transferee (or subsequent transferee) where
such transfer shall have occurred as a result of any Event of Default;
(11) to any Tax imposed on the Owner Trustee or an Owner
Participant resulting from, or which would not have occurred but for,
a Lessor Lien (including for this purpose Liens that would be Lessor
Liens but for the proviso to the definition of Lessor Liens);
(12) to any Tax which Lessee is contesting in good faith
under the provisions of Section 7(b)(iv) until the conclusion of such
contest;
(13) in the case of an Indemnitee which is the Owner
Participant or the Owner Trustee, to any Taxes to the extent imposed
by any jurisdiction for and with respect to any activities of such
Indemnitee in such jurisdiction which activities are unrelated to the
transactions contemplated by the Operative Documents; and
(14) to any Tax which has been included in the Lessor's
Cost.
The provisions of this Section 7(b)(ii) shall not apply to any
Tax imposed in respect of the receipt or accrual of any indemnity payment
made by Lessee pursuant to this Section 7(b) or Section 7(c) hereof or
pursuant to the Tax Indemnity Agreement; provided, however, that this
clause shall not result in any duplication of any amounts of
23
27
[Participation Agreement (1994 737 B)]
any gross-up payable under Section 7(b)(iii) or Section 7(c) hereof or the
Tax Indemnity Agreement.
(iii) Calculation of General Tax Indemnity Payments. Any payment
which Lessee shall be required to make to or for the account of any
Indemnitee with respect to any Tax which is subject to indemnification
under this Section 7(b) shall be in an amount which, after reduction by the
amount of all Taxes required to be paid by such Indemnitee in respect of
the receipt or accrual of such amount and after consideration of any
current savings of such Indemnitee resulting by way of any deduction,
credit or other tax benefit attributable to such indemnified Tax that
actually reduces any taxes for which Lessee is not actually required to
indemnify such Indemnitee pursuant to Section 7(b) hereof or the Tax
Indemnity Agreement shall be equal to the payment otherwise required
hereunder.
If, by reason of any Tax payment made to or for the account of an
Indemnitee by Lessee pursuant to this Section 7(b), such Indemnitee
subsequently realizes a tax deduction, savings or credit (including any
foreign tax credit and any reduction in Taxes) not previously taken into
account in computing such payment, such Indemnitee shall promptly pay to
Lessee an amount equal to the sum of (I) the actual reduction in Taxes, if
any, realized by such Indemnitee which is attributable to such deduction,
savings or credit and (II) the actual reduction in Taxes realized by such
Indemnitee as a result of any payment made by such Indemnitee pursuant to
this sentence; provided, however, that such Indemnitee shall not be
obligated to make any payment pursuant to this Section 7(b)(iii) to the
extent that the amount calculated pursuant to (I) above would exceed (x)
the amount of all prior payments (determined without regard to any amount
paid in respect of Taxes required to be paid by such Indemnitee in respect
of the receipt or accrual of such amounts received by such Indemnitee) from
Lessee pursuant to this Section 7(b), less (y) the portion of all prior
payments computed pursuant to (I) above by such Indemnitee to Lessee
hereunder.
For purposes of this Section 7(b)(iii) items of foreign Tax of
any Indemnitee shall be deemed to be utilized by such Indemnitee as credits
or deductions for any taxable year in accordance with the following
priorities:
First, all available foreign Taxes other than those
described below in Second; and
Second, all available foreign Taxes arising out of any
equipment leasing transaction to the extent that such Indemnitee was
indemnified or held harmless for such Taxes by a lessee on a pari
passu basis.
Any Taxes that are imposed on any Indemnitee as a result of the
disallowance or reduction of any tax benefit referred to in this subsection
as to which
24
28
[Participation Agreement (1994 737 B)]
such Indemnitee has made in full the payment to Lessee required hereby (or
as to which such Indemnitee would have made its payment but for Section
7(b)(vii) hereof), in a taxable year subsequent to the utilization by such
Indemnitee (including the expiration of any tax credit carryovers or
carrybacks of such Indemnitee that would not otherwise have expired) shall
be treated as a Tax for which Lessee is obligated to indemnify such
Indemnitee pursuant to the provisions of this Section 7(b) without regard
to the provisions of Section 7(b)(ii), 7(b)(iv) or the third paragraph of
this Section 7(b)(iii).
(iv) General Tax Indemnity -- Contests. If a written claim shall
be made against any Indemnitee for any Tax for which Lessee is obligated
pursuant to this Section 7(b), such Indemnitee shall notify Lessee in
writing promptly after receipt thereof (as well as the name of independent
tax counsel for purposes of this Section 7(b)(iv)) and shall provide Lessee
such information regarding such claim as Lessee may reasonably request, but
the failure to give such notice or to provide such information shall not
diminish Lessee's obligation hereunder unless such failure materially and
adversely affects Lessee's ability to (A) require such Indemnitee to
contest the Tax or (B) contest the Tax itself (in a case where Lessee
cannot require the Indemnitee to contest such Tax).
If a written claim shall be made for any Tax, other than an
Income Tax, for which Lessee is obligated pursuant to this Section 7(b),
and under applicable law of the taxing jurisdiction Lessee is allowed to
directly contest such Tax and the Tax to be contested is not reflected in a
report or return with other Taxes of any Indemnitee and if the Indemnitee
determines in good faith that it will not suffer any adverse consequences
as a result, then the Lessee shall be permitted, at its expense and in its
own name, or, if consented to by the Indemnitee, in the name of such
Indemnitee, to contest the imposition of such Tax; provided, however, that
Lessee shall not be permitted or entitled to contest any Tax (A) if such
contest will result in the risk of an imposition of criminal penalties or a
material risk of a sale, forfeiture or loss of the Aircraft, the Airframe,
the Engines, the Parts or any part thereof or the creation of any Lien
other than Liens for Taxes of Lessee (x) either not yet due or being
contested in good faith by appropriate proceedings so long as such
proceedings do not involve the risk of an imposition of criminal penalties
or the material risk of any sale, forfeiture or loss of the Aircraft, and
(y) for the payment of which such reserves, if any, as required to be
provided under generally accepted accounting principles have been provided
and, to the extent permitted by law, shall be entitled to withhold payment
during pendency of such contest or (B) if an Event of Default shall have
occurred and be continuing, unless the Lessee shall have, at the option of
the Owner Participant, either (i) provided security for its obligations
hereunder reasonably satisfactory to the Owner Participant by placing in
escrow sufficient funds to cover any such contested Tax or (ii) paid such
Tax.
If requested by Lessee in writing (A) within 30 days of Lessee's
receipt of notice from an Indemnitee under the first paragraph of this
Section 7(b)(iv) and (B) with
25
29
[Participation Agreement (1994 737 B)]
respect to a Tax for which Lessee is obligated to indemnify pursuant to
this Section 7(b) which is not described in the previous paragraph
exclusive of the proviso thereto, such Indemnitee shall in good faith at
Lessee's expense contest the imposition of any such Tax. After consulting
with Lessee and Lessee's counsel concerning the forum in which the
adjustment is most likely to be favorably resolved, such Indemnitee shall,
in its sole discretion, select the forum for such contest and determine
whether any such contest shall be by (A) resisting payment of such Tax, (B)
paying such Tax under protest or (C) paying such Tax and seeking a refund
or other repayment thereof. In no event shall such Indemnitee be requested
or required to contest the imposition of any Tax for which Lessee is liable
under this Section 7(b) unless (I) in Lessee's request to the Indemnitee to
contest such Tax, Lessee shall have agreed to pay such Indemnitee on demand
all reasonable costs and expenses that such Indemnitee actually incurs in
connection with contesting such claim (including, without limitation, all
costs, expenses, losses, reasonable legal and accounting fees,
disbursements, penalties, interest and additions to tax), (II) such action
to be taken will not result in the risk of an imposition of criminal
penalties or the material risk of any sale, forfeiture or loss of the
Aircraft, or the creation of any Lien other than Liens for Taxes of Lessee
(x) either not yet due or being contested in good faith by appropriate
proceedings so long as such proceedings do not involve the risk of an
imposition of criminal penalties or the material risk of any sale,
forfeiture or loss of the Aircraft and (y) for the payment of which such
reserves, if any, as are required to be provided under generally accepted
accounting principles have been provided by Lessee, (III) if such contest
shall be conducted in a manner requiring the payment of the claim, Lessee
shall have paid the amount required directly to the appropriate authority
or made an advance of the amount thereof to such Indemnitee on an
interest-free basis and agreed to indemnify the Indemnitee against any
additional net after-tax cost to such Indemnitee with respect to such
advance, (IV) with regard to an Income Tax on an Indemnitee which is the
Owner Participant, the Owner Trustee, the Original Loan Participant, or a
successor, assign or Affiliate of such Indemnitee, independent tax counsel
selected by such Indemnitee and reasonably satisfactory to the Lessee shall
furnish an opinion, prepared at the Lessee's expense, to the effect that
there is a reasonable basis to contest such claim, (V) in the case of an
Indemnitee which is the Owner Participant or the Owner Trustee, the
Original Loan Participant, or a successor, assign or Affiliate of such
Indemnitee, prior to the commencement of an administrative appeal Lessee
shall have delivered to such Indemnitee a written acknowledgment of
Lessee's obligation to indemnify fully such Indemnitee to the extent that
the contest is not successful; provided, however, that Lessee will not be
bound by its acknowledgment of liability if and to the extent that the
contest results in a determination which clearly and unambiguously
demonstrates that Lessee is not otherwise liable under this Section 7(b)
with respect to such Tax, and (VI) if an Event of Default shall have
occurred and be continuing, the Lessee shall have, at the option of such
Indemnitee, either (i) provided security for its obligations hereunder
reasonably satisfactory to such Indemnitee by placing in escrow sufficient
funds to cover any such contested Tax or (ii) paid such Tax.
26
30
[Participation Agreement (1994 737 B)]
If any Indemnitee shall obtain a refund of all or any part of any
Tax paid by Lessee such Indemnitee shall pay Lessee an amount equal to the
sum of (I) the amount of such refund, including interest received
attributable thereto, net of taxes required to be paid by such Indemnitee
as a result of any refund received and (II) any tax benefit realized by
such Indemnitee as a result of any payment by such Indemnitee made pursuant
to this sentence; provided, however, that such amount attributable to (I)
above shall not be in excess of the amount of such Tax payment (determined
without regard to any amount paid in respect of Taxes required to be paid
by such Indemnitee in respect of the receipt or accrual of such payment or
advance made by Lessee to such Indemnitee) plus interest received, if any,
from the relevant taxing authority with respect to such Tax payment, it
being intended that such Indemnitee shall realize a net benefit pursuant to
this Section 7(b) only if Lessee shall first have been reimbursed for any
payments by it to such Indemnitee pursuant to this Section 7(b) arising
from the same Loss. If any Indemnitee shall have paid Lessee any refund of
all or part of any Tax paid by Lessee and it is subsequently determined
that such Indemnitee was not entitled to the refund, such determination
shall be treated as the imposition of a Tax for which Lessee is obligated
to indemnify such Indemnitee pursuant to the provisions of this Section
7(b) without regard to Section 7(b)(ii) or Section 7(b)(iv).
Nothing contained in this Section 7(b)(iv) shall require any
Indemnitee to contest, or permit Lessee to contest, a claim with respect to
the imposition of any Tax if such Indemnitee shall waive its right to
indemnification under this Section 7 with respect to such claim.
(v) General Tax Indemnity -- Reports. Lessee will provide such
information as may be reasonably requested by an Indemnitee or required to
enable an Indemnitee to fulfill its tax filing requirements with respect to
the transactions contemplated by the Operative Documents. In the event any
return, statement or report is required to be made or filed with respect to
any Tax imposed on or indemnified against by Lessee under this Section 7(b)
(other than with respect to Income Taxes), Lessee shall notify the
Indemnitee of such requirement and (i) to the extent permitted by law or
required by law, Lessee shall make and file in its own name, and pay the
tax shown due on such return, statement or report in such manner as will
show the ownership of the Aircraft in the Owner Trustee and furnish the
Indemnitee with a copy of such return, statement or report; provided,
however, that Lessee shall have no obligation under this clause (i) to the
extent such Indemnitee after receipt of Lessee's written request shall have
failed to furnish Lessee with such information as is peculiarly within such
Indemnitee's control and is necessary to file such returns, statements or
reports, (ii) in the case of a return, statement or report required to be
in the name of or filed by such Indemnitee, Lessee shall prepare and
furnish such return, statement or report for filing by such Indemnitee in
such manner as shall be reasonably satisfactory to such Indemnitee and send
the same to such Indemnitee for filing no later than 10 Business Days prior
to the
27
31
[Participation Agreement (1994 737 B)]
due date; provided, however, that Lessee shall have no obligation under
this clause (ii) to the extent such Indemnitee after receipt of Lessee's
written request shall have failed to furnish Lessee with such information
as is peculiarly within such Indemnitee's control and is necessary to
prepare such return, statement or report, and (iii) in the case of a
return, statement or report required to reflect items in addition to Taxes
imposed on or indemnified against by the Lessee under this Section 7(b),
Lessee shall, upon the written request of such Indemnitee, provide such
Indemnitee with such information as is within Lessee's reasonable control.
Lessee shall hold each Indemnitee harmless from and against any
liabilities, including, but not limited to penalties, additions to tax,
fines and interest, arising out of any insufficiency or inaccuracy in any
such return, statement, report or information if such insufficiency or
inaccuracy is attributable to Lessee.
(vi) General Tax Indemnity -- Payment. Except as provided in
Section 7(b)(iv) hereof, Lessee shall pay any Tax directly to the
appropriate taxing authority if legally permissible and upon demand of an
Indemnitee shall pay such Tax and any other amounts due hereunder to such
Indemnitee within 20 Business Days of such demand, but in no event shall
any such payments be made more than 10 Business Days prior to the date the
Tax to which any such payment hereunder relates is due (unless Lessee has
not received such demand at least 15 Business Days prior to such date in
which case within five Business Days after receipt of such demand), in
immediately available funds. Any such demand for payment from an Indemnitee
shall specify in reasonable detail, the payment and the facts upon which
the right to payment is based. Each Indemnitee shall promptly forward to
Lessee any notice, xxxx or advice received by it concerning any Tax
indemnified against hereunder. As soon as practicable after each payment by
Lessee of any Tax indemnified against hereunder, Lessee shall furnish the
appropriate Indemnitee the original or a certified copy of a receipt for
Lessee's payment of such Tax or such other evidence of payment of such Tax
as is acceptable to such Indemnitee. Lessee shall also furnish promptly
upon request such data as any Indemnitee may reasonably require to enable
such Indemnitee to comply with the requirements of any taxing jurisdiction.
(vii) Application of Payments During Existence of Event of
Default or Default. Any amount payable to Lessee pursuant to the terms of
this Section 7(b) shall not be paid to or retained by Lessee if at the time
of such payment or retention a Default or an Event of Default shall have
occurred and be continuing under the Lease or any amounts required to be
paid by Lessee hereunder are due and have not been paid. At such time as
there shall not be continuing any such Default or Event of Default, such
amount shall be paid to the Lessee to the extent not previously applied
against Lessee's obligations hereunder as and when due after the Owner
Trustee shall have declared the Lease in default pursuant to Section 15
thereof.
(viii) Reimbursements by Indemnitees Generally. If, for any
reason, Lessee is required to make any payment with respect to any Taxes
imposed on any Indemnitee in
28
32
[Participation Agreement (1994 737 B)]
respect of the transactions contemplated by the Operative Documents or on
the Aircraft, the Airframe, the Engines, the Parts or any part thereof,
which Taxes are not the responsibility of Lessee under this Section 7(b),
then such Indemnitee shall pay to Lessee an amount which equals the amount
paid by Lessee with respect to such Taxes plus interest thereon, computed
from the date of payment by Lessee, at the Base Rate.
(ix) Forms, etc. Each Indemnitee agrees to furnish to Lessee from
time to time, at the Lessee's request and expense, 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 tax imposed by any
taxing authority in respect of any payments otherwise required to be made
by Lessee pursuant to the Operative Documents, which reduction or exemption
may be available to such Indemnitee.
(x) Non-Parties. If an Indemnitee is not a party to this
Agreement, Lessee may require the Indemnitee to agree to the terms of this
Section 7(b) prior to making any payment to such Indemnitee under this
Section 7(b).
(xi) Owner Participant. For the purposes of this Section 7(b),
the term "Owner Participant" shall mean and include MS Financing Inc. (and
its permitted successors and assigns) and where appropriate the affiliated
group of corporations (and each member thereof) making a consolidated or
combined return of which MS Financing Inc. (and its permitted successors
and assigns) is a member.
(xii) Income Tax. For purposes of this Section 7, the term Income
Tax means any Tax based on or measured by or with respect to net income
(including, without limitation, capital gains taxes, minimum taxes, and
taxes on tax preference items) or net receipts and taxes imposed on gross
income or gross receipts which are expressly in lieu of a net income tax
(provided, however, that sales, use, value added, rental, license, ad
valorem or property Taxes shall not constitute an Income Tax) and Taxes
which are capital, doing business, franchise, excess profits, net worth
taxes and interest, additions to tax, penalties, or other charges in
respect thereof.
(c) General Indemnity. Lessee hereby agrees to indemnify, on an
after-tax basis, each Indemnitee against, and agrees to protect, save and keep
harmless each of them from (whether or not the transactions contemplated herein
or in any of the other Operative Documents are consummated), any and all
Expenses imposed on, incurred by or asserted against any Indemnitee, in any way
relating to or arising out of or which would not have occurred but for (A) the
Operative Documents, the negotiation and the consummation of the transactions
contemplated thereby (including any misrepresentations or breach of warranty of
Lessee contained herein or in any document or certificate delivered pursuant
hereto and the breach by Lessee of any covenant or agreement contained in any
Operative Document) or any sublease under the Lease Agreement or the enforcement
of any of the terms of any thereof; (B) the
29
33
[Participation Agreement (1994 737 B)]
manufacture, design, purchase, resale, acceptance or rejection of the Airframe
or any Engine or Parts; (C) the Aircraft (or any portion thereof) or any Engine
whether or not installed on the Airframe or any airframe on which an Engine is
installed whether or not arising out of the finance, refinance, ownership,
delivery, nondelivery, storage, lease, sublease, possession, use, non-use,
operation, maintenance, modification, alteration, condition, sale, replacement,
substitution, return or other disposition, registration, reregistration or
airworthiness of the Aircraft including, without limitation, latent or other
defects, whether or not discoverable, strict tort liability and any damage to
property or the environment, death or injury to any person and any claim for
patent, trademark or copyright infringement; (D) the offer, sale, holding,
transfer or delivery of the Certificates, whether before or after the Delivery
Date (the indemnity in this clause (D) to extend also to any person who controls
an Indemnitee, its successors, assigns, employees, directors, officers, servants
and agents within the meaning of Section 15 of the Securities Act of 1933, as
amended); (E) the offer, holding, transfer or sale of any interest in the Trust
Estate or the Trust Agreement or any similar interest (i) on or prior to the
Delivery Date, or (ii) subsequent to the Delivery Date during the continuation
of an Event of Default under the Lease or in connection with the exercise by
Lessee of its purchase options under the Lease or in connection with a
refinancing pursuant to Section 17 or 20 hereof or in connection with the
termination of the Lease or action or direction of Lessee pursuant to Section 7,
8, 9, 10 or 19 thereof; or (F) the application of Parts 4 and 5 of Subtitle B of
Title I of ERISA to the transactions contemplated hereby or by any other
Operative Document; provided, that the foregoing indemnity shall not extend to
any Expense resulting from or arising out of or which would not have occurred
but for one or more of the following: (1) any representation or warranty by such
Indemnitee in the Operative Documents being incorrect, or (2) the failure by
such Indemnitee to perform or observe any agreement, covenant or condition in
any of the Operative Documents including, without limitation, the creation or
existence of a Lessor Lien (including for this purpose Liens that would be
Lessor Liens but for the proviso to the definition of Lessor Liens), or (3) the
willful misconduct or the gross negligence of such Indemnitee (other than gross
negligence imputed to such Indemnitee solely by reason of its interest in the
Aircraft), or (4) (A) in the case of such Indemnitee a disposition (voluntary or
involuntary) of all or any part of its interest in the Airframe or any Engine,
(B) in the case of a Holder a disposition (voluntary or involuntary) by such
Holder of all or any part of its interest in any Certificate or (C) in the case
of any Indemnitee a disposition by such Indemnitee of all or any part of such
Indemnitee's interest in the Operative Documents other than in each of (A), (B)
and (C) during the continuance of an Event of Default under the Lease or
pursuant to the exercise by Lessee of its purchase options or in connection with
a refinancing pursuant to Section 17 or 20 hereof or in connection with the
termination of the Lease or action or direction of Lessee pursuant to Section 7,
8, 9, 10 or 19 thereof, or (5) other than to the extent provided in the
succeeding paragraph, any Tax (as defined in Section 7(b) hereof) whether or not
Lessee is required to indemnify for such Tax pursuant to Section 7(b) hereof (it
being understood that Section 7(b) hereof and the Tax Indemnity Agreement and
provisions requiring payments to be made on an after-tax basis or expressly
providing for additional indemnification by Lessee exclusively provide for
Lessee's liability with respect to Taxes); provided, however, such exception
shall not apply to the
30
34
[Participation Agreement (1994 737 B)]
application of Parts 4 or 5 of Subpart B of Title I of ERISA or Section 502(i)
or (1) of ERISA to the execution and delivery by Lessee of the Operative
Documents to which Lessee, Owner Participant or Original Loan Participant is or
will be a party or the consummation of the transactions contemplated thereby
including the sale, resale or transfer of the Certificates, or (6) the offer or
sale by the Owner Participant after the Delivery Date of any interest in the
Trust Estate or the Trust Agreement or any similar interest, unless such offer
or sale shall occur (A) during a period when an Event of Default has occurred
and is continuing under the Lease at the time of such offer or sale; or (B) in
connection with the exercise by Lessee of its purchase options under the Lease
or in connection with a refinancing pursuant to Section 17 or 20 hereof or in
connection with the termination of the Lease or action or direction of Lessee
pursuant to Section 7, 8, 9, 10 or 19 thereof, or (7) a failure on the part of
the Owner Trustee to distribute in accordance with the Trust Agreement any
amounts received and distributable by it thereunder or a failure on the part of
the Indenture Trustee to distribute in accordance with the Trust Indenture any
amounts received and distributable by it thereunder, or (8) other than during
the continuation of a Default under Section 14(f) or (g) of the Lease or an
Event of Default under the Lease the authorization or giving or withholding of
any future amendments, supplements, waivers or consents with respect to any of
the Operative Documents unless such amendments, supplements, waivers or consents
(a) are requested by Lessee or (b) are required or permitted pursuant to the
terms of the Operative Documents (unless such requirement results from the
actions of an Indemnitee) (provided if Lessee is not responsible for the Expense
associated with such amendment, supplement, waiver or consent, the party
requesting the execution of the same shall be responsible for such expense) or
(9) other than to the extent provided in the succeeding paragraph any loss of
tax benefits or increase in tax liability under any tax law whether or not
Lessee is required to indemnify therefor pursuant to this Agreement or the Tax
Indemnity Agreement (it being understood that Section 7(b) hereof and the Tax
Indemnity Agreement and provisions requiring payments to be made on an after-tax
basis or expressly providing for additional indemnification by Lessee
exclusively provide for Lessee's liability with respect to Taxes); provided,
however, such exception shall not apply to the application of Parts 4 or 5 of
Subpart B of Title I of ERISA or Section 502(i) or (1) of ERISA to the execution
and delivery by Lessee of the Operative Documents to which Lessee, Owner
Participant or Original Loan Participant is or will be a party or the
consummation of the transactions contemplated thereby including the sale, resale
or transfer of the Certificates, or (10) except to the extent fairly
attributable to acts or events occurring on or prior thereto, acts or events
which occur after the earlier of: (I) the return of possession of the Airframe
or any Engine or any Part to the Owner Trustee or its designee pursuant to the
terms of the Lease (other than pursuant to Section 15 thereof, in which case
Lessee's liability under this Section 7(c) shall survive for so long as Lessor
shall be entitled to exercise remedies under such Section 15), (II) the
termination of the Term in accordance with Sections 5, 9 or 19 of the Lease,
(III) the last day of the Term if Lessor shall have furnished the notice
referred to in Section 10(d) of the Lease and Lessee shall have failed to return
possession to Lessor on such day or (IV) the payment by Lessee of all amounts
required to be paid under the Lease following an Event of Loss (but excluding
from the terms of this Subsection (IV) an Event of Loss followed by the
replacement of the Aircraft).
31
35
[Participation Agreement (1994 737 B)]
Notwithstanding clause 7(c)(5) or (9) above, Lessee further agrees
that any payment or indemnity pursuant to this Section 7(c) in respect of any
"Expenses" shall be in an amount which, after deduction of all Taxes required to
be paid by such recipient with respect to such payment or indemnity under the
laws of any federal, state or local government or taxing authority in the United
States, or under the laws of any taxing authority or governmental subdivision of
a foreign country, or any territory or possession of the United States or any
international authority, shall be equal to the excess, if any, of (A) the amount
of such Expense over (B) the current net reduction in Taxes actually required to
be paid by such recipient resulting from the accrual or payment of such Expense.
Nothing in this Section 7(c) shall be construed as a guaranty by
Lessee of payments due pursuant to the Certificates or of the residual value of
the Aircraft.
If a claim is made against an Indemnitee involving one or more
Expenses and such Indemnitee has notice thereof, such Indemnitee shall promptly
after receiving such notice give notice of such claim to Lessee; provided that
the failure to provide such notice shall not release Lessee from any of its
obligations to indemnify hereunder or from any other obligation that the Lessee
may have to such Indemnitee at law or in equity, and no payment by Lessee to an
Indemnitee pursuant to this Section 7(c) shall be deemed to constitute a waiver
or release of any right or remedy which the Lessee may have against such
Indemnitee for any actual damages as a result of the failure by such Indemnitee
to give Lessee such notice. Lessee shall be entitled, at its sole cost and
expense, acting through counsel reasonably acceptable to the respective
Indemnitee, (A) in any judicial or administrative proceeding that involves
solely a claim for one or more Expenses, to assume responsibility for and
control thereof, (B) in any judicial or administrative proceeding involving a
claim for one or more Expenses and other claims related or unrelated to the
transactions contemplated by the Operative Documents, to assume responsibility
for and control of such claim for Expenses to the extent that the same may be
and is severed from such other claims (and such Indemnitee shall use its
reasonable best efforts to obtain such severance), and (C) in any other case, to
be consulted by such Indemnitee with respect to judicial proceedings subject to
the control of such Indemnitee and to be allowed, at Lessee's sole expense, to
participate therein. Notwithstanding any of the foregoing to the contrary,
Lessee shall not be entitled to assume responsibility for and control of any
such judicial or administrative proceedings if (i) any Default under Section
14(a), (b), (f) or (g) of the Lease or an Event of Default under the Lease shall
have occurred and be continuing, (ii) if such proceedings will involve a
material risk of the sale, forfeiture or loss of, or the creation of any Lien
(other than a Permitted Lien) on, the Aircraft, the Indenture Estate or the
Trust Estate or any part thereof unless Lessee shall have posted a bond or other
security reasonably satisfactory to the relevant Indemnitees in respect to such
risk or (iii) if such proceedings could, in the good faith opinion of the
Indemnitee entail, any material risk of criminal liability or any material risk
of civil liability to any Indemnitee (unless Lessee has agreed to indemnify
against such civil liability in a manner reasonably acceptable to such
Indemnitee). The Indemnitee may participate at its own expense and with its own
counsel in any judicial proceeding controlled by Lessee
32
36
[Participation Agreement (1994 737 B)]
pursuant to the preceding provisions, provided, however, that if (i) in the
written opinion of counsel to such Indemnitee (which counsel and opinion shall
be reasonably acceptable to Lessee) an actual or potential material conflict of
interest exists where it is advisable for such Indemnitee to be represented by
separate counsel or (ii) such Indemnitee has been indicted or otherwise charged
in a criminal complaint in connection with a claim not excluded by Section 7(b)
or (c) hereof, and such Indemnitee informs the Lessee in writing that such
Indemnitee desires to be represented by separate counsel, the reasonable fees
and expenses of such separate counsel shall be borne by Lessee, provided, that
Lessee shall not be responsible for the fees and expenses of more than one
separate counsel for each group of affiliated Indemnitees.
The Indemnitee shall supply Lessee, at Lessee's expense, with such
information reasonably requested by Lessee as is necessary or advisable for
Lessee to control or participate in any proceeding to the extent permitted by
this Section 7(c). Such Indemnitee shall not enter into a settlement or other
compromise with respect to any Expense as to which Lessee has acknowledged its
obligation to indemnify without the prior written consent of Lessee (except
during the continuance of an Event of Default when such consent shall not be
required if such Indemnitee gives 30 days' prior written notice to Lessee
describing the proposed settlement or compromise), which consent shall not be
unreasonably withheld or delayed, unless such Indemnitee waives its right to be
indemnified with respect to such Expense under this Section 7(c).
Lessee shall supply the Indemnitee with such information reasonably
requested by the Indemnitee as is necessary or advisable for the Indemnitee to
control or participate in any proceeding to the extent permitted by this Section
7(c).
Upon payment of any Expense pursuant to this Section 7(c), Lessee,
without any further action, shall be subrogated to any claims the Indemnitee may
have relating thereto other than claims under Section 5.03 or 7.01 of the Trust
Indenture or Section 5.03 or 7.01 of the Trust Agreement and other than claims
against such Indemnitee's insurers under policies maintained at its own expense
in accordance with Section 11(e) of the Lease. The Indemnitee agrees to give
such further assurances or agreements and to cooperate with Lessee to permit
Lessee to pursue such claims, if any, to the extent reasonably requested by
Lessee.
In the event that Lessee shall have paid an amount to an Indemnitee
pursuant to this Section 7(c), and such Indemnitee subsequently shall be
reimbursed in respect of such indemnified amount from any other person, such
Indemnitee shall, unless a Default under Section 14(a), (b), (d) (solely with
respect to Lessee's obligations under Section 7(a) or (b)(viii) of the Lease or
Section 8 of the Lease), (f) or (g) of the Lease or an Event of Default shall
have occurred and be continuing, promptly pay Lessee but not before Lessee shall
have made all payments then due to such Indemnitee pursuant to this Section 7(c)
and any other payments then due under any of the Operative Documents, an amount
equal to the sum of (I) the amount of such reimbursement, including interest
received attributable thereto, net of taxes required to be paid
33
37
[Participation Agreement (1994 737 B)]
by such Indemnitee as a result of any reimbursement including interest received
attributable thereto and (II) any tax benefit actually realized by such
Indemnitee as a result of any payment by such Indemnitee made pursuant to this
sentence; provided, however, that in the case of any Indemnitee such amount
attributable to (I) above shall not be in excess of the amount of such Expense
payment net of any amount paid in respect of Taxes required to be paid by such
Indemnitee in respect of the receipt or accrual of such payment or advance made
by Lessee to such Indemnitee plus interest received, if any, from the relevant
taxing authority with respect to any such Expense payment, it being intended
that such Indemnitee shall realize a net benefit pursuant to this Section 7(c)
only if Lessee shall first have been reimbursed for any payments by it to such
Indemnitee pursuant to this Section 7(c).
Lessee agrees to pay the reasonable and continuing fees and expenses
of the Indenture Trustee (including the reasonable fees and expenses of its
counsel) and, as provided in Section 6.07 of the Trust Agreement, the Owner
Trustee (including, but not limited to, the reasonable fees and expenses of its
counsel), without cost, on a net after-tax basis, to the Owner Participant, for
acting as such, other than such fees and expenses which constitute Transaction
Expenses.
Lessee's obligations under the indemnities provided for in this
Agreement shall be those of a primary obligor, whether or not the Person
indemnified shall also be indemnified with respect to the same matter under the
terms of any other document or instrument, and the Person seeking
indemnification from Lessee pursuant to any provision of this Agreement may
proceed directly against Lessee without first seeking to enforce any other right
of indemnification.
To the extent permitted by applicable law, interest at the Past Due
Rate shall be paid, on demand, on any amount or indemnity not paid when due
pursuant to this Section 7 until the same shall be paid. Such interest shall be
paid in the same manner as the unpaid amount in respect of which such interest
is due.
Any amount which is payable to Lessee by any Person pursuant to this
Section 7 shall not be paid to Lessee if a Default under Section 14(a), (b), (d)
(solely with respect to Lessee's obligations under Section 7(a) or (b)(viii) of
the Lease or Section 8 of the Lease), (f) or (g) of the Lease or an Event of
Default under the Lease shall have occurred and be continuing or if any payment
is due and owing by Lessee under the Lease or to such Person under any other
Operative Document. Any such amount shall be held by such Person and, if such
Default or an Event of Default under the Lease shall have occurred and be
continuing, shall be applied against Lessee's obligations hereunder to such
Person as and when due (and, to the extent that Lessee has no obligations
hereunder to such Person, such amount shall be paid to Lessee). At such time as
there shall not be continuing any such Default or an Event of Default or there
shall not be due and owing any such payment, such amount shall be paid to Lessee
to the extent not previously applied in accordance with the immediately
preceding sentence.
34
38
[Participation Agreement (1994 737 B)]
(d) Withholding. If Lessee advises the Owner Trustee, the Indenture
Trustee and the relevant Holder in writing that interest on its Certificates is
subject to United States withholding tax, then the Owner Trustee shall instruct
the Indenture Trustee to, and Indenture Trustee shall, withhold as provided in
Section 2.04(b) of the Trust Indenture.
SECTION 8. Representations, Warranties and Covenants. (a) The Owner
Participant represents that it is acquiring its interest in the Trust Estate for
investment purposes only and not with a present intent as to any resale or
distribution thereof (subject nonetheless to any requirement of law that the
disposition of its properties shall at all times be and remain within its
control) and that neither it nor anyone acting on its behalf has directly or
indirectly offered any interest in the Trust Estate or any Certificates or any
similar securities for sale to, or solicited any offer to acquire any of the
same from, anyone in a manner which would result in a violation of the
Securities Act of 1933, as amended, or the securities laws, rules and
regulations of any state.
(b) Each of the Owner Participant and First Security Bank of Utah,
National Association, in its individual capacity, represents and warrants to the
other parties to this Agreement that it is, and on the Delivery Date will be, a
"citizen of the United States" as defined in Section 40102(a)(15) of the
Transportation Code. The Owner Participant agrees, solely for the benefit of
Lessee and the Holders, that if during such time as the Aircraft is registered
in the United States (or if Lessee desires to register the Aircraft in the
United States) (i) it shall not be a "citizen of the United States" within the
meaning of Section 40102(a)(15) of the Transportation Code and (ii) the Aircraft
shall be, or would therefore become, ineligible for registration in the name of
the Owner Trustee under the Transportation Code and regulations then applicable
thereunder, then the Owner Participant shall (at its own expense and without any
reimbursement or indemnification from Lessee) 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 (A) effect voting trust or
other similar arrangements or take any other action as may be necessary to
prevent any deregistration or to maintain the United States registration of the
Aircraft, or (B) transfer its beneficial interest in the Trust Estate in
accordance with Section 8(l) hereof. It is understood that: (1) the Owner
Participant shall be liable to any of the other parties hereto for any damages
suffered by any such other party as the result of the representation and
warranty of the Owner Participant in the first sentence of this Section 8(b)
proving to be untrue as of the Delivery Date; and (2) the Owner Participant
shall be liable to Lessee, any Sublessee and any Holder for any damages which
may be incurred by Lessee, any Sublessee or such Holder as a result of the Owner
Participant's failure to immediately comply with its obligations pursuant to the
second sentence of this Section 8(b) unless, in the case of liability to any
such individual party, such failure is a result of the relevant party's breach
of its obligations to cooperate set forth in the following sentence (including
for damages suffered by any such party (other than damages suffered by Lessee
which Lessee could have mitigated by taking reasonable steps) at any time more
than 5 Business Days after the Owner Participant obtains Actual Knowledge of
such ineligibility and of such loss of citizenship). Each party hereto agrees,
upon the request and at
35
39
[Participation Agreement (1994 737 B)]
the sole expense of the Owner Participant, to cooperate with the Owner
Participant in complying with its obligations under the provisions of the second
sentence of this Section 8(b) and such request shall not be subject to the
indemnity contained in Section 7(c) hereof. First Security Bank of Utah,
National Association, in its individual capacity, agrees that if at any time a
responsible officer of First Security Bank of Utah, National Association, shall
obtain Actual Knowledge that First Security Bank of Utah, National Association
has ceased to be a "citizen of the United States" within the meaning of Section
40102(a)(15) of the Transportation Code, it will promptly resign as Owner
Trustee (if and so long as such citizenship is necessary under the
Transportation Code as in effect at such time or, if it is not necessary, if and
so long as the Owner Trustee's citizenship would have any adverse effect on a
Holder, Lessee or the Owner Participant), effective upon the appointment of a
successor Owner Trustee in accordance with Section 9.01 of the Trust Agreement.
If the Owner Participant or First Security Bank of Utah, National Association,
in its individual capacity, does not comply with the requirements of this
Section 8(b), the Owner Trustee, the Indenture Trustee, the Owner Participant
and the Holders hereby agree that a Default or an Event of Default shall not
have occurred and be continuing under the Lease due to noncompliance by Lessee
with the registration requirements in the Lease.
(c) First Security Bank of Utah, National Association, in its
individual capacity represents and warrants that both the principal place of
business of the Owner Trustee and the place where its records concerning the
Aircraft and all of its interest in, to and under the Operative Documents to
which it is a party are or will be kept is Salt Lake City, Utah (other than such
as may be maintained or held by the Indenture Trustee pursuant to the Trust
Indenture) and has its chief executive office (as such term is used in Article 9
of the Uniform Commercial Code) in Salt Lake City, Utah. First Security Bank of
Utah, National Association in its individual capacity agrees that it will not
change the location of such office to a location outside of Salt Lake City,
Utah, without prior written notice to Lessee, Indenture Trustee and the Owner
Participant.
(d) The Original Loan Participant represents and warrants and, by
acceptance of its Certificates, each other Holder shall be deemed to have
represented and warranted that neither it nor anyone acting on its behalf has
offered any Certificates or any similar securities relating to the Aircraft for
sale to, or solicited any offer to buy any Certificates or any similar
securities relating to the Aircraft from, any person or entity other than in a
manner required by the Securities Act of 1933, as amended, and the rules and
regulations thereunder and the securities laws, rules and regulations of any
state.
(e) Each of the Owner Participant and so long as the Original Loan
Participant is a Holder, the Original Loan Participant, agree that, if, at any
time after the close of the calendar year in which occurs the seventh
anniversary of the Delivery Date and so long as no Section 14(a), (b), (f) or
(g) Default or any Event of Default under the Lease shall have occurred or be
continuing, Lessee has requested its consent to the registration of the
Aircraft, in the name of the Owner Trustee (or, if appropriate, in the name of
Lessee or a Sublessee as a "lessee" or a
36
40
[Participation Agreement (1994 737 B)]
"sublessee"), at Lessee's expense, (i) upon 45 days' prior written notice in a
country listed on Exhibit G to the Lease, with which the United States maintains
diplomatic relations at the time of such request, or (ii) upon 45 days' prior
written notice in any other country with which United States maintains
diplomatic relations at the time of such request and the Owner Participant and
the Original Loan Participant (but in regard to the Original Loan Participant,
only so long as the Original Loan Participant is a Holder) have not determined,
acting reasonably, that such other country would not provide substantially
equivalent protection for the rights of owner participants, lessors or lenders
in similar transactions as provided under United States law, the Owner
Participant and the Original Loan Participant (but in regard to the Original
Loan Participant, only so long as the Original Loan Participant is a Holder)
will not, in the case of either clause (i) or (ii), unreasonably withhold its
consent to such change of registration. Each of the Owner Participant and the
Original Loan Participant (but in regard to the Original Loan Participant, only
so long as the Original Loan Participant is a Holder) further agrees that the
inability of Lessee to deliver an opinion (reasonably satisfactory in form and
substance to the Owner Participant and the Indenture Trustee) of counsel
reasonably acceptable to the Owner Participant and the Indenture Trustee in such
country listed on Exhibit G to the Lease to the effect that the courts of such
country would give effect to the Owner Trustee's title to the Aircraft, to the
registry of the Aircraft in the name of the Owner Trustee (or, if appropriate,
in the name of Lessee or a Sublessee as a "lessee" or a "sublessee"), and to the
priority of the Lien under the Trust Indenture substantially to the same extent
as provided under United States law, shall constitute the sole reasonable
grounds to withhold such consent in regard to a country listed in Exhibit G to
the Lease, and if said opinion is delivered, the Owner Participant and the
Original Loan Participant (but in regard to the Original Loan Participant, only
so long as the Original Loan Participant is a Holder) will instruct, the Owner
Trustee and the Indenture Trustee, respectively, to make such change of
registration.
It is further agreed, however, that prior to any such change in the
country of registry of the Aircraft to a country not listed on Exhibit G to the
Lease, the Owner Participant, the Owner Trustee in its individual capacity and
the Indenture Trustee shall have received:
(i) assurances reasonably satisfactory to them (A) to the effect
that the insurance or self-insurance provisions of the Lease have been
complied with after giving effect to such change of registry, (B) of the
payment by Lessee of any expenses of the Owner Participant, the Owner
Trustee, the Indenture Trustee and the Original Loan Participant (but in
regard to the Original Loan Participant, only so long as the Original Loan
Participant is a Holder) in connection with such change of registry, (C) to
the effect that the original indemnities (and any additional indemnities
for which Lessee is then willing to enter into a binding agreement to
indemnify) in favor of the Owner Participant, the Owner Trustee (in its
individual capacity and as trustee under the Trust Agreement), the
Indenture Trustee and the Original Loan Participant (but in regard to the
Original Loan Participant, only so long as the Original Loan Participant is
a Holder), under this Agreement, the Trust Indenture and the Tax Indemnity
Agreement, afford each such
37
41
[Participation Agreement (1994 737 B)]
party substantially the same protection as provided prior to such change of
registry, (D) as to the continuation of the Trust Indenture as a first
priority lien on the Aircraft, (E) that such change will not result in the
imposition of, or increase in the amount of, any Tax for which Lessee is
not required to indemnify, or is not then willing to enter into a binding
agreement to indemnify, the Owner Participant, the Indenture Trustee, the
Owner Trustee (in its individual capacity and as trustee under the Trust
Agreement) and the Original Loan Participant (but in regard to the Original
Loan Participant, only so long as the Original Loan Participant is a
Holder), or any successor, assign or affiliate of any thereof, or the Trust
Estate pursuant to Section 7(b) hereof; and (F) that such new country of
registry imposes aircraft maintenance standards not materially less
stringent than those of the FAA, the Civil Aviation Authority of the United
Kingdom, the Director Generale de l'Aviation Civil of the French Republic
or the Luftfahrt Bundesamt of Germany; and
(ii) a favorable opinion of counsel (reasonably satisfactory to
the Owner Trustee in its individual capacity, to the Owner Participant and
to the Indenture Trustee (so long as the Original Loan Participant is a
Holder)) in the new jurisdiction of registry to the effect (A) that the
terms (including, without limitation, the governing-law, service-of-process
and jurisdictional- submission provisions thereof) of the Lease and the
Trust Indenture are legal, valid, binding and enforceable in such
jurisdiction, (B) that it is not necessary for the Owner Participant, the
Owner Trustee, the Original Loan Participant (but in regard to the Original
Loan Participant, only so long as the Original Loan Participant is a
Holder), or the Indenture Trustee to register or qualify to do business in
such jurisdiction, (C) that there is no tort liability of the owner of an
aircraft not in possession thereof under the laws of such jurisdiction
other than tort liability which might have been imposed on such owner under
the laws of the United States or any state thereof (it being understood
that, in the event such latter opinion cannot be given in a form
satisfactory to the Owner Participant and the Owner Trustee, in its
individual capacity, such opinion shall be waived if insurance reasonably
satisfactory to Owner Participant and the Owner Trustee, in its individual
capacity, is provided, at Lessee's expense, to cover such risk), (D)
(unless Lessee shall have agreed to provide insurance covering the risk of
requisition of use of the Aircraft by the government of such jurisdiction
so long as the Aircraft is registered under the laws of such jurisdiction)
that the laws of such jurisdiction require fair compensation by the
government of such jurisdiction payable in currency freely convertible into
Dollars for the loss of use of the Aircraft in the event of the requisition
by such government of such use, and (E) to such further effect with respect
to such other matters as the Owner Trustee in its individual capacity, the
Indenture Trustee (so long as the Original Loan Participant is a Holder) or
the Owner Participant may reasonably request.
Upon receipt by the Owner Participant and the Indenture Trustee
of the foregoing opinion of counsel, Exhibit F and Exhibit G to the Lease
shall be amended to add such country.
38
42
[Participation Agreement (1994 737 B)]
If, at any time, (X) the Owner Participant or the Original Loan
Participant (so long as the Original Loan Participant is a Holder) delivers
an opinion from a law firm (such opinion and counsel to be reasonably
satisfactory to Lessee) in a country then listed on Exhibit F or G to the
Lease (for the avoidance of doubt, including any Added Country (as defined
below)) to the effect that a reputable law firm located in such
jurisdiction would not as of the date of such opinion be able to deliver an
opinion of counsel as to the matters listed in Clauses (A) through (D) of
paragraph (ii) above (provided that in regard to (C) or (D), Lessee is not
willing to provide the insurance required by such subsection (C) or (D)) (a
"Delisting Opinion") or (Y) the Original Loan Participant (so long as the
Original Loan Participant is a Holder) delivers a Delisting Opinion in a
country added to Exhibits F and G to the Lease after the Delivery Date in
accordance with the terms of this Section 8(e) (an "Added Country") or
presents Lessee with evidence reasonably satisfactory to Lessee that one or
more of the assurances specified in (A) through (F) of paragraph (i) above
are no longer applicable to an Added Country (and, in regard to clause (C)
or (E) of such paragraph, Lessee is not willing to agree to provide the
additional indemnities permitted by such clauses), then Exhibits F and G to
the Lease shall be amended to delete such country or Added Country, as the
case may be; provided that no such deletion shall affect the registration
of the Aircraft then in effect. Lessee shall pay the reasonable costs of
the Owner Participant or the Original Loan Participant in obtaining such
Delisting Opinion or in consulting with such counsel if no opinion is
delivered, up to an aggregate of $3,000 per instance of amendment, if such
opinion is obtained or such consultation takes place in connection with
Lessee's request to change the registry of the Aircraft to, or to sublease
the Aircraft in, a country listed on Exhibit F or G to the Lease.
Except as otherwise provided in the immediately preceding paragraph,
Lessee shall pay all expenses of the Owner Participant, the Owner Trustee, the
Indenture Trustee and, so long as the Original Loan Participant is a Holder, the
Original Loan Participant in connection with any change of registry of the
Aircraft.
(f) The Owner Participant represents and warrants as follows:
(i) the Owner Participant is a corporation duly organized and
validly existing in good standing under the laws of its jurisdiction of
organization, and has the corporate power and authority to carry on its
business as now conducted, to own or hold under lease its properties and to
enter into and perform its obligations under the Owner Participant
Documents;
(ii) the Owner Participant Documents have been duly authorized by
all necessary corporate action on the part of the Owner Participant, do not
require any approval not already obtained of stockholders of the Owner
Participant or any approval or consent not already obtained of any trustee
or holders of any indebtedness or
39
43
[Participation Agreement (1994 737 B)]
obligations of the Owner Participant, and have been duly executed and
delivered by the Owner Participant, and, subject to and in reliance upon
the representations made by the Original Loan Participant and the Lessee in
Section 8(o) hereof and compliance with Sections 8(y) and 8(z) hereof,
neither the execution and delivery thereof by the Owner Participant, nor
the consummation of the transactions contemplated thereby by the Owner
Participant, nor compliance by the Owner Participant with any of the terms
and provisions thereof will contravene any United States federal or state
law, judgment, governmental rule, regulation or order applicable to or
binding on the Owner Participant (it being understood that no
representation or warranty is made with respect to laws, rules or
regulations relating to aviation or to the nature of the equipment owned by
the Owner Trustee, other than such laws, rules or regulations relating to
the citizenship requirements of the Owner Participant under applicable
aviation law) or contravene or result in any breach of or constitute any
default under, or result in the creation of any Lien (other than Liens
provided for or otherwise permitted in the Operative Documents) upon the
Trust Estate under, any indenture, mortgage, chattel mortgage, deed of
trust, conditional sales contract, bank loan or credit agreement, corporate
charter, by-law or other agreement or instrument to which the Owner
Participant is a party or by which it or its properties may be bound or
affected;
(iii) each of the Owner Participant Documents constitutes a
legal, valid and binding obligation of the Owner Participant enforceable
against the Owner Participant in accordance with the terms thereof, and the
trust intended to be formed by the Trust Agreement has been duly and
validly formed;
(iv) there are no pending or, to the knowledge of the Owner
Participant, threatened actions or proceedings against the Owner
Participant before any court or administrative agency which, if determined
adversely to the Owner Participant, would materially adversely affect the
financial condition of the Owner Participant or the ability of the Owner
Participant to perform its obligations under the Owner Participant
Documents; and
(v) on the Delivery Date, there will be no Lessor Liens
(including for this purpose Liens that would be Lessor Liens but for the
proviso to the definition of Lessor Liens) attributable to the Owner
Participant.
(g) Each of First Security Bank of Utah, National Association, in its
individual capacity and the Owner Participant severally covenants and agrees (i)
that it shall not cause or permit to exist any Lessor Liens attributable to it
with respect to the Aircraft or any other portion of the Trust Estate, (ii) that
it will promptly, at its own expense, take such action as may be necessary duly
to discharge such Lessor Liens attributable to it and (iii) to make restitution
to the Trust Estate for any actual diminution of the assets of the Trust Estate
resulting from such Lessor Liens attributable to it. The Owner Participant
agrees to make restitution to
40
44
[Participation Agreement (1994 737 B)]
the Trust Estate for any actual diminution of the assets of the Trust Estate
resulting from any Taxes or Expenses (as such terms are defined in Section 7
hereof) imposed on the Trust Estate against which Lessee is not required to
indemnify the Trust Estate pursuant to Section 7 hereof and which the Owner
Participant is expressly required to pay by the terms of the Operative
Documents, but excluding Taxes or Expenses referred to in Section 7(b)(ii)(5)
and 7(b)(ii)(7) and excluding any diminution of the Trust Estate by any Lessor
Liens attributable to or caused by First Security Bank of Utah, National
Association, in its individual capacity; provided that if the Owner Participant
shall make restitution to the Trust Estate on account of any Lessor Lien
attributable to or caused by First Security Bank of Utah, National Association,
in its individual capacity, then First Security Bank of Utah, National
Association, in its individual capacity, shall reimburse the Owner Participant
for such amount together with interest thereon at the Past Due Rate.
(h) State Street Bank and Trust Company in its individual capacity,
covenants and agrees that it shall not cause or permit to exist any Lien,
arising as a result of (i) claims against the Indenture Trustee not related to
its interest in the Aircraft or the administration of the Trust Estate pursuant
to the Trust Indenture, (ii) acts of the Indenture Trustee not permitted by, or
failure of the Indenture Trustee to take any action required by, the Operative
Documents to the extent such acts arise or such failure arises from or
constitutes gross negligence or willful misconduct, (iii) claims against the
Indenture Trustee relating to Taxes or Expenses which are excluded from the
indemnification provided by Section 7 pursuant to said Section 7, or (iv) claims
against the Indenture Trustee arising out of the transfer by the Indenture
Trustee of all or any portion of its interest in the Aircraft, the Trust Estate,
the Indenture Estate or the Operative Documents other than (A) a transfer of the
Aircraft pursuant to Section 9, 10 or 19 of the Lease or Article IV or V of the
Trust Indenture, (B) any borrowing pursuant to Section 17 hereof or (C) a
transfer of the Aircraft pursuant to Section 15 of the Lease while an Event of
Default is continuing and prior to the time that the Indenture Trustee has
received all amounts due pursuant to the Trust Indenture.
(i) The Original Loan Participant represents, warrants and covenants
that:
(i) it is a bank duly organized and validly existing in good
standing under the laws of its jurisdiction of organization and has full
power, authority and legal right to execute, deliver and carry out the
terms of this Agreement;
(ii) this Agreement has been duly authorized, executed and
delivered by it and constitutes the legal, valid and binding obligation of
the Original Loan Participant enforceable against it in accordance with its
terms; and
(iii) the Certificates to be issued to it pursuant to the Trust
Indenture are being acquired by it with no present intent to make any
resale or distribution thereof which would require registration under the
Securities Act of 1933, as amended, and it will not
41
45
[Participation Agreement (1994 737 B)]
offer or sell any Certificates in violation of the Securities Act of 1933,
provided that the disposition of its property shall at all times be and
remain within its control.
(j) The Indenture Trustee and the Original Loan Participant each
hereby waives, and each subsequent Holder by its acceptance of a Certificate
shall be deemed to have waived, to the fullest extent permitted by law the
benefit of the provisions of Section 1111(b) of Title 11 of the United States
Code with respect to recourse against the Owner Trustee (in its individual
capacity) and the Owner Participant on account of any amount payable as
principal of, Break Amount, if any, and interest on the Certificates. If (i) all
or any part of the Trust Estate becomes the property of, or the Owner
Participant becomes, a debtor subject to the reorganization provisions of the
Bankruptcy Code or any successor provision, (ii) pursuant to such reorganization
provisions the Owner Trustee (in its individual capacity) or the Owner
Participant is required, by reason of the Owner Trustee (in its individual
capacity) or the Owner Participant being held to have recourse liability to the
Original Loan Participant, to any other Holder or to the Indenture Trustee,
directly or indirectly (other than the recourse liability of the Owner
Participant under this Participation Agreement), to make payment on account of
any amount payable as principal, Break Amount, if any, or interest on the
Certificates and (iii) the Original Loan Participant, any other Holder or the
Indenture Trustee actually receives any Excess Payment (as hereinafter defined)
which reflects any payment by the Owner Trustee (in its individual capacity) or
the Owner Participant on account of (ii) above, then the Original Loan
Participant, such other Holder or the Indenture Trustee, as the case may be,
shall promptly refund to the Owner Trustee or the Owner Participant (whichever
shall have made such payment) such Excess Payment. For purposes of this Section
8(j), "Excess Payment" means the amount by which such payment exceeds the amount
which would have been received by the Original Loan Participant, any other
Holder or the Indenture Trustee if the Owner Trustee (in its individual
capacity) or the Owner Participant had not become subject to the recourse
liability referred to in clause (ii) above. Nothing contained in this Section
8(j) shall prevent the Original Loan Participant, any other Holder or the
Indenture Trustee from enforcing any personal recourse obligation (and retaining
the proceeds thereof) of the Owner Trustee (in its individual capacity) or the
Owner Participant under this Participation Agreement or the Owner Trustee (in
its individual capacity) under the Trust Indenture (and any exhibits or annexes
thereto).
(k) The Indenture Trustee represents, in its individual capacity, as
follows:
(i) it is a "citizen of the United States" as defined in Section
40102(a)(15) of the Transportation Code, that it will notify promptly all
parties to this agreement if in its reasonable opinion its status as a
"citizen of the United States" is likely to change and that it will resign
as Indenture Trustee as provided in Section 8.02 of the Trust Indenture if
it should cease to be a "citizen of the United States";
(ii) it is a trust company organized under the laws of the
Commonwealth of Massachusetts and has the corporate power and authority to
enter into and perform its
42
46
[Participation Agreement (1994 737 B)]
obligations under the Trust Indenture and this Agreement and to
authenticate the Certificates;
(iii) the Indenture Trustee Documents, and the authentication of
the Certificates have been duly authorized by all necessary corporate
action on its part, and neither the execution and delivery thereof nor its
performance of any of the terms and provisions thereof will violate any
federal or Massachusetts law or regulation relating to its trust powers or
contravene or result in any breach of, or constitute any default under its
charter or by-laws or the provisions of any indenture, mortgage, contract
or other agreement to which it is a party or by which it or its properties
may be bound or affected; and
(iv) each of the Indenture Trustee Documents has been duly
executed and delivered by it and, assuming that each such agreement is the
legal, valid and binding obligation of each other party thereto, is the
legal, valid and binding obligation of the Indenture Trustee, enforceable
against it in accordance with its terms.
(l) So long as the Aircraft shall be leased to Lessee under the Lease
and so long as the Certificates are outstanding, the Owner Participant will not
sell, assign, convey or otherwise transfer any of its right, title or interest
in and to this Agreement, the Trust Estate or the Trust Agreement to any person
or entity, unless (i) the proposed transferee is a "Transferee" (as defined
below) and (ii) the Owner Participant shall have delivered to the Owner Trustee,
Lessee and the Indenture Trustee an opinion (in form, scope and substance
reasonably satisfactory to the Indenture Trustee and Lessee) of counsel
reasonably satisfactory to the Indenture Trustee and Lessee to the effect that
the agreement referred to in clause (O) below and any guaranty required by
clause (B) or (C) below, if any, are the legal, valid, binding and enforceable
obligations of the Transferee and the guarantor, as the case may be (subject to
the normal bankruptcy and equitable remedies exceptions contained in an opinion
on such matters and any other applicable exemptions contained in the opinions
relating to the Owner Participant delivered pursuant to Section 4(a)(xiv)
hereof), and (iii) each of Lessee, the Indenture Trustee and the Original Loan
Participant shall have (1) received an opinion (in form and substance reasonably
satisfactory to Lessee and the Original Loan Participant) of counsel to the
Owner Participant (who shall be reasonably satisfactory to Lessee) to the effect
that there are no Taxes that will be imposed on Lessee, the Indenture Estate,
the Indenture Trustee or the Original Loan Participant or required to be
indemnified against by Lessee, imposed on such transfer or (2) received from the
Owner Participant so seeking to transfer such right, title or interest,
indemnification, pursuant to an agreement reasonably satisfactory to Lessee and
the Original Loan Participant, for Taxes described in clause (1). A "Transferee"
shall mean either (A) a bank or other financial institution with a combined
capital, surplus and undivided profits of at least $50,000,000 (so long as the
Original Loan Participant holds any Certificates, $75,000,000) or a corporation
whose net worth is at least $50,000,000 (so long as the Original Loan
Participant holds any Certificates, $75,000,000), (B) any subsidiary of such a
bank, financial institution or
43
47
[Participation Agreement (1994 737 B)]
corporation, provided that such bank, financial institution or corporation
furnishes to the Owner Trustee, the Indenture Trustee and Lessee a guaranty
satisfactory to them with respect to the Owner Participant's obligations, in the
case of the Owner Trustee, under the Trust Agreement and, in the case of the
Indenture Trustee and Lessee, the Owner Participant's obligations hereunder, or
(C) any other entity, provided such obligations are guaranteed by the transferor
Owner Participant; provided, however, that unless otherwise consented to by
Lessee any Transferee shall not be an airline, a commercial air carrier, an air
freight forwarder, an entity engaged in the business of parcel transport by air
or other similar person or a corporation or other entity controlling, controlled
by or under common control with such an airline, a commercial air carrier, an
air freight forwarder, an entity engaged in the business of parcel transport by
air or other similar person. Each such transfer to a Transferee shall be subject
to the conditions that (M) upon giving effect to such transfer, the Transferee
is a "citizen of the United States" within the meaning of Section 40102(a)(15)
of the Transportation Code or the Transferee, at its sole cost and expense on an
after-tax basis (including any continuing costs of the voting trust), shall have
entered into a voting trust or similar arrangement which permits the
registration of the Aircraft under the Transportation Code in the name of the
Owner Trustee, (N) the Transferee has the full power and authority to enter into
and carry out the transactions contemplated hereby, (O) the Transferee enters
into an agreement or agreements, in form and substance reasonably satisfactory
to the Owner Trustee, Lessee and the Indenture Trustee, whereby the Transferee
confirms that it shall be deemed a party to this Agreement and a party to the
Trust Agreement and agrees to be bound by all the terms of, and to undertake all
of the obligations of the transferor Owner Participant contained in the Owner
Participant's Documents (to the extent of the participation so transferred to
it) and makes the representation made in Section 8(f)(ii) which shall be based
on the representations, warranties, and covenants of the other parties (or their
successors) to the Operative Agreements, (P) such transfer does not violate any
applicable law including, without limitation, the Transportation Code, or any
rules or regulations promulgated thereunder, the Securities Act of 1933 or the
Trust Indenture Act of 1939, assuming the continuing truth of the representation
of the Lessee and the Original Loan Participant in Section 8(o) and compliance
with Sections 8(y) and 8(z), (Q) the transferor Owner Participant assumes the
risk of any loss of Interest Deductions, MACRS Deductions or any Inclusion Event
(each as defined in the Tax Indemnity Agreement) resulting from such transfer,
(R) after giving effect to such transfer, there shall be no more than two Owner
Participants of record at that time and (S) such transfer will not give rise to
a Default or Event of Default under the Trust Indenture; and Lessee may request
such Transferee to provide an opinion of counsel (who shall be reasonably
satisfactory to Lessee) in form and substance reasonably satisfactory to Lessee
as to any matter set forth in clauses (N) or (P) (in the case of clause (P),
such opinion
44
48
[Participation Agreement (1994 737 B)]
being to the effect that the interest being transferred does not require
registration under the Securities Act of 1933, and as to such other matters
referred to in clause (P) as are comparable in substance (including exceptions
and qualifications) to the opinions relating to the Owner Participant delivered
pursuant to Section 4(a)(xiv) hereof) (it being understood that counsel may
assume those facts pertaining to Lessee, Indenture Trustee or the Holders). Upon
any such transfer by the Owner Participant as above provided, the Transferee
shall be deemed the Owner Participant for all purposes hereof and of the other
Operative Documents and each reference herein to the transferor Owner
Participant shall thereafter be deemed for all purposes to be to the Transferee
and the transferor Owner Participant shall be relieved of all obligations of the
transferring Owner Participant under the Owner Participant Documents arising
after the date of such transfer except to the extent fairly attributable to acts
or events occurring prior thereto and not assumed by the transferee Owner
Participant (in each case, to the extent of the participation so transferred).
If the Owner Participant intends to transfer any of its interests hereunder, (i)
it shall give prior written notice thereof as soon as practicable, but in no
event less than 10 days prior thereto, to the Indenture Trustee, the Owner
Trustee and Lessee, specifying the name and address of the proposed Transferee
and (ii) the parties hereto shall, upon the written request of the Owner
Participant, reasonably cooperate in connection with such transfer, including
providing acknowledgements of their respective consent to such transfer. The
Owner Participant shall pay all of the reasonable costs of the other parties
hereto, on a net after-tax basis, of any such transfer. For purposes of this
paragraph, "net worth" shall mean the excess of total tangible assets over total
liabilities, each to be determined in accordance with generally accepted
accounting principles consistently applied.
(m) [Intentionally Omitted.]
(n) First Security Bank of Utah, National Association, both and State
Street Bank and Trust Company, each in its individual capacity, agrees for the
benefit of Lessee to comply with the terms of the Trust Indenture which it is
required to comply with in its individual capacity.
(o) The Owner Participant represents and warrants that no part of the
funds used by it to acquire its interest in the Trust Estate constitutes assets
of any "employee benefit plan" as defined in Section 3(3) of ERISA (an "ERISA
Plan"). The Original Loan Participant represents and warrants that no part of
the funds used by it to acquire the Certificates or any interest therein
(including any participation in such certificates) constitutes assets of an
ERISA Plan. Lessee represents and warrants that the execution and delivery of
this Agreement and the other Operative Documents and the consummation of the
transactions contemplated hereby and thereby will not involve any prohibited
transaction within the meaning of Section 406 of ERISA
45
49
[Participation Agreement (1994 737 B)]
or Section 4975 of the Code (such representation being made solely in reliance
upon and subject to the accuracy of the representations contained in the
preceding sentences of this subsection).
(p) First Security Bank of Utah, National Association, both in its
individual capacity and as Owner Trustee represents and warrants that:
(i) the Trust Agreement and, assuming due authorization, execution
and delivery of the Trust Agreement by the Owner Participant, each of the
other Owner Trustee Documents has been duly executed and delivered by one
of its officers who is duly authorized to execute and deliver such
instruments on behalf of the Owner Trustee;
(ii) the Trust Estate is free and clear of Lessor Liens
attributable to First Security Bank of Utah, National Association, in its
individual capacity, and there are no Liens affecting the title of the
Owner Trustee to the Aircraft or resulting from any act or claim against
First Security Bank of Utah, National Association, in its individual
capacity arising out of any event or condition not related to the
ownership, leasing, use or operation of the Aircraft or to any other
transaction contemplated by this Agreement or any of the other Operative
Documents, including any Lien resulting from the nonpayment by First
Security Bank of Utah, National Association, in its individual capacity of
any Taxes imposed or measured by its net income;
(iii) there has not occurred any event which constitutes (or to
the best of its knowledge would, with the passage of time or the giving of
notice or both, constitute) an Event of Default as defined in the Trust
Indenture which has been caused by or relates to First Security Bank of
Utah, National Association, in its individual capacity and which is
presently continuing;
(iv) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States and
(assuming due authorization, execution and delivery of the Trust Agreement
by the Owner Participant) has the corporate power and authority to enter
into and perform its obligations under the Trust Agreement, and (assuming
due authorization, execution and delivery of the Trust Agreement by the
Owner Participant) has full right, power and authority to enter into and
perform its obligations as Owner Trustee pursuant to the Trust Agreement
under each of the other Owner Trustee Documents;
(v) each of the Owner Trustee Documents has been duly authorized
by all necessary corporate action on its part, and neither the execution
and delivery thereof nor its performance of any of the terms and provisions
thereof will violate any federal or Utah law or regulation relating to its
banking or trust powers or contravene or result in any breach of, or
constitute any default under, its charter or by-laws or the provisions of
46
50
[Participation Agreement (1994 737 B)]
any indenture, mortgage, contract or other agreement to which it is a party
or by which it or its properties may be bound or affected;
(vi) assuming due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, each of the Owner Trustee
Documents has been duly executed and delivered by it and, each of the Trust
Agreement and the Participation Agreement (to the extent executed by the
Owner Trustee in its individual capacity) is a legal, valid and binding
obligation of First Security Bank of Utah, National Association, in its
individual capacity and as Owner Trustee, as the case may be, enforceable
against such party in accordance with the terms thereof;
(vii) on the Delivery Date, the Owner Trustee shall have received
whatever title to the Aircraft as was conveyed to it by Lessee;
(viii) it has not offered any interest in the Trust Estate or any
Certificates or any similar securities for sale to, or solicited any offer
to acquire the same from, anyone, and no responsible officer or responsible
employee of First Security Bank of Utah, National Association, has
knowledge of any such offer or solicitation, except as set forth in Section
7(a)(xi); and
(ix) assuming due authorization, execution and delivery of each of
the Owner Trustee Documents by each of the parties thereto (other than the
Owner Trustee), each of the Owner Trustee Documents is a legal, valid and
binding obligation of the Owner Trustee, enforceable against the Owner
Trustee in accordance with its respective terms and the trust intended to
be formed by the Trust Agreement has been duly and validly formed;
(x) there are no proceedings pending or, to the best knowledge of
First Security Bank of Utah, National Association, threatened, against
First Security Bank of Utah, National Association, in any court or before
any governmental authority or arbitration board or tribunal which, if
adversely determined, would materially and adversely affect the right,
power and authority of First Security Bank of Utah, National Association,
to enter into or perform its obligations under the Owner Trustee Documents;
and
(xi) neither the due execution and delivery of the Owner Trustee
Documents by First Security Bank of Utah, National Association, in its
individual capacity or as Owner Trustee under the Trust Agreement, as the
case may be, nor the consummation by it of any of the transactions
contemplated thereby require the consent or approval of, the giving of
notice to, or the registration with, any federal or Utah governmental
authority or agency pursuant to any federal or Utah law governing the
banking or trust powers of First Security Bank of Utah, National
Association.
47
51
[Participation Agreement (1994 737 B)]
(q) The Owner Participant agrees, solely for the benefit of Lessee,
that it will comply with any obligation expressly required of it under Section
9(c) of the Lease. The Owner Participant further covenants and agrees to pay or
cause the Owner Trustee to pay those costs and expenses specified to be paid by
the Owner Participant pursuant to the Lease and all costs and expenses that are
for the account of the Owner Trustee pursuant to Sections 3(f), 5(d), 5(e) and
12 of the Lease.
(r) Subject to compliance by Lessee with all of its obligations under
the Lessee Documents and provided that the Original Loan Participant shall no
longer be a Holder, each of the Owner Trustee, the Indenture Trustee and the
Owner Participant covenants and agrees that, at Lessee's expense on a net
after-tax basis (including, without limitation, reasonable attorney's fees and
expenses of each of such parties), (i) Lessee may elect to terminate the Lease
and to purchase the Aircraft pursuant to Section 19(b) of the Lease and that
each of such parties will execute and deliver appropriate documentation
transferring all right, title and interest in the Aircraft to Lessee (without
recourse or warranty except as to Lessor Liens (including for this purpose Liens
that would be Lessor Liens but for the proviso to the definition of Lessor
Liens) with respect to the Owner Participant) (including without limitation,
such bills of sale and other instruments and documents as Lessee shall
reasonably request to evidence (on the public record or otherwise) such transfer
and the vesting of all right, title and interest in and to the Aircraft in
Lessee), and (ii) Lessee, in connection with such purchase, may assume (and
receive a credit in an amount equal to the principal amount of the debt assumed,
against the purchase price payable by Lessee pursuant to Section 19(b)) the
obligations of the Owner Trustee pursuant to Section 2.15 of the Trust Indenture
and the Certificates (and the Lease, to the extent that the Owner Trustee's
obligations thereunder are incorporated into the Trust Indenture or the
Certificates), and Lessee shall confirm that its obligations under the Lease
shall be direct obligations to the Indenture Trustee as if set forth in the
Trust Indenture, and that each of the parties shall execute and deliver
appropriate documentation in form and substance reasonably satisfactory to such
parties under which Lessee will assume such obligations on the basis of full
recourse to Lessee, maintaining the security interest in the Aircraft created by
the Trust Indenture, releasing the Owner Participant and the Owner Trustee from
all future obligations in respect of the Certificates, the Trust Indenture and
all other Operative Documents and all such other actions (including the
furnishing of legal opinions reasonably requested by any party) as are
reasonably necessary to permit such assumption by Lessee.
(s) Lessee will not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets to any
Person unless:
(i) the corporation formed by such consolidation or into which
Lessee is merged or the Person which acquires by conveyance, transfer or
lease substantially all of the assets of Lessee as an entirety shall be a
"citizen of the United States" as defined in Section 40102(a)(15) of the
Transportation Code and shall be a United States certificated air carrier;
48
52
[Participation Agreement (1994 737 B)]
(ii) the corporation formed by such consolidation or into which
Lessee is merged or the Person which acquires by conveyance, transfer or
lease substantially all of the assets of Lessee as an entirety shall
execute and deliver to the Owner Trustee, the Indenture Trustee and the
Owner Participant a duly authorized, valid, binding and enforceable
agreement in form and substance reasonably satisfactory to the Indenture
Trustee and the Owner Participant containing an assumption by such
successor corporation or Person of the due and punctual performance and
observance of each covenant and condition of the Operative Documents to be
performed or observed by Lessee;
(iii) immediately after giving effect to such transaction, no
Event of Default under the Lease shall have occurred and be continuing;
(iv) Lessee shall have delivered to the Owner Trustee, the
Indenture Trustee and the Owner Participant a certificate signed by the
President or any Vice President and by the Secretary or an Assistant
Secretary of Lessee, and an opinion of counsel (which may be Lessee's
General Counsel) reasonably satisfactory to the Indenture Trustee and the
Owner Participant, each stating that such consolidation, merger,
conveyance, transfer or lease and the assumption agreement mentioned in
clause (ii) above comply with this Section 8(s) and that all conditions
precedent herein provided for relating to such transaction have been
complied with; and
(v) the corporation formed by such consolidation or into which
Lessee is merged or the Person which acquires by conveyance, transfer or
lease substantially all of the assets of Lessee, shall make such filings
and recordings with the FAA pursuant to the Transportation Code, as shall
be necessary or desirable to evidence such consolidation, merger,
conveyance, transfer or lease with or to such entity.
Upon any consolidation or merger, or any conveyance, transfer or lease
of substantially all of the assets of Lessee as an entirety in accordance with
this Section 8(s), the successor corporation or Person formed by such
consolidation or into which Lessee is merged or to which such conveyance,
transfer or lease is made shall succeed to, and be substituted for, and may
exercise every right and power of, Lessee under this Agreement with the same
effect as if such successor corporation or Person had been named as Lessee
herein. No such conveyance, transfer or lease of substantially all of the assets
of Lessee as an entirety shall have the effect of releasing Lessee or any
successor corporation or Person which shall theretofore have become such in the
manner prescribed in this Section 8(s) from its liability in respect of any
Operative Document to which it is a party.
(t) Lessee, at its expense, will, at the request of any party hereto,
take, or cause to be taken, such action with respect to the recording, filing,
rerecording and refiling of the Trust Agreement, the Lease, the Lease
Supplement, the Trust Indenture, the Trust Supplement
49
53
[Participation Agreement (1994 737 B)]
and any financing statements or other instruments as are necessary to maintain,
so long as the Trust Indenture or the Lease is in effect, the perfection of the
security interests created by the Trust Indenture and any security interest that
may be claimed to have been created by the Lease and the ownership interest of
the Owner Trustee in the Aircraft.
(u) Section 3 of the Lease contemplates that, under certain
circumstances, the Owner Participant will make certain recalculations of Basic
Rent, Interim Rent, Excess Amount, Stipulated Loss Value percentages,
Termination Value percentages and the EBO Percentage, and the Owner Participant
hereby agrees to make such recalculations as and when contemplated by the Lease
and subject to all the terms and conditions of the Lease and promptly to take
such further actions as may be necessary or desirable to give effect to and to
cause the Owner Trustee to give effect to the provisions of Section 3 of the
Lease.
(v) The Owner Participant hereby agrees not to terminate or revoke the
Trust Agreement or the trusts created thereunder without the prior written
consent of (i) the Lessee so long as the Lease shall remain in effect and no
Event of Default under the Lease shall have occurred and be continuing and (ii)
the Indenture Trustee so long as the Trust Indenture shall be in effect.
(w) Lessee covenants and agrees with the Owner Participant, the
Indenture Trustee and the Owner Trustee that at all times during the Term it
will be an "air carrier" within the meaning of the Transportation Code operating
under certificates issued pursuant to Section 41102 of such Code.
(x) The Original Loan Participant represents, and each subsequent
Holder by its acceptance of such Certificate shall be deemed to represent, that
it is exempt from United States withholding taxes, and each Holder covenants
that, if required to obtain or renew such exemption, it will, upon request and
to the extent it remains lawfully able to do so, properly prepare and promptly
furnish to each of the Owner Trustee, the Indenture Trustee and the Lessee
Internal Revenue Service Form 1001, Form 4224 (with respect to each tax year) or
Form W-8, whichever is applicable. The Original Loan Participant represents,
warrants and covenants that it will promptly notify the Owner Trustee, the
Indenture Trustee and Lessee if it transfers any interest in the Certificates to
any Person.
Each Holder shall indemnify (on an after-tax basis) and hold harmless
the Indenture Trustee, the Owner Trustee, Lessee and the Owner Participant
against any United States withholding taxes (and related interest and penalties)
which the Indenture Trustee fails to withhold on payments to it as a result of
its failure to provide the required certificate or form or the invalidity of any
certificate or form provided by it pursuant to this Section 8(x). Any amount
payable hereunder shall be paid within 30 days after receipt by such Holder of a
written demand therefor.
50
54
[Participation Agreement (1994 737 B)]
(y) The Original Loan Participant represents, warrants and covenants
and, by acceptance of its Certificate, each subsequent Holder shall be deemed to
have represented, warranted and covenanted that it will not sell, assign, grant
participations in or otherwise transfer its Certificate or Certificates to any
other Person unless such Person represents and warrants, in writing, to the
Original Loan Participant or such Holder, for the benefit of the Original Loan
Participant or such Holder, Owner Participant and Lessee that at least one of
the following statements is an accurate representation as to such Person and/or
the source of funds to be used by such Person to acquire the Certificate or
Certificates or participation therein:
(i) no part of such funds directly or indirectly constitutes
or may be deemed under the Code, ERISA or any applicable state law or
any rulings or regulations thereunder to be assets of an ERISA Plan;
or
(ii) such Person is an insurance company and such funds
constitute assets allocated to a separate account maintained by it
which is a "pooled separate account" (within the meaning of Section
3(17) of ERISA and Prohibited Transaction Class Exemption 90-1 issued
by the Department of Labor ("PTE 90-1")) in which an ERISA Plan has an
interest and the acquisition and holding of Certificates is entitled
to a prohibited transaction exemption granted by PTE 90-1; or
(iii) such Person is a bank and such funds constitute assets
allocated to a bank collective investment vehicle maintained by it as
a "collective investment fund" (as defined in Prohibited Transaction
Class Exemption 91-38 issued by the Department of Labor ("PTE 91-38"))
in which an ERISA Plan has an interest and the acquisition and holding
of Certificates is entitled to a prohibited transaction exemption
granted by PTE 91-38; or
(iv) such funds constitute assets of an "investment fund" in
which an ERISA Plan has an interest and which is managed by a
"qualified professional asset manager" or "QPAM" (as such terms are
defined in Part V of Prohibited Transaction Class Exemption 84-14
issued by the Department of Labor ("PTE 84-14") and the acquisition
and holding of the Certificates is entitled to a prohibited
transaction exemption granted by PTE 84-14; or
(v) such funds constitute assets of one or more ERISA Plans,
each of which is a "governmental plan" (as such term is defined in
Section 3(32) of ERISA and in Section 414(d) of the Code) or a "church
plan" (as such term is defined in Section 3(33) of ERISA and in
Section 414(e) of the Code) and the acquisition and holding of the
Certificates shall not constitute a prohibited transaction under
ERISA, the Code or any applicable state law;
51
55
[Participation Agreement (1994 737 B)]
provided, that the Original Loan Participant and any such subsequent Holder
may grant participations in any Certificates held by it only in accordance
with Section 8(z) hereof. Any such Person shall also represent and warrant
that it will require any transferee of its interest in any Certificates to
make the representations and warranties set forth in the preceding sentence
of this Section 8(y) and this sentence in writing, to such Person for the
benefit of such Person, the Owner Participant and Lessee.
(z) The Original Loan Participant covenants that it will not grant
participations in its Certificates to any Person unless such Person represents
and warrants, in writing, to the Original Loan Participant and for the benefit
of the Original Loan Participant, the Owner Participant and Lessee that no part
of the funds used by it to acquire its interest in the Certificates constitutes
assets of an ERISA Plan. Any such Person shall require any transferee of its
interest in the Certificates to make the representation in the preceding
sentence, in writing, to such Person for its benefit and the benefit of the
Original Loan Participant, the Owner Participant and Lessee.
SECTION 9. [Intentionally Omitted].
SECTION 10. Other Documents; Amendment. Each of the Owner Participant
and the Owner Trustee hereby (A) agrees with Lessee and the Indenture Trustee to
comply with all of the terms of the Trust Agreement (as the same may hereafter
be amended or supplemented from time to time in accordance with the terms
thereof) applicable to it, to the extent such non-compliance would be adverse to
such party; and (B) agrees with Lessee and the Indenture Trustee not to amend,
supplement or otherwise modify any provision of the Trust Agreement in a manner
adversely affecting such party without the prior written consent of such party.
Notwithstanding the foregoing, unless an Event of Default shall have occurred
and be continuing and so long as the Lease has not been terminated, the
Indenture Trustee and the Owner Participant hereby agree for the benefit of
Lessee that without the consent of Lessee they will not (and the Owner
Participant agrees that it will not cause the Owner Trustee to) amend,
supplement or otherwise modify any provision of the Trust Indenture in a manner
adversely affecting Lessee. The Indenture Trustee and the Owner Trustee agree to
promptly furnish to Lessee copies of any supplement, amendment, waiver or
modification of any of the Operative Documents to which Lessee is not a party.
The Original Loan Participant agrees and, by acceptance of its Certificate, each
subsequent Holder shall be deemed to have agreed that it will not take any
action in respect of the Indenture Estate except through the Indenture Trustee
pursuant to the Trust Indenture or as otherwise permitted by the Trust
Indenture.
SECTION 11. Certain Covenants of Lessee. Lessee covenants and agrees
with the Owner Participant, the Indenture Trustee and the Owner Trustee, in its
capacity as such and in its individual capacity as follows:
52
56
[Participation Agreement (1994 737 B)]
(a) Lessee will cause to be done, executed, acknowledged and delivered
all and every such further acts, conveyances and assurances as the Owner
Trustee, the Indenture Trustee or the Owner Participant shall reasonably
require for accomplishing the purposes of this Agreement and the other
Operative Documents; provided that any instrument or other document so
executed by Lessee will not expand any obligations or limit any rights of
Lessee in respect of the transactions contemplated by any Operative
Documents. Lessee, forthwith upon delivery of the Aircraft under the Lease
shall cause the Aircraft to be duly registered, and at all times thereafter
to remain duly registered, in the name of the Owner Trustee, except as
otherwise required or permitted hereunder or under the Lease, under the
Transportation Code or under the applicable law of another permitted
government of registry, or shall furnish to the Owner Trustee such
information as may be required to enable the Owner Trustee to make
application for such registration (at the expense of Lessee, including,
without limitation, reasonable attorney's fees and expenses), and shall
promptly furnish to the Owner Trustee such information as may be required
to enable the Owner Trustee to timely file any reports required to be filed
by it as the lessor under the Lease or as the owner of the Aircraft with
any governmental authority (including tax authorities).
(b) Lessee, at its expense, will cause the Trust Agreement, the Lease,
all Lease Supplements, all amendments to the Lease, the Trust Indenture,
and all supplements and amendments to the Trust Indenture to be promptly
filed and recorded, or filed for recording, to the extent permitted under
the Transportation Code, or required under any other applicable law. Upon
the execution and delivery of the Owner Trustee's FAA Xxxx of Sale, the
Lease Supplement covering the Aircraft, the Trust Supplement covering the
Aircraft, the Trust Agreement, the Lease and the Trust Indenture, such
documents shall be filed for recording with the Federal Aviation
Administration in the following order of priority: first, the Owner
Trustee's FAA Xxxx of Sale, second, the FAA registration application,
third, the Trust Indenture, with the Trust Agreement and the Trust
Supplement attached, and fourth, the Lease, with the Lease Supplement
covering the Aircraft, the Trust Indenture and the Trust Supplement
attached. Lessee agrees to furnish the Owner Participant, the Owner Trustee
and the Indenture Trustee with copies of the foregoing documents with
recording data as promptly as practicable following the issuance of same by
the FAA.
SECTION 12. Owner for Income Tax Purposes. It is hereby agreed among
Lessee, the Owner Participant and the Owner Trustee that for income tax purposes
the Owner Participant will be the owner of the Aircraft to be delivered under
the Lease and Lessee will be the lessee thereof, and each party hereto agrees to
characterize the Lease as a lease for income tax purposes.
SECTION 13. Notices; Consent to Jurisdiction. (a) All notices,
demands, instructions and other communications required or permitted to be given
to or made upon any
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[Participation Agreement (1994 737 B)]
party hereto shall be in writing and shall be personally delivered or sent by
registered or certified mail, postage prepaid, or by prepaid telex, TWX or
telegram (with messenger delivery specified in the case of a telegram), or by
telecopier, or by prepaid courier service, and shall be deemed to be given for
purposes of this Agreement on the day that such writing is delivered or if given
by certified mail, three Business Days after being deposited in the mails, in
accordance with the provisions of this Section 13(a). Unless otherwise specified
in a notice sent or delivered in accordance with the foregoing provisions of
this Section 13(a), notices, demands, instructions and other communications in
writing shall be given to or made upon the respective parties hereto at their
respective addresses (or to their respective telex, TWX or telecopier numbers)
as follows: (A) if to Lessee, the Owner Trustee, the Original Loan Participant,
the Indenture Trustee or the Owner Participant, to the respective addresses set
forth on Schedule I hereto, (and in the case of Owner Trustee a copy shall be
sent to the Owner Participant) or (B) if to a subsequent Owner Participant,
addressed to such subsequent Owner Participant at such address as such
subsequent Owner Participant shall have furnished by notice to the parties
hereto or (C) if to any subsequent Holder, addressed to such Holder at its
address set forth in the Certificate Register.
(b) Each party to this Agreement and, by acceptance of its
Certificate, each subsequent Holder (individually a "Party" and collectively
"Parties") irrevocably agrees that any legal suit, action or proceeding brought
by any other Party, which arises solely out of or relates solely to the
Operative Documents or any of the transactions contemplated hereby or thereby or
any document referred to herein or therein, may be instituted in the Circuit
Court of the State of Illinois, Xxxx County or the United States District Court
for the Northern District of Illinois and that they hereby waive the right to
trial by jury in any such proceeding; provided, however, that the foregoing
provisions shall not apply to third party tort claims (but shall apply to an
indemnity claim with respect to such tort claim) and that the foregoing shall
not apply to any right a Party may have to seek removal of such legal suit,
action or proceeding to federal court or to seek consolidation of any separate
legal suits, actions or proceedings brought by any one or more of the other
Parties in the same or different jurisdictions. The agreement set forth in this
Section 13(b) is given solely for the benefit of the Parties and such agreement
is not intended to and shall not inure to the benefit of any other person.
SECTION 14. Change of Situs of Owner Trust. The Owner Participant
agrees that if, at any time, the Trust Estate becomes subject to any Taxes for
which it is indemnified pursuant to Section 7(b) hereof and if, as a consequence
thereof, Lessee should request that the situs of the trust be moved to another
state in the United States from the state in which it is then located, the situs
of the trust may be moved with the written consent of the Owner Participant
(which consent shall not be unreasonably withheld) and the Owner Participant
will take whatever action may be reasonably necessary to accomplish such
removal; provided that (A) Lessee shall provide such additional tax
indemnification, as the Owner Participant may reasonably request, (B) the rights
and obligations under the Operative Documents of the Owner Participant shall not
be altered as a result of the taking of such action, (C) the lien of the Trust
Indenture on the Indenture Estate shall not be adversely affected by such
action, and the Lessee
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[Participation Agreement (1994 737 B)]
shall execute and deliver such documents as may be requested by the Indenture
Trustee to continue the perfection of the Lien on the Indenture Estate, (D) the
Owner Participant shall have received an opinion or opinions of counsel
(reasonably satisfactory to the Owner Participant) in scope, form and substance
reasonably satisfactory to the Owner Participant to the effect that (I) the
trust, as thus removed, shall remain a validly established trust, (II) any
amendments to the Trust Agreement necessitated by such removal shall have been
duly authorized, executed and delivered by the parties thereto and shall
constitute the valid and binding obligations of such parties, enforceable in
accordance with their terms, (III) such removal will not result in the
imposition of, or increase in the amount of, any Tax for which Lessee is not
required to indemnify the Owner Participant, the Owner Trustee or the Trust
Estate pursuant to Section 7(b) hereof (taking into account any additional
indemnification provided by Lessee pursuant to clause (A) of this sentence),
(IV) such removal will not, in the Owner Participant's reasonable judgment,
result in any Loss of MACRS Deductions, Interest Deductions or an Inclusion
Event (as defined in the Tax Indemnity Agreement) with respect to which Lessee
is not required to indemnify the Owner Participant pursuant to Section 5 of the
Tax Indemnity Agreement (taking into account any additional indemnification
provided by Lessee pursuant to clause (A) of this sentence), and (V) covering
such other matters as the Owner Participant may reasonably request, (E) if such
removal involves the replacement of the Owner Trustee, the Owner Participant
shall have received an opinion of counsel to such successor Owner Trustee in
form and substance reasonably satisfactory to the Owner Participant covering the
matters described in Section 4(a)(xiii) hereof and (F) Lessee shall indemnify
and hold harmless the Owner Participant on a net after-tax basis against any and
all reasonable and actual costs and expenses including attorneys' fees and
disbursements, registration, recording or filing fees and Taxes incurred by the
Owner Trustee or Owner Participant, in connection with such change of situs.
SECTION 15. Miscellaneous. (a) Each of the Owner Participant, the
Original Loan Participant and, by acceptance of its Certificate, each subsequent
Holder covenants and agrees that it shall not unreasonably withhold its consent
to any consent requested of the Owner Trustee, as Lessor, or the Indenture
Trustee under the terms of the Lease, which by its terms is not to be
unreasonably withheld by the Owner Trustee, as Lessor, or by the Indenture
Trustee.
(b) The representations, warranties, indemnities and agreements of
Lessee, the Owner Trustee, the Indenture Trustee, the Owner Participant and the
Original Loan Participant provided for in this Agreement, and Lessee's, the
Owner Trustee's, Indenture Trustee's, Original Loan Participant's and the Owner
Participant's obligations under any and all thereof, shall survive the making
available of the respective Commitments by the Participants, the delivery or
return of the Aircraft, the transfer of any interest of the Owner Participant in
the Trust Estate or the Aircraft or any Engine or the transfer of any interest
by any Holder in any Certificate or the Indenture Estate and the expiration or
other termination of this Agreement or any other Operative Document.
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[Participation Agreement (1994 737 B)]
(c) This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an original,
but all such counterparts shall together constitute but one and the same
instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified, except by an instrument
in writing signed by the party against which the enforcement of the termination,
amendment, supplement, waiver or modification is sought; and no such
termination, amendment, supplement, waiver or modification shall be effective
unless a signed copy thereof shall have been delivered to the Lessee, the
Indenture Trustee and the Owner Trustee. The terms of this Agreement shall be
binding upon, and inure to the benefit of and shall be enforceable by, Lessee,
the Participants, the Indenture Trustee and the Owner Trustee. THIS AGREEMENT
SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF ILLINOIS, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF
ILLINOIS.
(d) The parties hereto agree that all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Agreement and any agreement referred to
herein other than the Trust Agreement, unless expressly otherwise stated, are
made and intended only for the purpose of binding the Trust Estate and
establishing the existence of rights and remedies which can be exercised and
enforced against the Trust Estate. Therefore, anything contained in this
Agreement or such other agreements to the contrary notwithstanding (except for
any express provisions that the Owner Trustee is responsible for or is acting in
or making representations or agreements in its individual capacity), no recourse
shall be had with respect to this Agreement or such other agreements against the
Owner Trustee in its individual capacity or against any institution or person
which becomes a successor trustee or co-trustee or any officer, director,
trustee, servant or direct or indirect parent or controlling person or persons
of any of them; provided, however, that this Section 15(d) shall not be
construed to prohibit any action or proceeding against any party hereto for its
own willful misconduct or grossly negligent conduct; and provided, further, that
nothing contained in this Section 15(d) shall be construed to limit the exercise
and enforcement in accordance with the terms of this Agreement or such other
agreements of rights and remedies against the Trust Estate. The foregoing
provisions of this Section 15(d) shall survive the termination of this Agreement
and the other Operative Documents.
(e) No Participant shall have any obligation or duty to the Lessee, to
any other Participant or to others with respect to the transactions contemplated
hereby except those obligations or duties of such Participant expressly set
forth in this Agreement and the other Operative Documents and no Participant
shall be liable for performance by any other party hereto of such other party's
obligations or duties hereunder. Without limitation of the generality of the
foregoing, under no circumstances whatsoever shall any Participant be liable to
Lessee, nor shall any Participant be liable to any other Participant, for any
action or inaction on the part of the Indenture Trustee or the Owner Trustee in
connection with the transactions contemplated
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[Participation Agreement (1994 737 B)]
herein, whether or not such action or inaction is caused by the willful
misconduct or gross negligence of the Indenture Trustee or the Owner Trustee.
(f) This Agreement shall be binding upon and shall inure to the
benefit of and shall be enforceable against, the parties hereto and their
respective successors and permitted assigns including each successive holder of
the Owner Participant's interest and each successive holder of any Certificate
issued and delivered pursuant to this Agreement or the Trust Indenture whether
or not an express assignment to such holder of rights and obligations under this
Agreement has been made.
SECTION 16. Invoices and Payment of Expenses. Each of the Owner
Trustee, the Indenture Trustee, Lessee and the Participants shall promptly
submit to the Owner Participant and the Lessee for their joint prompt approval
copies of invoices of the Transaction Expenses as they are received. The Owner
Participant agrees to transfer to the Owner Trustee from time to time promptly
upon receipt of invoices of Transaction Expenses such amount as shall be
necessary in order to enable the Owner Trustee to pay such Transaction Expenses
or to pay such amounts directly. To the extent of funds received by it, the
Owner Trustee agrees to pay all invoices of Transaction Expenses that have been
so approved promptly upon receipt thereof. Notwithstanding the foregoing, in the
event that the transactions contemplated hereby shall not be consummated, Lessee
shall pay all Transaction Expenses, except that (i) the fees, expenses and
disbursements of the Owner Participant (including those relating to its counsel)
and the fees and expenses of any appraisal shall be borne by the Owner
Participant if such failure to consummate the transactions results from the
fault or the breach by the Owner Participant of its obligations hereunder and
(ii) the fees, expenses and disbursements of the Original Loan Participant
(including those relating to its counsel) shall be borne by the Original Loan
Participant if such failure to consummate the transactions results from the
fault of the Original Loan Participant. To the extent Transaction Expenses
exceed 0.5% of Lessor's Cost, Lessee may, in lieu of electing an optimization
pursuant to Section 18 hereof, pay all or a portion of the Transaction Expenses
described in clause (i)(5) of the definition of Transaction Expenses.
SECTION 17. Optional Prepayment of Certificates. (a) Subject to
subparagraph (d) below, in the event that at any time Lessee shall have given
written notice to the Owner Trustee, the Indenture Trustee and the Owner
Participant that there be effected a voluntary prepayment of all of the
outstanding Certificates by the Owner Trustee as part of a refunding or
refinancing transaction, the Owner Participant agrees to negotiate promptly in
good faith to conclude an agreement with Lessee as to the terms of such
refunding or refinancing transaction (including the terms of any debt to be
issued in connection with such refunding or refinancing transaction and the
documentation to be executed in connection therewith), and if after such good
faith negotiation Lessee and the Owner Participant shall have concluded an
agreement with respect to such terms:
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[Participation Agreement (1994 737 B)]
(1) within ten Business Days after the reaching of such
agreement, the Owner Participant will deliver to Lessee a certificate of an
authorized representative of the Owner Participant (the "Refinancing
Certificate") setting forth (i) the proposed date on which the outstanding
Certificates will be prepaid, describing the new debt to be issued and the
other aspects of such refunding or refinancing transaction to be
consummated (such date, the "Refinancing Date") and (ii) the following
information: (A) the principal amount of debt to be issued by the Owner
Trustee on the Refinancing Date, and (B) the proposed revised schedules of
Basic Rent, Interim Rent, Excess Amount, debt amortization, Stipulated Loss
Value percentages, Termination Value percentages and EBO Percentage. Within
ten Business Days of its receipt of the Refinancing Certificate, Lessee may
demand a verification pursuant to Exhibit E to the Lease of the information
set forth in the Refinancing Certificate. Upon the acceptance by Lessee of
the accuracy of the information set forth in the Refinancing Certificate or
the determination pursuant to such verification procedures of the revised
Basic Rent, Interim Rent, Excess Amount, debt amortization, Stipulated Loss
Value percentages, Termination Value percentages and EBO Percentage and the
Debt/Equity Ratio (such information, the "Refinancing Information") the
appropriate parties will take the actions specified in paragraphs (2)
through (6) below;
(2) the appropriate parties will enter into a financing or loan
agreement in form and substance reasonably satisfactory to the Owner
Participant, the Owner Trustee and the Lessee (which may involve an
underwriting agreement in connection with a public offering of such debt or
the purchase of such debt by a publicly funded entity (or entities) or the
sale of the Owner Trustee's interest in the Trust Estate and/or the
Aircraft and its resale to the Owner Trustee) with the institution or
institutions to be named therein (A) providing for (i) the issuance and
sale by the Owner Trustee to such institution or institutions on the
Refinancing Date of debt securities in an aggregate principal amount
specified in the Refinancing Information, which amount shall be at least
equal to the aggregate principal amount of all Certificates outstanding on
the Refinancing Date (such debt securities, the "New Debt") and (ii) the
application of the proceeds of the sale of the New Debt to the redemption
of all such Certificates on the Refinancing Date and (B) pursuant to which
the parties to the refinancing transaction (including the Owner Participant
and Lessee but excluding any public holders of debt) make such
representations, warranties and covenants as the Owner Participant or
Lessee may reasonably require;
(3) Lessee and the Owner Trustee will amend the Lease to provide
that (i) the Basic Rent, Interim Rent, Excess Amount and EBO Percentage in
respect of the period from and after the Refinancing Date shall be as
provided in the Refinancing Information and (ii) amounts payable in respect
of Stipulated Loss Value and Termination Value from and after the
Refinancing Date shall be as provided in the Refinancing Information;
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[Participation Agreement (1994 737 B)]
(4) the Owner Trustee will enter into an agreement to provide for
the securing thereunder of the New Debt in like manner as the Certificates
and will enter into such amendments and supplements to the Trust Indenture
(or such new indenture or other security agreement) as may be necessary to
effect such refunding or refinancing;
(5) unless otherwise agreed or required by the Owner Participant
(except with respect to Lessee's obligation to pay the fees and expenses of
the other parties' counsel), and whether or not such refunding or
refinancing transaction is consummated, Lessee shall pay all of the
reasonable Expenses of all parties to such refunding or refinancing,
including without limitation, the reasonable fees and expenses of such
parties' counsel and any related loan or commitment fees; and
(6) subject to compliance by the Owner Trustee with all
applicable terms and conditions for voluntary prepayment under the Trust
Indenture and this Agreement, each Holder of a Certificate being refinanced
or refunded will transfer to the Owner Trustee the Certificates held by it
immediately prior to such refunding or refinancing for cancellation (and
the Owner Trustee shall cancel the same), against receipt by such Holder of
the then outstanding principal amount of such Certificates, accrued and
unpaid interest thereon, plus Break Amount, if any, together with payment
in full of all other amounts then payable to such Holder and the Indenture
Trustee hereunder or under the Trust Indenture.
(b) In the case of a refunding or refinancing involving a public
offering of the New Debt, the Owner Participant shall have the right (but not
the obligation) to review and approve (which approval shall not be unreasonably
withheld) all offering materials to be employed in connection therewith. Subject
to the other terms and conditions of this Section 17 (including, without
limitation, Section 17(d)(i) hereof) any public offering of the New Debt shall
not, except as requested by Lessee, contain any restrictions on the sale to
Holders who may use ERISA funding sources. It is expressly understood that the
Owner Participant shall have no obligation hereunder to consent thereto if, in
its good faith judgment, such refunding or refinancing (A) increases its, any of
its Affiliates (other than any Affiliate which is acting as an underwriter) or
the Owner Trustee's exposure to (i) liabilities under federal or state
securities laws, (ii) regulation under state or federal securities laws, (iii)
the need to publicly disclose information that is not generally available to the
public, or (iv) being adversely affected in its respective ability to engage in
any other financing transaction, in each case to a level unacceptable to it in
its reasonable, good faith, judgment, or (B) requires the name of the Owner
Participant to be identified in any offering materials. Lessee shall have the
right to purchase such debt securities and apply such securities as a credit
against its obligations to pay Rent, provided that (x) in connection with such
refunding or refinancing Lessee shall have agreed to indemnify the Owner
Participant with respect to such right in a manner reasonably satisfactory to
the Owner Participant, and (y) Lessee may not, at any one time hold in the
aggregate any such debt securities having a face value in excess of that portion
of the two next succeeding
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[Participation Agreement (1994 737 B)]
installments of Basic Rent which is required to be paid to the holders of such
debt securities on account of principal and interest. Lessee shall have the
right to refund or refinance through a public offering of the New Debt
denominated in a currency other than Dollars subject to the restrictions hereof.
Any trustee of public debt shall be a bank or trust company having its principal
place of business in the Borough of Manhattan, City and State of New York,
Chicago, Illinois, Hartford, Connecticut or Boston, Massachusetts and having a
combined capital and surplus of at least $100,000,000(or, if less, then its
obligations shall be guaranteed by an entity having a combined capital and
surplus of at least $100,000,000), if there be such an institution willing, able
and legally qualified to perform the duties of trustee upon reasonable or
customary terms.
(c) Lessee shall give the Indenture Trustee at least thirty days
revocable written notice of the proposed date of the optional prepayment. Such
notice shall become irrevocable fifteen Business Days prior to the proposed date
of the optional prepayment.
(d) Notwithstanding the foregoing, the Owner Participant shall have no
obligation to proceed with any refunding or refinancing transaction as
contemplated by this Section 17:
(i) if in the Owner Participant's reasonable, good faith judgment,
such transaction would have an adverse impact (including, without
limitation, the risk of adverse tax consequences) on it;
(ii) unless a third party or parties, unaffiliated with Lessee and
Owner Participant, shall have committed to (and shall) provide the
financing needed to consummate the proposed refunding or refinancing
transaction, it being understood that Owner Participant shall have no
obligation to locate any such party or parties;
(iii) unless Lessee indemnifies Owner Trustee and Owner
Participant by agreement in form and substance reasonably satisfactory to
each of them, 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 or
refinancing transaction;
(iv) unless (x) provision is made for eliminating any foreign
currency exposure of Owner Participant and Owner Trustee, and (y) Lessee
shall indemnify the Owner Participant for any income tax withholding
consequences and other adverse tax consequences relating to such non-U.S.
denominated New Debt; or
(v) if the refinancing would increase or decrease the Owner
Participant's Commitment.
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[Participation Agreement (1994 737 B)]
(e) There shall be no more than two optional prepayments under this
Section 17.
SECTION 18. Optimization. (a) In the event that: (i) the Delivery Date
occurs other than on September 28, 1994, (ii) Transaction Expenses paid by
Lessor are determined to be other than 0.5% of Lessor's Cost, or (iii) the
Excess Amount is increased or decreased pursuant to the operation of the proviso
in the definition thereof, Lessee may, pursuant to this Section 18 and in
accordance with the requirements of Section 3(c) of the Lease, optimize the
Basic Rent, Interim Rent, Excess Amount, Stipulated Loss Value percentages,
Termination Value percentages and EBO Percentage subject to the proviso set
forth in Section 3(c)(i) of the Lease. The Owner Participant shall deliver to
Lessee and the Indenture Trustee a certificate of an authorized representative
of the Owner Participant (the "Optimization Certificate") setting forth the
proposed revised schedules of Basic Rent, Interim Rent, Excess Amount,
Stipulated Loss Value percentages, Termination Value percentages and EBO
Percentage. Within fifteen days of its receipt of the Optimization Certificate,
Lessee may demand a verification, pursuant to Exhibit E of the Lease, of the
information set forth in the Optimization Certificate. Upon the acceptance by
Lessee of the accuracy of the information set forth in the Optimization
Certificate or the determination pursuant to such verification procedures of
such information, the Owner Participant will cause the Owner Trustee to execute
an amendment to the Lease setting forth the optimized Basic Rent, Interim Rent,
Excess Amount, Stipulated Loss Value percentages, Termination Value percentages
and EBO Percentage, and the Lessee will execute such amended Lease and the
Indenture Trustee will execute any amendments to the Trust Indenture necessary
to effectuate the foregoing.
(b) In connection with optimization adjustments of Basic Rent, Interim
Rent, Excess Amount, Stipulated Loss Value percentages, Termination Value
percentages and EBO Percentage pursuant to this Section 18 and Section 3(c) of
the Lease, (M) the Holders will agree to changes in the amortization schedule of
the Certificates, and (N) each Holder will exchange the Certificates held by it
immediately prior to such optimization for new Certificates containing optimized
amortization schedules; provided, that such changes do not (W) increase or
decrease the principal amount of the Certificates outstanding as of the time of
such exchange, (X) change the final maturity date of any Certificate, (Y)
increase or decrease by more than six months the original weighted average life
to maturity (determined as of the Delivery Date) of the Certificates or (Z)
change the principal amount of the Certificates to be repaid in accordance with
the amortization schedule for the Certificates on any Payment Date during the
first two years after the Delivery Date.
(c) There shall be no adverse impact to the Owner Participant by
reason of such optimization.
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[Participation Agreement (1994 737 B)]
(d) Lessee shall pay on an after-tax basis all of the reasonable
Expenses of all parties to such optimization, including, without limitation, the
reasonable fees and expenses of such parties' counsel.
SECTION 19. [Intentionally Omitted].
SECTION 20. Interim Debt. (a) The parties hereto acknowledge and agree
that the Certificates issued to the Original Loan Participant on the Delivery
Date represent interim debt financing and that it is intended that such
Certificates be refinanced by Certificates issued to new Holders. In connection
therewith, in the event that at any time Lessee shall have given written notice
to the Owner Trustee, the Indenture Trustee, the Owner Participant and the
Original Loan Participant that Lessee is requesting a voluntary prepayment of
the Certificates held by the Original Loan Participant (in compliance with the
provisions of 2.11 of the Trust Indenture) by the Owner Trustee as part of a
refunding or refinancing transaction, the Owner Participant agrees to negotiate
promptly in good faith with Lessee in connection therewith (including the terms
of any debt to be issued in connection with such refunding or refinancing
transaction, the documentation to be executed in connection therewith and with
respect to such amendments to the Operative Documents as may be necessary in
order to facilitate such permanent debt financing), and if after such good faith
negotiation Lessee and the Owner Participant shall have concluded an agreement
with respect to such terms:
(1) within five Business Days after the reaching of such
agreement, the Owner Participant will deliver to Lessee a certificate of an
authorized representative of the Owner Participant (the "Section 20
Refinancing Certificate") setting forth (i) the proposed date on which the
outstanding Certificates will be prepaid, describing the new debt to be
issued and the other aspects of such refunding or refinancing transaction
to be consummated (such date, the "Section 20 Refinancing Date") and (ii)
the following information: (A) the principal amount of debt to be issued by
the Owner Trustee on the Section 20 Refinancing Date (such refinancing not
to increase or decrease the Owner Participant's Commitment), and (B) the
proposed revised schedules of Excess Amount, Basic Rent, Interim Rent, debt
amortization, Stipulated Loss Value percentages, Termination Value
percentages and EBO Percentage. Within five Business Days of its receipt of
the Section 20 Refinancing Certificate, Lessee may demand a verification
pursuant to Exhibit E to the Lease of the information set forth in the
Section 20 Refinancing Certificate. Upon the acceptance by Lessee of the
accuracy of the information set forth in the Section 20 Refinancing
Certificate or the determination pursuant to such verification procedures
of the revised Excess Amount, Basic Rent, Interim Rent, debt amortization,
Stipulated Loss Value percentages, Termination Value percentages and EBO
Percentage (such information, the "Section 20 Refinancing Information") the
appropriate parties will take the actions specified in paragraphs (2)
through (12) below;
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[Participation Agreement (1994 737 B)]
(2) the appropriate parties will enter into a financing or loan
agreement in form and substance reasonably satisfactory to the Lessee, the
Owner Participant and the Owner Trustee (which, subject to subsection (d)
below, may involve a public offering of such debt or the purchase of such
debt by a publicly funded entity (or entities)) with the institution or
institutions to be named therein providing for (i) the issuance and sale by
the Owner Trustee to such institution or institutions on the Section 20
Refinancing Date of Certificates in an aggregate principal amount specified
in the Section 20 Refinancing Information (such debt securities, the
"Section 20 New Debt") and (ii) the application of the proceeds of the sale
of the Section 20 New Debt to the prepayment of the Certificates
outstanding on the Section 20 Refinancing Date;
(3) Lessee and the Owner Trustee will amend the Lease to provide
that (i) the Basic Rent, Interim Rent, Excess Amount and EBO Percentage
payable in respect of the period from and after the Section 20 Refinancing
Date shall be as provided in the Section 20 Refinancing Information and
(ii) amounts payable in respect of Stipulated Loss Value and Termination
Value from and after the Section 20 Refinancing Date shall be as provided
in the Section 20 Refinancing Information;
(4) the Owner Trustee will enter into an agreement, if requested
by the Indenture Trustee, to provide for the securing thereunder of the
Section 20 New Debt in like manner as the outstanding Certificates and will
enter into such amendments and supplements to the Trust Indenture (or such
new indenture or other security agreement) as may be necessary to effect
such refunding or refinancing;
(5) upon the closing of such refunding or refinancing (and as
indemnification for the loss resulting therefrom), Lessee shall pay to the
Original Loan Participant as Supplemental Rent the Break Amount, if any
(without duplication of other amounts, if any, payable pursuant to any
other provision of the Operative Documents);
(6) the Owner Trustee shall pay all the costs of such refunding
or refinancing, such costs shall be considered as Transaction Expenses and
such Transaction Expenses shall be appropriately considered in calculating
the proposed revised schedules of Excess Amount, Basic Rent, Interim Rent,
debt amortization, Stipulated Loss Value percentages, Termination Value
percentages and EBO Percentage;
(7) the Original Loan Participant will deliver to the Owner
Trustee the Certificates held by it concurrently with such refunding or
refinancing for cancellation (and the Owner Trustee shall cancel the same),
against simultaneous receipt by the Original Loan Participant of the then
outstanding principal amount of such Certificates, accrued and unpaid
interest thereon (which amount shall be paid by the Owner Participant as a
prepayment of Excess Amount if such refinancing or refinancing occurs prior
to the Commencement Date), plus Break Amount, if any, together with payment
in
63
67
[Participation Agreement (1994 737 B)]
full of all other amounts then payable to the Original Loan Participant
hereunder or under the Certificates or the Trust Indenture;
(8) the appropriate parties will amend such of the Operative
Documents in such respects as shall be necessary to reflect any amendments
agreed upon by the parties thereto;
(9) if such refunding or refinancing involves a public offering,
no offering materials or prospectus shall identify the Owner Participant
(unless an Affiliate of the Owner Participant is also an underwriter of the
securities issued in such refunding or refinancing) or include financial
information in regard to the Owner Participant;
(10) the appropriate parties will execute and deliver appropriate
closing documents, execute and deliver appropriate closing certificates and
deliver appropriate opinions of counsel;
(11) the Owner Participant shall not be obligated to proceed with
any refinancing under this Section 20 if such refinancing would result in
any unindemnified adverse tax consequences determined by the Owner
Participant in its reasonable judgment (any such indemnity to be reasonably
satisfactory to the Owner Participant); and
(12) the parties hereto agree that, immediately prior to the
closing of such refunding or refinancing, all accrued and unpaid interest
on the Certificates shall be paid (i) by the Owner Participant on behalf of
the Owner Trustee (which payment shall be treated as a prepayment of the
Excess Amount) and by Lessee (in regard to that portion of Basic Rent, if
any, payable by Lessee on the Commencement Date), if such refunding or
refinancing is to close on or prior to the Commencement Date and (ii) by
Lessee on behalf of the Owner Trustee (which payment will be treated as a
prepayment of the next payment of Basic Rent due under the Lease), if such
refunding or refinancing is to close after the Commencement Date; and upon
the closing of such refunding or refinancing (and as indemnification for
the loss resulting therefrom), Lessee, on behalf of the Owner Trustee,
shall pay, on an after-tax basis to the Owner Participant, to the Original
Loan Participant the Break Amount, if any (without duplication of other
amounts, if any, payable pursuant to any other provision of the Operative
Documents).
(b) Only one optional refinancing or refunding pursuant to this
Section 20 shall be permitted during the Term.
64
68
[Participation Agreement (1994 737 B)]
(c) Any refinancing or refunding pursuant to this Section 20 shall be
of all Certificates then outstanding.
(d) Any public refinancing pursuant to this Section 20 shall comply
with all the restrictions, limitations and conditions applicable in the case of
a public refinancing pursuant to Section 17(b) hereof.
SECTION 21. Payment of Additional Amounts. Lessee shall pay as
Supplemental Rent to Lessor such additional amounts as may be due pursuant to
Section 2.17 of the Trust Indenture in respect of the Certificates held by the
Original Loan Participant.
* * *
65
69
[Participation Agreement (1994 737 B)]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
UNITED AIR LINES, INC.,
Lessee
By:
----------------------------------
Senior Vice President and
Chief Financial Officer
MS FINANCING INC.,
Owner Participant
By:
----------------------------------
Title:
-------------------------------
STATE STREET BANK AND TRUST
COMPANY,
Indenture Trustee
By:
----------------------------------
Title:
-------------------------------
FIRST SECURITY BANK OF
UTAH, NATIONAL ASSOCIATION,
not in its individual
capacity, except as
expressly provided herein,
but solely as Owner Trustee,
Owner Trustee
By:
----------------------------------
Title:
-------------------------------
66
70
[Participation Agreement (1994 737 B)]
THE MITSUBISHI TRUST AND BANKING
CORPORATION, NEW YORK BRANCH,
Original Loan Participant
By:
----------------------------------
Title:
-------------------------------
67
71
[Participation Agreement (1994 737 B)]
SCHEDULE I
Names and Addresses
Lessee:
U.S. Mail Overnight Delivery Service
United Air Lines, Inc. United Air Lines, Inc.
X.X. Xxx 00000 0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000 Elk Xxxxx Xxxxxxxx, XX 00000
Attn: Vice President and Attn: Vice President and
Treasurer Treasurer
Telecopy: (000) 000-0000
Owner Participant: Payment Address
MS Financing Inc. Citibank, N.A.
1251 Avenue of the Americas Delaware
Xxx Xxxx, XX 00000 Account #: 338833374
Attn: General Counsel
Telecopy: (000) 000-0000
Original Loan Participant:
The Mitsubishi Trust and Banking Instructions for the Account
Corporation, New York Branch of The Mitsubishi Trust and
520 Madison Avenue, 25th Floor Banking Corporation, Xxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000 Branch:
Bankers Trust Company
Attn: Xxxxx X. Xxxxx Account No. 00000000
Telecopy: (000) 000-0000 Reference: United Air Lines,
Telex: 425078 Inc.
Telephone No.: (000) 000-0000 Attn: Xxxxx X. Xxxxx
72
[Participation Agreement (1994 737 B)]
Indenture Trustee:
Address for Notices by Regular Mail/Telecopy:
State Street Bank and Trust Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Corporate Trust Department
Telecopy: (000) 000-0000
Address for Notices by Overnight Courier:
State Street Bank and Trust Company
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: Corporate Trust Department
Owner Trustee:
First Security Bank of Utah,
National Association
00 X. Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Corporate Trust Department
Telecopy: (000) 000-0000
I-2
73
[Participation Agreement (1994 737 B)]
SCHEDULE II
Commitments
Original Percentage of
Loan Participant Lessor's Cost Dollar Amount
---------------- ------------- -------------
THE MITSUBISHI TRUST 80.0% $19,760,000.00
AND BANKING CORPORATION,
New York Branch
Branch
Owner Participant:
MS FINANCING INC. 20.0% $ 4,940,000.00
Total Commitments: 100.0% $24,700,000.00
================= ====== ==============
II-3
