PARTICIPATION AGREEMENT N___AT
dated as of __________, 200_
among
AMERICAN TRANS AIR, INC.,
Lessee,
GENERAL ELECTRIC CAPITAL CORPORATION,
Owner Participant,
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity except as expressly provided herein,
but solely as Owner Trustee,
Owner Trustee
One Boeing model 737-800
aircraft bearing manufacturer's
serial no. _____
and U.S. registration no. N___AT
CONTENTS
1. DEFINITIONS AND CONSTRUCTION................................................1
2. PARTICIPATION IN LESSOR'S COST; ............................................2
ISSUANCE OF EQUIPMENT NOTES; TERMINATION OF OBLIGATION TO PARTICIPATE
2.1 Participation in Lessor's Cost....................................2
2.2 Termination of Obligation to Participate..........................2
3. LEASE OF AIRCRAFT...........................................................2
4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST; ...................3
POSTPONEMENT OF SCHEDULED DELIVERY DATE
4.1 Notices of Scheduled Delivery Date................................3
4.2 Payment of Lessor's Cost..........................................3
4.3 Postponement of Scheduled Delivery Date...........................4
4.4 Closing...........................................................4
5. CLOSING CONDITIONS..........................................................4
5.1 Conditions to Participants' Obligations...........................4
5.2 Conditions to Owner Trustee's Obligations.........................9
5.4 Conditions to Lessee's Obligations...............................10
5.5 Post-Registration Opinion........................................10
6. REPRESENTATIONS AND WARRANTIES.............................................11
6.1 Lessee's Representations and Warranties..........................11
6.2 Owner Participant's Representations and Warranties...............15
6.3 FSB's Representations and Warranties.............................17
7. COVENANTS..................................................................19
7.1 Lessee's Covenants...............................................19
7.2 Owner Participant's Covenants....................................21
7.3 FSB's and Owner Trustee's Covenants..............................23
7.6 Other Agreements.................................................25
8. CONFIDENTIALITY............................................................30
9. INDEMNIFICATION AND EXPENSES...............................................30
9.1 General Indemnity................................................30
9.2 Expenses.........................................................36
9.3 General Tax Indemnity............................................37
9.4 Payments.........................................................48
9.5 Interest.........................................................48
9.6 Benefit of Indemnities...........................................48
10. ASSIGNMENT OR TRANSFER OF INTERESTS.......................................49
10.1 Participants, Owner Trustee, and Note Holders...................49
10.2 Effect of Transfer..............................................50
11. RE-FUNDING AND CERTAIN OTHER MATTERS......................................51
12. SECTION 1110..............................................................51
13. CHANGE OF CITIZENSHIP.....................................................51
13.1 Generally.......................................................51
13.2 Owner Participant...............................................52
13.3 Owner Trustee...................................................52
14. CONCERNING OWNER TRUSTEE..................................................52
15. MISCELLANEOUS 53
15.1 Amendments......................................................53
15.2 Severability....................................................53
15.3 Survival........................................................53
15.4 Reproduction of Documents.......................................53
15.5 Counterparts....................................................54
15.6 No Waiver.......................................................54
15.7 Notices.........................................................54
15.8 Governing Law; Submission to Jurisdiction; Venue................55
15.9 Third-Party Beneficiary.........................................56
15.10 Entire Agreement...............................................56
15.11 Further Assurances.............................................56
ANNEX A Definitions
SCHEDULE 1 Accounts; Addresses
SCHEDULE 2 Commitments
SCHEDULE 3 Certain Terms
EXHIBIT A Opinion of special counsel to Lessee
EXHIBIT B Opinion of corporate counsel to Lessee
EXHIBIT C Opinion of corporate counsel to Airframe Manufacturer
EXHIBIT D Opinion of special counsel to Owner Trustee
EXHIBIT E Opinion of special counsel to Owner Participant
EXHIBIT F Opinion of FAA Counsel
EXHIBIT G Opinion of corporate counsel to Owner Participant
EXHIBIT H Form of Assignment and Assumption Agreement
EXHIBIT I Form of Owner Participant Guaranty
PARTICIPATION AGREEMENT N___AT
This Participation Agreement N___AT (this "Agreement"), dated as of
__________, 200_, is entered into by and among (1) American Trans Air, Inc.
("Lessee"), an Indiana corporation, (2) General Electric Capital Corporation
("Owner Participant"), a New York corporation, and (3) First Security Bank,
National Association, a national banking association, not in its individual
capacity (except as expressly provided herein), but solely as Owner Trustee (in
its capacity as Owner Trustee, "Owner Trustee" or "Lessor", and in its
individual capacity, "FSB").
RECITALS
A........Owner Participant and FSB are entering into the Trust
Agreement, pursuant to which Owner Trustee agrees to hold the Trust Estate for
the use and benefit of Owner Participant.
B........Lessee and Airframe Manufacturer entered into the Purchase
Agreement, pursuant to which Airframe Manufacturer agreed to manufacture certain
aircraft (including the Aircraft) and sell them to Lessee, and Lessee agreed to
buy certain aircraft (including the Aircraft) from Airframe Manufacturer.
C........Seller will sell the Aircraft to Owner Trustee pursuant to the
terms of this Participation Agreement.
D........Lessee and Owner Trustee are entering into the Purchase
Agreement Assignment and the Engine Manufacturer Warranty Agreement, pursuant to
which Lessee assigns to Owner Trustee certain of Lessee's rights under the
Purchase Agreement and the Engine Manufacturer Warranty Agreement.
E........Lessor and Lessee are entering into the Lease, pursuant to
which Lessor is leasing the Aircraft to Lessee and Lessee is leasing the
Aircraft from Lessor.
F........The parties to this Agreement want to set forth in this
Agreement the terms and conditions upon and subject to which the foregoing
transactions shall be effected.
The parties hereto agree as follows:
1. DEFINITIONS AND CONSTRUCTION
The terms defined in Annex A, when capitalized as in Annex A, have the same
meanings when used in this Agreement. Annex A also contains rules of usage that
control construction in this Agreement.
2. PARTICIPATION IN LESSOR'S COST; TERMINATION OF OBLIGATION TO PARTICIPATE
2.1 Participation in Lessor's Cost
Subject to the terms and conditions of this Agreement, on the Delivery
Date, Owner Participant shall participate in the payment of Lessor's Cost as
follows:
Owner Participant shall finance Owner Trustee's payment of Lessor's Cost
for the Aircraft by making an equity investment in the beneficial ownership of
the Aircraft in the amount in Dollars equal to Lessor's Cost.
2.2 Termination of Obligation to Participate
Notwithstanding any other provision of this Agreement, if the Closing does
not occur on or before the Commitment Termination Date, the Commitment of Owner
Participant and its obligation to participate in the payment of Lessor's Cost
shall expire and be of no further force and effect; provided, that the liability
of Owner Participant if it has defaulted in the payment of its Commitment shall
not be released.
3. LEASE OF AIRCRAFT
Subject to the terms and conditions of this Agreement, on the Delivery
Date, Owner Trustee shall purchase and accept delivery of the Aircraft from
Seller under and pursuant to the Purchase Agreement and the Purchase Agreement
Assignment, and thereupon Owner Trustee shall lease the Aircraft to Lessee, and
Lessee shall lease the Aircraft from Owner Trustee, under the Lease.
4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST; POSTPONEMENT OF
SCHEDULED DELIVERY DATE
4.1 Notices of Scheduled Delivery Date
Lessee agrees to give Owner Participant and Owner Trustee at least one
Business Day's written notice of the Scheduled Delivery Date, which notice shall
set forth Lessor's Cost and the amount of Owner Participant's Commitment. Owner
Participant agrees that making its Commitment available shall constitute a
waiver of such notice.
4.2 Payment of Lessor's Cost
(a) Owner Participant agrees, subject to the terms and conditions of this
Agreement, to make the Dollar amount of its Commitment available, by wire
transfer of immediately available funds to FSB's account at First Security Bank,
National Association, ABA No. _______, account no. ______, reference American
Trans Air, Inc. Lease N___AT, at or before 12:00 noon, New York City time, on
the Scheduled Delivery Date. All such funds made available by Owner Participant
to FSB shall, until payment thereof to Seller as provided in ss. 4.2(b)(2) or
return thereof to Owner Participant as provided in ss. 4.3.2, be held by FSB in
trust for the benefit of the Owner Participant as the sole and exclusive
property of the Owner Participant and not as part of the Trust Estate.
(b) Subject to the satisfaction, or waiver by the applicable party, of the
conditions precedent set forth in ss. 5, and simultaneously with the receipt by
the parties hereto of all amounts to be paid to them on the Delivery Date
pursuant to this ss. 4.2, Owner Trustee shall:
(1) purchase, take title to, and accept delivery of the Aircraft;
(2) in consideration of the transfer of title to the Aircraft to Owner
Trustee, direct FSB to pay, from the funds made available to FSB hereunder by
Owner Participant, all such funds, which payments in the aggregate shall be
equal to Lessor's Cost, by wire transfer of immediately available funds to
Seller's account set forth in Schedule 1 or as otherwise directed by Seller;
(3) execute an application for registration of the Aircraft with the FAA;
(4) lease the Aircraft to Lessee pursuant to the Lease; and
(5) take such other action as may be required to be taken by Owner Trustee
on the Delivery Date by the terms of any Operative Agreement.
4.3 Postponement of Scheduled Delivery Date
4.3.1 Postponement
If for any reason whatsoever the Closing is not consummated on the
Scheduled Delivery Date, Lessee may, subject to the provisions of 1(e) of the
Note Purchase Agreement, by telephonic notice, given by 5:00 p.m. New York City
time (such telephonic notice to be promptly confirmed in writing by personal
delivery or facsimile) on the Scheduled Delivery Date, to Owner Participant and
Owner Trustee, designate a Delayed Delivery Date, in which case Owner
Participant will keep its funds available.
FSB shall promptly return to Owner Participant all funds made available to
FSB in accordance with ss. 4.2(a), together with interest or income earned
thereon, if the Closing fails to occur on the Scheduled Delivery Date.
4.4 Closing
The Closing shall occur at the offices of Xxxxxxxx Xxxxxxx LLP, 0000 Xxxx
xx Xxxxxxx Xxxxx, Xxxxxxx, XX (with a set of Operative Agreements also being
delivered in New York City), or such other place as the parties shall agree.
5. CLOSING CONDITIONS
5.1 Conditions to Owner Participant's Obligations
Owner Participant's obligation to make the Dollar amount of its Commitment
available for payment as directed by Owner Trustee on the Delivery Date is
subject to the satisfaction or such Owner Participant's waiver, on or before the
Delivery Date, of the conditions in this ss. 5.1; provided, that it shall not be
a condition to the obligation of Owner Participant that any document be produced
or action taken that is to be produced or taken by such Owner Participant or by
a Person within Owner Participant's control.
5.1.1 Notice
Owner Participant received the notice described in ss. 4.1 or, in the
case of a Delayed Delivery Date, ss. 4.3, when and as required thereby.
5.1.2 Delivery of Documents
Except as otherwise provided in this ss. 5.1.2, Owner Participant receives
executed counterparts of the following documents, and such counterparts (x) have
been duly authorized, executed, and delivered by the party or parties thereto,
(y) are reasonably satisfactory in form and substance to Owner Participant, and
(z) are in full force and effect:
(a) the Lease (Lessor to receive the sole executed chattel paper original
thereof);
(b) the Tax Indemnity Agreement; provided, that only Owner Participant and
Lessee shall receive copies of the Tax Indemnity Agreement;
(c) the Trust Agreement;
(d) the Purchase Agreement Assignment;
(e) the Consent and Agreement and the Engine Manufacturer Warranty
Agreement;
(f) an excerpted copy of the Purchase Agreement to the extent relating to
Airframe Manufacturer's or Engine Manufacturer's warranties or related
obligations or any right in the Purchase Agreement assigned to Owner Trustee
pursuant to the Purchase Agreement Assignment; provided, that only Owner Trustee
shall receive copies of such agreement (copies of which may be inspected by
Owner Participant and its special counsel on the Delivery Date, but after the
Delivery Date such copies shall be retained by Owner Trustee and may be
inspected and reviewed by Owner Participant or its counsel if and only if a
Default exists);
(g) the Bills of Sale;
(h) the Guarantee;
(i) an invoice from Seller specifying the amount due to Seller in respect
of the Aircraft, which amount shall equal Lessor's Cost of the Aircraft;
(j) the broker's report and insurance certificates required byss. 11 of the
Lease;
(k) an appraisal or appraisals from an Appraiser, which appraisal or
appraisals shall be reasonably satisfactory in form and substance to Owner
Participant; provided, that only Owner Participant shall receive copies of such
appraisal(s);
(l) (1) a copy of Lessee's articles of incorporation, by-laws, and
resolutions, in each case certified as of the Delivery Date by the Secretary or
an Assistant Secretary of Lessee, duly authorizing Lessee's execution, delivery,
and performance of the Lessee Operative Agreements required to be executed and
delivered by Lessee on or before the Delivery Date in accordance with the
provisions hereof and thereof; (2) a copy of Guarantor's articles of
incorporation, by-laws, and resolutions, in each case certified as of the
Delivery Date by the Secretary or an Assistant Secretary of Guarantor, duly
authorizing Guarantor's execution, delivery, and performance of the Guarantee;
(3) incumbency certificates of Lessee, Guarantor, Owner Participant, and FSB as
to the person(s) authorized to execute and deliver the relevant Operative
Agreements on behalf of such party; and (4) copies of the certificate or
articles of incorporation, by-laws, and general authorizing resolutions of the
boards of directors (or executive committees) or other satisfactory evidence of
authorization of Owner Participant and FSB, certified as of the Delivery Date by
the Secretary or an Assistant or Attesting Secretary of Owner Participant and
FSB, which authorize the execution, delivery and performance by Owner
Participant and FSB, respectively, of each of the Operative Agreements to which
it is a party, together with such other documents and evidence with respect to
it as Lessee or Owner Participant reasonably requests in order to establish the
consummation of the transactions contemplated by this Agreement and the taking
of all corporate proceedings in connection therewith;
(m) an Officer's Certificate of Lessee, dated the Delivery Date, stating
that its representations and warranties in this Agreement are true and correct
as of the Delivery Date (or, to the extent that any such representation and
warranty expressly relates to an earlier date, true and correct as of such
earlier date);
(n) an Officer's Certificate of FSB, dated the Delivery Date, stating that
its representations and warranties, in its individual capacity and as Owner
Trustee, in this Agreement are true and correct as of the Delivery Date (or, to
the extent that any such representation and warranty expressly relates to an
earlier date, true and correct as of such earlier date);
(o) an Officer's Certificate of Owner Participant, dated the Delivery Date,
stating that its representations and warranties in this Agreement are true and
correct as of the Delivery Date (or, to the extent that any such representation
and warranty expressly relates to an earlier date, true and correct as of such
earlier date);
(p) an application for registration of the Aircraft with the FAA in the
name of Owner Trustee (FAA Counsel to receive the sole executed copy thereof,
for filing with the FAA);
(q) the Financing Statements;
(r) the following opinions of counsel, in each case dated the Delivery
Date:
(1) an opinion of Xxxxxxxx Xxxxxxx LLP, special counsel to Lessee and
Guarantor, substantially in the form of Exhibit A;
(2) an opinion of Lessee's and Guarantor's Legal Department, substantially
in the form of Exhibit B;
(3) an opinion of corporate counsel to Airframe Manufacturer, substantially
in the form of Exhibit C;
(4) an opinion of Ray, Xxxxxxx & Xxxxxxx, special counsel to Owner Trustee,
substantially in the form of Exhibit D;
(5) an opinion of Xxxxx Xxxxxxxxxx LLP, special counsel to Owner
Participant, substantially in the form of Exhibit E;
(6) an opinion of FAA Counsel, substantially in the form of Exhibit F;
(7) an opinion of Xxxxx Xxxxxxxxxx LLP, special tax counsel to Owner
Participant, with respect to certain tax consequences of the transactions
contemplated hereby; provided, that only Owner Participant shall receive such
opinion; and
(8) an opinion of corporate counsel of Owner Participant, substantially in
the form of Exhibit G, and
(s) Owner Participant receives copies of such other documents as it
reasonably requests, except as provided in clause (f) of this ss. 5.1.2.
5.1.3 Violation of Law
No change occurs after the date of this Agreement in any applicable Law
that makes it a violation of Law for (a) Lessee, Owner Participant, or Owner
Trustee to execute, deliver, and perform the Operative Agreements to which it is
a party or to be a party subject to the obligations of the Operative Agreements
to which Owner Participant is bound, or (b) Owner Participant to make the Dollar
amount of its Commitment available.
5.1.4 Representations, Warranties, and Covenants
The representations and warranties of each other party to this Agreement
made, in each case, in any Operative Agreement to which it is a party, are true
and accurate in all material respects as of the Delivery Date (unless any such
representation and warranty was made with reference to a specified date, in
which case such representation and warranty was true and accurate as of such
specified date), and each other party to this Agreement has performed and
observed, in all material respects, all of its covenants, obligations, and
agreements in each Operative Agreement to which it is a party to be observed or
performed by it as of the Delivery Date.
5.1.5 No Default
On the Delivery Date, no Default exists or would result from the sale or
lease of the Aircraft.
5.1.6 No Event of Loss
No Event of Loss with respect to the Airframe or any Engine has occurred,
and no circumstance, condition, act, or event has occurred that, with the giving
of notice or lapse of time, would give rise to or constitute an Event of Loss
with respect to the Airframe or any Engine.
5.1.7 Title
Owner Trustee has good title (subject to filing and recordation of the FAA
Xxxx of Sale with the FAA) to the Aircraft, free and clear of Liens, except (a)
the rights of Lessee under the Lease, (b) the beneficial interest of Owner
Participant created by the Trust Agreement, (c) Liens permitted by clause (d)
(solely for taxes not yet due) of ss. 6 of the Lease, and (d) Liens permitted by
clause (e) of ss. 6 of the Lease.
5.1.8 Certification
The Aircraft has been duly certificated by the FAA as to type, and upon
registration in Owner Trustee's name will be eligible for an FAA
airworthiness
certificate.
5.1.9 Section 1110
Owner Trustee, as lessor under the Lease, is entitled to the benefits of
Section 1110 (as currently in effect) with respect to the right to take
possession of the Airframe and Engines as provided in the Lease in the event of
a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor.
5.1.10 Filing
The FAA-Filed Documents are on the Delivery Date duly filed for recordation
with the FAA in accordance with the Transportation Code, and each Financing
Statement has been duly filed or is in the process of being duly filed in the
appropriate jurisdiction.
5.1.11 No Proceedings
No action or proceeding has been instituted, nor is any action threatened
in writing, before any Government Entity, nor has any order, judgment, or decree
been issued or proposed to be issued by any Government Entity, to set aside,
restrain, enjoin, or prevent the completion and consummation of any Operative
Agreement or the Transactions.
5.1.12 Governmental Action
All appropriate action required to have been taken before the Delivery Date
by the FAA, or any other Government Entity of the United States, in connection
with the Transactions has 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 have been
issued.
5.2 Conditions to Owner Trustee's Obligations
Owner Trustee's obligation to apply the Commitments to pay Lessor's Cost on
the Delivery Date is subject to the satisfaction or Owner Trustee's waiver, on
or before the Delivery Date, of the conditions in this ss. 5.2.
5.2.1 Notice
Owner Trustee receives the notice described in ss. 4.1 or, in the case of a
Delayed Delivery Date, ss. 4.3, when and as required thereby.
5.2.2 Documents Owner Trustee receives executed originals of the documents
described in ss. 5.1.2, except as otherwise provided therein, unless the failure
to receive any such document is the result of any action or inaction by Owner
Trustee.
5.2.3 Other Conditions Precedent
Each of the conditions in xx.xx. 5.1.3, 5.1.4, 5.1.5, and 5.1.9 is
satisfied, unless the failure of any such condition to be satisfied is the
result of any action or inaction by Owner Trustee.
5.3 Conditions to Lessee's Obligations
Lessee's obligation to lease the Aircraft on the Delivery Date is subject
to the satisfaction or Lessee's waiver, on or before the Delivery Date, of the
conditions in this ss. 5.3.
5.3.1 Documents
Lessee receives executed originals of the documents described in ss. 5.1.2,
except as otherwise provided therein, and they are satisfactory to Lessee,
unless the failure to receive any such document is the result of any action or
inaction by Lessee.
5.3.2 Taxes
Lessee is satisfied that no sales, use, value-added, goods-and-services, or
like tax, and no stamp tax duty, is payable with respect to the delivery of the
Aircraft on the Delivery Date (to the extent that Lessee could be liable
therefor under ss. 9.3).
5.3.3 Other Conditions
Each of the conditions in xx.xx. 5.1.3, 5.1.4, 5.1.5, 5.1.6, 5.1.7, 5.1.8,
5.1.9, 5.1.10, 5.1.11, and 5.1.12 has been satisfied or waived by Lessee, unless
the failure of any such condition to be satisfied is the result of any action or
inaction by Lessee.
5.4 Post-Registration Opinion
Promptly after the registration of the Aircraft and the recordation of the
FAA-Filed Documents pursuant to the Transportation Code, Lessee will cause FAA
Counsel to deliver to Lessee, Owner Participant, and Owner Trustee a favorable
opinion or opinions addressed to each of them with respect to such recordation.
6. REPRESENTATIONS AND WARRANTIES
6.1 Lessee's Representations and Warranties
Lessee represents and warrants to Owner Participant and Owner Trustee that:
6.1.1 Organization; Qualification
Lessee is a corporation duly incorporated, validly existing, and in good
standing under the Laws of Indiana, and has the corporate power and authority to
conduct the business in which it is currently engaged and to own or hold under
lease its properties and to enter into and perform its obligations under the
Lessee Operative Agreements. Lessee is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction in which the nature
and extent of the business conducted by it, or the ownership of its properties,
requires such qualification, except where the failure to be so qualified would
not give rise to a Materially Adverse Change to Lessee.
6.1.2 Corporate Authorization
Lessee has taken, or caused to be taken, all necessary corporate action
(including obtaining any consent or approval of stockholders required by its
articles of incorporation or by-laws) to authorize its execution, delivery, and
performance of its obligations under each of the Lessee Operative Agreements.
6.1.3 No Violation
Lessee's execution, delivery, and performance of its obligations under the
Lessee Operative Agreements do not and will not (a) violate any provision of
Lessee's articles of incorporation or by-laws, (b) violate any Law applicable to
or binding on Lessee, or (c) violate or constitute any default under (other than
any violation or default that would not result in a Materially Adverse Change to
Lessee), or result in the creation of any Lien (other than as permitted under
the Lease) upon the Aircraft under, any lease, loan, or other material agreement
to which Lessee is a party or by which Lessee or any of its properties is bound.
6.1.4 Approvals
Lessee's execution and delivery of, and performance of its obligations
under, the Lessee Operative Agreements do not and will not require the consent
or approval of, the giving of notice to, the registration with, the recording or
filing of any documents with, or the taking of any other action in respect of
(a) any trustee or other holder of any Debt of Lessee, (b) any Government
Entity, or (c) any other Person, other than (x) the FAA-Filed Documents and the
Financing Statements (and continuation statements periodically), and (y)
filings, recordings, notices, corporate approvals of Lessee (which have been
duly obtained) or other ministerial actions pursuant to any routine recording,
contractual, or regulatory requirements.
6.1.5 Valid and Binding Agreements
The Lessee Operative Agreements have been duly authorized, executed, and
delivered by Lessee, and (assuming their due authorization, execution, and
delivery by the other parties thereto) constitute legal, valid, and binding
obligations of Lessee and are enforceable against Lessee in accordance with
their terms, except as such enforceability may be limited by bankruptcy,
insolvency, and other similar Laws affecting the rights of creditors generally
and general principles of equity.
6.1.6 Litigation
Except as set forth in Guarantor's most recent Annual Report on Form 10-K,
filed by Lessee with the SEC on or before the Delivery Date, or in any Quarterly
Report on Form 10-Q or Current Report on Form 8-K filed by Guarantor with the
SEC subsequent to such Form 10-K and on or before the Delivery Date, no action,
claim, or proceeding is now pending or, to Lessee's Actual Knowledge,
threatened, against Lessee, Guarantor, or any of their Affiliates, before any
Government Entity or any arbitrator, that is reasonably likely to be determined
adversely to Lessee and if determined adversely to Lessee would result in a
Materially Adverse Change.
6.1.7 Financial Condition
Guarantor's audited consolidated balance sheet for its most-recent fiscal
year, included in Guarantor's Annual Report on Form 10-K filed by Guarantor with
the SEC for such fiscal year, and the related consolidated statements of
operations and cash flows for the period then ended, have been prepared in
accordance with GAAP and fairly present in all material respects the financial
condition of Guarantor and its consolidated subsidiaries as of such date and the
results of its operations and cash flows for such period, and since the date of
such balance sheet, there has been no Materially Adverse Change in such
financial condition or operations, except for matters disclosed in (a) the
financial statements referred to above, or (b) any subsequent Quarterly Report
on Form 10-Q or Current Report on Form 8-K filed by Guarantor with the SEC on or
before the Delivery Date.
6.1.8 Registration and Recordation
Except for (a) registering the Aircraft with the FAA pursuant to the
Transportation Code in the name of Owner Trustee, (b) filing for recordation
(and recording) the FAA-Filed Documents, (c) filing the Financing Statements
(and continuation statements relating thereto at periodic intervals), (d)
Lessor's taking possession and retaining the chattel paper original counterpart
of the Lease, and (e) affixing the placards referred to in ss. 7.1.3 of the
Lease, no further action, including filing or recording any document (including
any financing statement under UCC Article 9) is necessary in order to establish
and perfect Owner Trustee's right, title, and interest, in the Aircraft and the
Lease, as against Lessee and any other Person, in any applicable jurisdiction in
the United States.
6.1.9 Chief Executive Office
Lessee's chief executive office (as defined in UCC Article 9) is located at
0000 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx, 00000.
6.1.10 No Default
No Default exists.
6.1.11 No Event of Loss
No Event of Loss has occurred with respect to the Airframe or any Engine,
and, to Lessee's Actual Knowledge, no circumstance, condition, act, or event has
occurred that, with the giving of notice or lapse of time, gives or would give
rise to or constitutes or would constitute an Event of Loss to the Airframe or
any Engine.
6.1.12 Compliance With Laws
(a) Lessee is a Citizen of the United States and a U.S. Air Carrier.
(b) Lessee holds all licenses, permits, and franchises from the appropriate
Government Entities necessary to authorize Lessee lawfully to engage in air
transportation and to carry on scheduled commercial passenger service as
currently conducted, except to the extent that the failure to hold any such
license, permit, or franchise would not give rise to a Materially Adverse Change
to Lessee.
(c) Lessee is not an "investment company" or a company controlled by an
"investment company" within the meaning of the Investment Company Act of 1940.
6.1.13 Securities Laws
Neither Lessee nor any Person authorized to act on its behalf has directly
or indirectly offered any beneficial interest or Security relating to the
ownership of the Aircraft or the Lease or any interest in the Trust Estate and
the Trust Agreement for sale to, or solicited any offer to acquire any such
interest or security from, or has sold any such interest or security to, any
Person in violation of the Securities Act.
6.1.14 Broker's Fees
No Person acting on behalf of Lessee is or will be entitled to any broker's
fee, commission, or finder's fee in connection with the Transactions, except for
fees payable to Lessee's Advisor(s), if any.
6.1.15 Section 1110
Owner Trustee, as lessor under the Lease, will be entitled to the benefits
of Section 1110 (as currently in effect), with respect to the right to take
possession of the Airframe and Engines as provided in the Lease, in the event of
a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor.
6.1.16 No Government Consents
Neither Lessee's execution and delivery of any of the Lessee Operative
Agreements nor Lessee's performance of its obligations hereunder requires 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 Government Entity, 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 and are, or will on the Delivery Date be,
in full force and effect, and the registration and filings referred to herein
and (b) any normal periodic and other reporting requirements under the
applicable rules of the FAA to the extent required to be given or obtained only
on or after the Delivery Date.
6.1.17 Payment of Taxes
Lessee and its Affiliates have filed or caused to be filed all federal,
state, and material local and non-U.S. tax returns that are required to be filed
and have paid or caused to be paid all taxes shown to be due on such returns or
on any assessment received by Lessee or its Affiliates, except any that are
being contested diligently and in good faith by appropriate proceedings and for
which adequate provision for payment has been made in accordance with GAAP.
There is no ongoing audit or, to the knowledge of Lessee, other investigation by
any Government Entity of the tax liability of Lessee or its Affiliates and there
is no unresolved claim by a taxing authority concerning Lessee's or any
Affiliate's tax liability, for any period for which returns have been filed or
were due, that, in either case, reasonably may be expected to result in
liability of Lessee which could have a materially adverse effect on the
business, operations or financial condition of Lessee or the ability of Lessee
to perform its obligations under the Operative Agreements.
6.2 Owner Participant's Representations and Warranties
Owner Participant represents and warrants to Lessee and Owner Trustee that:
6.2.1 Organization, etc.
Owner Participant (a) is a corporation duly incorporated, validly existing
and in good standing under the Laws of the OP Jurisdiction, (b) has the
corporate power and authority to conduct the business in which it is currently
engaged, to own or hold under lease its properties, and to enter into and
perform its obligations under the Owner Participant Agreements, and (c) has a
tangible net worth (exclusive of goodwill) greater than $50 million.
6.2.2 Corporate Authorization
Owner Participant has taken (or caused to be taken) all necessary corporate
action (including obtaining any consent or approval of stockholders required by
its certificate of incorporation or by-laws) to authorize its execution,
delivery, and performance of its obligations under each of the Owner Participant
Agreements.
6.2.3 No Violation
Owner Participant's execution, delivery, and performance of its obligations
under each of the Owner Participant Agreements do not and will not (a) violate
any provision of Owner Participant's certificate of incorporation or by-laws,
(b) violate any Law applicable to or binding on Owner Participant (no
representation or warranty is made with respect to ERISA, other than as set
forth in ss. 6.2.9) or (c) violate or constitute any default under (other than
any violation or default that would not result in a Materially Adverse Change to
Owner Participant), or result in the creation of any Lien (other than as
provided for or otherwise permitted in the Operative Agreements) upon the Trust
Estate under, any lease, loan, or other material agreement to which Owner
Participant is a party or by which Owner Participant or any of its properties is
bound.
6.2.4 Approvals
Owner Participant's execution, delivery, and performance of its obligations
under each of the Owner Participant Agreements do not and will not require the
consent or approval of, the giving of notice to, the registration with, the
recording or filing of any documents with, or the taking of any other action in
respect of (a) any trustee or other holder of any Debt of Owner Participant, and
(b) any Government Entity, other than filing the FAA-Filed Documents and the
Financing Statements and routine regulatory filings.
6.2.5 Valid and Binding Agreements
The Owner Participant Agreements have been duly authorized, executed, and
delivered by Owner Participant, and (assuming the due authorization, execution,
and delivery by the other parties thereto) constitute legal, valid, and binding
obligations of Owner Participant and are enforceable against Owner Participant
in accordance with their terms, except as such enforceability may be limited by
bankruptcy, insolvency, and other similar Laws affecting the rights of creditors
generally and general principles of equity.
6.2.6 Citizenship
Owner Participant is a Citizen of the United States.
6.2.7 No Liens
There are no Lessor Liens attributable to Owner Participant on all or any
part of the Trust Estate.
6.2.8 Investment by Owner Participant
Owner Participant is acquiring its beneficial interest in the Trust Estate
for its own account, for investment and not with a view to any resale or
distribution thereof; provided, that, subject to the transfer restrictions in
ss. 10, its disposition of its beneficial interest in the Trust Estate shall at
all times be within its control.
6.2.9 ERISA
No part of the funds to be used by Owner Participant to acquire or hold its
interests in the Trust Estate directly or indirectly constitutes assets of a
Plan.
6.2.10 Litigation
There are no pending or, to Owner Participant's Actual Knowledge,
threatened actions or proceedings against Owner Participant before any
Government Entity that, if determined adversely to Owner Participant, would
materially adversely affect Owner Participant's ability to perform its
obligations under the Owner Participant Agreements.
6.2.11 Securities Laws
Neither Owner Participant nor any Person Owner Participant has authorized
to act on its behalf has directly or indirectly offered any beneficial interest
in or Security relating to the ownership of the Aircraft or any interest in the
Trust Estate for sale to, or solicited any offer to acquire any of the same
from, any Person in violation of the Securities Act or applicable state
securities Laws (with the understanding that Owner Participant shall not be
deemed to have authorized Lessee's Advisor(s) to act on Owner Participant's
behalf).
6.2.12 Broker's Fees
No Person acting on behalf of Owner Participant is or will be entitled to
any broker's fee, commission, or finder's fee in connection with the
Transactions.
6.3 FSB's Representations and Warranties
FSB represents and warrants to Lessee and Owner Participant that:
6.3.1 Organization, etc.
FSB is a national banking association duly organized, validly existing and
in good standing under the Laws of the United States, holding a valid
certificate to do business as a national banking association with banking
authority to execute, deliver, and perform its obligations under the Owner
Trustee Agreements.
6.3.2 Corporate Authorization
FSB has taken (or caused to be taken) all necessary corporate action
(including obtaining any consent or approval of stockholders required by Law or
by its articles of association or by-laws) to authorize the execution and
delivery by FSB or Owner Trustee, of each of the Owner Trustee Agreements, and
the performance of its obligations thereunder.
6.3.3 No Violation
FSB's and Owner Trustee's execution, delivery, and performance of their
respective obligations under the Owner Trustee Agreements do not and will not
(a) violate any provision of FSB's articles of association or by-laws, (b)
violate any Utah Law or federal banking Law applicable to or binding on Owner
Trustee or FSB, or (c) violate or constitute any default under (other than any
violation or default that would not result in a Materially Adverse Change to FSB
or Owner Trustee), or result in the creation of any Lien upon any property of
FSB, Owner Trustee, or any of FSB's subsidiaries under, any lease, loan, or
other material agreement to which FSB or Owner Trustee is a party or by which
FSB, Owner Trustee, or any of their properties is or may be bound or affected.
6.3.4 Approvals
FSB's and Owner Trustee's execution, delivery, and performance of their
respective obligations under the Owner Trustee Agreements do not and will not
require the consent, approval, or authorization of, the giving of notice to, the
registration with, the recording or filing of any documents with, or the taking
of any other action in respect of, (a) any trustee or other holder of any Debt
of FSB, or (b) any Government Entity governing banking and trust powers, other
than filing the FAA-Filed Documents and the Financing Statements.
6.3.5 Valid and Binding Agreements
The Owner Trustee Agreements have been duly authorized, executed, and
delivered by FSB and Owner Trustee, and (assuming the due authorization,
execution, and delivery thereof by the other parties thereto) constitute legal,
valid, and binding obligations of FSB and Owner Trustee and are enforceable
against FSB and Owner Trustee in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency, and other similar Laws
affecting the rights of creditors generally and general principles of equity.
6.3.6 Citizenship
FSB is a Citizen of the United States.
6.3.7 Chief Executive Office
The chief executive office (as defined in UCC Article 9) of Owner Trustee
is located at 00 Xxxxx Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000.
6.3.8 Title
On the Delivery Date, Owner Trustee shall have received whatever title to
the Aircraft as was conveyed to it by Seller.
6.3.9 No Liens; Financing Statements
There are no Lessor Liens attributable to FSB or Owner Trustee in respect
of all or any part of the Aircraft, or the Trust Estate. Except for the
Financing Statements, neither FSB nor Owner Trustee has executed any UCC
financing statement relating to the Aircraft or the Lease.
6.3.10 Litigation
There are no pending or, to FSB's Actual Knowledge, threatened actions or
proceedings against FSB or Owner Trustee before any Government Entity that, if
determined adversely to FSB, would materially adversely affect the ability of
FSB or Owner Trustee to perform its obligations under the Owner Trustee
Agreements.
6.3.11 Securities Laws
Neither FSB, nor any Person authorized to act on its behalf, has directly
or indirectly offered any beneficial interest or Security relating to the
ownership of the Aircraft or any interest in the Trust Estate, for sale to, or
solicited any offer to acquire any such interest or security from, or has sold
any such interest or security to, any Person other than Owner Participant.
6.3.12 Expenses and Taxes
There are no Expenses or Taxes that may be imposed on or asserted against
the Trust, the Trust Estate, or any part thereof or any interest therein, Lessee
or Owner Participant (except as to Owner Trustee, Taxes imposed on the fees
payable to Owner Trustee) under the laws of Utah in connection with Owner
Trustee's execution, delivery, or performance of any Operative Agreement, which
Expenses or Taxes would not have been imposed if Owner Trustee had not (x) had
its principal place of business in Utah, (y) performed (in its individual
capacity or as Owner Trustee) any or all of its duties under the Operative
Agreements in Utah, or (z) engaged in any activities unrelated to the
transactions contemplated by the Operative Agreements in Utah.
7. COVENANTS
7.1 Lessee's Covenants
Lessee agrees for the benefit of Owner Participant and Owner Trustee as
follows:
7.1.1 Corporate Existence; U.S. Air Carrier
Lessee shall at all times maintain its corporate existence, except as
permitted byss. 13.2 of the Lease, and shall at all times remain a U.S. Air
Carrier.
7.1.2 Notice of Change of Chief Executive Office
Lessee will give to Owner Participant and Owner Trustee timely written
notice of (but in any event within 90 days after) any relocation of its chief
executive office (as defined in UCC Article 9), and will promptly take any
action required by ss. 7.1.3(c) as a result of such relocation.
7.1.3 Certain Assurances
(a) Lessee shall duly execute, acknowledge, and deliver (or cause to be
executed, acknowledged, and delivered) all such further documents, and shall do
and cause to be done such further things, as Owner Participant or Owner Trustee
reasonably requests to accomplish the purposes of the Operative Agreements,
provided that no document so executed by Lessee will expand any obligations or
limit any rights of Lessee in respect of the Transactions.
(b) Lessee shall promptly take such action with respect to the recording,
filing, re-recording, and refiling of the Lease and the Trust Agreement, and any
supplements thereto, as shall be necessary to establish, perfect, and protect
Owner Trustee's interests and rights in and to the Aircraft and under the Lease.
Lessee shall furnish to Owner Participant or Owner Trustee such information
(other than with respect to the citizenship of Owner Participant and Owner
Trustee) in Lessee's possession or otherwise reasonably available to Lessee and
required to enable Owner Participant or Owner Trustee to apply to register the
Aircraft under the Transportation Code (subject to Lessee's rights under ss.
7.1.2 of the Lease), and shall pay or cause to be paid all out-of-pocket costs
and expenses thereof (including reasonable attorneys' fees and disbursements).
(c) Lessee will cause the FAA-Filed Documents, the Financing Statements,
and all continuation statements (and any amendments necessitated by any
combination, consolidation, or merger pursuant to ss. 13.2 of the Lease, or any
relocation of its chief executive office) in respect of the Financing Statements
to be prepared and, subject only to the execution and delivery thereof by Owner
Trustee, duly and timely filed and recorded, or filed for recordation, to the
extent permitted under the Transportation Code (with respect to the FAA-Filed
Documents) or the UCC or similar law of any other applicable jurisdiction (with
respect to such other documents).
(d) If the Aircraft is registered in a country other than the United States
pursuant to ss. 7.1.2 of the Lease, Lessee will furnish to Owner Trustee and
Owner Participant annually while the Aircraft is not U.S.-registered (starting
with the calendar year after such registration is effected) an opinion of
special counsel reasonably satisfactory to Owner Participant stating that, in
the opinion of such counsel, either (1) such action has been taken with respect
to the recording, filing, re-recording, and re-filing of the Operative
Agreements and any supplements and amendments thereto as is necessary to
establish, perfect, and protect Owner Trustee's right, title and interest in and
to the Aircraft and the Operative Agreements, reciting the details of such
actions, or (2) no such action is necessary to maintain the perfection of such
right, title, and interest.
7.1.4 Securities Laws
Neither Lessee nor any Person authorized to act on its behalf will directly
or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or the Lease or any interest in the Trust Estate and
Trust Agreement for sale to, or solicit any offer to acquire any such interest
or security from, or sell any such interest or security to, any Person in
violation of the Securities Act or applicable state or foreign securities Laws.
7.1.5 Certification
Lessee shall cause the Aircraft to be duly certified by the FAA as to
airworthiness and shall, immediately upon registration of the Aircraft in Owner
Trustee's name, obtain an FAA airworthiness certificate for the Aircraft.
7.2 Owner Participant's Covenants
Owner Participant agrees for the benefit of Lessee and Owner Trustee as
follows:
7.2.1 Liens
Owner Participant (a) (1) will not directly or indirectly create, incur,
assume, or suffer to exist any Lessor Lien attributable to it on or with respect
to all or any part of the Trust Estate or the Aircraft, and (2) will, at its own
cost and expense, promptly take such action as is necessary to discharge any
Lessor Lien attributable to Owner Participant on all or any part of the Trust
Estate or the Aircraft; provided, that Owner Participant shall not be required
to comply with the foregoing provisions of this clause (a) if it shall in good
faith by appropriate proceedings contest claims or charges resulting in any such
Lien as long as such contest does not involve any material danger of the sale,
forfeiture, loss, or loss of use of the Aircraft or the interest of Lessor or
Owner Participant therein; and (b) will hold harmless and indemnify Lessee,
Owner Trustee, each of their respective Affiliates, successors, and permitted
assigns, and the Trust Estate from and against (1) any and all Expenses, (2) any
reduction in the amount payable out of the Trust Estate, and (3) any
interference with the possession, operation, or other use of all or any part of
the Aircraft, in each case imposed on, incurred by, or asserted against any of
the foregoing as a consequence of any such Lessor Lien (without regard to the
proviso to the foregoing clause (a)).
7.2.2 Revocation of Trust Agreement
(a) Owner Participant will comply with the provisions of the Trust
Agreement applicable to it, will not terminate or revoke the Trust Agreement or
the trusts created thereunder without the prior written consent of Lessee, and
will not amend, modify, or supplement the Trust Agreement, or waive any of the
provisions thereof, if such amendment, modification, supplement, or waiver would
have any adverse effect on Lessee, without the consent of Lessee.
(b) Notwithstanding ss. 7.2.2(a), Owner Participant may at any time remove
Owner Trustee pursuant to ss. 9.1 of the Trust Agreement or terminate the Trust
Agreement pursuant to ss. 11.2 of the Trust Agreement.
7.2.3 Change of Situs of Owner Trust
If, at any time, any Tax Indemnitee or the Trust Estate becomes subject to
any Taxes for which it is indemnified pursuant to ss. 9.3 of this Agreement and
if, as a consequence thereof, Lessee requests that the situs of the Trust be
moved to another state in the United States from the state in which it is then
located, the situs of the Trust may be moved with the written consent of Owner
Participant (which consent shall not be unreasonably withheld) and Owner
Participant will take whatever action is reasonably necessary to accomplish such
removal; provided, that, in any event, (a) Lessee shall provide such additional
tax indemnification as Owner Participant reasonably requests to cover any
additional unindemnified Taxes or loss of Tax benefits described in the
assumptions in the Tax Indemnity Agreement resulting from such change in situs,
(b) the rights and obligations under the Operative Agreements of Owner
Participant shall not be adversely affected as a result of the taking of such
action, (c) Owner Participant shall receive an opinion or opinions of counsel
(which counsel is reasonably satisfactory to Owner Participant), in scope, form,
and substance reasonably satisfactory to Owner Participant, to the effect that
(1) the Trust, as thus removed, remains a validly-established trust, (2) any
amendments to the Trust Agreement necessitated by such removal have been duly
authorized, executed, and delivered and constitute valid and binding obligations
of such parties, enforceable in accordance with their terms, (3) covering such
other matters as Owner Participant reasonably requests, (d)if such removal
involves the replacement of Owner Trustee, then Owner Participant shall receive
an opinion of counsel to such successor Owner Trustee, in form and substance
reasonably satisfactory to Owner Participant, covering the matters described in
the opinion delivered pursuant to ss. 5.1.2(r)(4), and (e) Lessee shall
indemnify and hold harmless Owner Participant, FSB, and Owner Trustee, on a net
after-tax basis, against any and all reasonable out-of-pocket costs and expenses
(including attorneys' fees and disbursements), fees and expenses of any new
owner trustee, registration, recording, or filing fees, and taxes incurred by
Owner Participant or Owner Trustee in connection with such change of situs.
Owner Participant agrees, for Lessee's benefit, that Owner Participant will not
consent to or direct a change in the situs of the Trust Estate without Lessee's
prior written consent.
7.2.4 Compliance with Lease Provisions
Owner Participant agrees, solely for Lessee's benefit, to comply with the
express provisions applicable to Owner Participant in the Lease.
7.2.5 Securities Act
Owner Participant will not directly or indirectly offer any beneficial
interest or security relating to the ownership of the Aircraft or any interest
in the Trust Estate for sale to, or solicit any offer to acquire any such
interest or security from, or sell any such interest or security to, any Person
in violation of the Securities Act or applicable state or foreign securities
Laws, provided, that this ss. 7.2.5 shall not impose on Owner Participant any
responsibility with respect to any such offer, sale, or solicitation by any
other party hereto.
7.2.6 Regarding Owner Trustee
Owner Participant will direct Owner Trustee to perform its obligations
under each Owner Trustee Agreement.
7.3 FSB's and Owner Trustee's Covenants
FSB and Owner Trustee agree for the benefit of Lessee and Owner Participant
as follows:
7.3.1 Liens
FSB (a) will not directly or indirectly create, incur, assume, or suffer to
exist any Lessor Lien attributable to it or Owner Trustee on all or any part of
the Trust Estate or the Aircraft, (b) will, at its own cost and expense,
promptly take such action as is necessary to discharge any Lessor Lien
attributable to FSB or Owner Trustee on all or any part of the Trust Estate or
the Aircraft, and (c) will personally hold harmless and indemnify Lessee, Owner
Participant, each of their Affiliates, successors, and permitted assigns, and
the Trust Estate from and against (1) any and all Expenses, (2) any reduction in
the amount payable out of the Trust Estate, and (3) any interference with the
possession, operation, or other use of all or any part of the Aircraft imposed
on, incurred by, or asserted against any of the foregoing as a consequence of
any such Lessor Lien.
7.3.2 Other Business
Owner Trustee will not enter into any business or other activity except as
contemplated by the Operative Agreements.
7.3.3 Notice of Change of Chief Executive Office
FSB and Owner Trustee will give to Lessee and Owner Participant 30 days'
prior written notice of any relocation of its chief executive office (as defined
in UCC Article 9), and will promptly take any action required by ss. 7.3.7 as a
result of such relocation.
7.3.4 Securities Act
Neither FSB nor Owner Trustee will directly or indirectly offer any
beneficial interest or Security relating to the ownership of the Aircraft or any
interest in the Trust Estate for sale to, or solicit any offer to acquire any
such interest or security from, or sell any such interest or security to, any
Person in violation of the Securities Act or applicable state or foreign
securities Laws, provided, that the foregoing shall not impose on FSB or Owner
Trustee any responsibility with respect to any such offer, sale, or solicitation
by any other party hereto.
7.3.5 Performance of Agreements
Owner Trustee shall perform its obligations under the Owner Trustee
Agreements in accordance with the terms thereof.
7.3.6 Notices; Documents
If any claim with respect to any liabilities is filed against Owner Trustee
and Owner Trustee has Actual Knowledge thereof, then Owner Trustee shall
promptly notify Lessee in writing thereof. Owner Trustee further agrees to
provide to Lessee promptly any documents (including the certificate of aircraft
registration) that it receives from the FAA with respect to the Aircraft.
7.3.7 Filings
After the Delivery Date, Owner Trustee shall duly execute and deliver to
Lessee all filings and recordings (including all filings and UCC financing
statements under the Transportation Code and the UCC and any amendments to UCC
financing statements necessitated by any relocation of its chief executive
office), prepared and delivered to it by Lessee, required to perfect Owner
Trustee's title to the Aircraft and to make such title, liens, and security
interests valid and enforceable.
7.3.8 Trust Agreement
FSB and Owner Trustee hereby (a) agree for the benefit of Lessee not to
amend, supplement, terminate, or otherwise modify any provision of the Trust
Agreement in a manner that adversely affects the rights of any such party
without the prior written consent of such party, and (b) agree for the benefit
of Lessee not to revoke the trust created by the Trust Agreement if such
revocation would have an adverse effect on Lessee. Nothing in this Agreement
shall impair any right under the Trust Agreement of FSB to resign as Owner
Trustee in accordance with the provisions of the Trust Agreement.
7.4 Other Agreements
7.4.1 Owner Trustee Is Owner for All Purposes
Lessee, Owner Participant, and Owner Trustee agree that for all purposes,
after the Closing, Owner Trustee will be the owner of the Aircraft (except that
Owner Participant will be the owner for income tax purposes) and Lessee will be
the lessee thereof. No transfer, by operation of Law or otherwise, of Owner
Participant's beneficial interest in and to the Trust Estate shall operate to
transfer legal title to any part of the Trust Estate to any transferee thereof.
7.4.2 Commencement of Bankruptcy Proceedings
Lessee, Owner Participant, FSB, and Owner Trustee agree for the benefit of
each of the others that it will not commence or join in any proceeding under the
Bankruptcy Code to commence a case under ss. 303 of the Bankruptcy Code against
the Trust Estate. Nothing contained herein shall be deemed to preclude Owner
Participant, FSB, or Owner Trustee from filing any claim against the Trust
Estate in any case commenced against the Trust Estate.
7.4.3 Quiet Enjoyment; Sale by Owner Trustee Binding
(a) Owner Participant and Owner Trustee agree for the benefit of Lessee
that, unless an Event of Default exists, such Person shall not interfere (and
shall not permit any Affiliate or other Person claiming by, through, or under it
to interfere) with Lessee's rights in accordance with the Lease to the quiet
enjoyment, possession, and use of the Aircraft during the Term.
(b) Any assignment, sale, transfer, or other conveyance of the Aircraft by
Owner Trustee made pursuant to the terms of this Agreement or the Lease shall
bind Owner Participant, and shall be effective to transfer or convey all right,
title, and interest of Owner Trustee and Owner Participant in and to the
Aircraft. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency, or regularity of such assignment, sale,
transfer, or conveyance, or as to the application of any sale or other proceeds
with respect thereto by Owner Trustee, as regards Owner Participant.
7.4.4 Other Documents; Amendment
(a) Each of Owner Participant and Owner Trustee hereby agrees for the
benefit of Lessee not to amend, supplement, or otherwise modify any provision of
the Trust Agreement in a manner that could adversely affect such party, without
the prior written consent of such party. Owner Trustee agrees to furnish
promptly to Lessee copies of any supplement, amendment, waiver, or modification
of any of the Operative Agreements to which Lessee is not a party.
(b) Owner Trustee agrees to join with Lessee to the extent that action on
its part is necessary or appropriate (1) to cause the following to be duly
accomplished in accordance with applicable United States federal Law by the time
the Aircraft is delivered under this Agreement and the Lease: (aa) to apply to
register the Aircraft in Owner Trustee's name, and (bb) all related action
necessary in order for Lessee to have temporary or permanent authority to
operate the Aircraft as contemplated by the Lease, and (2) forthwith upon
delivery of the Aircraft under this Agreement and the Lease, to cause all
necessary documents to be duly filed for recording in accordance with applicable
United States federal Law.
7.4.5 Consents
Each of Owner Participant and Owner Trustee covenants and agrees, for
Lessee's benefit, that it shall not unreasonably withhold its consent to any
consent or approval requested of it or of Owner Trustee under the terms of any
of the Operative Agreements which by its terms is not to be unreasonably
withheld.
7.4.6 Insurance
Each of Owner Participant and Owner Trustee agrees not to obtain or
maintain insurance for its own account as permitted by ss. 11.2 of the Lease if
such insurance would limit, increase the cost of, or otherwise adversely affect
the coverage of any insurance required to be obtained or maintained by Lessee
pursuant to ss. 11 and Annex D of the Lease.
7.4.7 Foreign Registration
(a) Owner Participant and Owner Trustee hereby agree for Lessee's benefit
that, subject to ss. 7.1.2 of the Lease, Lessee shall be entitled to register
the Aircraft or cause the Aircraft to be registered in a country other than the
United States, if:
(1) such registration is made only after the Tax Attribute Period, unless
Lessee prepays on a lump-sum basis any liability that would be due under the Tax
Indemnity Agreement as a result of such registration based upon the assumption
that such registration would continue for the remainder of the term of the
Permitted Sublease described in clause (3) below;
(2) no Special Default or Event of Default exists at the time of such
registration;
(3) such proposed change of registration is made in connection with a
Permitted Sublease to a Permitted Air Carrier, and such country is such
Permitted Air Carrier's domicile;
(4) such country is a country with which the United States then maintains
normal diplomatic relations (or, if Taiwan, the United States then maintains
diplomatic relations at least as good as those in effect on the Delivery Date,
provided that Lessee may not effect such registration in Taiwan unless it has
obtained the prior written consent of Owner Participant, which Owner Participant
may withhold in its sole and absolute discretion); and
(5) Owner Participant and Owner Trustee receive an opinion of counsel
(subject to customary exceptions) reasonably satisfactory to Owner Participant,
addressed to each such party, to the effect that:
(aa) such country recognizes Owner Trustee's ownership interest in the
Aircraft;
(bb) Lessee's obligations, and Owner Trustee's rights and remedies, under
the Lease are valid, binding, and enforceable under the laws of such
jurisdiction;
(cc) after giving effect to such change in registration, Owner Trustee's
title continues as a valid and protected interest, and all filing, recording, or
other action necessary to protect Owner Trustee's interest have been
accomplished (or, if such opinion cannot be given at the time of such proposed
change in registration because such change in registration is not yet effective,
(1) the opinion shall detail what filing, recording, or other action is
necessary, and (2) Owner Participant and Owner Trustee shall receive a
certificate from Lessee that all possible preparations to accomplish such
filing, recording, and other action are done, and such filing, recording, and
other action are accomplished, and a supplemental opinion to that effect shall
be delivered to Owner Participant and Owner Trustee promptly after the effective
date of such change in registration;
(dd) it is not necessary, solely as a consequence of such change in
registration and without giving effect to any other activity of Owner Trustee or
Owner Participant, for Owner Trustee or Owner Participant to qualify to do
business in such jurisdiction as a result of such reregistration or in order to
exercise any rights or remedies with respect to the Aircraft pursuant to the
Lease;
(ee) there is no tort liability of the owner or lessor of an aircraft not
in possession thereof under the laws of such jurisdiction (it being agreed that,
if such latter opinion cannot be given in a form satisfactory to Owner
Participant, such opinion shall be waived if insurance reasonably satisfactory
to Owner Participant is provided to cover such risk); and
(ff) unless Lessee agrees to provide insurance covering the risk of
requisition of use of the Aircraft by the government of such country (so long as
the Aircraft is registered under the laws of such country), the laws of such
country require fair compensation by the government of such country payable in
currency freely convertible into Dollars and freely removable from such country
(without license or permit, unless Lessee before such proposed reregistration
has obtained such license or permit) for the taking or requisition by such
government of such use.
(b) In addition, as a condition precedent to any change in
registration, Lessee shall give to Owner Participant assurances reasonably
satisfactory to each of them:
(1) that the provisions ofss. 11 of the Lease have been complied with after
giving effect to such change of registration;
(2) of Lessee's payment, on an after-tax basis, of all reasonable
out-of-pocket expenses of Lessor and Owner Participant in connection with such
change of registry, including (aa) the reasonable fees and disbursements of
counsel to Lessee and Lessor, (bb) any filing or recording fees, Taxes, or
similar payments incurred in connection with the change of registration of the
Aircraft; and
(3) that the tax and other indemnities in favor of each Person named as an
indemnitee under any other Operative Agreement afford to each such Person
substantially the same protection as provided before such change of registration
(or Lessee agrees to provide, or cause to be provided, additional indemnities
that, together with such original indemnities, in the reasonable judgment of
Owner Participant and Lessor, afford such protection).
7.4.8 Other Commercial Relations Unaffected
Notwithstanding anything to the contrary set forth in any Operative
Agreement:
(a) except as set forth in the Purchase Agreement Assignment, nothing in
the Operative Agreements shall constitute or be deemed to be a waiver by Lessee
of any rights, remedies, or claims it may have against Airframe Manufacturer or
Engine Manufacturer or any subcontractor or supplier of either; and the
Operative Agreements do not and shall not be construed or deemed to create any
rights, waivers, immunities, or indemnities in favor of Airframe Manufacturer,
Engine Manufacturer, or any subcontractor or supplier of either with respect to
any such rights, remedies, or claims of Lessee; and
(b) neither Airframe Manufacturer, by its execution and delivery of the
Consent and Agreement, nor Engine Manufacturer, by its execution and delivery of
the Engine Manufacturer Warranty Agreement, shall be deemed to have waived any
rights, remedies, or claims which Airframe Manufacturer or Engine Manufacturer
(or any subcontractor or supplier of either) has against Lessee; and the
Operative Agreements do not and shall not be construed or deemed to create any
rights, waivers, immunities, or indemnities in favor of Lessee with respect to
any such rights, remedies, or claims of Airframe Manufacturer or Engine
Manufacturer (or any subcontractor or supplier of either).
7.4.9 Interest in Certain Engines
Owner Participant and Owner Trustee agree, for the benefit of each lessor,
conditional seller, or secured party of any airframe or engine leased to,
purchased by, or owned by Lessee or any Permitted Sublessee subject to a lease,
conditional sale, or other security agreement that it will not acquire or claim,
as against such lessor, conditional seller, or secured party, any right, title,
or interest in any engine as the result of the installation of such engine on
the Airframe at any time while such engine is subject to such lease, conditional
sale, or other security agreement and owned by such lessor or conditional seller
or subject to a security interest in favor of such secured party.
8. CONFIDENTIALITY
Lessee, Owner Participant, and Owner Trustee shall keep Annexes B, C, and D
and Schedules 1, 2, 3, and 4 to the Lease, the Participation Agreement, the
Purchase Agreement Assignment, and the Tax Indemnity Agreement confidential, and
shall not disclose them, or cause them to be disclosed, to any Person, except
(a) to prospective and permitted transferees of Lessee's, Owner Participant's,
or Owner Trustee's interest or their counsel, independent insurance brokers,
auditors, or other agents who agree to hold such information confidential, (b)
to Lessee's, Owner Participant's, or Owner Trustee's counsel, independent
insurance brokers, auditors, or other agents, Affiliates, or investors who agree
to hold such information confidential, (c) as may be required by any statute,
court, or administrative order or decree, legal process, or governmental ruling
or regulation, including those of any applicable insurance regulatory bodies
(including the National Association of Insurance Commissioners), federal or
state banking examiners, Internal Revenue Service auditors, or any stock
exchange, (d) with respect to Lessee and Owner Participant, by mutual agreement
of such parties, or (e) to such other Persons as are reasonably deemed necessary
by the disclosing party in order to protect the interests of such party or for
the purposes of enforcing such documents by such party; provided, that any and
all disclosures permitted by clauses (c), (d), and (e) above shall be made only
to the extent necessary to meet the specific requirements or needs of the
Persons making such disclosures.
9. INDEMNIFICATION AND EXPENSES
9.1 General Indemnity
9.1.1 Indemnity
Whether or not any of the Transactions are consummated, Lessee shall
indemnify, protect, defend, and hold harmless each Indemnitee from, against, and
in respect of, and shall pay on a net after-tax basis, any and all Expenses of
any kind or nature whatsoever, including those imposed on, incurred or suffered
by, or asserted against any Indemnitee, relating to, based on, resulting from,
or arising out of or in connection with, in each case directly or indirectly,
any one or more of the following:
(a) the Operative Agreements, or the enforcement of any of the terms of any
of the Operative Agreements;
(b) the Aircraft, the Airframe, any Engine, or any Part, including, with
respect thereto, (1) the manufacture, design, purchase, acceptance,
nonacceptance, rejection, ownership, registration, reregistration,
deregistration, delivery, nondelivery, lease, sublease, assignment, possession,
use, non-use, operation, maintenance, testing, repair, overhaul, condition,
alteration, modification, addition, improvement, storage, airworthiness,
replacement, repair, sale, substitution, return, abandonment, redelivery, or
other disposition of the Aircraft, any Engine, or any Part, (2) any claim or
penalty arising out of violations of applicable Laws, (3) tort liability,
whether or not arising out of the negligence of any Indemnitee (whether active,
passive, or imputed, and including strict liability and liability without
fault), (4) death or property damage of passengers, shippers, or others, (5)
environmental control, noise, or pollution, (6) any claim for patent, trademark,
or copyright infringement and (7) any Liens in respect of the Aircraft, any
Engine, or any Part; and
(c) any breach of or failure to perform or observe, or any other
noncompliance with, any covenant, agreement, or other obligation to be performed
by Lessee under any Lessee Operative Agreement, or the falsity of any
representation or warranty of Lessee in any Lessee Operative Agreement, other
than in the Tax Indemnity Agreement.
9.1.2 Exceptions
Notwithstanding anything in ss. 9.1.1, Lessee shall not be required to
indemnify, protect, defend, and hold harmless any Indemnitee pursuant to ss.
9.1.1 against any Expense of such Indemnitee:
(a) for any Taxes or a loss of Tax benefit, whether or not Lessee is
required to indemnify therefor pursuant to ss. 9.3 or the Tax Indemnity
Agreement (other than amounts required to be paid to render the payment of any
Expense payable under ss. 9.1.1 on an after-tax basis);
(b) except to the extent attributable to acts or events occurring prior
thereto, acts or events (other than acts or events related to Lessee's
performance of its obligations pursuant to the terms of the Lessee Operative
Agreements) that occur after: (1) with respect to the Airframe, any Engine, or
any Part, the return of possession (which, if the Aircraft is placed in storage
as provided inss. 5 of the Lease, is the date that the Aircraft is placed in
storage) of such Airframe, Engine, or Part pursuant to the Lease (other than
pursuant toss. 15 thereof, in which case Lessee's liability under thisss. 9.1
shall survive for so long as Lessor is entitled to exercise remedies under
suchss. 15 or in connection with Lessee in the event of exercise of its early
termination option underss. 9 of the Lease or its purchase options underss. 17.3
of the Lease), and (2) the termination of the Term in accordance with the Lease;
(c) to the extent attributable to any Transfer (voluntary or involuntary)
by or on behalf of Owner Participant of any interest in the Aircraft or the
Trust Estate, except for out-of-pocket costs and expenses incurred as a result
of such Transfer during the existence of an Event of Default (or in connection
with Lessee in the event of exercise of its early termination option under ss. 9
of the Lease or its purchase options under ss. 17.3 of the Lease);
(d) to the extent attributable to the gross negligence or willful
misconduct of such Indemnitee or any related Indemnitee (as defined below)
(other than gross negligence or willful misconduct imputed to such Person by
reason of its interest in the Aircraft or any Operative Agreement);
(e) in the case of FSB, to the extent attributable to matters enumerated in
the proviso toss. 13;
(f) to the extent attributable to the incorrectness or breach of any
representation or warranty of such Indemnitee or any related Indemnitee
contained in or made pursuant to any Operative Agreement;
(g) to the extent attributable to the failure, by such Indemnitee or any
related Indemnitee, to perform or observe any agreement, covenant, or condition
on its part to be performed or observed in any Operative Agreement;
(h) to the extent attributable to the offer or sale by such Indemnitee or
any related Indemnitee of any interest in the Aircraft, the Trust Estate, or the
Trust Agreement, or any similar interest, in violation of the Securities Act or
other applicable federal, state, or foreign securities Laws (other than any
thereof caused by the acts or omissions of Lessee or any person acting on behalf
of Lessee);
(i) with respect to Owner Trustee, to the extent attributable to its
negligence or willful misconduct in the distribution of funds received and
distributable by it in accordance with the Trust Agreement,
(j) other than during the existence of an Event of Default, to the extent
attributable to the authorization or giving or withholding of any future
amendments, supplements, waivers, or consents with respect to any Operative
Agreement, other than any requested by Lessee or required by or made pursuant to
the terms of the Operative Agreements (unless such requirement results from the
actions of an Indemnitee not required by or made pursuant to the Operative
Agreements);
(k) to the extent attributable to any amount which any Indemnitee expressly
agrees to pay or such Indemnitee expressly agrees shall not be paid by or be
reimbursed by Lessee;
(l) to the extent that it is an ordinary and usual operating or overhead
expense of such Indemnitee;
(m) with respect to Owner Participant or Owner Trustee, or any related
Indemnitee, to the extent attributable to the deregistration of the Aircraft
under the Transportation Code as a result of the failure of such Person (or any
related Indemnitee of such Person) to be a Citizen of the United States as a
result of any act (other than reregistration of the Aircraft pursuant to ss.
7.1.2 of the Lease) of Owner Participant or Owner Trustee or any related
Indemnitee of such Person (not taken at the request of Lessee);
(n) for any Lessor Lien attributable to such Indemnitee or any related
Indemnitee; or
(o) to the extent incurred by or asserted against an Indemnitee other than
Owner Participant (but without limiting the other provisions of this ss. 9.1.2,
including clauses (f) and (g), as to Owner Participant) as a result of any
"prohibited transaction", within the meaning of ERISA ss. 406 or Code ss.
4975(c)(1).
For purposes of this ss. 9.1, a Person shall be considered a "related
Indemnitee" of an Indemnitee if that Person is an Affiliate or employer of such
Indemnitee, a director, officer, employee, or agent of such Indemnitee or any
such Affiliate, or a successor or permitted assignee of any of the foregoing;
provided, that Owner Trustee and FSB shall not be deemed to be related
Indemnitees of Owner Participant merely because of their trust or fiduciary
relationships.
9.1.3 Separate Agreement
This Agreement constitutes a separate agreement with respect to each
Indemnitee, and is enforceable directly by each such Indemnitee.
9.1.4 Notice
If an Indemnitee makes a claim for any Expense indemnifiable under this ss.
9.1, such Indemnitee shall give prompt written notice thereof to Lessee.
Notwithstanding the foregoing, any Indemnitee's failure to notify Lessee as
provided in this ss. 9.1.4, or in ss. 9.1.5, shall not release Lessee from any
of its obligations to indemnify such Indemnitee hereunder, except to the extent
that such failure results in an additional Expense to Lessee (in which event
Lessee shall not be responsible for such additional expense) or materially
impairs Lessee's ability to contest such claim.
9.1.5 Notice of Proceedings; Defense of Claims; Limitations
(a) If any action, suit, or proceeding for which Lessee is responsible
under this ss. 9.1 is brought against any Indemnitee, such Indemnitee shall
notify Lessee of the commencement thereof, and Lessee may, at its expense,
participate in and, to the extent that it so desires (subject to the provisions
of the following paragraph), assume and control its defense and, subject to ss.
9.1.5(c), settle or compromise it. Unless Owner Participant agrees in writing
otherwise, no settlement of any claim hereunder may require Owner Participant to
agree to any remedy apart from the payment of money damages (for which such
payment of money damages Lessee will in any event indemnify the Indemnitees).
(b) Lessee or its insurer(s) shall have the right, at its or their expense,
to investigate or, if Lessee or its insurer(s) agree not to dispute liability to
the Indemnitee giving notice of such action, suit, or proceeding under this ss.
9.1.5 for indemnification hereunder or under any insurance policies pursuant to
which coverage is sought, control the defense of, any action, suit, or
proceeding, relating to any Expense for which indemnification is sought pursuant
to this ss. 9.1, and each Indemnitee shall cooperate with Lessee or its
insurer(s) with respect thereto; provided, that Lessee shall not be entitled to
control the defense of any such action, suit, or proceeding, or to settle or
compromise any such Expense, (i) while any Special Default or Event of Default
under ss. 14.1 of the Lease exists, or (ii) if such action, suit, or proceeding
will involve a material risk of the sale, forfeiture, or loss of, or the
creation of any Lien (other than a Permitted Lien) on the Aircraft, the Trust
Estate, or any part thereof, unless Lessee shall have posted a bond or other
security or collateral satisfactory to Owner Participant in respect to such
risk, or (iii) if such action, suit, or proceeding could in the good faith
opinion of such Indemnitee entail any risk of criminal liability or material
civil liability or present a conflict of interest making separate representation
necessary. In connection with any such Lessee-controlled action, suit, or
proceeding, such Indemnitee shall have the right to participate therein, at its
sole cost and expense, with counsel reasonably satisfactory to Lessee, provided
that such Indemnitee's participation does not, in the reasonable opinion of the
independent counsel appointed by Lessee or its insurers to conduct such
proceedings, interfere with the defense of such case.
(c) In no event shall any Indemnitee enter into a settlement or other
compromise with respect to any Expense without Lessee's prior written consent
(which shall not be unreasonably withheld or delayed), unless such Indemnitee
waives its right to be indemnified with respect to such Expense under this ss.
9.1.
(d) To the extent that any Expense indemnified by Lessee hereunder may be
covered by insurance maintained by Lessee, at Lessee's expense, each Indemnitee
agrees to cooperate with the insurers in the exercise of their rights to
investigate, defend, or compromise that Expense as may be required to retain the
benefits of the insurance for that Expense.
(e) If an Indemnitee is not a party to this Agreement, Lessee may require
that Indemnitee to agree in writing to the terms of this ss. 9 and ss. 15.8
before making any payment to such Indemnitee under this ss. 9.
(f) Nothing herein shall be deemed to be a guarantee of any residual value
of the Aircraft.
(g) Nothing in this ss. 9.1.5 shall require an Indemnitee to contest any
Expense or to assume responsibility for or control of any judicial proceeding
with respect thereto.
9.1.6 Information
Lessee will provide the relevant Indemnitee with such information not
within the control of such Indemnitee (but in Lessee's control or reasonably
available to Lessee) which such Indemnitee reasonably requests, and will
otherwise cooperate with such Indemnitee so as to enable such Indemnitee to
fulfill its obligations under ss. 9.1.5 and to control or participate in any
proceeding to the extent permitted by ss. 9.1.5. The Indemnitee shall supply
Lessee with such information not within the control of Lessee (but in such
Indemnitee's control or reasonably available to such Indemnitee) which Lessee
reasonably requests to control or participate in any proceeding to the extent
permitted by ss. 9.1.5.
9.1.7 Effect of Other Indemnities; Subrogation; Further Assurances
Upon payment in full by or on behalf of Lessee of any indemnity provided
for under this Agreement, without any further action and to the full extent
permitted by Law, Lessee will be subrogated to all rights and remedies of the
Person indemnified (other than with respect to any of such Indemnitee's
insurance policies or in connection with any indemnity claim of such Indemnitee
under ss. 5.3 or ss. 7 of the Trust Agreement) in respect of the matter as to
which such indemnity was paid. Each Indemnitee will give such further assurances
or agreements and cooperate with Lessee to permit Lessee to pursue any such
claims, to the extent reasonably requested by Lessee and at Lessee's expense.
9.1.8 Refunds
If an Indemnitee receives any refund, in whole or in part, with respect to
any Expense paid by or on behalf of Lessee hereunder, that Indemnitee will
promptly pay the amount refunded (but not an amount in excess of the amount
Lessee or any of its insurers has paid in respect of such Expense) over to
Lessee unless an Event of Default exists, in which case such amount shall be
paid over to Owner Trustee to hold as security for Lessee's obligations under
the Lessee Operative Agreements or, if requested by Lessee, applied to satisfy
those obligations. Any subsequent loss of such recovery or tax benefit or refund
shall be subject to the provisions of ss. 9.1 and ss. 9.3.
9.2 Expenses
9.2.1 Invoices and Payment
Owner Trustee and Owner Participant shall promptly submit to Lessee for its
prompt approval (which shall not be unreasonably withheld) copies of invoices in
reasonable detail of the Transaction Expenses for which it is responsible for
providing information as they are received (and not later than the 90th day
after the Delivery Date). If so submitted and approved, Owner Participant agrees
promptly (and not later than the later of (i) the 105th day after the Delivery
Date and (ii) the tenth Business Day following such approval) to pay such
Transaction Expenses . Notwithstanding the foregoing, Lessee at its sole option
shall have the right to pay directly any and all Transaction Expenses payable to
Lessee Advisor or Lessee's counsel or (if such payment does not result in
adverse tax consequences to Owner Participant) to any other Person. If Owner
Participant fails to pay any Transaction Expense that it is obligated to pay
hereunder, Lessee shall pay such Transaction Expense. Any such payment by Lessee
shall not affect Owner Participant's obligations or Lessee's rights against
Owner Participant for its failure to make any such payment.
9.2.2 Payment of Other Expenses
Lessee shall pay (a) the ongoing fees and expenses of Owner Trustee, and
(b) all reasonable out-of-pocket costs and expenses (including the reasonable
fees and disbursements of counsel) incurred by Owner Participant attributable to
(1) any transfer of title to the Aircraft or any Engine contemplated by ss. 4.5
of the Lease, or (2) any waiver, amendment, or modification of any Operative
Agreement to the extent requested by Lessee.
9.2.3 Indemnification Interest
Lessee will pay to each Indemnitee upon demand, to the extent permitted by
applicable Law, interest at the Past Due Rate on any amount of indemnity not
paid when due pursuant to this ss. 9 until the same shall be paid.
9.3 General Tax Indemnity
9.3.1 General
Except as provided in ss. 9.3.2, Lessee agrees that each payment of Rent
paid by Lessee pursuant to the Lease, and any other payment or indemnity paid by
Lessee to a Tax Indemnitee under any Operative Agreement, shall be free of all
withholdings or deductions with respect to Taxes of any nature, and if Lessee is
required by applicable law to make any such withholding or deduction for any
such payment, (a) Lessee shall make all such withholdings or deductions, (b) the
amount payable by Lessee shall be increased so that, after making all required
withholdings or deductions, such Tax Indemnitee receives the same amount that it
would have received had no such withholdings or deductions been made, and (c)
Lessee shall pay the full amount withheld or deducted to the relevant Taxing
Authority in accordance with applicable law. Except as provided in ss. 9.3.2,
and whether or not any of the Transactions are consummated, Lessee shall pay,
indemnify, protect, defend, and hold harmless on an after-tax basis each Tax
Indemnitee from all Taxes imposed by any Taxing Authority imposed on or asserted
against any Tax Indemnitee or the Aircraft, the Airframe, any Engine, or any
Part, or any interest in any of the foregoing (whether or not indemnified
against by any other Person), upon or with respect to the Operative Agreements,
their execution, or the transactions or payments contemplated thereby, including
any Tax imposed upon or with respect to (w) the Aircraft, the Airframe, any
Engine, any Part, any Operative Agreement, any data, or any other thing
delivered or to be delivered under an Operative Agreement, (x) the purchase,
manufacture, acceptance, rejection, sale, transfer of title, return, ownership,
delivery, transport, charter, rental, lease, re-lease, sublease, assignment,
possession, repossession, presence, use, condition, storage, preparation,
maintenance, modification, alteration, improvement, operation, registration,
transfer or change of registration, reregistration, repair, replacement,
overhaul, location, control, imposition of any Lien (other than a Lessor Lien),
financing, refinancing requested by Lessee, abandonment, or other disposition of
the Aircraft, the Airframe, any Engine, any Part, any data, or any other thing
delivered or to be delivered under an Operative Agreement, or (y) rent,
interest, fees, or other income, proceeds, receipts, or earnings, whether actual
or deemed, arising upon, in connection with, or in respect of any of the
Operative Agreements (including the property or income or other proceeds with
respect to property held as part of the Trust Estate) or the transactions
contemplated thereby.
9.3.2 Certain Exceptions
The provisions of ss. 9.3.1 shall not apply to, and Lessee shall have no
liability hereunder for, Taxes:
(a) imposed on a Tax Indemnitee by the federal government of the United
States or any Taxing Authority or governmental subdivision of the United States
or any state or local Taxing Authority (1) on, based on, or measured by gross or
net income or gross or net receipts, including capital gains taxes, excess
profits taxes, minimum taxes from tax preferences, alternative minimum taxes,
branch profits taxes, accumulated earnings taxes, personal holding company
taxes, succession taxes and estate taxes, and any withholding taxes on, based
on, or measured by gross or net income or receipts, or (2) on, or with respect
to, or measured by capital or net worth or in the nature of a franchise tax or a
tax for the privilege of doing business (other than, in the case of clause (1)
or (2), Taxes in the nature of sales, use, license, value added (to the extent
not imposed as a substitute for an income tax), transfer, stamp, ad valorem, or
property Taxes);
(b) imposed on a Tax Indemnitee by any Taxing Authority or governmental
subdivision thereof or therein outside of the United States (including any
Taxing Authority in or of a territory, possession, or commonwealth of the United
States) (1) on, based on, or measured by gross or net income or receipts,
including capital gains taxes, excess profits taxes, minimum taxes from tax
preferences, alternative minimum taxes, branch profits taxes, accumulated
earnings taxes, personal holding company taxes, succession taxes and estate
taxes, and any withholding taxes on, based on, or measured by gross or net
income or receipts, or (2) on, or with respect to, or measured by capital or net
worth or in the nature of a franchise tax or a tax for the privilege of doing
business (other than, in the case of clause (1) or (2), Taxes in the nature of
(aa) sales, use, license, value added (to the extent not imposed as a substitute
for an income tax), transfer, stamp, ad valorem, or property Taxes, or (bb) any
Taxes imposed by any Taxing Authority (other than a Taxing Authority within
whose jurisdiction such Tax Indemnitee is incorporated or organized or maintains
its principal place of business) if such Tax Indemnitee would not have been
subject to such Taxes by such jurisdiction but for (i) the location,
registration, use, or operation of the Aircraft, the Airframe, any Engine, or
any Part thereof by a Lessee Person within the jurisdiction of the Taxing
Authority imposing such Tax, or (ii) the activities of any Lessee Person (except
for activities of a Lessee Person who is not an Affiliate, successor, or assign
of Lessee acting in its capacity other than as a Lessee Person, which activities
are unrelated to the transactions contemplated by the Operative Agreements) in
such jurisdiction, including use of any other aircraft by Lessee in such
jurisdiction, (iii) the status of any Lessee Person as a foreign entity or as an
entity owned in whole or in part by foreign persons, (iv) Lessee's having made
(or having been deemed to have made) payments to such Tax Indemnitee from the
relevant jurisdiction, or (v) in the case of Owner Participant, or any related
Tax Indemnitee, Lessee's being incorporated, organized, or maintaining a place
of business in such jurisdiction);
(c) on, with respect to, or measured by any trustee fees, commissions,
premiums, or compensation received by Owner Trustee;
(d) on the Trust or the Trust Estate that result from treatment of the
Trust or the Trust Estate as an entity, such as a corporation, separate and
apart from Owner Participant;
(e) that are being contested as provided inss. 9.3.4 during the pendency of
such contest;
(f) imposed on any Tax Indemnitee to the extent that such Taxes result from
the gross negligence or willful misconduct of such Tax Indemnitee or any
Affiliate thereof (other than the gross negligence or willful misconduct imputed
to such Tax Indemnitee by reason of such Tax Indemnitee's participation in the
transactions contemplated by the Operative Agreements);
(g) imposed on or with respect to a Tax Indemnitee (including the
transferee in those cases in which the Tax on transfer is imposed on, or is
collected from, the transferee) as a result of a transfer or other disposition
(including a deemed transfer or disposition) by such Tax Indemnitee or a related
Tax Indemnitee (or, in the case of Owner Participant, by Owner Trustee, or, in
the case of Taxes imposed on a transferee, by the transferor) of any interest in
the Aircraft, the Airframe, any Engine, or any Part, the Rent, the Trust, the
Trust Estate, the Lease, or any interest arising under the Operative Agreements
or a transfer or disposition (including a deemed transfer or disposition) of any
interest in a Tax Indemnitee (other than (1) a substitution, replacement,
modification, pooling, or improvement of the Aircraft, the Airframe, any Engine
or any Part by a Lessee Person that is treated for Tax purposes as a transfer or
disposition, (2) a transfer pursuant to an exercise of remedies upon a
then-existing Event of Default, (3) a transfer pursuant toss. 17.3 orss. 9 of
the Lease, or (4) a transfer pursuant to an Event of Loss);
(h) in excess of those that would have been imposed had there not been a
transfer or other disposition by or to such Tax Indemnitee or a related Tax
Indemnitee described in clause (g) of this ss. 9.3.2;
(i) imposed on Owner Participant and indemnified by Lessee pursuant to the
Tax Indemnity Agreement;
(j) imposed with respect to any period after the expiration or earlier
termination of the Term and, if required pursuant to the terms of the Lease, the
return of possession of the Aircraft to Lessor or placement in storage at the
request of Lessor in accordance with the Lease (provided, that this clause (j)
shall not apply to Taxes imposed after such period arising as a result of
payments by Lessee under the Operative Agreements after such period or are
attributable to events occurring prior to or coincident with such expiration or
earlier termination of the Term);
(k) consisting of any interest, penalties, or additions to tax imposed on a
Tax Indemnitee as a result (in whole or in part) of a failure of such Tax
Indemnitee or a related Tax Indemnitee to file any return properly and timely,
unless such failure is caused by Lessee's failure to fulfill its obligations, if
any, under ss. 9.3.6 with respect to such return;
(l) resulting from, or that would not have been imposed but for, any Lessor
Liens arising as a result of claims against, or acts or omissions of, or
otherwise attributable to such Tax Indemnitee or a related Tax Indemnitee;
(m) imposed on any Tax Indemnitee as a result of the breach by such Tax
Indemnitee or a related Tax Indemnitee of any covenant of such Tax Indemnitee or
any Affiliate thereof contained in any Operative Agreement or the inaccuracy of
any representation or warranty by such Tax Indemnitee or any Affiliate thereof
in any Operative Agreement;
(n) in the nature of an intangible or similar Tax upon or with respect to
the value of the interest of Owner Participant in the Trust Estate or the Trust,
only if such Taxes are in the nature of franchise Taxes or result from the
conduct of business by such Tax Indemnitee in the taxing jurisdiction and are
imposed because of the place of incorporation or the activities unrelated to the
Transactions in the taxing jurisdiction of such Tax Indemnitee;
(o) that is included in Lessor's Cost and paid to the appropriate Taxing
Authority;
(p) other than any Tax described in ss. 9.3.2(b) hereof, imposed on a Tax
Indemnitee by a Taxing Authority of a jurisdiction outside the United States, to
the extent that such Taxes would not have been imposed but for a connection
between the Tax Indemnitee or a related Tax Indemnitee and such jurisdiction
imposing such Tax unrelated to the Transactions; or
(q) relating to ERISA or to Codess. 4975.
For purposes hereof, a Tax Indemnitee and any other Tax Indemnitees who are
successors, assigns, agents, or Affiliates of such Tax Indemnitee shall be
related Tax Indemnitees.
9.3.3 Payment
(a) Without regard to ss. 9.3.2(a), (b), or (h) hereof, Lessee's indemnity
obligation to a Tax Indemnitee under this ss. 9.3 shall be the amount which,
after taking into account any Tax imposed upon the receipt or accrual of the
amounts payable under this ss. 9.3 and any tax benefits actually recognized by
such Tax Indemnitee as a result of the indemnifiable Tax (including any benefits
recognized as a result of such Tax Indemnitee's use of an indemnifiable Tax as a
credit against Taxes not indemnifiable under this ss. 9.3), equals the amount of
the Tax indemnifiable under this ss. 9.3.
(b) At Lessee's request, the computation of the amount of any indemnity
payment owed by Lessee or any amount owed by a Tax Indemnitee to Lessee pursuant
to this ss. 9.3 shall be verified and certified by an independent public
accounting firm selected by such Tax Indemnitee and reasonably satisfactory to
Lessee. Such verification shall be binding. The costs of such verification
(including the fee of such public accounting firm) shall be borne by Lessee
unless such verification results in an adjustment in Lessee's favor of 5% or
more of the net present value of the payment as computed by such Tax Indemnitee,
in which case such Tax Indemnitee shall pay those costs.
(c) Each Tax Indemnitee shall provide Lessee with such certifications, and
such information and documentation in such Tax Indemnitee's possession, as
Lessee reasonably requests to minimize any indemnity payment pursuant to this
ss. 9.3; provided, that notwithstanding anything to the contrary in this ss.
9.3.3(c), no Tax Indemnitee shall be required to provide Lessee with any Tax
returns.
(d) Each Tax Indemnitee shall promptly forward to Lessee any written
notice, xxxx, or advice that such Tax Indemnitee receives from any Taxing
Authority concerning any Tax for which it seeks indemnification under this ss.
9.3. Lessee shall pay any amount for which it is liable pursuant to this ss. 9.3
directly to the appropriate Taxing Authority if legally permissible, or upon
demand of a Tax Indemnitee, to such Tax Indemnitee within 30 days of such demand
(or, if a contest occurs in accordance with ss. 9.3.4, within 30 days after a
Final Determination (as defined below)), but in no event more than one Business
Day before the related Tax is due. If requested by a Tax Indemnitee in writing,
Lessee shall furnish to the appropriate Tax Indemnitee the original or a
certified copy of a receipt for Lessee's payment of any Tax paid by Lessee, or
such other evidence of payment of such Tax as is acceptable to such Tax
Indemnitee. Lessee shall also furnish promptly upon written request such data as
any Tax Indemnitee reasonably requires to enable such Tax Indemnitee to comply
with the requirements of any taxing jurisdiction, unless such data are not
reasonably available to Lessee or (unless such data are specifically requested
by a Taxing Authority) are not customarily furnished by domestic air carriers
under similar circumstances. For purposes of this ss. 9.3, a "Final
Determination" is (1) a decision, judgment, decree, or other order by any court
of competent jurisdiction that occurs pursuant to the provisions of ss. 9.3.4,
which decision, judgment, decree, or other order has become final and
unappealable, (2) a closing agreement or settlement agreement entered into in
accordance with ss. 9.3.4 that has become binding and is not subject to further
review or appeal (absent fraud, misrepresentation, etc.), or (3) the termination
of administrative proceedings and the expiration of the time for instituting a
claim in a court proceeding.
(e) If any Tax Indemnitee actually realizes a tax savings by reason of any
Tax paid or indemnified by Lessee pursuant to this ss. 9.3 (whether such tax
savings arise by means of a foreign tax credit, depreciation or cost recovery
deduction, or otherwise), and such savings are not otherwise taken into account
in computing such payment or indemnity, such Tax Indemnitee shall pay to Lessee
an amount equal to the lesser of (1) the amount of such tax savings, plus any
additional net tax savings recognized as the result of any payment made pursuant
to this sentence, when, as, if, and to the extent realized, and (2) the amount
of all payments pursuant to this ss. 9.3 by Lessee to such Tax Indemnitee (less
any payments previously made by such Tax Indemnitee to Lessee pursuant to this
ss. 9.3.3(e)) (and the excess, if any, of the amount described in clause (1)
over the amount described in clause (2) shall be carried forward and applied to
reduce pro tanto any subsequent obligations of Lessee to make payments to such
Tax Indemnitee pursuant to this ss. 9.3); provided, that such Tax Indemnitee
shall not be required to make any payment pursuant to this sentence so long as a
Special Default or an Event of Default of a monetary nature exists. If a tax
benefit is later disallowed or denied, the disallowance or denial shall be
treated as a Tax indemnifiable under ss. 9.3.1 without regard to the provisions
of ss. 9.3.2 (other than ss. 9.3.2(f)). Each such Tax Indemnitee shall in good
faith use reasonable efforts in filing its tax returns and in dealing with
Taxing Authorities to seek and claim any such tax benefit.
9.3.4 Contest
(a) If a written claim is made against a Tax Indemnitee for Taxes that
Lessee could be liable to pay or indemnify for hereunder, or if a Tax Indemnitee
determines that a Tax is due and that Lessee could have an indemnity obligation
for that Tax hereunder, such Tax Indemnitee shall promptly notify Lessee in
writing of such claim (provided, that failure so to notify Lessee shall not
relieve Lessee of its indemnity obligations hereunder unless the failure to
notify effectively forecloses Lessee's rights to require a contest of such
claim), and shall take no action with respect to such claim without Lessee's
prior written consent for 30 days following Lessee's receipt of such notice;
provided, that, if applicable Law requires such Tax Indemnitee to take action
before the end of such 30-day period, such Tax Indemnitee shall, in such notice
to Lessee, so inform Lessee, and such Tax Indemnitee shall take no action for as
long as it is legally able to avoid taking action (and a Tax Indemnitee shall be
entitled to pay the Tax claimed and xxx for a refund before the end of such
30-day period if (1)(aa) the failure to pay the Tax would result in substantial
penalties (unless immediately reimbursed by Lessee) and the act of paying the
Tax would not materially prejudice the right to contest, or (bb) the failure to
pay would result in criminal penalties, and (2) such Tax Indemnitee shall take
any action so required in connection with so paying the Tax in a manner that is
the least prejudicial to the pursuit of the contest). In addition, such Tax
Indemnitee shall (provided that Lessee shall have agreed to keep such
information confidential other than to the extent necessary in order to contest
the claim) furnish Lessee with copies of any requests for information from any
Taxing Authority relating to such Taxes with respect to which Lessee may be
required to indemnify hereunder. If requested by Lessee in writing within 30
days after its receipt of such notice, such Tax Indemnitee shall, at Lessee's
expense (including all reasonable costs, expenses, and reasonable attorneys' and
accountants' fees and disbursements), in good faith contest (or, if permitted by
applicable law, allow Lessee to contest) through appropriate administrative and
judicial proceedings the validity, applicability, or amount of such Taxes by (x)
resisting payment thereof, (y) not paying the Taxes except under protest if
protest is necessary and proper, or (z) if the payment is made, using reasonable
efforts to obtain a refund thereof in an appropriate administrative or judicial
proceeding. If requested to do so by Lessee, the Tax Indemnitee shall appeal any
adverse administrative or judicial decision, except that the Tax Indemnitee
shall not be required to pursue any appeals to the United States Supreme Court.
If and to the extent that the Tax Indemnitee is able to separate the contested
issue(s) from other issues arising in the same administrative or judicial
proceeding that are unrelated to the Transactions without (in such Tax
Indemnitee's good faith judgment) adversely affecting such Tax Indemnitee, such
Tax Indemnitee shall permit Lessee to control the conduct of any such proceeding
and shall provide to Lessee (at Lessee's cost and expense) with such information
or data in such Tax Indemnitee's control or possession and reasonably necessary
to conduct such contest (other than such Tax Indemnitee's federal income Tax
returns) in which case Lessee shall keep such Tax Indemnitee reasonably informed
concerning the progress of such contest. If the contest is being controlled by a
Tax Indemnitee, such Tax Indemnitee shall consult with Lessee in good faith
regarding the manner of contesting such claim and shall keep Lessee reasonably
informed regarding the progress of such contest. A Tax Indemnitee shall not fail
to take any action expressly required by this ss. 9.3.4 (including any action
regarding any appeal of an adverse determination with respect to any claim) or
settle or compromise any claim without Lessee's prior written consent (except as
contemplated by ss. 9.3.4(b) or (c)).
(b) Notwithstanding the foregoing, in no event shall a Tax Indemnitee be
required to pursue any contest (or to permit Lessee to pursue any contest)
unless (1) Lessee agrees to pay to such Tax Indemnitee on demand and on an
after-tax basis all reasonable costs and expenses that such Tax Indemnitee
incurs in connection with contesting such Taxes, including all reasonable
out-of-pocket costs and expenses and reasonable attorneys' and accountants' fees
and disbursements, (2) if such contest involves the payment of the claim, Lessee
advances the amount thereof (to the extent indemnified hereunder) plus interest,
penalties, and additions to tax with respect thereto that are required to be
paid before commencing the contest on an interest-free net after-Tax basis to
such Tax Indemnitee, (3) such Tax Indemnitee does not reasonably determine that
the action to be taken will result in any material risk of forfeiture, sale, or
loss of the Aircraft (unless Lessee makes provisions to protect the interests of
any such Tax Indemnitee in a manner reasonably satisfactory to such Tax
Indemnitee) (provided, that such Tax Indemnitee shall notify Lessee in writing
promptly after it becomes aware of any such risk), (4) no Event of Default
exists, unless Lessee has provided security for its obligations hereunder by
advancing to such Tax Indemnitee, before proceeding or continuing with such
contest, the amount of the Tax being contested, plus any interest and penalties
and an amount estimated in good faith by such Tax Indemnitee for expenses, (5)
before commencing any judicial action controlled by Lessee, Lessee acknowledges
its liability for such claim hereunder in writing, provided, that Lessee shall
not be bound by its acknowledgment if the Final Determination articulates
conclusions of law and fact that demonstrate that Lessee has no liability for
the contested amounts hereunder, (6) such Tax Indemnitee shall have received at
Lessee's sole expense, an opinion independent tax counsel, such counsel to be
selected by Lessee and reasonably satisfactory to such Tax Indemnitee ("Tax
Counsel"), to the effect that a reasonable basis, within the meaning of ABA
Formal Opinion No. 85-352, exists for contesting such claim, (7) the amount of
payments or indemnification that would be required as a result of such
adjustment, when aggregated with further potential payments or adjustments where
the subject matter of the proposed adjustment is of a continuing nature, as to
the Aircraft and all other aircraft operated by Lessee, shall be at least
$10,000, and (8) the issue shall not be substantially identical as an issue
previously contested hereunder and decided adversely, unless such Tax Indemnitee
shall have received, at Lessee's sole expense, a written opinion, in form and
substance reasonably satisfactory to such Tax Indemnitee, of Tax Counsel to the
effect that the applicable circumstances or law have changed and in light
thereof, there is reasonable basis under ABA Formal Opinion No. 85-352 that the
tax treatment of the item which is the subject of the claim will be upheld in
litigation if the claimed tax treatment is challenged by a Taxing Authority.
Notwithstanding the foregoing, if any Tax Indemnitee releases, waives,
compromises, or settles any claim that may be indemnifiable by Lessee pursuant
to this ss. 9.3 and which such Tax Indemnitee is otherwise obligated to contest
under this ss. 9.3.4 without Lessee's written permission, Lessee's obligation to
indemnify such Tax Indemnitee with respect to such claim (and all
directly-related claims, and claims based on the outcome of such claim) shall
terminate, subject to ss. 9.3.4(c), and subject to ss. 9.3.4(c), such Tax
Indemnitee shall repay to Lessee any amount previously paid or advanced to such
Tax Indemnitee with respect to such claim, plus interest at the rate that would
have been payable by the relevant Taxing Authority on a refund of such Tax.
(c) Notwithstanding anything in this ss. 9.3, a Tax Indemnitee will not be
required to contest the imposition of any Tax, and shall be permitted to settle
or compromise any claim without Lessee's consent, if such Tax Indemnitee (1)
waives its right to indemnity under this ss. 9.3 with respect to such Tax (and
any directly-related claim, and any claim the outcome of which is determined
based upon the outcome of such claim), (2) pays to Lessee any amount previously
paid or advanced by Lessee pursuant to this ss. 9.3 with respect to such Tax,
plus interest at the rate that would have been payable by the relevant Taxing
Authority on a refund of such Tax, and (3) agrees to discuss with Lessee the
views or positions of any relevant Taxing Authority with respect to the
imposition of such Tax provided, that if Lessee has agreed in writing to settle
a claim for a stated amount and the relevant Tax Indemnitee settles the claim on
more favorable terms, such Tax Indemnitee shall not be required to waive the
indemnity for such claim to the extent of the amount agreed to by Lessee.
9.3.5 Refund
If any Tax Indemnitee receives a refund of, or becomes entitled to a credit
against other liability for, all or any part of any Taxes paid, reimbursed, or
advanced by Lessee, such Tax Indemnitee shall pay to Lessee within 30 days of
such receipt an amount equal to the lesser of (a) the amount of such refund or
credit plus any net tax benefit (taking into account any Taxes incurred by such
Tax Indemnitee by reason of the receipt of such refund or realization of such
credit) actually realized by such Tax Indemnitee as a result of any payment by
such Tax Indemnitee made pursuant to this sentence (including this clause (a)),
and (b) such tax payment, reimbursement, or advance by Lessee to such Tax
Indemnitee theretofore made pursuant to this ss. 9.3 (and the excess, if any, of
the amount described in clause (a) over the amount described in clause (b) shall
be carried forward and applied to reduce pro tanto any subsequent obligation of
Lessee to make payments to such Tax Indemnitee pursuant to this ss. 9.3). If, in
addition to such refund or credit, such Tax Indemnitee receives (or is credited
with) an amount representing interest on the amount of such refund or credit,
such Tax Indemnitee shall pay to Lessee within 30 days after receiving or
realizing such credit the portion of such interest fairly attributable to Taxes
paid, reimbursed, or advanced by Lessee before the receipt of such refund or
realization of such credit. Notwithstanding the foregoing, a Tax Indemnitee
shall not be obligated to make any payment to Lessee pursuant to this ss. 9.3.5
if a Special Default or an Event of Default has occurred and is continuing. If
it is later determined that such Tax Indemnitee was not entitled to such refund
or credit, the portion of the refund or credit repaid, recaptured or disallowed
(and any interest and tax savings paid by such Tax Indemnitee to Lessee with
respect thereto) shall be treated as Taxes for which Lessee must indemnify such
Tax Indemnitee pursuant to this ss. 9.3 without regard to ss. 9.3.2 hereof other
than ss. 9.3.2(f).
9.3.6 Tax Filing
Lessee shall timely file any report, return, or statement that is required
to be filed with respect to any Tax which is subject to indemnification under
this ss. 9.3 (except for any such report, return, or statement which a Tax
Indemnitee has timely notified Lessee in writing that such Tax Indemnitee
intends to file, or for which such Tax Indemnitee is required by law to file, in
its own name); provided, that the relevant Tax Indemnitee shall furnish Lessee
with any information in such Tax Indemnitee's possession or control that is
reasonably necessary to file any such return, report, or statement and that
Lessee reasonably requests in writing (but the Tax Indemnitee shall not be
required to furnish copies of its actual tax returns, although it may be
required to furnish relevant information contained therein). Lessee shall either
file such report, return, or statement and send a copy to such Tax Indemnitee
(and to Owner Trustee, if the Tax Indemnitee is not Owner Trustee), or, if
Lessee is not permitted to file such report, return, or statement, it shall
notify such Tax Indemnitee of such requirement and prepare and deliver such
report, return, or statement to such Tax Indemnitee in a manner reasonably
satisfactory to such Tax Indemnitee within a reasonable time before the time
such report, return, or statement is to be filed.
9.3.7 Forms
Each Tax Indemnitee agrees to furnish from time to time to Lessee, or such
other Person as Lessee shall designate, at Lessee's request, such duly-executed
and properly-completed forms as may be necessary or appropriate in order to
claim any reduction of or exemption from any withholding or other Tax imposed by
any Taxing Authority, if (a) such reduction or exemption is available to such
Tax Indemnitee, and (b) Lessee has provided such Tax Indemnitee with any
information necessary to complete such form not otherwise reasonably available
to such Tax Indemnitee.
9.3.8 Non-Parties
If a Tax Indemnitee is not a party to this Agreement, Lessee may require
the Tax Indemnitee to agree in writing, in a form reasonably acceptable to
Lessee, to the terms of this ss. 9.3 and ss. 15.8 before making any payment to
such Tax Indemnitee under this ss. 9.3.
9.4 Payments
Any payments made pursuant to ss. 9.1 or ss. 9.3 shall be due on the 30th
day after demand, and shall be made directly to the relevant Indemnitee or Tax
Indemnitee or to Lessee, in immediately available funds at such bank or to such
account as specified by such Indemnitee or Tax Indemnitee or Lessee (as
applicable) in written directives to the payor, or, if no such direction has
been given, by check of the payor payable to the order of, and mailed to, such
Indemnitee or Tax Indemnitee or Lessee (as applicable) by certified mail,
postage prepaid, at its address as set forth in this Agreement.
9.5 Interest
If any amount, payable by Lessee, any Indemnitee, or any Tax Indemnitee
under ss. 9.1 or ss. 9.3 is not paid when due, the Person obligated to make such
payment shall pay on demand, to the extent permitted by Law, to the Person
entitled thereto, interest on any such amount for the period from and including
the due date for such amount to but excluding the date the amount is paid, at
the Past-Due Rate. Such interest shall be paid in the same manner as the unpaid
amount in respect of which such interest is due.
9.6 Benefit of Indemnities
Lessee's obligations for indemnities, obligations, adjustments, and
payments in ss. 9.1 or ss. 9.3 are expressly made for the benefit of, and shall
be enforceable by, the Indemnitee or Tax Indemnitee entitled thereto, without
declaring the Lease to be in default or taking other action thereunder.
10. ASSIGNMENT OR TRANSFER OF INTERESTS
10.1 Owner Participant and Owner Trustee
10.1.1 Owner Participant
(a) During the Term, Owner Participant shall not Transfer any or all of its
right, title, or interest in the Trust Estate or the Trust Agreement or to this
Agreement unless:
(1) the Transferee has full power, authority, and legal right to execute,
deliver, and perform the obligations of Owner Participant under the Owner
Participant Agreements and provides reasonably satisfactory evidence of such
power and authority to Lessee and Owner Trustee;
(2) the Transferee enters into a legal, valid, binding, and enforceable
agreement, substantially in the form of Exhibit I hereto (or otherwise in form
and substance reasonably satisfactory to Lessee), effective to confirm that such
Transferee agrees to be bound by all the terms of, and to undertake all of the
obligations arising after such transfer of, the transferring Owner Participant
in the Owner Participant Agreements, and in which it makes representations and
warranties substantially the same as those in ss. 6.2 of this Agreement;
(3) upon such Transfer Lessee shall not be obligated to pay any greater
amount or incur any greater obligation than that which it would have been
obliged to pay or incur under the Lease or other Lessee Operative Agreement if
no transfer or assignment had taken place, and upon such Transfer the terms and
conditions of the Lessee Operative Agreements insofar as they relate to the
rights and obligations of Lessee are not altered;
(4) Owner Participant shall deliver to Lessee and Owner Trustee an opinion
of counsel reasonably satisfactory to each of them to the effect that such
agreement or agreements referred to in ss. 10.1.1(a)(2) and, if applicable, ss.
10.1.1(a)(6) or (a)(7) are legal, binding, and enforceable in accordance with
its or their terms and that such transfer will not violate the Transportation
Code, the registration provisions of the Securities Act, or any other applicable
Federal law;
(5) the Transfer shall relate to Owner Participant's entire interest as
Owner Participant; or, if it relates to less than its entire interest as Owner
Participant, then (aa) Lessee shall have given its prior written consent to the
partial Transfer, and (bb) all amendments to the Operative Agreements,
reasonably requested by Lessee or Owner Participant, that are necessary or
appropriate to accommodate the existence of multiple Owner Participants, shall
be agreed to and executed by the parties thereto, all at the expense of the
Owner Participants under ss. 10.1.1(c);
(6) the Transferee is a Citizen of the United States (such status to be
determined without considering FAR ss. 47.9 or any other provision that may
restrict Lessee's use or operation of the Aircraft), or shall use a voting
powers trust or similar arrangement in order to hold an interest in the Trust
Estate such that the Aircraft can be registered in the United States (without
considering FAR ss. 47.9 or any other provision that may restrict Lessee's use
or operation of the Aircraft); and
(7) the Transferee is a single Person and is either (aa) a Permitted
Institution, (bb) or an Affiliate of a Permitted Institution, if such
Affiliate's obligations under the Owner Participant Agreements are guaranteed by
such Permitted Institution pursuant to a written guaranty, substantially in the
form of Exhibit J hereto (or otherwise in form and substance reasonably
satisfactory to Lessee and Owner Trustee), or (cc) with Lessee's prior written
consent, any other Person the obligations of whom under the Owner Participant
Agreements are guaranteed by a Permitted Institution pursuant to a written
guaranty, in form and substance reasonably satisfactory to Lessee and Owner
Trustee.
(b) Owner Participant shall give written notice to Lessee and Owner Trustee
at least 10 days before any such Transfer, specifying the name and address of
the proposed Transferee, and providing financial statements of the proposed
Transferee or guarantor evidencing satisfaction of the requirements described in
ss. 10.1.1(a)(7)(aa) or (bb).
(c) Any reasonable fees, charges, and expenses, including the reasonable
legal fees, charges, and expenses incurred by Lessee, Owner Participant, or
Owner Trustee in connection with any Transfer by Owner Participant permitted by
this ss. 10.1.1, or by the Transferee in any such case, will be paid for by
Owner Participant.
10.1.2 Owner Trustee
Owner Trustee may transfer its interests in the Trust Agreement pursuant to
ss. 9 thereof.
10.2 Effect of Transfer
Upon any Transfer in accordance with ss. 10.1.1 or ss. 10.1.2, the
Transferee shall be deemed "Owner Participant" or "Owner Trustee", respectively,
for all purposes of the Operative Agreements and, in the case of a Transferee of
Owner Participant, shall be deemed to have paid its ratable portion of Lessor's
Cost previously made by Owner Participant, making such conveyance and
represented by the interest being conveyed, and each reference herein to Owner
Participant or Owner Trustee shall thereafter be deemed a reference to such
Transferee for all purposes, and the transferring Owner Participant or Owner
Trustee shall be released (including, in the case of Owner Participant, any
Guarantor with respect to any guaranty provided by it under ss. 10.1.1(a)(7))
from all of its liabilities and obligations under the Operative Agreements to
the extent such liabilities and obligations arise after such Transfer and, in
each case, to the extent such liabilities and obligations are assumed by the
Transferee; provided, that such transferring Owner Participant, or Owner Trustee
will continue to have the benefit of any rights or indemnities under any
Operative Agreement vested or relating to circumstances, conditions, acts, or
events before such Transfer.
11. SECTION 1110
Lessee, Owner Participant, and Owner Trustee intend that Owner Trustee, as
lessor under the Lease, shall be entitled to the benefits of Section 1110 in the
event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a
debtor.
12. CHANGE OF CITIZENSHIP
12.1 Generally
Without prejudice to the representations, warranties, or covenants as to
any party's status as a Citizen of the United States:
(a) Lessee and FSB agree that, immediately upon obtaining knowledge of any
facts that would cast doubt upon its continuing status as a Citizen of the
United States, and promptly upon public disclosure of negotiations in respect of
any transaction which would or might adversely affect such status, it will
notify all parties hereto of all relevant matters in connection therewith; and
(b) Owner Participant agrees that, if its status is to change or has
changed as a Citizen of the United States, or it makes public disclosure of
circumstances as a result of which it believes that such status is likely to
change, it will notify all the other parties to this Participation Agreement of
(1) such change in status promptly after obtaining Actual Knowledge thereof, and
(2) such belief as soon as practicable after such public disclosure (but in any
event within 10 Business Days after such public disclosure).
12.2 Owner Participant
Owner Participant agrees, solely for the benefit of Lessee, that if, when
the Aircraft is registered in the United States, (a) Owner Participant is not be
a Citizen of the United States, and (b) the Aircraft shall be, or would
therefore become, ineligible for registration in the name of Owner Trustee under
the Transportation Code and regulations then applicable thereunder (without
considering FAR ss. 47.9 or any other provision that may restrict Lessee's or
any Permitted Sublessee's use or operation of the Aircraft), then Owner
Participant shall as soon as is reasonably practicable (but in any event within
30 days after obtaining Actual Knowledge of such ineligibility and of such loss
of citizenship), (y) effect voting trust or other similar arrangements (in which
case any provisions contained in the Operative Agreements restricting Owner
Participant's or Owner Trustee's ability to amend the Trust Agreement shall not
apply to the extent necessary to permit the use of such a voting trust or other
similar arrangement) or take any other action necessary to prevent any
deregistration or maintain the United States registration of the Aircraft, or
(z) transfer in accordance with the terms of this Agreement all its right,
title, and interest in and to this Agreement, the Trust Estate, and the Trust
Agreement in accordance with ss. 10.1.
12.3 Owner Trustee
Upon FSB's giving any notice in accordance with ss. 12.1(a), Owner Trustee
shall, subject to ss. 9.1.1 of the Trust Agreement, resign as Owner Trustee.
Upon its receipt of such notice, Owner Participant shall as promptly as
practicable appoint a Citizen of the United States as successor Owner Trustee
pursuant to ss. 9.1 of the Trust Agreement.
13. CONCERNING OWNER TRUSTEE
Except as otherwise expressly provided herein, or in the Trust Agreement,
Owner Trustee is entering into this Agreement solely in its capacity as trustee
as provided in the Trust Agreement and not in its individual capacity, and in no
case whatsoever will it be liable or accountable in its individual capacity for
any of the statements, representations, warranties, agreements, or obligations
of Owner Trustee hereunder, or for any loss in respect thereof, as to all of
which the parties agree to look solely to the Trust Estate; provided, that
nothing in this ss. 13 shall limit in scope or substance the personal liability
of FSB (a) to Owner Participant as expressly set forth in the Trust Agreement,
(b) in respect of the representations, warranties, and agreements of FSB
expressly made as such herein or in any other Operative Agreement to which it is
a party, and (c) for the consequences of its own gross negligence, willful
misconduct, and, in receiving, handling or remitting of funds only, its willful
misconduct or simple negligence as a trustee.
14. MISCELLANEOUS
14.1 Amendments
No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated, or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to amend, supplement, waive, modify, discharge,
terminate, or otherwise vary and is signed by the party against whom the
enforcement of the amendment, supplement, waiver, modification, discharge,
termination, or variance is sought. Each such amendment, supplement, waiver,
modification, discharge, termination, or variance shall be effective only in the
specific instance and for the specific purpose for which it is given. No
provision of this Agreement shall be varied or contradicted by oral
communication, course of dealing or performance, or other manner not set forth
in writing and signed by the party against whom enforcement of the same is
sought.
14.2 Severability
If any provision of this Agreement is held invalid, illegal, or
unenforceable in any respect in any jurisdiction, then, to the extent permitted
by Law, (a) all other provisions hereof shall remain in full force and effect in
such jurisdiction, and (b) such invalidity, illegality, or unenforceability
shall not affect the validity, legality, or enforceability of such provision in
any other jurisdiction. If, however, any Law pursuant to which such provisions
are held invalid, illegal, or unenforceable may be waived, the parties hereto
hereby waive that Law to the full extent permitted, to the end that this
Agreement shall be a valid and binding agreement in all respects, enforceable in
accordance with its terms.
14.3 Survival
The indemnities in this Agreement shall survive the delivery or return of
the Aircraft, the Transfer of any interest of Owner Participant in this
Agreement, the Trust Estate, and the Trust Agreement, and the expiration or
other termination of any Operative Agreement, except to the extent otherwise
provided therein.
14.4 Reproduction of Documents
This Agreement (including all annexes, schedules, and exhibits hereto) and
all documents relating hereto, including (a) future consents, waivers, and
modifications, and (b) past and future financial statements, certificates, and
other information furnished to any party hereto, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic, or
other similar process, and any party may destroy any original documents so
reproduced. Any such reproduction shall be as admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original exists and whether or not such party made the reproduction in the
regular course of business), and any enlargement, facsimile, or further
reproduction of such reproduction also shall be so admissible in evidence.
14.5 Counterparts
This Agreement and any amendments, waivers, consents, or supplements hereto
may be executed in any number of counterparts (or upon separate signature pages
bound together into one or more counterparts), each fully-executed set of which
shall be deemed to be an original.
14.6 No Waiver
No failure on the part of any party hereto to exercise, and no delay by any
party hereto in exercising, any of its rights, powers, remedies, or privileges
under this Agreement or otherwise available shall impair, prejudice, or waive
any such right, power, remedy, or privilege or be construed as a waiver of any
breach hereof or default hereunder or as an acquiescence therein, nor shall any
single or partial exercise of any such right, power, remedy, or privilege
preclude any other or further exercise thereof by it or the exercise of any
other right, power, remedy, or privilege by it. No notice to or demand on any
party hereto in any case shall, unless otherwise required under this Agreement,
entitle such party to any other or further notice or demand in similar or other
circumstances, or waive the rights of any party hereto to any other or further
action in any circumstances without notice or demand.
14.7 Notices
Unless otherwise expressly permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers, and other
communications required or permitted to be made, given, furnished, or filed
hereunder shall be in writing (and the specification of a writing in certain
instances and not in others does not imply an intention that a writing is not
required as to the latter), shall refer specifically to this Agreement, and
shall be personally delivered, sent by fax or telecommunication transmission
(which in either case provides written confirmation to the sender of its
delivery), sent by registered mail or certified mail, return receipt requested,
or sent by next-business-day courier service, in each case to the address or fax
number set forth for such party in Schedule 1, or to such other address or
number as such party hereafter specifies by notice to the other parties hereto.
Each such notice, request, demand, authorization, direction, consent, waiver, or
other communication shall be effective when received or, if made, given,
furnished, or filed by fax or telecommunication transmission, when confirmed.
14.8 Governing Law; Submission to Jurisdiction; Venue
(a) This Agreement shall in all respects be governed by and interpreted in
accordance with the laws of the state of New York, including all matters of
construction, validity, and performance.
(b) Each party hereto hereby irrevocably agrees, accepts, and submits
itself to the non-exclusive jurisdiction of the courts of the state of New York
in the city and county of New York and of the United States for the Southern
District of New York, in connection with any legal action, suit, or proceeding
with respect to any matter relating to or arising out of or in connection with
the Operative Agreements.
(c) Each party hereto hereby irrevocably consents and agrees to the service
of any and all legal process, summons, notices, and documents of any of the
aforementioned courts in any such suit, action, or proceeding may be made by
delivering copies thereof by registered or certified mail, postage prepaid, at
the address set forth pursuant to ss. 14.7. Each party hereto hereby agrees that
service upon it, or any of its agents, in each case in accordance with this ss.
14.8(c), shall constitute valid and effective personal service upon such party,
and each party hereto hereby agrees that the failure of any of its agents to
give any notice of such service to any such party shall not impair or affect in
any way the validity of such service on such party or any judgment rendered in
any action or proceeding based thereon.
(d) Each party hereto hereby irrevocably waives, to the extent permitted by
applicable law, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any legal action or proceeding brought hereunder in any of the
above-named courts, that such action or proceeding is brought in an inconvenient
forum, that venue for the action or proceeding is improper, or that any
Operative Agreement may not be enforced in or by such courts.
(e) Each party hereto hereby waives its right to a jury trial of any
claim or cause of action in any court in any jurisdiction based upon or arising
out of or relating to the Operative Agreements.
14.9 Third-Party Beneficiary
This Agreement is not intended to provide (and shall not provide) any
Person not a party hereto with any rights of any nature whatsoever against any
of the parties hereto, and no Person not a party hereto shall have any right,
power, or privilege in respect of any party hereto, or have any benefit or
interest, arising out of this Agreement.
14.10 Entire Agreement
This Agreement, together with the other Operative Agreements, on and as of
the date hereof, constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof, and all prior understandings or
agreements, whether written or oral, among any of the parties hereto with
respect to such subject matter are hereby superseded in their entireties.
14.11 Further Assurances
Each party hereto shall execute, acknowledge, and deliver (or cause to be
executed, acknowledged, and delivered) all such further agreements, instruments,
certificates, or other documents, and shall do and cause to be done such further
things, as any other party hereto reasonably requests in connection with the
administration of, or to carry out more effectively the purposes of, or to
assure and confirm better to such other party the rights and benefits to be
provided under, this Agreement and the other Operative Agreements.
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IN WITNESS WHEREOF, the parties have executed this Participation
Agreement N___AT.
AMERICAN TRANS AIR, INC., Lessee
By: ___________________________________________________
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION, Owner Participant
By: ___________________________________________________
Name:
Title:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, not
in its individual capacity
(except as expressly
provided herein), but
solely as trustee, Owner
Trustee
By: ___________________________________________________
Name:
Title:
FIRST SECURITY BANK, NATIONAL ASSOCIATION,(as
in its individual capacity
expressly provided herein)
By: ___________________________________________________
Name:
Title:
ACCOUNTS; ADDRESSES
Account for Payments Address for Notices
American American Trans Air, Inc.
Trans Air, Inc. 0000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Exec. VP and CFO
fax: (000) 000-0000
Owner Participant General Electric Capital
Corp.
Attention: _________________
Fax: (____) __________
The Boeing The Boeing Company
Company X.X. Xxx 0000
Xxxxxxx, XX 00000-0000
Attention: Treasurer
M/S 68-34
fax: (000) 000-0000
First Security First Security Bank, N.A.
Bank,National 00 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxxx Xxxx Xxxx Xxxx, XX 00000
Attention: Corporate
Trust Department
fax: (000) 000-0000
COMMITMENTS
Participant Percentage of Lessor's Cost Dollar Amount
Owner Participant Owner Participant's Percentage
General Electric Capital 100% $__________
Corporation
CERTAIN TERMS
Defined Term Definition
Commitment Termination Date __________, 200_
Lessee's Advisor(s) Capstar Partners, LLC
Lessor's Cost $_______________
OP Jurisdiction New York
Owner Participant's Special Counsel Xxxxx Xxxxxxxxxx LLP
Trust Company Jurisdiction Utah
