Exhibit 99(a)
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PARTICIPATION AGREEMENT
[NW ____ _]
Dated as of
[_________________]
Among
NORTHWEST AIRLINES, INC.,
Lessee,
NORTHWEST AIRLINES CORPORATION,
Guarantor,
[________________________________],
Owner Participant,
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
Pass Through Trustee under each of
the Pass Through Trust Agreements,
XXXXX FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
not in its Individual Capacity, except as expressly provided
herein, but solely as Owner Trustee,
STATE STREET BANK AND TRUST COMPANY,
Subordination Agent,
and
STATE STREET BANK AND TRUST COMPANY,
in its Individual Capacity and as Indenture Trustee
-----------------------
One [Airbus A330-323][Boeing 757-351] Aircraft
N[_____]
Leased to Northwest Airlines, Inc.
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INDEX TO PARTICIPATION AGREEMENT
Page
SECTION 1. Participations in Lessor's Cost of the Aircraft.................3
SECTION 2. Lessee's Notice of Delivery Date................................4
SECTION 3. Instructions to the Owner Trustee...............................4
SECTION 4. Conditions......................................................5
(a) Conditions Precedent to the
Participations in the Aircraft...........................5
(b) Conditions Precedent to the Obligations
of Lessee and the Guarantor.............................12
SECTION 5. [Intentionally Omitted]........................................14
SECTION 6. Extent of Interest of Certificate Holders......................14
SECTION 7. Representations and Warranties of Lessee and the
Guarantor; Indemnities.........................................14
(a) Representations and Warranties............................14
(b) General Tax Indemnity.....................................17
(c) General Indemnity.........................................17
(d) Income Tax................................................17
SECTION 8. Representations, Warranties and Covenants......................18
SECTION 9. Reliance of Primary Liquidity Provider and Policy
Provider..........................................36
SECTION 10. Other Documents................................................36
SECTION 11. Certain Covenants of Lessee....................................37
SECTION 12. Owner for Federal Tax Purposes.................................37
SECTION 13. Certain Definitions; Notices; Consent to Jurisdiction..........37
SECTION 14. Change of Situs of Owner Trust.................................38
SECTION 15. Miscellaneous..................................................39
SECTION 16. Expenses.......................................................40
SECTION 17. Refinancings...................................................41
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SCHEDULES
SCHEDULE I - Names and Addresses
SCHEDULE II - Commitments
SCHEDULE III - Pass Through Trust Agreements
EXHIBITS
Exhibit A - Schedule of Countries Authorized for Reregistration
Exhibit B-1 - Form of Opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx, special
counsel for the Lessee and the Guarantor
Exhibit B-2 - Form of Opinion of Cadwalader, Xxxxxxxxxx & Xxxx,
special counsel for the Lessee and the Guarantor
Exhibit B-3 - Form of Opinion of Lessee's Legal Department
Exhibit C - Form of Opinion of counsel for the Manufacturer
[and the Supplier-- A330]
Exhibit D - Form of Opinion of Ray, Xxxxxxx & Xxxxxxx,
special counsel for the Owner Trustee
Exhibit E-1 - Form of Opinion of [___________________], special
counsel for the Owner Participant
Exhibit E-2 - Form of Opinion of Owner Participant's in-house counsel
Exhibit F - Form of Opinion of Xxxxx & Xxxxxxx, P.C.
Exhibit G - Form of Opinion of Xxxxxxx XxXxxxxxx LLP, special
counsel for the Indenture Trustee
Exhibit H-1 - [Intentionally Omitted]
Exhibit H-2 - [Intentionally Omitted]
Exhibit I - Form of ss.1110 Opinion of Cadwalader, Xxxxxxxxxx & Xxxx,
special counsel for the Lessee
Exhibit J-1 - Form of Opinion of Xxxxxxx XxXxxxxxx LLP, special
counsel for the Pass Through Trustee
Exhibit J-2 - Form of Opinion of Xxxxxxx XxXxxxxxx LLP, special
counsel for the Subordination Agent
Exhibit K - Section 7(b) - General Tax Indemnity
Exhibit L - Section 7(c) - General Indemnity
-ii-
PARTICIPATION AGREEMENT
[NW ____ _]
THIS PARTICIPATION AGREEMENT [NW ____ _] dated as of
[_______________], among (i) NORTHWEST AIRLINES, INC., a Minnesota corporation
(the "Lessee"), (ii) NORTHWEST AIRLINES CORPORATION, a Delaware corporation
(the "Guarantor"), (iii) [_________________________], a [__________]
corporation (the "Owner Participant"), (iv) STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, not in its individual capacity
except as otherwise provided herein, but solely as trustee (in such capacity,
the "Pass Through Trustee") under each of two separate Pass Through Trust
Agreements (as defined below), (v) XXXXX FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity,
except as expressly provided herein, but solely as Owner Trustee under the
Trust Agreement (herein, in such latter capacity, together with any successor
owner trustee, called the "Owner Trustee"), (vi) STATE STREET BANK AND TRUST
COMPANY, not in its individual capacity, but solely as subordination agent and
trustee (in such capacity, the "Subordination Agent") under the Intercreditor
Agreement (defined below), and (vii) STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company, in its individual capacity and as Indenture
Trustee under the Trust Indenture (as hereinafter defined) (herein, in such
latter capacity together with any successor indenture trustee, called the
"Indenture Trustee") (this "Agreement");
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement (as such term is defined
in the Lease hereinafter referred to) between Lessee and the [Supplier]
[Manufacturer], the [Supplier] [Manufacturer] has agreed to sell to Lessee,
among other things, certain [Airbus A330-323] [Boeing 757-351] aircraft,
including the Aircraft which has been delivered by the [Supplier]
[Manufacturer] to Lessee and is the subject of this Agreement;
WHEREAS, concurrently with the execution and delivery of this
Agreement,
(i) Lessee and the Owner Trustee are entering into a Purchase
Agreement Assignment [NW ____ _], dated as of the date hereof (herein
called the "Purchase Agreement Assignment"), whereby Lessee assigns to
the Owner Trustee certain rights and interests of Lessee under the
Purchase Agreement with respect to the Aircraft; and
(ii) [the Manufacturer and the Supplier have executed the
Manufacturer Consent and Agreement to Assignment of Warranties [NW ____
__] and the Supplier Consent and Agreement to Assignment of Warranties
[NW ____ _] (herein collectively called the "Consent and Agreement"),
substantially in the forms attached to the Purchase Agreement Assignment;
-- A330] [the Manufacturer has executed the Consent and Agreement [NW
____ _] (herein called the "Consent and Agreement"), substantially in the
form attached to the Purchase Agreement Assignment; -- 757];
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant is entering into a Trust Agreement [NW ____
_], dated as of the date hereof (said Trust Agreement, as the same may be
amended or supplemented from time to time, being herein called the "Trust
Agreement", such term to include, unless the context otherwise requires, any
Trust Supplement referred to below), with the Owner Trustee, pursuant to which
Trust Agreement the Owner Trustee agrees, among other things, to hold the
Trust Estate defined in Section 1.01 thereof (herein called the "Trust
Estate") for the use and benefit of the Owner Participant;
WHEREAS, the Indenture Trustee and the Owner Trustee concurrently
with the execution and delivery of this Agreement are entering into the Trust
Indenture and Security Agreement [NW ____ _], dated as of the date hereof
(said Trust Indenture and Security Agreement, as the same may be amended or
supplemented from time to time, being herein called the "Trust Indenture",
such term to include, unless the context otherwise requires, the Trust
Supplement referred to below) pursuant to which the Owner Trustee will issue
secured certificates substantially in the form set forth in Section 2.01
thereof (the "Secured Certificates", and individually, a "Secured
Certificate") in two series, which Secured Certificates are to be secured by
the mortgage and security interests created by the Owner Trustee in favor of
the Indenture Trustee, and the Owner Trustee shall execute and deliver a Trust
and Indenture Supplement substantially in the form of Exhibit A to the Trust
Indenture (the "Trust Supplement") covering the Aircraft, supplementing the
Trust Agreement and the Trust Indenture;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Trustee and Lessee have entered into the Lease Agreement
[NW ____ _], dated as of the date hereof (such Lease Agreement, as the same
may be amended or supplemented from time to time to the extent permitted by
the terms thereof and this agreement, herein called the "Lease", such term to
include, unless the context otherwise requires, the Lease Supplement referred
to below), whereby, subject to the terms and conditions set forth therein, the
Owner Trustee agrees to lease to Lessee, and Lessee agrees to lease from the
Owner Trustee the Aircraft on the date (the "Delivery Date") that the Aircraft
is sold and delivered by Lessee to the Owner Trustee under the Xxxx of Sale,
and accepted by the Owner Trustee for all purposes of the Lease, such
acceptance to be evidenced by the execution of the Trust Supplement covering
the Aircraft, and such lease to be evidenced by the execution and delivery of
a Lease Supplement covering the Aircraft;
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant is entering into a Tax Indemnity Agreement
[NW ____ _], dated as of the date hereof, with Lessee (the "Tax Indemnity
Agreement");
WHEREAS, concurrently with the execution and delivery of this
Agreement; the Guarantor is entering into a Guarantee [NW ____ _], dated as of
the date hereof, pursuant to which the Guarantor guarantees certain
obligations of Lessee under the Operative Documents (the "Guarantee");
WHEREAS, pursuant to the Pass Through Trust Agreement and each of
the Pass Through Trust Supplements set forth in Schedule III hereto
(collectively, the "Pass Through
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Trust Agreements"), on the Issuance Date two separate trusts (collectively,
the "Pass Through Trusts" and, individually, a "Pass Through Trust") were
created to facilitate the transactions contemplated hereby, including, without
limitation, the issuance and sale by each Pass Through Trust of pass through
certificates pursuant thereto (collectively, the "Certificates");
WHEREAS, the proceeds from the issuance and sale of the Certificates
by each Pass Through Trust will be applied in part by the Pass Through Trustee
on the Delivery Date to purchase from the Owner Trustee, on behalf of each
Pass Through Trust, all of the Secured Certificates bearing the same interest
rate as the Certificates issued by such Pass Through Trust;
WHEREAS, on the Issuance Date (i) Westdeutsche Landesbank
Girozentrale, acting through its New York branch (the "Primary Liquidity
Provider"), entered into two revolving credit agreements (each, a "Primary
Liquidity Facility"), one for the benefit of the holders of Certificates of
each Pass Through Trust, with the Subordination Agent, as agent for the Pass
Through Trustee on behalf of such Pass Through Trust; and (ii) the Pass
Through Trustee, the Primary Liquidity Provider, the Policy Provider, the
Subordination Agent and other parties thereto entered into the Intercreditor
Agreement;
WHEREAS, the Secured Certificates will be held by the Subordination
Agent pursuant to the Intercreditor Agreement on behalf of the Pass Through
Trusts;
WHEREAS, in order to facilitate the transactions contemplated
hereby, Lessee and the Guarantor have entered into the Underwriting Agreement,
dated as of July 29, 2002, among Lessee, the Guarantor and the several
underwriters named therein (the "Underwriting Agreement"); and
WHEREAS, certain terms are used herein as defined in Section 13(a)
hereof;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, the parties hereto agree as follows:
SECTION 1. Participations in Lessor's Cost of the Aircraft. (a)
Participation by Pass Through Trustees. Subject to the terms and conditions of
this Agreement, the Pass Through Trustee for each Pass Through Trust agrees to
finance, in part, the Owner Trustee's payment of Lessor's Cost for the
Aircraft by paying to the Owner Trustee the aggregate purchase price of the
Secured Certificates being issued to such Pass Through Trustee as set forth on
Schedule II opposite the name of such Pass Through Trust. The Pass Through
Trustees shall make such payments to the Owner Trustee on a date to be
designated pursuant to Section 2 hereof, but in no event later than
[__________], by transferring to the account of the Owner Trustee at State
Street Bank and Trust Company, 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, ABA No. 000-000-000, Account No. 0000-000-0, Reference: Northwest/NW
[_____ __], not later than 9:30 a.m., New York City time, on the Delivery Date
in immediately available funds in Dollars, the amount set forth opposite the
name of such Pass Through Trust on Schedule II hereto.
Upon the occurrence of the above transfers by the Pass Through
Trustee for each Pass Through Trust to the Owner Trustee, the Owner Trustee,
at the direction of the Owner Participant, shall issue, pursuant to Article II
of the Trust Indenture, to the Subordination Agent
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on behalf of the Pass Through Trustee for each of the Pass Through Trusts,
Secured Certificates of the maturity and aggregate principal amount, bearing
the interest rate and for the purchase price set forth on Schedule II hereto
opposite the name of such Pass Through Trust.
(b) Participation by Owner Participant. Subject to the terms and
conditions of this Agreement, the Owner Participant hereby agrees to
participate in the payment of Lessor's Cost for the Aircraft by making an
equity investment in the beneficial ownership of the Aircraft on a date to be
designated pursuant to Section 2 hereof, but in no event later than
[__________], by transferring to the account of the Owner Trustee at State
Street Bank and Trust Company, 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000, ABA No. 000-000-000, Account No. 0000-000-0, Reference: Northwest/NW
[_____ __], not later than 9:30 a.m., New York City time, on the Delivery Date
in immediately available funds in Dollars, the amount set forth opposite the
Owner Participant's name on Schedule II hereto.
(c) General Provisions. The amount of the participation of each of
the Pass Through Trustee and the Owner Participant to be made as provided
above in the payment of Lessor's Cost for the Aircraft is hereinafter called
such party's "Commitment" for the Aircraft. In case any of the Pass Through
Trustee or the Owner Participant shall default in its obligation under the
provisions of this Section 1, no other such party shall have any obligation to
make any portion of such defaulted amount available or to increase the amount
of its Commitment and the obligation of such nondefaulting party shall remain
subject to the terms and conditions set forth in this Agreement. Upon receipt
by the Owner Trustee of all amounts to be furnished to it on the Delivery Date
pursuant to this Section 1 and the satisfaction of the conditions set forth in
Section 4 hereof, Lessee shall transfer title to and deliver the Aircraft to
the Owner Trustee, and the Owner Trustee shall purchase and take title to and
accept delivery of the Aircraft. In consideration of the transfer of title to
and delivery of the Aircraft to the Owner Trustee, the Owner Trustee shall,
simultaneously with such transfer of title and delivery, pay to Lessee (from
the amounts so furnished it by the Participants) Lessor's Cost for the
Aircraft.
SECTION 2. Lessee's Notice of Delivery Date. Lessee agrees to give
each Participant, the Owner Trustee and the Indenture Trustee at least two
Business Days' telecopy or other written notice of the Delivery Date for the
Aircraft, which Delivery Date shall be a Business Day, which notice shall
specify the amount of Lessor's Cost and the amount of each Participant's
Commitment for the Aircraft. As to each Participant, the making of its
Commitment for the Aircraft available in the manner required by Section 1
shall constitute a waiver of such notice.
SECTION 3. Instructions to the Owner Trustee. The Owner Participant
agrees that its releasing the amount of its Commitment for the Aircraft to the
account of the Owner Trustee in accordance with the terms of Section 1 shall
constitute, subject to satisfaction or waiver of the conditions set forth in
Section 4(a), without further act, authorization and direction by the Owner
Participant to the Owner Trustee:
(i) to pay to Lessee Lessor's Cost for the Aircraft;
(ii) to the extent not previously accomplished by a prior
authorization, to authorize a representative or representatives of the
Owner Trustee (who shall be an
4
employee or employees, or an agent or agents, of Lessee designated by
Lessee) to accept delivery of the Aircraft on the Delivery Date pursuant
to the Acceptance Certificate;
(iii) to accept from Lessee the Xxxx of Sale and the FAA Xxxx of
Sale for the Aircraft referred to in Section 4(a)(v)(8) and 4(a)(v)(9);
(iv) to execute an Aircraft Registration Application, the Lease
Supplement and the Trust Supplement, in each case covering the Aircraft;
(v) to borrow from the Pass Through Trustee to finance a portion of
the Lessor's Cost for the Aircraft and to execute and deliver to the
Subordination Agent on behalf of the Pass Through Trustee for each of the
Pass Through Trusts a principal amount of Secured Certificates bearing
the interest rate set forth opposite the name of such Pass Through Trust
on Schedule II hereto, pursuant hereto and to the Trust Indenture; and
(vi) to take such other action as may be required to be taken by the
Owner Trustee on the Delivery Date by the terms of any Operative
Document.
SECTION 4. Conditions. (a) Conditions Precedent to the
Participations in the Aircraft. It is agreed that the obligations of each of
the Pass Through Trustee and the Owner Participant to participate in the
payment of Lessor's Cost and to make available the amount of its respective
Commitment are subject to the satisfaction prior to or on the Delivery Date of
the following conditions precedent, except that paragraphs (iii), (v)(5),
(xxi), (xxii) and (xxiv) shall not be a condition precedent to the obligations
of the Pass Through Trustee, and paragraphs (iv), (vii)(D) and (xiv) shall not
be a condition precedent to the obligation of the Owner Participant:
(i) The Pass Through Trustee and the Owner Participant shall have
received due notice with respect to such participation pursuant to
Section 2 hereof (or shall have waived such notice either in writing or
as provided in Section 2).
(ii) No change shall have occurred after the date of the execution
and delivery of this Agreement in applicable law or regulations or
guidelines or interpretations thereof by appropriate regulatory
authorities which would make it a violation of law or regulations or
guidelines for the Pass Through Trustee or the Owner Participant to make
its Commitment available in accordance with Section 1 hereof.
(iii) In the case of the Owner Participant, the Pass Through
Trustees shall have made available the amount of their Commitments for
the Aircraft in accordance with Section 1 hereof.
(iv) In the case of the Pass Through Trustees, the Owner Participant
shall have made available the amount of its Commitment for the Aircraft
in accordance with Section 1 hereof.
(v) The following documents shall have been duly authorized,
executed and delivered by the respective party or parties thereto, shall
each be satisfactory in form and substance to the Pass Through Trustee
and the Owner Participant and shall be in full
5
force and effect and executed counterparts shall have been delivered to
the Pass Through Trustee and the Owner Participant, or their respective
counsel, provided that only the Subordination Agent on behalf of each
Pass Through Trustee shall receive an executed original of such Pass
Through Trustee's respective Secured Certificate and provided, further,
that an excerpted copy of the Purchase Agreement shall only be delivered
to and retained by the Owner Trustee (but the Indenture Trustee shall
also retain an excerpted copy of the Purchase Agreement which may be
inspected by the Owner Participant and its counsel prior to the Delivery
Date and subsequent to the Delivery Date may be inspected and reviewed by
the Indenture Trustee if and only if there shall occur and be continuing
an Event of Default), the chattel paper xounterpart of the Lease and the
Lease Supplement covering the Aircraft dated the Delivery Date shall be
delivered to the Indenture Trustee, and the Tax Indemnity Agreement need
only be satisfactory to the Owner Participant and Lessee and shall only
be delivered to Lessee and the Owner Participant and their respective
counsel:
(1) an excerpted copy of the Purchase Agreement (insofar as it
relates to the Aircraft) [and the Guaranty -- A330];
(2) the Purchase Agreement Assignment;
(3) the Lease;
(4) a Lease Supplement covering the Aircraft dated the Delivery
Date;
(5) the Tax Indemnity Agreement;
(6) the Trust Agreement;
(7) a Trust Supplement covering the Aircraft dated the Delivery
Date;
(8) the Xxxx of Sale;
(9) the FAA Xxxx of Sale;
(10) an acceptance certificate covering the Aircraft in the
form agreed to by the Owner Participant and Lessee (herein called
the "Acceptance Certificate") duly completed and executed by the
Owner Trustee or its agent, which may be a representative of Lessee,
and by such representative on behalf of Lessee;
(11) the Trust Indenture;
(12) the Secured Certificates;
(13) the Consent and Agreement;
(14) the Guarantee; [and]
6
[(15) the French Pledge Agreement.-- A330]
In addition, the Pass Through Trustee and the Owner Participant each
shall have received executed counterparts or conformed copies of the following
documents:
(1) each of the Pass Through Trust Agreements;
(2) the Intercreditor Agreement; and
(3) the Primary Liquidity Facility for each of the Pass Through
Trusts.
(vi) A Uniform Commercial Code financing statement or statements
covering all the security interests created by or pursuant to the
Granting Clause of the Trust Indenture that are not covered by the
recording system established by the Federal Aviation Act shall have been
executed and delivered by the Owner Trustee, and such financing statement
or statements shall have been duly filed in all places necessary or
advisable, and any additional Uniform Commercial Code financing
statements deemed advisable by the Owner Participant or the Pass Through
Trustee shall have been executed and delivered by Lessee or the Owner
Trustee and duly filed.
(vii) The Pass Through Trustee and the Owner Participant shall have
received the following:
(A)(1) an incumbency certificate of Lessee and the Guarantor
(as the case may be) as to the person or persons authorized to
execute and deliver this Agreement, the Lease, the Lease Supplement
covering the Aircraft, the Xxxx of Sale, the FAA Xxxx of Sale, the
Purchase Agreement Assignment, the Tax Indemnity Agreement, the Pass
Through Trust Agreements, the Guarantee and any other documents to
be executed on behalf of Lessee or the Guarantor (as the case may
be) in connection with the transactions contemplated hereby and the
signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of
Lessee and the Guarantor or the executive committee thereof,
certified by the Secretary or an Assistant Secretary of Lessee and
the Guarantor (as the case may be), duly authorizing the
transactions contemplated hereby and the execution and delivery of
each of the documents required to be executed and delivered on
behalf of Lessee or the Guarantor (as the case may be) in connection
with the transactions contemplated hereby; and
(3) a copy of the certificate of incorporation of Lessee and
the Guarantor, certified by the Secretary of State of the State of
Minnesota in the case of Lessee and certified by the Secretary of
State of the State of Delaware in the case of the Guarantor, a copy
of the by-laws of Lessee and the Guarantor, certified by the
Secretary or Assistant Secretary of Lessee and the Guarantor (as the
case may be), and a certificate or other evidence from the Secretary
of State of the State of Minnesota in the case of Lessee and from
the Secretary of State of the State of Delaware in the case of the
Guarantor, dated as of a date reasonably near
7
the Delivery Date, as to the due incorporation and good standing of
Lessee or the Guarantor (as the case may be) in such state.
(B)(1) an incumbency certificate of the Indenture Trustee as to
the person or persons authorized to execute and deliver this
Agreement, the Trust Indenture and any other documents to be
executed on behalf of the Indenture Trustee in connection with the
transactions contemplated hereby and the signatures of such person
or persons;
(2) a copy of the resolutions of the board of directors of the
Indenture Trustee, certified by the Secretary or an Assistant
Secretary of the Indenture Trustee, duly authorizing the
transactions contemplated hereby and the execution and delivery of
each of the documents required to be executed and delivered on
behalf of the Indenture Trustee in connection with the transactions
contemplated hereby;
(3) a copy of the articles of association and by-laws of the
Indenture Trustee, each certified by the Secretary or an Assistant
Secretary of the Indenture Trustee; and
(4) a certificate signed by an authorized officer of the
Indenture Trustee, dated the Delivery Date, certifying that the
representations and warranties contained herein of the Indenture
Trustee are correct as though made on and as of the Delivery Date,
except to the extent that such representations and warranties relate
solely to an earlier date (in which case such representations and
warranties are correct on and as of such earlier date).
(C)(1) an incumbency certificate of the Owner Trustee as to the
person or persons authorized to execute and deliver this Agreement,
the Lease, the Lease Supplement covering the Aircraft, the Trust
Agreement, the Trust Indenture, the Purchase Agreement Assignment
and any other documents to be executed on behalf of the Owner
Trustee in connection with the transactions contemplated hereby and
the signatures of such person or persons;
(2) a copy of the resolutions of the board of directors of the
Owner Trustee, certified by the Secretary or an Assistant Secretary
of the Owner Trustee, duly authorizing the transactions contemplated
hereby and the execution and delivery of each of the documents
required to be executed and delivered on behalf of the Owner Trustee
in connection with the transactions contemplated hereby;
(3) a copy of the articles of association and by-laws of the
Owner Trustee, each certified by the Secretary or an Assistant
Secretary of the Owner Trustee; and
(4) a certificate signed by an authorized officer of the Owner
Trustee, dated the Delivery Date, certifying that the
representations and warranties contained herein of the Owner Trustee
(in its individual capacity and as trustee) are correct as though
made on and as of the Delivery Date, except to the extent
8
that such representations and warranties relate solely to an earlier
date (in which case such representations and warranties are correct
on and as of such earlier date).
(D)(1) an incumbency certificate of the Owner Participant as to
the person or persons authorized to execute and deliver this
Agreement, the Tax Indemnity Agreement, the Trust Agreement and any
other documents to be executed on behalf of the Owner Participant in
connection with the transactions contemplated hereby and the
signatures of such person or persons;
(2) a certificate signed by the Secretary or an Assistant
Secretary of the Owner Participant, to the effect that the
transactions contemplated hereby and the execution and delivery of
each of the documents required to be executed and delivered on
behalf of the Owner Participant in connection with the transactions
contemplated hereby have been duly authorized;
(3) a copy of the articles of association and by-laws of the
Owner Participant, each certified by the Secretary or an Assistant
Secretary of the Owner Participant; and
(4) a certificate signed by an authorized officer of the Owner
Participant, dated the Delivery Date, certifying that the
representations and warranties contained herein of the Owner
Participant are correct as though made on and as of the Delivery
Date, except to the extent that such representations and warranties
relate solely to an earlier date (in which case such representations
and warranties are correct on and as of such earlier date).
(viii) All appropriate action required to have been taken prior to
the Delivery Date in connection with the transactions contemplated by
this Agreement shall have been taken by the Federal Aviation
Administration, or any governmental or political agency, subdivision or
instrumentality of the United States, and all orders, permits, waivers,
authorizations, exemptions and approvals of such entities required to be
in effect on the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been issued, and all such
orders, permits, waivers, authorizations, exemptions and approvals shall
be in full force and effect on the Delivery Date.
(ix) On the Delivery Date the Pass Through Trustee and the Owner
Participant shall have received a certificate signed by an authorized
officer of Lessee (and with respect to the matters set forth in clause
(4) below, the Guarantor) to the effect that:
(1) the Aircraft has been duly certified by the Federal
Aviation Administration as to type and has a current certificate of
airworthiness;
(2) the FAA Xxxx of Sale, the Lease, the Lease Supplement, the
Trust Indenture and the Trust Supplement covering the Aircraft shall
have been duly filed for recordation (or shall be in the process of
being so duly filed for recordation) with the Federal Aviation
Administration, and the Trust Agreement
9
shall have been filed (or shall be in the process of being so filed)
with the Federal Aviation Administration;
(3) application for registration of the Aircraft in the name of
the Owner Trustee has been duly made with the Federal Aviation
Administration; and
(4) the representations and warranties contained herein of
Lessee and the Guarantor are correct as though made on and as of the
Delivery Date, except to the extent that such representations and
warranties (other than those contained in clause (F) of Section
7(a)(iv)) relate solely to an earlier date (in which case such
representations and warranties were correct on and as of such
earlier date).
(x) Lessee and the Guarantor shall have entered into the
Underwriting Agreement and each of the Pass Through Trust Agreements, and
the Pass Through Certificates shall have been issued and sold pursuant to
the Underwriting Agreement and the Pass Through Trust Agreements.
(xi) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee,
the Owner Participant and the Owner Trustee, and reasonably satisfactory
as to scope and substance to the Pass Through Trustee and the Owner
Participant, an opinion substantially in the form of Exhibit B-1 hereto
from Xxxxxxx Xxxxxxx & Xxxxxxxx, special counsel for Lessee and the
Guarantor, an opinion substantially in the form of Exhibit B-2 hereto
from Cadwalader, Xxxxxxxxxx & Xxxx, special counsel for Lessee and the
Guarantor, and an opinion substantially in the form of Exhibit B-3 hereto
from Lessee's legal department.
(xii) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee,
the Owner Participant, the Owner Trustee, the Guarantor and Lessee and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of Exhibit C hereto from [counsel to the
Supplier and the Manufacturer. -- A330] [counsel to the Manufacturer --
757].
(xiii) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee,
the Owner Participant, the Owner Trustee, the Guarantor and Lessee, and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of Exhibit D hereto from Ray, Xxxxxxx &
Xxxxxxx, special counsel for the Owner Trustee.
(xiv) The Pass Through Trustee shall have received, addressed to the
Pass Through Trustee, the Indenture Trustee, the Owner Trustee, the
Guarantor and Lessee, and reasonably satisfactory as to scope and
substance to the Pass Through Trustee, the Guarantor and Lessee, an
opinion substantially in the form of Exhibit E-1 hereto from
[________________], special counsel for the Owner Participant, and an
opinion substantially in the form of Exhibit E-2 hereto from the Owner
Participant's in-house counsel.
10
(xv) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Indenture Trustee,
the Owner Participant, the Owner Trustee, the Guarantor and Lessee, and
reasonably satisfactory as to scope and substance to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of Exhibit F hereto from Xxxxx & Xxxxxxx, P.C.
(xvi) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Owner Participant,
the Owner Trustee, the Guarantor and Lessee, and reasonably satisfactory
as to scope and substance to the Pass Through Trustee, the Owner
Participant, the Guarantor and Lessee, an opinion substantially in the
form of Exhibit G hereto from Xxxxxxx XxXxxxxxx LLP, special counsel for
the Indenture Trustee.
(xvii) [Intentionally Omitted].
(xviii) The Pass Through Trustee and Owner Participant shall have
received an independent insurance broker's report, in form and substance
satisfactory to the Pass Through Trustee and the Owner Participant, as to
the due compliance with the terms of Section 11 of the Lease relating to
insurance with respect to the Aircraft.
(xix) Lessor's Cost for the Aircraft shall be $[______________].
(xx) No action or proceeding shall have been instituted nor shall
governmental action be threatened before any court or governmental
agency, nor shall any order, judgment or decree have been issued or
proposed to be issued by any court or governmental agency at the time of
the Delivery Date to set aside, restrain, enjoin or prevent the
completion and consummation of this Agreement or the transactions
contemplated hereby.
(xxi) The Owner Participant shall have received from
[___________________], special tax counsel to the Owner Participant, an
opinion, in form and substance satisfactory to the Owner Participant,
with respect to certain Federal income tax aspects of the transaction
contemplated by the Operative Documents.
(xxii) In the opinion of the Owner Participant and its special tax
counsel, there shall have been, since the date hereof, no amendment,
modification, addition, or change in or to the provisions of the Internal
Revenue Code of 1986, as amended through the date hereof, and the
regulations promulgated under the Code (including temporary regulations),
Internal Revenue Service Revenue Procedures or Revenue Rulings, or other
administrative interpretations, applicable judicial precedents or
Executive Orders of the President of the United States, all as in effect
on the date hereof, the effect of which might preclude the Owner
Participant from obtaining any of the income tax benefits and
consequences assumed to be available to the Owner Participant as set
forth in Section 2 of the Tax Indemnity Agreement.
(xxiii) The Pass Through Trustee and the Owner Participant shall
have received a favorable opinion substantially in the form of Exhibit I
hereto addressed to the Pass Through Trustee and the Owner Participant,
and reasonably satisfactory as to scope and
11
substance to the Pass Through Trustee and the Owner Participant, from
Cadwalader, Xxxxxxxxxx & Xxxx, special counsel for Lessee, which opinion
shall state (with customary assumptions and qualifications) that the
Owner Trustee, as lessor under the Lease, and the Indenture Trustee, as
assignee of the Owner Trustee's rights under the Lease pursuant to the
Trust Indenture, would be entitled to the benefits of 11 U.S.C. ss.1110
with respect to the Aircraft.
(xxiv) The Owner Participant shall have received (A) a certificate
signed by an authorized officer of the Pass Through Trustee, dated the
Delivery Date, certifying that the representations and warranties
contained herein of the Pass Through Trustee are correct as though made
on and as of the Delivery Date, except to the extent that such
representations and warranties relate solely to an earlier date (in which
case such representations and warranties are correct on and as of such
earlier date), (B) an opinion substantially in the form of Exhibit J-1
hereto addressed to the Owner Participant, the Guarantor and Lessee of
Xxxxxxx XxXxxxxxx LLP, special counsel for the Pass Through Trustee, and
reasonably satisfactory as to scope and substance to the Owner
Participant, the Guarantor and Lessee, and (C)(1) an incumbency
certificate of the Pass Through Trustee as to the person or persons
authorized to execute and deliver this Agreement and any other documents
to be executed on behalf of the Pass Through Trustee in connection with
the transactions contemplated hereby and the signatures of such person or
persons; (2) a copy of the articles of association and by-laws of the
Pass Through Trustee, each certified by the Secretary or an Assistant
Secretary of the Pass Through Trustee; and (3) such other documents and
evidence with respect to the Pass Through Trustee as it may reasonably
request in order to establish the due consummation of the transactions
contemplated by this Agreement, the taking of all necessary action in
connection therewith and compliance with the conditions herein set forth.
(xxv) The Pass Through Trustee and the Owner Participant shall have
received, addressed to the Pass Through Trustee, the Owner Participant,
the Owner Trustee, the Indenture Trustee, the Guarantor and Lessee, and
reasonably satisfactory as to scope and substance, to the Pass Through
Trustee, the Owner Participant, the Guarantor and Lessee, an opinion
substantially in the form of Exhibit J-2 hereto from Xxxxxxx XxXxxxxxx
LLP, special counsel to the Subordination Agent.
Promptly upon the registration of the Aircraft and the recording of
the Trust Indenture, the Lease, the Lease Supplement covering the Aircraft and
the Trust Supplement covering the Aircraft pursuant to the Federal Aviation
Act, Lessee will cause Xxxxx & Xxxxxxx, P.C., special counsel in Oklahoma
City, Oklahoma, to deliver to the Pass Through Trustee, the Indenture Trustee,
the Owner Participant, the Owner Trustee and Lessee an opinion as to the due
and valid registration of the Aircraft in the name of the Owner Trustee, the
due recording of the FAA Xxxx of Sale, the Trust Indenture, such Lease
Supplement, such Trust Supplement and the Lease and the filing of the Trust
Agreement and the lack of filing of any intervening documents with respect to
the Aircraft.
(b) Conditions Precedent to the Obligations of Lessee and the
Guarantor. It is agreed that (A) the obligations of Lessee to sell the
Aircraft to the Owner Trustee and to accept delivery of the Aircraft under the
Lease, and (B) the obligations of Lessee and the Guarantor to
12
enter into the other Operative Documents, are all subject to the fulfillment
to the satisfaction of Lessee and the Guarantor prior to or on the Delivery
Date of the following conditions precedent:
(i) All appropriate action required to have been taken on or prior
to the Delivery Date in connection with the transactions contemplated by
this Agreement shall have been taken by the Federal Aviation
Administration, or any governmental or political agency, subdivision or
instrumentality of the United States, and all orders, permits, waivers,
exemptions, authorizations and approvals of such entities required to be
in effect on the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been issued, and all such
orders, permits, waivers, exemptions, authorizations and approvals shall
be in full force and effect on the Delivery Date.
(ii) The conditions specified in Sections 4(a)(ii), 4(a)(iii) and
4(a)(iv) hereof shall have been satisfied.
(iii) Those documents described in Section 4(a)(v) shall have been
duly authorized, executed and delivered by the respective party or
parties thereto (other than Lessee and the Guarantor) in the manner
specified in Section 4(a)(v), shall each be satisfactory in form and
substance to Lessee and the Guarantor, shall be in full force and effect
on the Delivery Date, and an executed counterpart of each thereof (other
than the Secured Certificates) shall have been delivered to Lessee or its
special counsel and the Guarantor or its special counsel.
(iv) Lessee and the Guarantor shall have received (A) each
certificate referred to in Section 4(a)(vii) (other than the certificate
referred to in clause (A) thereof), (B) the certificate referred to in
Section 4(a)(xxiv)(A), and (C)(1) an incumbency certificate of the Pass
Through Trustee as to the person or persons authorized to execute and
deliver this Agreement and any other documents to be executed on behalf
of the Pass Through Trustee in connection with the transactions
contemplated hereby and the signatures of such person or persons; (2) a
copy of the articles of association and by-laws of the Pass Through
Trustee, each certified by the Secretary or an Assistant Secretary of the
Pass Through Trustee; and (3) such other documents and evidence with
respect to the Pass Through Trustee as Lessee or its special counsel and
the Guarantor or its special counsel may reasonably request in order to
establish the due consummation of the transactions contemplated by this
Agreement, the taking of all necessary action in connection therewith and
compliance with the conditions herein set forth.
(v) Lessee and the Guarantor shall have received the opinions set
forth in Sections 4(a)(xii), 4(a)(xiii), 4(a)(xiv), 4(a)(xv), 4(a)(xvi),
4(a)(xxiv)(B) and 4(a)(xxv) in each case addressed to Lessee and the
Guarantor and dated the Delivery Date and in each case in scope and
substance reasonably satisfactory to Lessee and its special counsel and
the Guarantor and its special counsel.
(vi) No action or proceeding shall have been instituted nor shall
governmental action be threatened before any court or governmental
agency, nor shall any order, judgment or decree have been issued or
proposed to be issued by any court or governmental agency at the time of
the Delivery Date to set aside, restrain, enjoin or
13
prevent the completion and consummation of this Agreement or the
transactions contemplated hereby.
(vii) No change shall have occurred after the date of the execution
and delivery of this Agreement in applicable law or regulations or
guidelines or interpretations by appropriate regulatory authorities which
would make it a violation of law or regulations or guidelines for Lessee
or the Guarantor to enter into any transaction contemplated by the
Operative Documents.
(viii) In the opinion of Lessee and its special counsel, there shall
have been, since the date hereof, no amendment, modification, addition or
change in or to the Internal Revenue Code of 1986, as amended through the
date hereof, the regulations promulgated under the Code (including
temporary regulations), Internal Revenue Service Revenue Procedures or
Revenue Rulings, or other administrative interpretations, applicable
judicial precedents or Executive Orders of the President of the United
States which might give rise to an indemnity obligation of Lessee under
any of the Operative Documents.
(ix) Lessee shall have been paid Lessor's Cost for the Aircraft.
SECTION 5. [Intentionally Omitted].
SECTION 6. Extent of Interest of Certificate Holders. No Certificate
Holder (as defined in the Trust Indenture) shall have any further interest in,
or other right with respect to, the mortgage and security interests created by
the Trust Indenture when and if the principal of and interest on all Secured
Certificates held by such holder and all other sums payable to such holder
hereunder, under the Trust Indenture and under such Secured Certificates shall
have been paid in full. Each Pass Through Trustee and, by its acceptance of a
Secured Certificate, each Certificate Holder agrees that it will look solely
to the income and proceeds from the Trust Indenture Estate to the extent
available for distribution to such Certificate Holder as provided in Article
III of the Trust Indenture and that neither the Owner Participant nor the
Owner Trustee shall be personally liable to the Pass Through Trustees or any
Certificate Holder for any amounts payable under the Secured Certificates, the
Trust Indenture or hereunder, except as expressly provided in the Operative
Documents.
SECTION 7. Representations and Warranties of Lessee and the
Guarantor; Indemnities. (a) Representations and Warranties. Lessee and the
Guarantor represent and warrant to the Pass Through Trustee, the Owner
Trustee, the Indenture Trustee, the Primary Liquidity Provider, the
Subordination Agent and the Owner Participant that as of the Delivery Date:
(i) each of Lessee and the Guarantor is a corporation duly
organized, validly existing and in good standing under the laws of the
state of its incorporation, has the corporate power and authority to own
or hold under lease its properties, has, or had on the respective dates
of execution thereof, the corporate power and authority to enter into and
perform its obligations under (i) in the case of Lessee, the Lessee
Documents, the Pass Through Trust Agreements, the Underwriting Agreement
and the other Operative
14
Documents to which it is a party and (ii) in the case of the Guarantor,
this Agreement, the Pass Through Trust Agreements, the Underwriting
Agreement and the other Operative Documents to which it is a party, and
is duly qualified to do business as a foreign corporation in each state
in which its operations or the nature of its business requires other than
failures to so qualify which would not have a material adverse effect on
the condition (financial or otherwise), consolidated business or
properties of it and its subsidiaries considered as one enterprise;
(ii) Lessee is a Certificated Air Carrier, and its chief executive
office (as such term is used in Article 9 of the Uniform Commercial Code
in effect in the State of Minnesota) is located at Eagan, Minnesota;
(iii) the execution and delivery by Lessee or the Guarantor (as the
case may be) of the Lessee Documents, the Pass Through Trust Agreements,
the Underwriting Agreement and each other Operative Document to which
Lessee or the Guarantor (as the case may be) is a party, and the
performance of the obligations of Lessee or the Guarantor (as the case
may be) under the Lessee Documents, the Pass Through Trust Agreements,
the Underwriting Agreement and each other Operative Document to which
Lessee or the Guarantor (as the case may be) is a party, have been duly
authorized by all necessary corporate action on the part of Lessee or the
Guarantor, do not require any stockholder approval, or approval or
consent of any trustee or holder of any material indebtedness or material
obligations of Lessee or the Guarantor, except such as have been duly
obtained and are in full force and effect, and do not contravene any law,
governmental rule, regulation or order binding on Lessee or the Guarantor
(as the case may be) or the certificate of incorporation or by-laws of
Lessee or the Guarantor (as the case may be), or contravene the
provisions of, or constitute a default under, or result in the creation
of any Lien (other than Permitted Liens) upon the property of Lessee or
the Guarantor (as the case may be) under, any indenture, mortgage,
contract or other agreement to which Lessee or the Guarantor (as the case
may be) is a party or by which it may be bound or affected which
contravention, default or Lien, individually or in the aggregate, would
be reasonably likely to have a material adverse effect on the condition
(financial or otherwise), business or properties of the Guarantor and its
subsidiaries considered as one enterprise;
(iv) neither the execution and delivery by Lessee or the Guarantor
(as the case may be) of the Lessee Documents, the Pass Through Trust
Agreements, the Underwriting Agreement or any other Operative Document to
which Lessee or the Guarantor (as the case may be) is a party, nor the
performance of the obligations of Lessee or the Guarantor (as the case
may be) under the Lessee Documents, the Pass Through Trust Agreements,
the Underwriting Agreement or the other Operative Documents to which
Lessee or the Guarantor (as the case may be) is a party, requires the
consent or approval of, the giving of notice to, the registration with,
or the taking of any other action in respect of, the Department of
Transportation, the FAA, or any other federal, state or foreign
governmental authority having jurisdiction over Lessee or the Guarantor,
other than (A) the registration of the Certificates under the Securities
Act of 1933, as amended, and under the securities laws of any state in
which the Certificates may be offered for sale if the laws of such state
require such action, (B) the qualification of the Pass Through Trust
15
Agreements under the Trust Indenture Act of 1939, as amended, pursuant to
an order of the Securities and Exchange Commission, (C) the orders,
permits, waivers, exemptions, authorizations and approvals of the
regulatory authorities having jurisdiction over the operation of the
Aircraft by Lessee or any Sublessee required to be obtained on or prior
to the Delivery Date, which orders, permits, waivers, exemptions,
authorizations and approvals have been duly obtained and are, or on the
Delivery Date will be, in full force and effect (other than a flying time
wire, all steps to obtain the issuance of which will have been, on the
Delivery Date, taken or caused to be taken by Lessee), (D) the
registration of the Aircraft referred to in Section 4(a)(ix)(3), (E) the
registrations and filings referred to in Section 7(a)(vi), and (F)
authorizations, consents, approvals, actions, notices and filings
required to be obtained, taken, given or made either only after the date
hereof or the failure of which to obtain, take, give or make would not be
reasonably likely to have a material adverse effect on the condition
(financial or otherwise), business or properties of the Guarantor and its
subsidiaries considered as one enterprise;
(v) this Agreement, each of the other Lessee Documents, the Pass
Through Trust Agreements and the Guarantee constitute the legal, valid
and binding obligations of Lessee or the Guarantor (as the case may be)
enforceable against Lessee or the Guarantor (as the case may be) in
accordance with their respective terms, except as the same may be limited
by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or similar laws affecting the rights of
creditors or lessors generally and by general principles of equity,
whether considered in a proceeding at law or in equity, and except, in
the case of the Lease, as limited by applicable laws which may affect the
remedies provided in the Lease, which laws, however, do not make the
remedies provided in the Lease inadequate for practical realization of
the benefits intended to be afforded thereby;
(vi) except for (A) [the filing for recording pursuant to the
Federal Aviation Act of the termination of the Mortgage, (B)] the filing
of the Trust Agreement with the FAA, [(B)] the registration of the
Aircraft pursuant to the Federal Aviation Act, [(C)] the filing for
recording pursuant to the Federal Aviation Act of the Lease with the
Lease Supplement covering the Aircraft, the Trust Indenture and the Trust
Supplement attached thereto and made a part thereof, the Trust Indenture
with the Trust Supplement attached thereto and made a part thereof and
the FAA Xxxx of Sale, [(D)] the filing of financing statements (and
continuation statements at periodic intervals) with respect to the
security interests created by such documents under the Uniform Commercial
Code of Minnesota and Utah and such other states as may be specified in
the opinions furnished pursuant to Section 4(a)(xi) hereof [and the
filing of a UCC-3 termination statement relating to the financing
statement filed in connection with the Mortgage], and [(E)] the taking of
possession by the Indenture Trustee of the original chattel paper
counterpart of each of the Lease and the Lease Supplement covering the
Aircraft, no further filing or recording of any document (including any
financing statement in respect thereof under Article 9 of the Uniform
Commercial Code of any applicable jurisdiction) is necessary under the
laws of the United States of America or any State thereof in order to
perfect the Owner Trustee's interest in the Aircraft as against Lessee
and any third parties, or to perfect the security interest in favor of
the Indenture Trustee in the Owner Trustee's interest in the Aircraft
(with respect to such portion of the Aircraft as is covered by the
recording
16
system established by the FAA pursuant to 49 U.S.C. Section 44107) and in
the Lease in any applicable jurisdiction in the United States;
(vii) neither Lessee, the Guarantor nor any of their affiliates has
directly or indirectly offered the Certificates for sale to any Person
other than in a manner permitted by the Securities Act of 1933, as
amended, and by the rules and regulations thereunder;
(viii) neither Lessee nor the Guarantor is an "investment company"
within the meaning of the Investment Company Act of 1940, as amended;
(ix) no event has occurred and is continuing which constitutes an
Event of Default or would constitute an Event of Default but for the
requirement that notice be given or time lapse or both;
(x) no event has occurred and is continuing which constitutes an
Event of Loss or would constitute an Event of Loss with the lapse of
time;
(xi) Lessee is solvent and will not be rendered insolvent by the
sale of the Aircraft; after the sale of the Aircraft the capital of
Lessee will not be unreasonably small for the conduct of the business in
which Lessee is engaged or is about to engage; Lessee has no intention or
belief that it is about to incur debts beyond its ability to pay as they
mature; and Lessee's sale of the Aircraft is made without any intent to
hinder, delay or defraud either present or future creditors;
(xii) none of the proceeds from the issuance of the Secured
Certificates or from the acquisition by the Owner Participant of its
beneficial interest in the Trust Estate will be used directly or
indirectly by Lessee to purchase or carry any "margin security" as such
term is defined in Regulation U of the Board of Governors of the Federal
Reserve System; and
(xiii) On the Delivery Date, all sales or use tax then due and for
which Lessee is responsible pursuant to Section 7(b)(i) hereof shall have
been paid, other than such taxes which are being contested by Lessee in
good faith and by appropriate proceedings so long as such proceedings do
not involve any material risk of the sale, forfeiture or loss of the
Aircraft.
(b) General Tax Indemnity. Exhibit K, which is a complete statement
of the provisions of Section 7(b), is incorporated herein in its entirety as
if fully set forth herein.
(c) General Indemnity. Exhibit L, which is a complete statement of
the provisions of Section 7(c), is incorporated herein in its entirety as if
fully set forth herein.
(d) Income Tax. For purposes of this Section 7, the term "Income
Tax" means any Tax based on or measured by gross or net income or receipts
(other than sales, use, license or property Taxes or Taxes in the nature
thereof) (including, without limitation, capital gains taxes, minimum taxes,
income taxes collected by withholding and taxes on tax preference items), and
Taxes which are capital, doing business, excess profits or net worth taxes and
interest, additions to tax, penalties, or other charges in respect thereof.
17
SECTION 8. Representations, Warranties and Covenants.
(a) Intentionally Omitted].
(b) [Intentionally Omitted].
(c) Each of the Owner Participant and Xxxxx Fargo Bank Northwest,
National Association, in its individual capacity, represents and warrants to
the other parties to this Agreement that it is, and on the Delivery Date will
be, a Citizen of the United States without making use of any voting trust,
voting powers agreement or similar arrangement. The Owner Participant agrees,
solely for the benefit of Lessee and the Loan Participants, that if (i) it
shall cease to be, or believes itself likely to cease to be, a Citizen of the
United States and (ii) the Aircraft shall or would therefore become ineligible
for registration in the name of the Owner Trustee under the Federal Aviation
Act and regulations then applicable thereunder, then the Owner Participant
shall (at its own expense and without any reimbursement or indemnification
from Lessee) promptly effect a voting trust, voting powers agreement or other
similar arrangement or take any other action as may be necessary to prevent
any deregistration and to maintain the United States registration of the
Aircraft. It is agreed that: (A) the Owner Participant shall be liable to pay
on request to each of the other parties hereto and to each holder of a Secured
Certificate for any damages suffered by any such other party or holder as the
result of the representation and warranty of the Owner Participant in the
first sentence of this Section 8(c) proving to be untrue as of the Delivery
Date; and (B) the Owner Participant shall be liable to pay on request to
Lessee, any Sublessee and the Loan Participants for any damages which may be
incurred by Lessee, any Sublessee or the Loan Participants as a result of the
Owner Participant's failure to comply with its obligations pursuant to the
second sentence of this Section 8(c). Each party hereto agrees, upon the
request and at the sole expense of the Owner Participant, to cooperate with
the Owner Participant in complying with its obligations under the provisions
of the second sentence of this Section 8(c). Xxxxx Fargo Bank Northwest,
National Association, in its individual capacity, agrees that if at any time
an officer or responsible employee of the Corporate Trust Department of Xxxxx
Fargo Bank Northwest, National Association, shall obtain actual knowledge that
Xxxxx Fargo Bank Northwest, National Association, has ceased to be a Citizen
of the United States without making use of a voting trust, voting powers
agreement or similar arrangement, it will promptly resign as Owner Trustee (if
and so long as such citizenship is necessary under the Federal Aviation Act as
in effect at such time or, if it is not necessary, if and so long as the Owner
Trustee's citizenship would have any material adverse effect on the Loan
Participants, Lessee or the Owner Participant), effective upon the appointment
of a successor Owner Trustee in accordance with Section 9.01 of the Trust
Agreement. If the Owner Participant or Xxxxx Fargo Bank Northwest, National
Association, in its individual capacity, does not comply with the requirements
of this Section 8(c), the Owner Trustee, the Indenture Trustee and the
Participants hereby agree that an Event of Default (or an event which would
constitute an Event of Default but for lapse of time or the giving of notice
or both) shall not have occurred and be continuing under the Lease due to
non-compliance by Lessee with the registration requirements in the Lease.
(d) Xxxxx Fargo Bank Northwest, National Association, in its
individual capacity, represents and warrants that both the principal place of
business of the Owner Trustee and the place where its records concerning the
Aircraft and all of its interest in, to and under the
18
Operative Documents to which it is a party are kept is Salt Lake City, Utah.
Xxxxx Fargo Bank Northwest, National Association, in its individual capacity,
agrees that it will not change the location of such office to a location
outside of Salt Lake City, Utah, without prior written notice to all parties.
Xxxxx Fargo Bank Northwest, National Association, in its individual capacity,
further represents and warrants that (A) on the Delivery Date the Owner
Trustee shall have received whatever title to the Aircraft as was conveyed to
it by Lessee, and (B) the Trust Agreement, and, assuming due authorization,
execution and delivery of the Trust Agreement by the Owner Participant, the
other Owner Trustee Documents, when executed and delivered, shall have been
duly executed and delivered by one of its officers who is duly authorized to
execute and deliver such instruments on behalf of the Owner Trustee. Xxxxx
Fargo Bank Northwest, National Association, in its individual capacity,
represents that it has not offered any interest in the Trust Estate or any
Secured Certificates or any similar securities for sale to, or solicited any
offer to acquire the same from, anyone, and that no officer or responsible
employee of the Corporate Trust Department of Xxxxx Fargo Bank Northwest,
National Association, has knowledge of any such offer or solicitation by
anyone other than Lessee.
(e) Each Loan Participant represents and warrants that neither it
nor anyone acting in its behalf has offered any Secured Certificates for sale
to, or solicited any offer to buy any Secured Certificate from, any Person
other than in a manner in compliance with, and which does not require
registration under, the Securities Act of 1933, as amended, or the rules and
regulations thereunder.
(f) The Owner Participant and the Indenture Trustee agree that, at
any time after the Depreciation Period, Lessee may elect to effect a change in
registration of the Aircraft, at Lessee's cost and expense, so long as (a) the
country of registry of the Aircraft is a country listed on Exhibit A hereto
(or such other country as the Owner Trustee approves) and (b) the following
conditions are met: (i) unless the country of registry is Taiwan, the United
States maintains normal diplomatic relations with the country of registry of
the Aircraft, and if the country of registry is Taiwan, the United States
maintains diplomatic relations at least as good as those in effect on the
Delivery Date; and (ii) the Owner Trustee and the Indenture Trustee shall have
received favorable opinions (subject to customary exceptions) addressed to
each such party, from counsel of recognized reputation qualified in the laws
of the relevant jurisdiction to the effect that:
(A) the Owner Trustee's ownership interest in the Aircraft
shall be recognized under the laws of such jurisdiction, (B) the
obligations of Lessee, and the rights and remedies of the Owner
Trustee, under the Lease shall remain valid, binding and (subject to
customary bankruptcy and equitable remedies exceptions and to other
exceptions customary in foreign opinions generally) enforceable
under the laws of such jurisdiction (or the laws of the jurisdiction
to which the laws of such jurisdiction would refer as the applicable
governing law), (C) after giving effect to such change in
registration, the Lien of the Trust Indenture on the Owner Trustee's
right, title and interest in and to the Aircraft and the Lease shall
continue as a valid and duly perfected first priority security
interest and all filing, recording or other action necessary to
protect the same shall have been accomplished (or, if such opinion
cannot be given at the time of such proposed change in registration
because such change in registration is not yet effective, (1)
19
the opinion shall detail what filing, recording or other action is
necessary and (2) the Owner Trustee and the Indenture Trustee shall
have received a certificate from Lessee that all possible
preparations to accomplish such filing, recording and other action
shall have been done, and such filing, recording and other action
shall be accomplished and a supplemental opinion to that effect
shall be delivered to the Owner Trustee and the Indenture Trustee on
or prior to the effective date of such change in registration), (D)
it is not necessary, solely as a consequence of such change in
registration and without giving effect to any other activity of the
Owner Trustee, the Owner Participant or the Indenture Trustee (or
any Affiliate thereof), as the case may be, for the Owner Trustee,
the Owner Participant or the Indenture Trustee to qualify to do
business in such jurisdiction, (E) there is no tort liability of the
owner of an aircraft not in possession thereof under the laws of
such jurisdiction (it being agreed that, in the event such latter
opinion cannot be given in a form satisfactory to the Owner
Participant, such opinion shall be waived if insurance reasonably
satisfactory to the Owner Participant is provided to cover such
risk), and (F) (unless Lessee shall have agreed to provide insurance
covering the risk of requisition of use of such Aircraft by the
government of such jurisdiction so long as such Aircraft is
registered under the laws of such jurisdiction) the laws of such
jurisdiction require fair compensation by the government of such
jurisdiction payable in currency freely convertible into Dollars for
the loss of use of such Aircraft in the event of the requisition by
such government of such use.
In addition, as a condition precedent to any such change in registration,
Lessee shall furnish to the Owner Trustee and the Indenture Trustee an
Officer's Certificate to the effect that the insurance required by Section 11
of the Lease shall be in full force and effect at the time of such change in
registration after giving effect to such change in registration and that the
new country of registry imposes aircraft maintenance standards not materially
different from those of the United States, France, Germany, Japan, the
Netherlands or the United Kingdom. Lessee shall pay all costs, expenses, fees,
recording and registration taxes, including the reasonable fees and expenses
of counsel to the Owner Trustee, the Owner Participant and the Indenture
Trustee, and other charges in connection with any such change in registration.
(g) The Owner Participant represents and warrants to Lessee, the
Guarantor, the Indenture Trustee, the Pass Through Trustee, the Subordination
Agent, the Primary Liquidity Provider and the Owner Trustee, in its capacity
as such and in its individual capacity, as follows:
(i) it is duly incorporated, validly existing and in good standing
under the laws of [_______________] and has the corporate power and
authority to carry on its present business and operations and to own or
lease its properties, and has the corporate power and authority to enter
into and to perform its obligations under the Owner Participant
Documents; this Agreement and the other Owner Participant Documents have
been duly authorized, executed and delivered by it; and this Agreement
and each of the other Owner Participant Documents constitute the legal,
valid and binding obligations of the Owner Participant enforceable
against it in accordance with its respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the rights of creditors
generally and by general
20
principles of equity, whether considered in a proceeding at law or in
equity; and it has a tangible net worth (exclusive of goodwill) greater
than [$50,000,000 for 757] [$75,000,000 for A330];
(ii) neither (A) the execution and delivery by the Owner Participant
of the Owner Participant Documents nor (B) compliance by it with all of
the provisions thereof, (x) will contravene any law or order of any court
or governmental authority or agency applicable to or binding on the Owner
Participant (it being understood that no representation or warranty is
made with respect to laws, rules or regulations relating to aviation or
to the nature of the equipment owned by the Owner Trustee other than such
laws, rules or regulations relating to the citizenship requirements of
the Owner Participant under applicable law), or (y) will contravene the
provisions of, or constitutes or has constituted or will constitute a
default under, or result in the creation of any Lien (other than Liens
provided for in the Operative Documents) upon any property of the Owner
Participant under, its certificate of incorporation or by-laws or any
indenture, mortgage, contract or other agreement or instrument to which
the Owner Participant is a party or by which it or any of its property
may be bound or affected;
(iii) no authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body (other
than as required by the Federal Aviation Act or the regulations
promulgated thereunder) is required for the due execution, delivery or
performance by it of the Owner Participant Documents;
(iv) there are no pending or, to its knowledge, threatened actions
or proceedings before any court or administrative agency or arbitrator
which would materially adversely affect the Owner Participant's ability
to perform its obligations under this Agreement, the Tax Indemnity
Agreement and the Trust Agreement;
(v) neither the Owner Participant nor anyone authorized by it to act
on its behalf (it being understood that in proposing, facilitating and
otherwise taking any action in connection with the financing contemplated
hereby and agreed to herein by the Owner Participant, Lessee has not
acted as agent of the Owner Participant) has directly or indirectly
offered any Secured Certificate or Certificate or any interest in and to
the Trust Estate, the Trust Agreement or any similar interest for sale
to, or solicited any offer to acquire any of the same from, any Person;
the Owner Participant's interest in the Trust Estate and the Trust
Agreement is being acquired for its own account and is being purchased
for investment and not with a view to any resale or distribution thereof;
(vi) on the Delivery Date, the Trust Estate shall be free of Lessor
Liens (including for this purpose Liens which would be Lessor Liens but
for the proviso in the definition of Lessor Liens) attributable to the
Owner Participant; and
(vii) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar arrangement).
(h) Each of Xxxxx Fargo Bank Northwest, National Association, in its
individual capacity, and the Owner Participant covenants and agrees that it
shall not cause or
21
permit to exist a Lessor Lien attributable to it with respect to the Aircraft
or any other portion of the Trust Estate. Each of Xxxxx Fargo Bank Northwest,
National Association, in its individual capacity, and the Owner Participant
agrees that it will promptly, at its own expense, take such action as may be
necessary duly to discharge such Lessor Lien attributable to it. Each of Xxxxx
Fargo Bank Northwest, National Association, in its individual capacity, and
the Owner Participant agrees to make restitution to the Trust Estate for any
actual diminution of the assets of the Trust Estate resulting from Lessor
Liens (including for this purpose Liens which would be Lessor Liens but for
the proviso in the definition of Lessor Liens) attributable to it. The Owner
Participant agrees to make restitution to the Trust Estate for any actual
diminution of the assets of the Trust Estate resulting from any Taxes or
Expenses imposed on the Trust Estate against which Lessee is not required to
indemnify the Trust Estate pursuant to Section 7 hereof.
(i) State Street Bank and Trust Company, in its individual capacity,
covenants and agrees that it shall not cause or permit to exist any Lien,
arising as a result of (A) claims against the Indenture Trustee not related to
its interest in the Aircraft or the administration of the Trust Indenture
Estate pursuant to the Trust Indenture, (B) acts of the Indenture Trustee not
permitted by, or failure of the Indenture Trustee to take any action required
by, the Operative Documents to the extent such acts arise or such failure
arises from or constitutes gross negligence or willful misconduct, (C) claims
against the Indenture Trustee relating to Taxes or Expenses which are excluded
from the indemnification provided by Section 7 pursuant to said Section 7, or
(D) claims against the Indenture Trustee arising out of the transfer by the
Indenture Trustee of all or any portion of its interest in the Aircraft, the
Trust Estate, the Trust Indenture Estate or the Operative Documents other than
a transfer of the Aircraft pursuant to Section 9, 10 or 19 of the Lease or
Article IV or V of the Trust Indenture or a transfer of the Aircraft pursuant
to Section 15 of the Lease while an Event of Default is continuing and prior
to the time that the Indenture Trustee has received all amounts due pursuant
to the Trust Indenture.
(j) [Intentionally Omitted].
(k) Each Loan Participant represents and warrants that the Secured
Certificate to be issued to it pursuant to the Trust Indenture is being
acquired by it for investment and not with a view to resale or distribution
(it being understood that such Loan Participant may pledge or assign as
security its interest in each Secured Certificate issued to it), provided that
the disposition of its property shall at all times be and remain within its
control, except that the Loan Participants may sell, transfer or otherwise
dispose of any Secured Certificate or any portion thereof, or grant
participations therein, in a manner which in itself does not require
registration under the Securities Act of 1933, as amended.
(l) The Indenture Trustee, and by acceptance of the Secured
Certificates the Certificate Holders, hereby (i) agree that for purposes of
the application of Section 1111(b) of Title 11 of the United States Code or
any successor provision or any comparable provisions that the "debtor" in any
bankruptcy proceeding involving the assets held or administered pursuant to
the Trust Agreement shall be strictly limited to the Trust Estate (excluding
the Excluded Payments) and (ii) make (and hereby agree to make), with respect
to the Trust Indenture Estate, the election provided for in Section 1111(b)(2)
of Title 11 of the United States Code. It is hereby agreed by the Indenture
Trustee, and by the acceptance of the Secured Certificates the Certificate
Holders hereby agree, that if (i) all or any part of the Trust Estate becomes
the property of, or the
22
Owner Participant becomes, a debtor subject to the reorganization provisions
of the Bankruptcy Reform Act of 1978 or any successor provision or any
comparable proceeding, (ii) pursuant to such reorganization provisions the
Owner Trustee (in its individual capacity) or the Owner Participant is
required, by reason of the Owner Trustee (in its individual capacity) or the
Owner Participant being held to have recourse liability to the holder(s) of
the Secured Certificates or to the Indenture Trustee, directly or indirectly
(other than the recourse liability of the Owner Participant under this
Participation Agreement), to make payment on account of any amount payable as
principal or interest on the Secured Certificates and (iii) any holder(s) of
the Secured Certificates or the Indenture Trustee actually receives any Excess
Payment (as hereinafter defined) which reflects any payment by the Owner
Trustee (in its individual capacity) or the Owner Participant on account of
(ii) above, then such holder(s) or the Indenture Trustee, as the case may be,
shall promptly refund to the Owner Trustee or the Owner Participant (whichever
shall have made such payment) such Excess Payment. For purposes of this
Section 8(l), "Excess Payment" means the amount by which such payment exceeds
the amount which would have been received by the holder(s) of the Secured
Certificates or the Indenture Trustee if the Owner Trustee (in its individual
capacity) or the Owner Participant had not become subject to the recourse
liability referred to in (ii) above. Nothing contained in this Section 8(l)
shall prevent the holder of a Secured Certificate or the Indenture Trustee
from enforcing any personal recourse obligation (and retaining the proceeds
thereof) of the Owner Trustee (in its individual capacity) or the Owner
Participant under this Agreement or the Trust Indenture (and any exhibits or
annexes thereto).
(m) State Street Bank and Trust Company represents, warrants and
covenants, in its individual capacity, to Lessee, the Guarantor, the Owner
Trustee, the Pass Through Trustee, the Subordination Agent, the Primary
Liquidity Provider and the Owner Participant as follows:
(i) it is a Massachusetts trust company duly incorporated, validly
existing and in good standing under the laws of Massachusetts, is a
Citizen of the United States (without making use of any voting trust,
voting powers agreement or similar arrangement), will notify promptly all
parties to this Agreement if in its reasonable opinion its status as a
Citizen of the United States (without making use of any voting trust,
voting powers agreement or similar arrangement) is likely to change and
will resign as Indenture Trustee as provided in Section 8.02 of the Trust
Indenture promptly after it obtains actual knowledge that it has ceased
to be such a Citizen of the United States (without making use of a voting
trust, voting powers agreement or similar arrangement), and has the full
corporate power, authority and legal right under the laws of the
Commonwealth of Massachusetts and the United States pertaining to its
banking, trust and fiduciary powers to execute and deliver each of this
Agreement, the Trust Indenture and each other Operative Document to which
it is a party and to carry out its obligations under this Agreement, the
Trust Indenture, each other Operative Document to which it is a party and
to authenticate the Secured Certificates;
(ii) the execution and delivery by the Indenture Trustee of the
Indenture Trustee Documents and the authentication of the Secured
Certificates and the performance by the Indenture Trustee of its
obligations under the Indenture Trustee Documents have been duly
authorized by the Indenture Trustee and will not violate its
23
articles of association or by-laws or the provisions of any indenture,
mortgage, contract or other agreement to which it is a party or by which
it is bound;
(iii) this Agreement and each of the other Indenture Trustee
Documents constitute the legal, valid and binding obligations of the
Indenture Trustee enforceable against it in accordance with their
respective terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and by general principles of
equity, whether considered in a proceeding at law or in equity;
(iv) there are no pending or, to its knowledge, threatened actions
or proceedings against the Indenture Trustee, either in its individual
capacity or as Indenture Trustee, before any court or administrative
agency which, if determined adversely to it, would materially adversely
affect the ability of the Indenture Trustee, in its individual capacity
or as Indenture Trustee as the case may be, to perform its obligations
under the Operative Documents to which it is a party; and
(v) there are no Indenture Trustee's Liens on the Aircraft or any
portion of the Trust Estate.
(n) The Owner Participant will not, directly or indirectly, sell,
assign, convey or otherwise transfer any of its right, title or interest in
and to this Agreement, the Trust Estate or the Trust Agreement or any proceeds
therefrom to any person or entity, unless (i) the proposed transferee is a
"Transferee" (as defined below), (ii) Lessee shall have (1) received an
opinion (in form and substance reasonably satisfactory to Lessee) of counsel
to the Owner Participant (who shall be reasonably satisfactory to Lessee) to
the effect that such transfer will not result in any risk of loss of tax
benefits to, or any increase in the tax liability of, Lessee and (2) received
from the Owner Participant so seeking to transfer such right, title or
interest reasonably satisfactory indemnification for any loss of tax benefits
to, and increase in the tax liability of, Lessee, and (iii) the Owner
Participant sells, assigns, conveys or otherwise transfers all of its right,
title and interest in and to this Agreement, the Trust Estate, the Trust
Agreement and the proceeds therefrom to a single entity. A "Transferee" shall
mean either (A) a bank or other financial institution with a combined capital,
surplus and undivided profits of at least [$50,000,000 for 757] [$75,000,000
for A330] or a corporation whose tangible net worth is at least [$50,000,000
for 757] [$75,000,000 for A330], exclusive of goodwill, in either case as of
the proposed date of such transfer, as determined in accordance with generally
accepted accounting principles, or (B) any subsidiary of such a bank,
financial institution or corporation, provided that such bank, financial
institution or corporation furnishes to the Owner Trustee, the Indenture
Trustee and Lessee a guaranty with respect to the Owner Participant's
obligations, in the case of the Owner Trustee, under the Trust Agreement and,
in the case of the Indenture Trustee and Lessee, the Owner Participant's
obligations hereunder, including but not limited to, under Section 8(c) and
Section 8(h) hereof, in form and substance reasonably satisfactory to Lessee,
the Owner Trustee and the Indenture Trustee; provided, however, that any
Transferee shall not be an airline, a commercial air carrier, an air freight
forwarder, an entity engaged in the business of parcel transport by air or
other similar person or a corporation or other entity controlling, controlled
by or under common control with such an airline, a commercial air carrier, an
air freight forwarder, an entity engaged in the business of parcel transport
by air or other similar person. Each such
24
transfer to a Transferee shall be subject to the conditions that (M) upon
giving effect to such transfer, the Transferee is a Citizen of the United
States (without making use of a voting trust agreement, voting powers
agreement or other similar arrangement unless approved by Lessee), and has
full power and authority to enter into the transactions contemplated hereby,
(N) the Transferee has the requisite power and authority to enter into and
carry out the transactions contemplated hereby and such Transferee shall have
delivered to Lessee, the Owner Trustee and the Indenture Trustee an opinion of
counsel in form and substance reasonably satisfactory to such persons as to
the due authorization, delivery, legal, valid and binding effect and
enforceability of the agreement or agreements referred to in the next clause
with respect to the Transferee and any guaranty provided pursuant to the
provisions of this Section 8(n) as to the guarantor, (O) the Transferee enters
into an agreement or agreements, in form and substance reasonably satisfactory
to the Owner Trustee, Lessee and the Indenture Trustee, whereby the Transferee
confirms that it shall be deemed a party to this Agreement and a party to the
Trust Agreement and agrees to be bound by all the terms of, and to undertake
all of the obligations of the transferor Owner Participant contained in, the
Owner Participant Documents (to the extent of the participation so transferred
to it) and makes the representations and warranties made by the Owner
Participant thereunder, (P) such transfer does not affect registration of the
Aircraft under the Federal Aviation Act, or any rules or regulations
promulgated thereunder or create a relationship which would be in violation
thereof or violate any provision of the Securities Act of 1933, as amended, or
any other applicable Federal or state law, (Q) the transferor Owner
Participant assumes the risk of any loss of Interest Deductions, Amortization
Deductions and MACRS Deductions, the risk of any Inclusion Event (each as
defined in the Tax Indemnity Agreement), and the risk of any sales, use, value
added or similar tax resulting from such transfer, (R) the transferor Owner
Participant pays all of the costs and expenses (including, without limitation,
fees and expenses of counsel) incurred in connection with such transfer,
including the costs and expenses of the Owner Trustee, the Indenture Trustee,
Lessee and the Loan Participants in connection therewith, and (S) the terms of
the Operative Documents and the Overall Transaction shall not be altered. Upon
any such transfer by the Owner Participant as above provided, the Transferee
shall be deemed the Owner Participant for all purposes hereof and of the other
Operative Documents and each reference herein to the transferor Owner
Participant shall thereafter be deemed for all purposes to be to the
Transferee and the transferor Owner Participant shall be relieved of all
obligations of the transferor Owner Participant under the Owner Participant
Documents arising after the date of such transfer except to the extent fully
attributable to or arising out of acts or events occurring prior thereto and
not assumed by the Transferee (in each case, to the extent of the
participation so transferred). If the Owner Participant intends to transfer
any of its interests hereunder, it shall give 30 days prior written notice
thereof to the Indenture Trustee, the Owner Trustee and Lessee, specifying the
name and address of the proposed Transferee.
(o) Notwithstanding the provisions of Section 8(x) hereof, unless
waived by the Loan Participants, Lessee shall not be entitled to assume the
Secured Certificates on the date for purchase of the Aircraft pursuant to
Section 19(d) of the Lease if on such date an Event of Default shall have
occurred and be continuing or any condition or event shall exist which, with
the passage of time or giving of notice or both, would become such an Event of
Default.
(p) Xxxxx Fargo Bank Northwest, National Association, and State
Street Bank and Trust Company, each in its individual capacity, agrees for the
benefit of Lessee to comply
25
with the terms of the Trust Indenture which it is required to comply with in
its individual capacity.
(q) The Owner Participant represents and warrants that it is not
acquiring its interest in the Trust Estate or any interests represented
thereby with the assets of any "employee benefit plan" as defined in Section
3(3) of ERISA or of any "plan" within the meaning of Section 4975(e)(1) of the
Code. Each Loan Participant agrees that it will not transfer any Secured
Certificate (or any part thereof) to any entity (except pursuant to Section
2.14 of the Trust Indenture) unless such entity makes (or is deemed to have
made) a representation and warranty as of the date of transfer that either no
part of the funds to be used by it for the purchase and holding of such
Secured Certificate (or any part thereof) constitutes assets of any "employee
benefit plan" or that such purchase and holding will not result in a
non-exempt prohibited transaction (under Section 4975 of the Code and Section
406 of ERISA). The Owner Participant agrees that it will not transfer any of
its right, title or interest in and to this Agreement, the Trust Estate or the
Trust Agreement or any proceeds therefrom to any entity unless such entity
makes (or is deemed to have made) a representation and warranty as of the date
of transfer that either no part of the funds to be used by it for the purchase
of such right, title and interest (or any part thereof) constitutes assets of
any "employee benefit plan" or that such transfer will not result in a
non-exempt prohibited transaction (under Section 4975 of the Code and Section
406 of ERISA). The Pass Through Trustee agrees that it will not agree to any
amendment, modification or waiver of Section 1.01(e)(i) of the Trust
Supplement to each Pass Through Trust Agreement specified in Schedule III
hereto without the prior written consent of the Owner Participant.
(r) Each Participant, the Owner Trustee and the Indenture Trustee
agrees for the benefit of the Manufacturer and Lessee that it will not
disclose or suffer to be disclosed the terms of the Purchase Agreement to any
third party except (A) as may be required by any applicable statute, court or
administrative order or decree or governmental ruling or regulation or to any
regulatory authorities having official jurisdiction over them, (B) in
connection with the financing of the Aircraft and the other transactions
contemplated by the Operative Documents (including any transfer of Secured
Certificates (including by way of participation or assignment of an interest,
provided such participant or assignee agrees to hold such terms confidential
to the same extent as herein provided) or the Owner Participant's beneficial
interest in the Trust Estate and any exercise of remedies under the Lease and
the Trust Indenture), (C) with the prior written consent of the Manufacturer
and Lessee, (D) to the Owner Trustee's, the Indenture Trustee's and each
Participant's counsel or special counsel, independent insurance brokers or
other agents who agree to hold such information confidential, or (E) in the
case of the Owner Participant and/or the Owner Trustee, it may disclose so
much of the Purchase Agreement as has been assigned to the Owner Trustee under
the Purchase Agreement Assignment to bona fide potential purchasers of the
Aircraft.
(s) The Owner Trustee and the Owner Participant severally, not
jointly, represent and warrant that none of the funds made available by the
Pass Through Trustee pursuant to Section 1 hereof will be used for the purpose
of purchasing or carrying any "margin security" as defined in Regulation U of
the Board of Governors of the Federal Reserve System or for the purpose of
reducing or retiring any indebtedness which was originally incurred to
purchase or carry such margin security or for any other purpose which might
cause the transaction contemplated by this Agreement to constitute a "purpose
credit" within the meaning
26
of Regulation X of the Board of Governors of the Federal Reserve System,
assuming that the proceeds were and are applied as contemplated by the
provisions of this Agreement.
(t) Each Loan Participant covenants and agrees that it shall not
cause or permit to exist a Loan Participant Lien attributable to it with
respect to the Aircraft or any other portion of the Trust Estate. Each Loan
Participant agrees that it will promptly, at its own expense, take such other
action as may be necessary duly to discharge such Loan Participant Lien
attributable to it. Each Loan Participant agrees to make restitution to the
Trust Estate for any actual diminution of the assets of the Trust Estate
resulting from such Loan Participant Lien attributable to it.
(u) State Street Bank and Trust Company, in its individual capacity,
covenants and agrees that it shall not cause or permit to exist any Indenture
Trustee's Liens with respect to the Trust Indenture Estate or the Trust
Estate. State Street Bank and Trust Company, in its individual capacity,
agrees that it will promptly, at its own expense, take such action as may be
necessary duly to discharge such Indenture Trustee's Liens. State Street Bank
and Trust Company, in its individual capacity, agrees to make restitution to
the Trust Estate for any actual diminution of the assets of the Trust
Indenture Estate or the Trust Estate resulting from such Indenture Trustee's
Liens.
(v) The Owner Trustee, in its individual capacity (except as
provided in clauses (iii) and (vii) below) and (but only as provided in
clauses (iii) and (vii) and, to the extent that it relates to the Owner
Trustee, clauses (ii), (ix) and (xi) below) as Owner Trustee, represents and
warrants to Lessee, the Guarantor, the Pass Through Trustee, the Subordination
Agent, the Primary Liquidity Provider and the Owner Participant that:
(i) the Owner Trustee, in its individual capacity, is a national
banking association duly organized and validly existing in good standing
under the laws of the United States, has full corporate power and
authority to carry on its business as now conducted, has the corporate
power and authority to execute and deliver the Trust Agreement, has the
corporate power and authority to carry out the terms of the Trust
Agreement, and has (assuming the authorization, execution and delivery of
the Trust Agreement by the Owner Participant), as Owner Trustee, and to
the extent expressly provided herein or therein, in its individual
capacity, the corporate power and authority to execute and deliver and to
carry out the terms of this Agreement, the Trust Indenture, the Secured
Certificates, the Lease and each other Operative Document (other than the
Trust Agreement) to which it is a party;
(ii) the Owner Trustee in its trust capacity and, to the extent
expressly provided herein, in its individual capacity, has duly
authorized, executed and delivered this Agreement, in its individual
capacity, has duly authorized, executed and delivered the Trust Agreement
and in its trust capacity, except as expressly provided therein, has duly
authorized, executed and delivered the other Owner Trustee Documents and
(assuming the due authorization, execution and delivery of the Trust
Agreement by the Owner Participant) this Agreement and each of the other
Owner Trustee Documents constitute the legal, valid and binding
obligations of the Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, enforceable against it in its individual
27
capacity or as Owner Trustee, as the case may be, in accordance with its
terms, except as the same may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and by general principles of equity,
whether considered in a proceeding at law or in equity;
(iii) assuming the due authorization, execution and delivery of the
Trust Agreement by the Owner Participant, the Owner Trustee has duly
authorized, and on the Delivery Date shall have duly issued, executed and
delivered to the Indenture Trustee for authentication, the Secured
Certificates pursuant to the terms and provisions hereof and of the Trust
Indenture, and each Secured Certificate on the Delivery Date will
constitute the valid and binding obligation of the Owner Trustee and will
be entitled to the benefits and security afforded by the Trust Indenture
in accordance with the terms of such Secured Certificate and the Trust
Indenture;
(iv) neither the execution and delivery by the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, of any Owner
Trustee Document, nor the consummation by the Owner Trustee, in its
individual capacity or as Owner Trustee, as the case may be, of any of
the transactions contemplated thereby, nor the compliance by the Owner
Trustee, in its individual capacity or as Owner Trustee, as the case may
be, with any of the terms and provisions thereof, (A) requires or will
require any approval of its stockholders, or approval or consent of any
trustees or holders of any indebtedness or obligations of it, or (B)
violates or will violate its articles of association or by-laws, or
contravenes or will contravene any provision of, or constitutes or will
constitute a default under, or results or will result in any breach of,
or results or will result in the creation of any Lien (other than as
permitted under the Operative Documents) upon its property under, any
indenture, mortgage, chattel mortgage, deed of trust, conditional sale
contract, bank loan or credit agreement, license or other agreement or
instrument to which it is a party or by which it is bound, or contravenes
or will contravene any law, governmental rule or regulation of the United
States of America or the State of Utah governing the trust powers of the
Owner Trustee, or any judgment or order applicable to or binding on it;
(v) no consent, approval, order or authorization of, giving of
notice to, or registration with, or taking of any other action in respect
of, any Utah state or local governmental authority or agency or any
United States federal governmental authority or agency regulating the
trust powers of the Owner Trustee in its individual capacity is required
for the execution and delivery of, or the carrying out by, the Owner
Trustee, in its individual capacity or as Owner Trustee, as the case may
be, of any of the transactions contemplated hereby or by the Trust
Agreement, the Participation Agreement, the Trust Indenture, the Lease or
the Secured Certificates, or any other Operative Document to which it is
a party or by which it is bound, other than any such consent, approval,
order, authorization, registration, notice or action as has been duly
obtained, given or taken or which is described in Section 7(a)(iv);
(vi) there exists no Lessor Lien (including for this purpose Liens
which would be Lessor Liens but for the proviso in the definition of
Lessor Liens) attributable to the Owner Trustee, in its individual
capacity;
28
(vii) there exists no Lessor Lien (including for this purpose Liens
which would be Lessor Liens but for the proviso in the definition of
Lessor Liens) attributable to the Owner Trustee, as lessor under the
Lease;
(viii) there are no Taxes payable by the Owner Trustee, either in
its individual capacity or as Owner Trustee, imposed by the State of Utah
or any political subdivision thereof in connection with the issuance of
the Secured Certificates, or the execution and delivery in its individual
capacity or as Owner Trustee, as the case may be, of any of the
instruments referred to in clauses (i), (ii), (iii) and (iv) above, that,
in each case, would not have been imposed if the Trust Estate were not
located in the State of Utah and Xxxxx Fargo Bank Northwest, National
Association had not (a) had its principal place of business in, (b)
performed (in its individual capacity or as Owner Trustee) any or all of
its duties under the Operative Documents in, and (c) engaged in any
activities unrelated to the transactions contemplated by the Operative
Documents in, the State of Utah;
(ix) there are no pending or, to its knowledge, threatened actions
or proceedings against the Owner Trustee, either in its individual
capacity or as Owner Trustee, before any court or administrative agency
which, if determined adversely to it, would materially adversely affect
the ability of the Owner Trustee, in its individual capacity or as Owner
Trustee, as the case may be, to perform its obligations under any of the
instruments referred to in clauses (i), (ii), (iii) and (iv) above;
(x) both its chief executive office, and the place where its records
concerning the Aircraft and all its interests in, to and under all
documents relating to the Trust Estate, are located in Salt Lake City,
Utah;
(xi) the Owner Trustee has not, in its individual capacity or as
Owner Trustee, directly or indirectly offered any Secured Certificate or
Certificate or any interest in or to the Trust Estate, the Trust
Agreement or any similar interest for sale to, or solicited any offer to
acquire any of the same from, anyone other than the Pass Through Trustee
and the Owner Participant; and the Owner Trustee has not authorized
anyone to act on its behalf (it being understood that in arranging and
proposing the financing contemplated hereby and agreed to herein by the
Owner Trustee, Lessee has not acted as agent of the Owner Trustee) to
offer directly or indirectly any Secured Certificate, any Certificate or
any interest in and to the Trust Estate, the Trust Agreement or any
similar interest for sale to, or to solicit any offer to acquire any of
the same from, any Person;
(xii) it is a Citizen of the United States (without making use of a
voting trust agreement, voting powers agreement or similar arrangements);
and
(xiii) there has not occurred any event which constitutes (or, to
the best of its knowledge would, with the passing of time or the giving
of notice or both, constitute) an Event of Default as defined in the
Trust Indenture which has been caused by or relates to the Owner Trustee,
in its individual capacity, and which is presently continuing.
(w) The Owner Participant covenants and agrees that if (i) Lessee
has elected pursuant to Section 9(a)(2) of the Lease to terminate the Lease by
causing the Aircraft to be sold
29
pursuant to Section 9(c) of the Lease and (ii) the Owner Trustee has, pursuant
to Section 9(c) of the Lease, given to Lessee written notice of Lessor's
election to retain title to the Aircraft and (iii) the Owner Trustee has
failed to make, on or before the Termination Date, any payment required to be
made by the Owner Trustee pursuant to Section 9(c) in connection with its
retention of title to the Aircraft, the Owner Participant will indemnify
Lessee for any losses, damages, costs or expenses of any kind (including any
additional rents paid by Lessee and any fees and expenses of lawyers,
appraisers, brokers or accountants) incurred as a consequence of such failure
by the Owner Trustee. The Owner Participant further covenants and agrees to
pay those costs and expenses specified to be paid by the Owner Participant
pursuant to Exhibit E to the Lease.
(x) Each of the Owner Participant, the Owner Trustee, the Indenture
Trustee and Lessee covenants and agrees that if Lessee elects to terminate the
Lease and purchase the Aircraft pursuant to Section 19(d) of the Lease, then
each of the parties will execute and deliver appropriate documentation
transferring all right, title and interest in the Aircraft to Lessee
(including, without limitation, such bills of sale and other instruments and
documents as Lessee shall reasonably request to evidence (on the public record
or otherwise) such transfer and the vesting of all right, title and interest
in and to the Aircraft in Lessee), and if Lessee, in connection with such
purchase, elects to assume the obligations of the Owner Trustee pursuant to
the Trust Indenture and the Secured Certificates each of the parties will
execute and deliver appropriate documentation permitting Lessee to assume such
obligations on the basis of full recourse to Lessee, maintaining the security
interest in the Aircraft created by the Trust Indenture, releasing the Owner
Participant and the Owner Trustee from all future obligations in respect of
the Secured Certificates, the Trust Indenture and all other Operative
Documents and all such other actions as are reasonably necessary to permit
such assumption by Lessee.
Notwithstanding the foregoing, Lessee shall not be entitled to
assume the obligations of the Owner Trustee in respect of the Secured
Certificates unless Lessee causes to be delivered to the Indenture Trustee (a)
an opinion of counsel to the effect that (i) the Lien of the Trust Indenture
continues to be a valid and duly perfected first priority security interest in
and to the Aircraft, (ii) the Indenture Trustee will be entitled to the
benefits of 11 U.S.C. ss.1110; provided that the opinion required by subclause
(ii) need only be given if immediately prior to such assumption the Owner
Trustee will have been entitled to the benefits of 11 U.S.C. ss.1110 and (iii)
the Pass Through Trusts will not be subject to Federal income taxation and the
Certificate Holders will not recognize income, gain or loss for Federal income
tax purposes as a result of such assumption and will be subject to Federal
income tax in the same amounts, in the same manner, and at the same time as
would have been the case if such assumption had not occurred and (b) written
confirmation from Xxxxx'x Investors Services, Inc., Standard & Poor's Ratings
Services, a division of the XxXxxx-Xxxx Companies, Inc. and Fitch Ratings that
such assumption will not result in a withdrawal, suspension or downgrading of
the rating of any class of Pass Through Certificates without regard to the
Policy (as defined in the Policy Provider Agreement).
(y) (A) Lessee will not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person unless:
30
(i) the corporation formed by such consolidation or into which
Lessee is merged or the Person which acquires by conveyance, transfer or
lease substantially all of the assets of Lessee as an entirety shall be a
Certificated Air Carrier;
(ii) the corporation formed by such consolidation or into which
Lessee is merged or the Person which acquires by conveyance, transfer or
lease substantially all of the assets of Lessee as an entirety shall
execute and deliver to the Owner Trustee, the Indenture Trustee and the
Owner Participant an agreement in form and substance reasonably
satisfactory to the Indenture Trustee and the Owner Participant
containing an assumption by such successor corporation or Person of the
due and punctual performance and observance of each covenant and
condition of this Agreement, the Lease, the Purchase Agreement Assignment
and the Tax Indemnity Agreement to be performed or observed by Lessee;
(iii) immediately after giving effect to such transaction, no
Default or Event of Default under the Lease shall have occurred and be
continuing; and
(iv) Lessee shall have delivered to the Owner Trustee, the Indenture
Trustee and the Owner Participant a certificate signed by the President,
any Executive Vice President, any Senior Vice President, the Treasurer or
any Vice President and by the Secretary or an Assistant Secretary of
Lessee, and an opinion of counsel reasonably satisfactory to the
Indenture Trustee and the Owner Participant, each stating that such
consolidation, merger, conveyance, transfer or lease and the assumption
agreement mentioned in clause (ii) above comply with this subparagraph
(A) of Section 8(y) and that all conditions precedent herein provided for
relating to such transaction have been complied with.
Upon any such consolidation or merger or any such conveyance,
transfer or lease of substantially all of the assets of Lessee as an entirety
in accordance with this subparagraph (A) of Section 8(y), the successor
corporation or Person formed by such consolidation or into which Lessee is
merged or to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, Lessee
under this Agreement with the same effect as if such successor corporation or
Person had been named as Lessee herein. No such conveyance, transfer or lease
of substantially all of the assets of Lessee as an entirety shall have the
effect of releasing Lessee or any successor corporation or Person which shall
theretofore have become such in the manner prescribed in this subparagraph (A)
of Section 8(y) from its liability in respect of any Operative Document to
which it is a party.
(B) Lessee shall at all times maintain its corporate existence
except as permitted by subparagraph (A) of this Section 8(y).
(z) Lessee, at its expense, will take, or cause to be taken, such
action with respect to the recording, filing, re-recording and refiling of the
Lease, the Lease Supplement, the Trust Agreement, the Trust Indenture, the
Trust Supplement and any financing statements or other instruments as are
necessary to maintain, so long as the Trust Indenture or the Lease is in
effect, the perfection of the security interests created by the Trust
Indenture and any security interest that may be claimed to have been created
by the Lease and the interest of the Owner
31
Trustee in the Aircraft or will furnish to the Owner Trustee and the Indenture
Trustee timely notice of the necessity of such action, together with such
instruments, in execution form, and such other information as may be required
to enable them to take such action. Lessee will notify the Owner Trustee, the
Owner Participant and the Indenture Trustee of any change in the location of
its chief executive office (as such term is used in Article 9 of the Uniform
Commercial Code) or of any change in its jurisdiction of incorporation
promptly after making such change or in any event within the period of time
necessary under applicable law to prevent the lapse of perfection (absent
refiling) of financing statements filed under the Operative Documents.
(aa) Section 3 of the Lease contemplates that, under certain
circumstances, the Owner Participant will make certain recalculations of Basic
Rent percentages and allocations, the Special Purchase Price, [the Initial
Installment, the Remaining Installments,] Stipulated Loss Value percentages
and Termination Value percentages, and the Owner Participant hereby agrees to
make such recalculations as and when contemplated by the Lease and subject to
all the terms and conditions of the Lease and promptly to take such further
actions as may be necessary or desirable to give effect to and to cause the
Owner Trustee to give effect to the provisions of Section 3 of the Lease.
(bb) The Owner Participant hereby agrees with Lessee that it will
pay, or cause to be paid, all costs and expenses that are for the account of
the Owner Trustee pursuant to Section 5(d) of the Lease.
(cc) Each Loan Participant hereby represents, warrants and agrees
that it shall not transfer any interest in any Secured Certificate unless and
until the transferee agrees in writing (copies of which shall be provided by
the Indenture Trustee to Lessee, the Owner Trustee and the Owner Participant)
to make the representations contemplated to be made by a Loan Participant in
this Agreement and to be bound by the terms of this Agreement and the Trust
Indenture (including, without limitation, the representations and covenants
set forth in Sections 8(e), 8(k), 8(l), 8(q), and 8(t) hereof and this Section
8(cc) and Sections 2.03, 2.14 and 4.03 of the Trust Indenture).
(dd) The Pass Through Trustee represents and warrants to Lessee, the
Guarantor, the Indenture Trustee, the Subordination Agent, the Primary
Liquidity Provider, the Owner Participant and the Owner Trustee, in its
capacity as such and in its individual capacity, as follows:
(i) the Pass Through Trustee is a duly organized national banking
association, validly existing and in good standing with the Comptroller
of the Currency under the laws of the United States, has the full power,
authority and legal right under the laws of the United States pertaining
to its banking, trust and fiduciary powers to execute and deliver each of
the Pass Through Trust Agreements, the Intercreditor Agreement and this
Agreement and to perform its obligations under the Pass Through Trust
Agreements, the Intercreditor Agreement and this Agreement, and has its
chief executive office located in Hartford, Connecticut;
32
(ii) this Agreement, each of the Pass Through Trust Agreements and
the Intercreditor Agreement have been duly authorized, executed and
delivered by the Pass Through Trustee; this Agreement, each of the Pass
Through Trust Agreements and the Intercreditor Agreement constitute the
legal, valid and binding obligations of the Pass Through Trustee
enforceable against it in accordance with their respective terms, except
as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(iii) none of the execution, delivery and performance by the Pass
Through Trustee of any of the Pass Through Trust Agreements, the
Intercreditor Agreement or this Agreement, the purchase by the Pass
Through Trustee of the Secured Certificates pursuant to this Agreement,
or the issuance of the Certificates pursuant to the Pass Through Trust
Agreements, contravenes any law, rule or regulation of the State of
Connecticut or any United States governmental authority or agency
regulating the Pass Through Trustee's banking, trust or fiduciary powers
or any judgment or order applicable to or binding on the Pass Through
Trustee and does not contravene or result in any breach of, or constitute
a default under, the Pass Through Trustee's articles of association or
by-laws or any agreement or instrument to which the Pass Through Trustee
is a party or by which it or any of its properties may be bound;
(iv) neither the execution and delivery by the Pass Through Trustee
of any of the Pass Through Trust Agreements, the Intercreditor Agreement
or this Agreement, nor the consummation by the Pass Through Trustee of
any of the transactions contemplated hereby or thereby, requires the
consent or approval of, the giving of notice to, the registration with,
or the taking of any other action with respect to, any Connecticut
governmental authority or agency or any federal governmental authority or
agency regulating the Pass Through Trustee's banking, trust or fiduciary
powers;
(v) there are no Taxes payable by the Pass Through Trustee imposed
by the State of Connecticut or any political subdivision or taxing
authority thereof in connection with the execution, delivery and
performance by the Pass Through Trustee of this Agreement, any of the
Pass Through Trust Agreements or the Intercreditor Agreement (other than
franchise or other taxes based on or measured by any fees or compensation
received by the Pass Through Trustee for services rendered in connection
with the transactions contemplated by any of the Pass Through Trust
Agreements), and there are no Taxes payable by the Pass Through Trustee
imposed by the State of Connecticut or any political subdivision thereof
in connection with the acquisition, possession or ownership by the Pass
Through Trustee of any of the Secured Certificates (other than franchise
or other taxes based on or measured by any fees or compensation received
by the Pass Through Trustee for services rendered in connection with the
transactions contemplated by any of the Pass Through Trust Agreements),
and, assuming that for federal income tax purposes the trusts created by
the Pass Through Trust Agreements will not be taxable as corporations,
but rather, each will be characterized as a grantor trust under subpart
E, Part I, of Subchapter J of the Code or as a partnership, such trusts
will not be subject to any Taxes imposed by the State of Connecticut or
any political subdivision thereof;
33
(vi) there are no pending or threatened actions or proceedings
against the Pass Through Trustee before any court or administrative
agency which individually or in the aggregate, if determined adversely to
it, would materially adversely affect the ability of the Pass Through
Trustee to perform its obligations under this Agreement, the
Intercreditor Agreement or any Pass Through Trust Agreement;
(vii) except for the issue and sale of the Certificates, the Pass
Through Trustee has not directly or indirectly offered any Secured
Certificate for sale to any Person or solicited any offer to acquire any
Secured Certificates from any Person, nor has the Pass Through Trustee
authorized anyone to act on its behalf to offer directly or indirectly
any Secured Certificate for sale to any Person, or to solicit any offer
to acquire any Secured Certificate from any Person; and the Pass Through
Trustee is not in default under any Pass Through Trust Agreement; and
(viii) the Pass Through Trustee is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, Lessee or the Guarantor.
(ee) The Subordination Agent represents and warrants to Lessee, the
Guarantor, the Indenture Trustee, the Pass Through Trustee, the Primary
Liquidity Provider, the Owner Participant and the Owner Trustee, in its
capacity as such and in its individual capacity, as follows:
(i) the Subordination Agent is duly incorporated, validly existing
and in good standing under the laws of the Commonwealth of Massachusetts,
and has the full corporate power, authority and legal right under the
laws of the Commonwealth of Massachusetts and the United States
pertaining to its banking, trust and fiduciary powers to execute and
deliver each of the Primary Liquidity Facilities, the Intercreditor
Agreement and this Agreement and to perform its obligations under this
Agreement, the Primary Liquidity Facilities and the Intercreditor
Agreement;
(ii) this Agreement, each of the Primary Liquidity Facilities and
the Intercreditor Agreement have been duly authorized, executed and
delivered by the Subordination Agent; this Agreement, each of the Primary
Liquidity Facilities and the Intercreditor Agreement constitute the
legal, valid and binding obligations of the Subordination Agent
enforceable against it in accordance with their respective terms, except
as the same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the rights of
creditors generally and by general principles of equity, whether
considered in a proceeding at law or in equity;
(iii) none of the execution, delivery and performance by the
Subordination Agent of each of the Primary Liquidity Facilities, the
Intercreditor Agreement or this Agreement contravenes any law, rule or
regulation of the Commonwealth of Massachusetts or any United States
governmental authority or agency regulating the Subordination Agent's
banking, trust or fiduciary powers or any judgment or order applicable to
or binding on the Subordination Agent and do not contravene or result in
any breach of, or constitute a default under, the Subordination Agent's
articles of
34
association or by-laws or any agreement or instrument to which the
Subordination Agent is a party or by which it or any of its properties
may be bound;
(iv) neither the execution and delivery by the Subordination Agent
of any of the Primary Liquidity Facilities, the Intercreditor Agreement
or this Agreement nor the consummation by the Subordination Agent of any
of the transactions contemplated hereby or thereby requires the consent
or approval of, the giving of notice to, the registration with, or the
taking of any other action with respect to, any Massachusetts
governmental authority or agency or any federal governmental authority or
agency regulating the Subordination Agent's banking, trust or fiduciary
powers;
(v) there are no Taxes payable by the Subordination Agent imposed by
the Commonwealth of Massachusetts or any political subdivision or taxing
authority thereof in connection with the execution, delivery and
performance by the Subordination Agent of this Agreement, any of the
Primary Liquidity Facilities or the Intercreditor Agreement (other than
franchise or other taxes based on or measured by any fees or compensation
received by the Subordination Agent for services rendered in connection
with the transactions contemplated by the Intercreditor Agreement or any
of the Primary Liquidity Facilities), and there are no Taxes payable by
the Subordination Agent imposed by the Commonwealth of Massachusetts or
any political subdivision thereof in connection with the acquisition,
possession or ownership by the Subordination Agent of any of the Secured
Certificates (other than franchise or other taxes based on or measured by
any fees or compensation received by the Subordination Agent for services
rendered in connection with the transactions contemplated by the
Intercreditor Agreement or any of the Primary Liquidity Facilities);
(vi) there are no pending or threatened actions or proceedings
against the Subordination Agent before any court or administrative agency
which individually or in the aggregate, if determined adversely to it,
would materially adversely affect the ability of the Subordination Agent
to perform its obligations under this Agreement, the Intercreditor
Agreement or any Primary Liquidity Facility;
(vii) the Subordination Agent has not directly or indirectly offered
any Secured Certificate for sale to any Person or solicited any offer to
acquire any Secured Certificates from any Person, nor has the
Subordination Agent authorized anyone to act on its behalf to offer
directly or indirectly any Secured Certificate for sale to any Person, or
to solicit any offer to acquire any Secured Certificate from any Person;
and the Subordination Agent is not in default under any Primary Liquidity
Facility; and
(viii) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter, Lessee or the Guarantor.
(ff) Each of Lessee, the Owner Participant, the Owner Trustee, the
Indenture Trustee, the Pass Through Trustee and the Subordination Agent
covenants that (i) until one year and one day after the Series G-2 Secured
Certificates have been paid in full, it shall not acquiesce, petition or
otherwise invoke or cause or join in invoking or causing the Class G-2
35
Pass Through Trust or any other Person to invoke the process of any
governmental authority for the purpose of commencing or sustaining a case
(whether voluntary or not) against the Class G-2 Pass Through Trust under any
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Class G-2 Pass Through Trust or any substantial part of its property or
ordering the winding-up or liquidation of the affairs of the Class G-2 Pass
Through Trust and (ii) until one year and one day after the Series C-2 Secured
Certificates have been paid in full, it shall not acquiesce, petition or
otherwise invoke or cause or join in invoking or causing the Class C-2 Pass
Through Trust or any other Person to invoke the process of any governmental
authority for the purpose of commencing or sustaining a case (whether
voluntary or not) against the Class C-2 Pass Through Trust under any
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Class C-2 Pass Through Trust or any substantial part of its property or
ordering the winding-up or liquidation of the affairs of the Class C-2 Pass
Through Trust.
SECTION 9. Reliance of Primary Liquidity Provider and Policy
Provider. Each of the parties hereto agrees and acknowledges that the Primary
Liquidity Provider and the Policy Provider shall be a third party beneficiary
of each of the representations and warranties made herein by such party, and
that the Primary Liquidity Provider and the Policy Provider may rely on such
representations and warranties to the same extent as if such representations
and warranties were made to the Primary Liquidity Provider and the Policy
Provider directly. Lessee agrees and acknowledges that the Primary Liquidity
Provider and the Policy Provider shall be a third party beneficiary of the
indemnities contained in Section 7(c) hereof and that the Policy Provider
shall be a third party beneficiary of the indemnities contained in Section
7(b) hereof, and may rely on such indemnities to the same extent as if such
indemnities were made to the Primary Liquidity Provider and the Policy
Provider directly.
SECTION 10. Other Documents. Each of the Owner Participant and the
Owner Trustee hereby (A) agrees with Lessee and the Loan Participants to
comply with all of the terms of the Trust Agreement (as the same may hereafter
be amended or supplemented from time to time in accordance with the terms
thereof) applicable to it; (B) agrees with Lessee and the Indenture Trustee
not to amend, supplement or otherwise modify any provision of the Trust
Agreement in a manner adversely affecting such party without the prior written
consent of such party; and (C) agrees with Lessee and the Loan Participants
not to revoke the Trust Agreement without the prior written consent of Lessee
(so long as the Lease remains in effect) and the Indenture Trustee (so long as
the Lien of the Trust Indenture remains in effect or there are any Secured
Certificates outstanding). Notwithstanding the foregoing, so long as the Lease
has not been terminated, the Indenture Trustee and the Owner Trustee hereby
agree for the benefit of Lessee that without the consent of Lessee they will
not (i) amend or modify Article III or IX of the Trust Indenture, (ii) make
any amendment which will affect the stated principal amount or interest on the
Secured Certificates or (iii) amend or modify the provisions of Sections 2.05
or 10.14 of the Trust Indenture. The Indenture Trustee and the Owner Trustee
agree to promptly furnish to Lessee copies of any supplement, amendment,
waiver or modification of any of the Operative Documents to which Lessee is
not a party. Notwithstanding anything to the contrary contained herein, in the
Trust Agreement or in any other Operative Document, the Owner Participant will
not consent to or direct a change in the situs of the Trust Estate without the
prior written consent of Lessee. Each Loan Participant agrees that it will not
take any action in respect
36
of the Trust Indenture Estate except through the Indenture Trustee pursuant to
the Trust Indenture or as otherwise permitted by the Trust Indenture.
SECTION 11. Certain Covenants of Lessee. Lessee covenants and agrees
with each of the Loan Participants, the Owner Participant, the Indenture
Trustee and the Owner Trustee, in its capacity as such and in its individual
capacity as follows:
(a) Lessee will cause to be done, executed, acknowledged and
delivered all and every such further acts, conveyances and assurances as the
Owner Trustee, the Indenture Trustee or the Owner Participant shall reasonably
require for accomplishing the purposes of this Agreement and the other
Operative Documents; provided that any instrument or other document so
executed by Lessee will not expand any obligations or limit any rights of
Lessee in respect of the transactions contemplated by any Operative Documents.
Lessee, forthwith upon delivery of the Aircraft under the Lease, shall cause
the Aircraft to be duly registered, and at all times thereafter to remain duly
registered, in the name of the Owner Trustee, except as otherwise required or
permitted hereunder or under the Lease, under the Federal Aviation Act, or
shall furnish to the Owner Trustee such information as may be required to
enable the Owner Trustee to make application for such registration, and shall
promptly furnish to the Owner Trustee such information as may be required to
enable the Owner Trustee to timely file any reports required to be filed by it
as the lessor under the Lease or as the owner of the Aircraft with any
governmental authority.
(b) Lessee will cause the Lease, all Lease Supplements, all
amendments to the Lease, the Trust Indenture, all supplements and amendments
to the Trust Indenture and this Agreement to be promptly filed and recorded,
or filed for recording, to the extent permitted under the Federal Aviation
Act, or required under any other applicable law. Upon the execution and
delivery of the FAA Xxxx of Sale, the Lease, the Lease Supplement covering the
Aircraft, the Trust Supplement and the Trust Indenture shall be filed for
recording with the Federal Aviation Administration in the following order of
priority; first, the FAA Xxxx of Sale, second, the Lease, with the Lease
Supplement covering the Aircraft, the Trust Indenture and the Trust Supplement
attached, and third, the Trust Indenture, with the Trust Supplement attached.
SECTION 12. Owner for Federal Tax Purposes. It is hereby agreed
among Lessee, the Owner Participant and the Owner Trustee that for Federal
income tax purposes the Owner Participant will be the owner of the Aircraft to
be delivered under the Lease and Lessee will be the lessee thereof, and each
party hereto agrees to characterize the Lease as a lease for Federal income
tax purposes.
SECTION 13. Certain Definitions; Notices; Consent to Jurisdiction.
(a) Except as otherwise defined in this Agreement, terms used herein in
capitalized form shall have the meanings attributed thereto in the Lease. The
term "Trust Office" shall have the meaning set forth in the Trust Agreement.
Unless the context otherwise requires, any reference herein to any of the
Operative Documents refers to such document as it may be amended from time to
time.
(b) All notices, demands, instructions and other communications
required or permitted to be given to or made upon any party hereto or to the
Guarantor shall be in writing
37
and shall be personally delivered or sent by registered or certified mail,
postage prepaid, or by telecopier, or by prepaid courier service, and shall be
deemed to be given for purposes of this Agreement on the day that such writing
is delivered or sent to the intended recipient thereof in accordance with the
provisions of this Section 13(b). Unless otherwise specified in a notice sent
or delivered in accordance with the foregoing provisions of this Section
13(b), notices, demands, instructions and other communications in writing
shall be given to or made upon the respective parties hereto at their
respective addresses (or to their respective telecopier numbers) as follows:
(A) if to Lessee, the Guarantor, the Owner Trustee, the Pass Through Trustee,
the Subordination Agent, the Indenture Trustee or the Owner Participant, to
the respective addresses set forth below the signatures of such parties at the
foot of this Agreement, or (B) if to a subsequent Owner Participant, addressed
to such subsequent Owner Participant at such address as such subsequent Owner
Participant shall have furnished by notice to the parties hereto, or (C) if to
any subsequent Certificate Holder, addressed to such Certificate Holder at its
address set forth in the Secured Certificate register maintained pursuant to
Section 2.07 of the Trust Indenture.
(c) Each of the parties hereto (A) hereby irrevocably submits itself
to the non-exclusive jurisdiction of the United States District Court for the
Southern District of New York and to the non-exclusive jurisdiction of the
Supreme Court of the State of New York, New York County, for the purposes of
any suit, action or other proceeding arising out of this Agreement, the Lease,
the Tax Indemnity Agreement or any other Operative Document, the subject
matter of any thereof or any of the transactions contemplated hereby or
thereby brought by any party or parties thereto, or their successors or
assigns, and (B) hereby waives, and agrees not to assert, by way of motion, as
a defense, or otherwise, in any such suit, action or proceeding, to the extent
permitted by applicable law, that the suit, action or proceeding is brought in
an inconvenient forum, that the venue of the suit, action or proceeding is
improper, or that this Agreement, the Lease, the Tax Indemnity Agreement or
any other Operative Document or the subject matter of any thereof or any of
the transactions contemplated hereby or thereby may not be enforced in or by
such courts. Lessee hereby generally consents to service of process at
Cadwalader, Xxxxxxxxxx & Xxxx, 000 Xxxxxx Xxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Managing Attorney, or such office of Lessee in New York City as
from time to time may be designated by Lessee in writing to the Owner
Participant, the Owner Trustee and the Indenture Trustee.
SECTION 14. Change of Situs of Owner Trust. The Owner Participant
agrees that if, at any time, the Trust Estate becomes subject to any Taxes for
which it is indemnified pursuant to Section 7(b) hereof and if, as a
consequence thereof, Lessee should request that the situs of the trust be
moved to another state in the United States from the state in which it is then
located, the situs of the trust may be moved with the written consent of the
Owner Participant (which consent shall not be unreasonably withheld) and the
Owner Participant will take whatever action may be reasonably necessary to
accomplish such removal; provided that (A) Lessee shall provide such
additional tax indemnification as the Owner Participant and the Indenture
Trustee may reasonably request, (B) the rights and obligations under the
Operative Documents of the Owner Participant and the Indenture Trustee shall
not be altered as a result of the taking of such action, (C) the lien of the
Trust Indenture on the Trust Indenture Estate shall not be adversely affected
by such action, (D) the Owner Participant and the Indenture Trustee shall have
received an opinion or opinions of counsel (satisfactory to the Owner
Participant and the Indenture Trustee), in scope, form and substance
satisfactory to the Owner Participant and the Indenture Trustee to the effect
that (I) the trust, as thus removed, shall remain a validly established trust,
38
(II) any amendments to the Trust Agreement necessitated by such removal shall
have been duly authorized, executed and delivered by the parties thereto and
shall constitute the valid and binding obligations of such parties,
enforceable in accordance with their terms, (III) such removal will not result
in the imposition of, or increase in the amount of, any Tax for which Lessee
is not required to indemnify the Owner Participant, the Indenture Trustee, the
Owner Trustee or the Trust Estate pursuant to Section 7(b) hereof (taking into
account any additional indemnification provided by Lessee pursuant to clause
(A) of this sentence), and (IV) such removal will not result in any loss of
Interest Deductions or MACRS Deductions or an Inclusion Event (as defined in
the Tax Indemnity Agreement) with respect to which Lessee is not required to
indemnify the Owner Participant pursuant to Section 4 of the Tax Indemnity
Agreement (taking into account any additional indemnification provided by
Lessee pursuant to clause (A) of this sentence), (E) if such removal involves
the replacement of the Owner Trustee, the Indenture Trustee and the Owner
Participant shall have received an opinion of counsel to such successor Owner
Trustee in form and substance reasonably satisfactory to the Indenture Trustee
and to the Owner Participant covering the matters described in the opinion
delivered pursuant to Section 4(a)(xiii) hereof and such other matters as the
Indenture Trustee and the Owner Participant may reasonably request, and (F)
Lessee shall indemnify and hold harmless the Owner Participant and the
Indenture Trustee on a net after-tax basis against any and all reasonable and
actual costs and expenses including reasonable counsel fees and disbursements,
registration fees, recording or filing fees and taxes incurred by the Owner
Trustee, the Owner Participant and the Indenture Trustee in connection with
such change of situs.
SECTION 15. Miscellaneous. (a) The Owner Participant covenants and
agrees that it shall not unreasonably withhold its consent to any consent
requested of the Owner Trustee, as Lessor, under the terms of the Lease which
by its terms is not to be unreasonably withheld by the Owner Trustee, as
Lessor.
(b) The representations, warranties, indemnities and agreements of
Lessee, the Guarantor, the Owner Trustee, the Indenture Trustee, the
Subordination Agent, the Pass Through Trustee and the Owner Participant
provided for in this Agreement, and Lessee's, the Guarantor's, the Owner
Trustee's, the Indenture Trustee's, the Subordination Agent's, the Pass
Through Trustee's and the Owner Participant's obligations under any and all
thereof, shall survive the making available of the respective Commitments by
the Pass Through Trustee and the Owner Participant, the delivery or return of
the Aircraft, the transfer of any interest of the Owner Participant in the
Trust Estate or the Aircraft or any Engine or the transfer of any interest by
any Loan Participant in any Secured Certificate or the Trust Indenture Estate
and the expiration or other termination of this Agreement or any other
Operative Document.
(c) This Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified, except by an instrument
in writing signed by the party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to the
Indenture Trustee and the Owner Trustee. The terms of this Agreement shall be
binding upon, and inure to the benefit of, Lessee and, subject to the terms of
39
this Agreement, its successors and permitted assigns, the Guarantor, the Pass
Through Trustee and its successors as Pass Through Trustee (and any additional
trustee appointed) under any of the Pass Through Trust Agreements, the Owner
Participant and, subject to the terms of this Agreement, its successors and
permitted assigns, each Certificate Holder and its successors and registered
assigns, the Indenture Trustee and its successors as Indenture Trustee under
the Trust Indenture and the Owner Trustee and its successors as Owner Trustee
under the Trust Agreement. The terms of this Agreement shall inure to the
benefit of the Primary Liquidity Provider, its successors and permitted
assigns and to the Policy Provider, its successors and permitted assigns. THIS
AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN
THE STATE OF NEW YORK.
(d) The parties hereto agree that all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Agreement and any agreement referred to
herein other than the Trust Agreement, unless expressly otherwise stated, are
made and intended only for the purpose of binding the Trust Estate and
establishing the existence of rights and remedies which can be exercised and
enforced against the Trust Estate. Therefore, anything contained in this
Agreement or such other agreements to the contrary notwithstanding (except for
any express provisions that the Owner Trustee is responsible for in its
individual capacity), no recourse shall be had with respect to this Agreement
or such other agreements against the Owner Trustee in its individual capacity
or against any institution or person which becomes a successor trustee or
co-trustee or any officer, director, trustee, servant or direct or indirect
parent or controlling person or persons of any of them; provided, however,
that this Section 15(d) shall not be construed to prohibit any action or
proceeding against any party hereto for its own willful misconduct or grossly
negligent conduct for which it would otherwise be liable; and provided,
further, that nothing contained in this Section 15(d) shall be construed to
limit the exercise and enforcement in accordance with the terms of this
Agreement or such other agreements of rights and remedies against the Trust
Estate. The foregoing provisions of this Section 15(d) shall survive the
termination of this Agreement and the other Operative Documents.
(e) It is the intention of the parties hereto that the Owner
Trustee, as Lessor under the Lease, and the Indenture Trustee, as assignee of
such Owner Trustee's rights under the Lease pursuant to the Trust Indenture,
will be entitled to the benefits of 11 U.S.C. ss. 1110 in the event of any
reorganization of Lessee under Chapter 11 of the Bankruptcy Code.
SECTION 16. Expenses. (a) Invoices and Payment. Each of the parties
hereto shall promptly submit to the Owner Trustee and Lessee for their prompt
approval (which shall not be unreasonably withheld) copies of invoices in
reasonable detail of the Transaction Expenses for which it is responsible for
providing information as they are received (but in no event later than
[________________]). The Owner Participant agrees to transfer to the Owner
Trustee promptly but in any event no later than [______________] such amount
as shall be necessary in order to enable the Owner Trustee to pay Transaction
Expenses. To the extent of funds received by it, the Owner Trustee agrees to
pay all invoices of Transaction Expenses that have been approved by it and
Lessee promptly upon receipt thereof. Notwithstanding the
40
foregoing, to the extent that Transaction Expenses exceed [___]% of Lessor's
Cost, Lessee at its sole option shall have the right to pay directly any or
all Transaction Expenses which are in excess of [____]% of Lessor's Cost.
(b) Payment of Other Expenses. In the event that the transaction
contemplated by this Participation Agreement fails to close as a result of the
Owner Participant's failure to negotiate in good faith or to comply with the
terms and conditions upon which its participation in the transaction was
predicated, the Owner Participant will be responsible for all of its fees and
expenses, including but not limited to the fees, expenses and disbursements of
its special counsel.
SECTION 17. Refinancings.
(a) So long as no Event of Default shall have occurred and be
continuing, Lessee shall have the right to refinance all (but not less than
all) of the Secured Certificates no more than three times by giving written
notice to the Owner Participant and the Owner Trustee that there be effected a
voluntary redemption of the Secured Certificates by the Owner Trustee,
whereupon the Owner Participant agrees to negotiate promptly in good faith to
conclude an agreement with Lessee as to the terms of such refinancing
operation (including the terms of any debt to be issued in connection with
such refinancing); provided that no such refinancing shall require an increase
in the amount of the Owner Participant's investment in the beneficial
ownership of the Aircraft.
Upon such agreement:
(1) within ten Business Days after the reaching of such agreement,
the Owner Participant will deliver to Lessee a certificate of an authorized
representative of the Owner Participant (the "Refinancing Certificate")
setting forth (i) the proposed date on which the outstanding Secured
Certificates will be redeemed, any new debt will be issued and the other
aspects of such refinancing will be consummated (such date, the "Refinancing
Date") and (ii) the following information calculated pursuant to the
provisions of paragraph (6) of this Section 17(a): (A) subject to the
limitations set forth in this Section 17, the proposed adjusted debt/equity
ratio, (B) the principal amount of debt to be issued by the Owner Trustee on
the Refinancing Date, (C) the amount, if any, by which the Owner Participant's
aggregate investment in the beneficial interest in the Aircraft is to be
decreased and (D) the proposed revised schedules of Basic Rent percentages,
debt amortization, Special Purchase Price, [Initial Installment, Remaining
Installments,] Stipulated Loss Value percentages and Termination Value
percentages. The Refinancing Certificate shall not provide for a debt/equity
ratio of more than 4:1. Within fourteen days of its receipt of the Refinancing
Certificate, Lessee may demand a verification pursuant to Exhibit E to the
Lease of the information set forth in the Refinancing Certificate. Upon the
acceptance by Lessee of the accuracy of the information set forth in the
Refinancing Certificate (or the determination pursuant to such verification
procedures), as to the debt/equity ratio, the principal amount of debt to be
issued by the Owner Trustee on the Refinancing Date and the revised Basic Rent
percentages, debt amortization, Special Purchase Price, [Initial Installment,
Remaining Installments,] Stipulated Loss Value percentages and Termination
Value percentages (such information, whether as set forth or as so determined,
the
41
"Refinancing Information") the appropriate parties will take the actions
specified in paragraphs (2) through (5) below;
(2) the appropriate parties will enter into appropriate
documentation (which may involve an underwriting agreement in connection with
such sale) with the institution or institutions to be named therein providing
for (i) the issuance and sale by the Owner Trustee to such institution or
institutions on the Refinancing Date of debt securities in an aggregate
principal amount specified in the Refinancing Information which amount shall
be equal to the aggregate principal amount of all Secured Certificates
outstanding on the Refinancing Date (such debt securities, the "New Debt")
except that the principal amount of New Debt may exceed the principal amount
of all outstanding Secured Certificates in connection with the first
refinancing under this Section 17, (ii) the application of the proceeds of the
sale of the New Debt to the redemption of all such Secured Certificates on the
Refinancing Date and (iii) the payment of the excess, if any, of such proceeds
over the amounts necessary to effect such redemption to the Owner Trustee;
(3) Lessee shall give the notice to the Indenture Trustee pursuant
to Section 2.11 of the Trust Indenture, and Lessee and the Owner Trustee will
amend the Lease to provide that (i) Basic Rent payable in respect of the
period from and after the Refinancing Date shall be as provided in the
Refinancing Information and (ii) amounts payable in respect of the Special
Purchase Price, [Initial Installment, Remaining Installments,] Stipulated Loss
Value and Termination Value from and after the Refinancing Date shall be as
provided in the Refinancing Information;
(4) the Owner Trustee will enter into an agreement to provide for
the securing thereunder of the New Debt in like manner as the Secured
Certificates and will enter into such amendments and supplements to the Trust
Indenture (or such new indenture or other security agreement) as may be
necessary to effect such refinancing;
(5) the Owner Participant shall pay all of the expenses (other than
those of Lessee) of such refinancing (including, but not limited to, the fees,
expenses and disbursements of counsel and any placement or underwriting fees)
and such expenses shall be treated as Transaction Expenses; and
(6) when calculating any of the information required to be set forth
in a Refinancing Certificate, the Owner Participant shall make such
calculations in a manner which (A) maintains the Owner Participant's Net
Economic Return (except to the extent the assumptions referred to in the
definition of "Net Economic Return" have been altered since the Delivery Date
in connection with an adjustment to Rents pursuant to Section 3(d) of the
Lease or such assumptions are the subject of the recalculations being
conducted by the Owner Participant), and (B) minimizes the Net Present Value
of Rents to Lessee to the extent possible consistent with clause (A).
(b) The Secured Certificates shall not be subject to voluntary
redemption by the Owner Trustee without the consent of Lessee except as set
forth in Section 2.14 of the Trust Indenture.
42
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers thereunto duly authorized as of
the day and year first above written.
NORTHWEST AIRLINES, INC.,
Lessee
By:------------------------------------------
Name:
Title:
Address: U.S. Mail
----------
0000 Xxxx Xxx Xxxxxxx (X0000)
Xxxxx, Xxxxxxxxx 00000-0000
Overnight Courier
-----------------
0000 Xxxx Xxx Xxxxxxx (A4010)
Xxxxx, Xxxxxxxxx 00000-0000
Attn: Treasurer
Telecopy No.: (000) 000-0000
NORTHWEST AIRLINES CORPORATION,
Guarantor
By:------------------------------------------
Name:
Title:
Address: U.S. Mail
----------
0000 Xxxx Xxx Xxxxxxx (X0000)
Xxxxx, Xxxxxxxxx 00000-0000
Overnight Courier
-----------------
0000 Xxxx Xxx Xxxxxxx (A4010)
Xxxxx, Xxxxxxxxx 00000-0000
Attn: Treasurer
Telecopy No.: (000) 000-0000
- Signature Page -
[____________________________],
Owner Participant
By: ----------------------------------------
Name:
Title:
Address:
Attn:
Telecopy No.:
State Street Bank and
Trust Company,
Indenture Trustee
By: ----------------------------------------
Name:
Title:
Address: U.S. Mail
---------
Corporate Trust Department
X.X. Xxx 000
Xxxxxx, Xxxxxxxxxxxxx
00000-0000
Overnight Courier
-----------------
Corporate Trust Department
0 Xxxxxx xx Xxxxxxxxx
Xxxxxx, Xxxxxxxxxxxxx
00000-00
Telecopy No.: (000) 000-0000
XXXXX FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, not in its individual
capacity, except as expressly provided
herein, but solely as Owner Trustee,
Owner Trustee
By: --------------------------------------
Name:
Title:
Address: MAC: U1228-120
000 Xxxxx Xxxx Xxxxxx,
00xx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Corporate Trust Services
Telecopy No.: (000) 000-0000
- Signature Page -
STATE STREET BANK AND TRUST COMPANY OF
ONNECTICUT, NATIONAL ASSOCIATION, not
n its individual capacity, except as
therwise provided herein, but solely as
ass Through Trustee,
ass Through Trustee
By: -------------------------------------
Name:
Title:
Address: 000 Xxxxxx Xxxxxx, Xxxxxxx
Square
Hartford, CT 06103
Attn: Corporate/Muni Department
Telecopy No.: (000) 000-0000
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity, except
as otherwise provided herein, but
solely as Subordination Agent,
Subordination Agent
By:-------------------------------------
Name:
Title:
Address: U.S. Mail
---------
Corporate Trust Department
X.X. Xxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000-
0778
Overnight Courier
-----------------
Corporate Trust Department
0 Xxxxxx xx Xxxxxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Telecopy No.: (000) 000-0000
- Signature Page -
SCHEDULE I
Names and Addresses
-------------------
Lessee: Northwest Airlines, Inc.
U.S. Mail
----------
0000 Xxxx Xxx Xxxxxxx (X0000)
Xxxxx, Xxxxxxxxx 00000-0000
Overnight Courier
-----------------
0000 Xxxx Xxx Xxxxxxx (A4010)
Xxxxx, Xxxxxxxxx 00000-0000
Attn: Treasurer
Telecopy No.: (000) 000-0000
Wire Transfer
-------------
USBank, Minneapolis
ABA No. 000000000
Acct. No. 150250099440
Owner Participant: [__________________________]
Attn: _____________________
Telecopy No.:______________
with a copy to:
[Address]
Attn: __________________________________
Telecopy No.: __________________________
Payments made
to the Owner Participant as provided in Section 3.06 of
the Trust Indenture shall be made to:
[Bank]
[Address]
ABA No. ________________________________
Account No. ____________________________
Account Name: __________________________
Reference: _____________________________
SCHEDULE I - PAGE 1
Indenture Trustee: State Street Bank and Trust Company
U.S. Mail
---------
Corporate Trust Department
X.X. Xxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Overnight Courier
-----------------
Corporate Trust Department
0 Xxxxxx xx Xxxxxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Telecopy No.: (000) 000-0000
Wire Transfer
-------------
State Street Bank and Trust Company
ABA No. 000-000-000
for credit to State Street Bank and Trust Company
Acct. No. 0000-000-0
Attn: Corporate Trust Department
Reference: Northwest/NW [____ _]
Owner Trustee: Xxxxx Fargo Bank Northwest, National Association
MAC: U1228-120
000 Xxxxx Xxxx Xxxxxx, 00xx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attn: Corporate Trust Services
Telecopy No.: (000) 000-0000
Payments made to the Owner Trustee as provided in
Section 3(f) of the Lease shall be made to:
Xxxxx Fargo Bank Northwest, National Association
ABA No. 000-0000-00
Acct. No. 051-0922115
Attn: Corporate Trust Department
Credit: Northwest/NW [____ _]
Loan Participant: State Street Bank and Trust Company
of Connecticut, National Association
000 Xxxxxx Xxxxxx, Xxxxxxx Square
Hartford, CT 06103
Attn: Corporate/Muni Department
Telecopy No.: (000) 000-0000
SCHEDULE I- PAGE 2
Subordination Agent: State Street Bank and Trust Company
U.S. Mail
---------
Corporate Trust Department
X.X. Xxx 000
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Overnight Courier
-----------------
Corporate Trust Department
0 Xxxxxx xx Xxxxxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Telecopy No.: (000) 000-0000
SCHEDULE I - PAGE 3
SCHEDULE II
Commitments
Interest Rate Percentage of
Purchasers and Maturity Purchase Price Lessor's Cost
---------- ------------ -------------- -------------
Northwest Airlines
Pass Through Trust
2002-1G-2 6.264% Series
G-2 Secured $[___________] [___________]%
Certificates due
[___________]
2002-1C-2 9.055% Series C-2 Secured $[___________] [___________]%
Certificates due
[___________]
Owner Participant Equity Investment
----------------- -----------------
[___________] $[___________] [___________]%
Total Commitments [___________] 100%
SCHEDULE II - PAGE 1
SCHEDULE III
Pass Through Trust Agreements
1. Pass Through Trust Agreement, dated as of June 3, 1999, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and
State Street Bank and Trust Company of Connecticut, National
Association, as supplemented by Trust Supplement No. 2002-1G-2,
dated as of the Issuance Date among Northwest Airlines, Inc.,
Northwest Airlines Corporation and State Street Bank and Trust
Company of Connecticut, National Association.
2. Pass Through Trust Agreement, dated as of June 3, 1999, among
Northwest Airlines Corporation, Northwest Airlines, Inc., and
State Street Bank and Trust Company of Connecticut, National
Association, as supplemented by Trust Supplement No. 2002-1C-2,
dated as of the Issuance Date among Northwest Airlines, Inc.,
Northwest Airlines Corporation and State Street Bank and Trust
Company of Connecticut, National Association.
SCHEDULE III - PAGE 1
EXHIBIT A
TO PARTICIPATION
AGREEMENT
[NW ____ _]
SCHEDULE OF COUNTRIES FOR REREGISTRATION
----------------------------------------
Argentina Malta
Australia Mexico
Austria Morocco
Bahamas Netherlands
Belgium New Zealand
Brazil Norway
Canada Paraguay
Chile People's Republic of China
Denmark Philippines
Egypt Portugal
Finland Republic of China (Taiwan)
France Singapore
Germany South Africa
Greece South Korea
Hungary Spain
Iceland Sweden
India Switzerland
Indonesia Thailand
Ireland Trinidad and Tobago
Italy United Kingdom
Japan Uruguay
Luxembourg Venezuela
Malaysia
EXHIBIT A - PAGE 1
EXHIBIT K
TO PARTICIPATION
AGREEMENT
[NW ____ _]
Section 7(b) - General Tax Indemnity
------------------------------------
(b) General Tax Indemnity.
(i) Indemnity. Except as provided in Section 7(b)(ii) hereof,
Lessee shall pay, protect, save and on written demand shall
indemnify and hold harmless any Tax Indemnitee from and against any
and all Taxes howsoever imposed against any Tax Indemnitee, Lessee
or the Aircraft, the Airframe, any Engine or any Part thereof or
interest therein by any Federal, state or local government or other
taxing authority in the United States or by any foreign government
or any political subdivision or taxing authority thereof or by any
territory or possession of the United States or by any international
authority ("Taxing Authority") upon or in connection with or
relating to (A) the construction, financing, refinancing, purchase,
acquisition, acceptance, rejection, delivery, nondelivery,
transport, ownership, registration, reregistration, insuring,
assembly, possession, repossession, operation, location, use,
control, condition, maintenance, repair, sale, return, abandonment,
installation, storage, redelivery, replacement, manufacture,
leasing, subleasing, modification, rebuilding, importation, transfer
of title, transfer of registration, exportation or other application
or disposition of the Aircraft, the Airframe, any Engine or any Part
thereof or interest therein, (B) the rentals, receipts or earnings
from the Aircraft, the Airframe, any Engine or any Part, (C) any
amount paid or payable pursuant to any Operative Document or any
document related thereto or the property or the income or other
proceeds with respect to any of the property held in the Trust
Estate or the Trust Indenture Estate, (D) the Aircraft, the
Airframe, any Engine or any Part, (E) any or all of the Operative
Documents, or the issuance of the Secured Certificates (or the
refinancing thereof) and any other documents contemplated hereby or
thereby and amendments and supplements hereto and thereto or the
execution, delivery or performance of any thereof or the issuance,
acquisition, modification, holding or subsequent transfer thereof,
(F) the payment of the principal of, or interest or Make-Whole
Amount or other premium on, or other amounts payable with respect
to, the Secured Certificates or the Pass Through Certificates, or
(G) otherwise with respect to or in connection with the transactions
contemplated by the Operative Documents.
(ii) Exclusions from General Tax Indemnity. The provisions of
Section 7(b)(i) shall not apply:
(1) with respect to any Tax Indemnitee to any Income Tax
(as defined in Section 7(d) hereof) imposed by (A) the United
States Federal government or (B) any U.S. state or local taxing
jurisdiction;
EXHIBIT K - PAGE 1
(2) with respect to any Tax Indemnitee, to any Income
Taxes imposed by any foreign or international government,
jurisdiction or taxing authority or territory or possession of
the United States except (with respect to the Owner Trustee,
the Owner Participant and the Trust Estate) to the extent that
such Tax Indemnitee would be subject to such Income Tax if the
sole connection between such Tax Indemnitee and the Taxing
Authority had been the location and operation of the Aircraft
or the activities of Lessee or any sublessee within such Taxing
Authority;
(3) to any capital gains taxes, excess profits taxes,
value added taxes, branch profits taxes, accumulated earnings
taxes, personal holding company taxes, succession taxes or
estate or similar taxes;
(4) to any Tax imposed as a result of a transfer or
disposition by a Tax Indemnitee including, without limitation,
the revocation of the trust created by the Trust Agreement or a
transfer or disposition of all or any portion of its respective
equitable or legal ownership interest in the Aircraft, the
Trust Estate, a Secured Certificate (including sales of
participations therein), the Trust Indenture Estate (as defined
in the Trust Indenture) or any Operative Document, the
Intercreditor Agreement, either of the Primary Liquidity
Facilities, or any Pass Through Trust Agreement or any interest
in such Tax Indemnitee, unless such transfer or disposition
shall occur (A) pursuant to the exercise of remedies pursuant
to Section 15 of the Lease or (B) in connection with the
termination of the Lease pursuant to Sections 9, 10 or 19
thereof;
(5) to any Tax based on or measured by any fees received
by the Owner Trustee, any Pass Through Trustee, the Indenture
Trustee, the Policy Provider or the Subordination Agent in
connection with any transaction contemplated by the Operative
Documents, the Intercreditor Agreement, any of the Primary
Liquidity Facilities or any Pass Through Trust Agreement;
(6) to any Tax imposed with respect to events occurring or
matters arising after the earlier of (x) the expiration of the
Term or the earlier termination of the Lease pursuant to
Section 9 or 19 thereof, (y) the return of possession of the
Aircraft to the Owner Trustee or its designee pursuant to the
terms of the Lease or (z) the commencement of storage pursuant
to Section 5(d) of the Lease provided that this exclusion shall
not apply to Taxes to the extent such Taxes are imposed on or
with respect to any events or matters occurring or arising
prior to such expiration, termination, return of possession of
the Aircraft or storage;
(7) to any Tax in the nature of an intangible or similar
tax upon or with respect to the value or principal amount of
the interest of any Tax Indemnitee in any of the Secured
Certificates, the Owner Trust or the Pass Through Certificates;
(8) with respect to any Tax Indemnitee to any Tax imposed
on or with respect to a transferee (or subsequent transferee)
of an original Tax Indemnitee to
EXHIBIT K - PAGE 2
the extent such Taxes would not have been required to be
withheld or imposed on or with respect to such original Tax
Indemnitee;
(9) to any Tax which would not have been imposed on (A)
the Owner Trustee, the Trust Estate or the Owner Participant
but for, a Lessor Lien (including, for this purpose, Liens
which would be a Lessor Lien but for the proviso in the
definition of Lessor Liens), (B) the Indenture Trustee but for
an Indenture Trustee's Lien or (C) a Pass Through Trustee or
the Subordination Agent, but for a Loan Participant Lien, in
each case with respect to the Tax Indemnitee to whom such Lien
is attributable;
(10) to any Tax to the extent such Tax would not have been
imposed but for a present or future connection between the Tax
Indemnitee or any Affiliate thereof and the jurisdiction
imposing such Taxes (including, without limitation, the Tax
Indemnitee or an Affiliate thereof being or having been a
citizen or resident thereof, or being or having been organized,
present or engaged in a trade or business therein, or having or
having had, a permanent establishment or fixed place of
business therein, or engaging, or having engaged, in one or
more transactions or activities therein unrelated to the
transactions contemplated by the Operative Documents), other
than a connection arising solely by reason of the transactions
contemplated by the Operative Documents;
(11) to any Tax imposed on a Tax Indemnitee to the extent
imposed as a result of such Tax Indemnitee's failure to comply
with any certification, information, documentation, reporting
or similar procedure that is required by law, treaty or
regulation as a condition to the allowance of any reduction in
the rate of such Tax or any exemption or other relief from such
Tax;
(12) to any Tax on a Tax Indemnitee to the extent arising
out of, or caused by, or to the extent such Tax would not have
been incurred but for, (A) the willful misconduct or gross
negligence of such Tax Indemnitee or any of its Affiliates or
(B) the inaccuracy or breach of any representation, warranty,
covenant or agreement by such Tax Indemnitee or any of its
Affiliates in any Operative Document, the Intercreditor
Agreement, any of the Primary Liquidity Facilities or any Pass
Through Trust Agreement;
(13) to any Tax on a Tax Indemnitee to the extent
consisting of interest, penalties, fines or additions to Tax
resulting from the negligence or willful misconduct of such Tax
Indemnitee or any of its Affiliates in connection with the
filing of, or failure to file, any tax return, the payment of,
or failure to pay any Tax, or the conduct of any proceeding in
respect thereof unless resulting from the failure by Lessee to
perform its obligations under Section 7(b)(v) hereof;
(14) to any Tax imposed on any Tax Indemnitee under
Section 4975 of the Internal Revenue Code or under subtitle B
of ERISA or any equivalent state law as a result of the use by
such Tax Indemnitee or any of its Affiliates of the assets of
an "employee benefit plan" (as defined in Section 3(3) of
ERISA) to
EXHIBIT K - PAGE 3
purchase a Secured Certificate, make an equity investment or
otherwise acquire any interest in the Trust Estate or any
Secured Certificate;
(15) to any Tax that would not have been imposed but for
an amendment to any Operative Document to which Lessee is not a
party, the Intercreditor Agreement, any of the Primary
Liquidity Facilities or any Pass Through Trust Agreement, which
amendment was not required or consented to by Lessee in
writing;
(16) in the case of the Policy Provider, to any premium or
similar Tax; or
(17) to any penalties imposed on a Tax Indemnitee other
than the Owner Trustee attributable to the failure of such Tax
Indemnitee or any Affiliate thereof to comply with any
requirement imposed on it under Sections 6011, 6111 or 6112 of
the Code or the regulations (including temporary regulations)
promulgated thereunder.
(iii) Calculation of General Tax Indemnity Payments. Any
payment which Lessee shall be required to make to or for the account
of any Tax Indemnitee with respect to any Tax which is subject to
indemnification under this Section 7(b) shall be in an amount which,
after reduction by the amount of all Taxes required to be paid by
such Tax Indemnitee in respect of the receipt or accrual of such
amount and after consideration of any current savings of such Tax
Indemnitee resulting by way of any deduction, credit or other tax
benefit attributable to such indemnified Tax that actually reduces
any Taxes for which Lessee is not required to indemnify such Tax
Indemnitee pursuant to this Section 7(b) or the Tax Indemnity
Agreement, shall be equal to the payment otherwise required
hereunder.
If, by reason of any Tax payment made to or for the account of
a Tax Indemnitee by Lessee pursuant to this Section 7(b), such Tax
Indemnitee or any of its Affiliates subsequently realizes a tax
benefit (whether by deduction, allocation, apportionment or credit
(including a foreign tax credit)) not previously taken into account
in computing such payment, such Tax Indemnitee shall promptly pay to
Lessee an amount equal to the sum of (I) the actual reduction in
Taxes, if any, realized by such Tax Indemnitee which is attributable
to such tax benefit and (II) the actual reduction in Taxes realized
by such Tax Indemnitee as a result of any payment made by such Tax
Indemnitee pursuant to this sentence. For purposes of this Section
7(b)(iii), items of foreign Tax of any Tax Indemnitee shall be
deemed to be utilized by such Tax Indemnitee as credits or
deductions for any taxable year in accordance with the following
priorities:
First, all available foreign Taxes for which such Tax
Indemnitee was not indemnified or held harmless by anyone;
Second, all available foreign Taxes for which such Tax
Indemnitee was indemnified or held harmless by Lessee, and all
available foreign taxes
EXHIBIT K - PAGE 4
indemnified under any other transaction (except any described
in Clause Third), on a pari passu basis; and
Third, any remaining foreign Taxes arising from any transaction
in which there is an express agreement that such Taxes shall be
utilized after foreign taxes from other transactions.
Once the foreign Tax for which such Tax Indemnitee was
indemnified by Lessee is deemed to be utilized pursuant to the
ordering rules contained in this paragraph, it shall not
subsequently be recharacterized as not having been utilized as a
result of a foreign tax liability arising in a subsequent year.
Any Taxes that are imposed on any Tax Indemnitee as a result of
the disallowance or reduction of any tax benefit referred to in this
subsection as to which such Tax Indemnitee has made in full the
payment to Lessee required hereby (or as to which such Tax
Indemnitee would have made its payment but for Section 7(b)(viii) or
which tax benefit was otherwise taken into account in computing
Lessee's indemnity obligation pursuant to this Section 7) in a
taxable year subsequent to the utilization by such Tax Indemnitee
shall be treated as a Tax for which Lessee is obligated to indemnify
such Tax Indemnitee pursuant to the provisions of this Section 7(b),
without regard to the exclusions set forth in Section 7(b)(ii)
hereof (other than clauses (12) or (13) thereto).
Each 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 tax savings which would result in payments to
Lessee under this Section 7(b).
(iv) General Tax Indemnity--Contests. At Lessee's request
Lessee shall be entitled at its sole cost and expense (A) in the
case of a contest involving only Taxes indemnified hereunder
("Indemnified Taxes") or (B) in any proceeding involving a claim for
one or more Indemnified Taxes as well as a claim for other Taxes,
where the contest of the claim for Indemnified Taxes can be severed
from the contest of other Taxes, to assume responsibility for and
control of the contest ("Lessee Controlled Contest"). Unless
otherwise required by law, any such contest shall be conducted by
and in the name of Lessee. If a written claim shall be made against
and received by any Tax Indemnitee for any Tax for which Lessee is
obligated pursuant to this Section 7(b), such Tax Indemnitee shall
notify Lessee promptly of such claim (it being understood and agreed
that failure to provide such notice shall not adversely affect or
otherwise prejudice any Tax Indemnitee's right to indemnity under
this Section 7(b) except to the extent such failure has a materially
adverse effect on the ability to contest such claim). If the Tax
cannot be contested in a Lessee Controlled Contest, upon request
from Lessee within thirty (30) days after receipt of such notice,
such Tax Indemnitee shall in good faith at Lessee's sole cost and
expense contest the imposition of such Tax (a "Tax Indemnitee
Controlled Contest"). After consulting with Lessee and Lessee's
counsel concerning the forum in which the adjustment is most likely
to be favorably resolved, such Tax Indemnitee may select in its sole
discretion after considering in good faith Lessee's and Lessee's
counsel recommendation the forum for such contest and determine
whether any such contest shall be by (A) resisting payment of such
Tax, (B) paying such Tax under
EXHIBIT K - PAGE 5
protest or (C) paying such Tax and seeking a refund or other
repayment thereof. Except as otherwise provided in clause (Z) below,
during the pendency of a contest pursuant to this Section 7(b)(iv)
Lessee may withhold payment of any Tax to the extent provided by
applicable law. In no event shall such Tax Indemnitee be required,
or Lessee be permitted, to contest the imposition of any Tax for
which Lessee is obligated pursuant to this Section 7(b) unless (W)
no Event of Default shall have occurred and be continuing (unless
Lessee shall have provided security reasonably satisfactory to such
Tax Indemnitee securing Lessee's performance of its obligations
under this Section 7(b)), (X) Lessee shall have agreed to pay to
such Tax Indemnitee on demand all reasonable costs and expenses on
an after-tax basis that such Tax Indemnitee may incur in connection
with contesting such claim (including, without limitation, all
reasonable legal and accounting fees), (Y) such action to be taken
will not result in a material risk of sale, forfeiture or loss of,
or the creation of any Lien on, the Aircraft, the Engines or any
Part, other than Permitted Liens, unless Lessee shall have provided
such Tax Indemnitee security against such risk in form and amount
reasonably acceptable to such Tax Indemnitee, and (Z) if such
contest shall be conducted in a manner requiring the payment of the
claim, Lessee shall have paid the amount required directly to the
appropriate authority or made an advance of the amount thereof to
such Tax Indemnitee on an interest-free basis and agreed to
indemnify such Tax Indemnitee on an after-tax basis against any
Taxes payable by such Tax Indemnitee with respect to such advance.
Notwithstanding anything to the contrary in this Section 7(b),
in any Tax Indemnitee Controlled Contest the Tax Indemnitee may not
settle or agree to any claim without the prior written consent of
Lessee, and the Tax Indemnitee shall conduct any such administrative
proceedings and judicial contest in good faith in an attempt to
minimize the amount payable by Lessee under this Section 7(b). The
term "after-tax basis" for purposes of this Section 7(b) shall mean
an amount which, after deduction of all Taxes required to be paid by
or on behalf of the Tax Indemnitee in respect of the receipt or
accrual of such amount, is equal to the payment required under the
provisions of this Section 7(b) which require payments to be made on
an after-tax basis.
If any Tax Indemnitee shall obtain a refund of all or any part
of any Tax paid by Lessee, such Tax Indemnitee shall pay Lessee an
amount equal to the amount of such refund, including interest
received attributable thereto, plus any net tax benefit (or minus
any net tax detriment) realized by such Tax Indemnitee as a result
of any refund received and payment by such Tax Indemnitee made
pursuant to this sentence.
Nothing contained in this Section 7(b)(iv) shall require any
Tax Indemnitee to contest, or permit Lessee to contest, a claim
which such Tax Indemnitee would otherwise be required to contest
pursuant to this Section 7(b)(iv), if such Tax Indemnitee shall
waive payment by Lessee of any amount that might otherwise be
payable by Lessee under this Section 7(b) in respect of such claim
and any other claim, the contest of which would be adversely
affected.
(v) General Tax Indemnity--Reports. If any report, return or
statement is required to be filed with respect to any Tax which is
subject to indemnification under this Section 7(b), Lessee shall
timely file the same at its sole expense (except for any such
EXHIBIT K - PAGE 6
report, return or statement which the Tax Indemnitee has notified
Lessee that the Tax Indemnitee intends to file or which the Tax
Indemnitee is required by law to file in its own name). Lessee shall
have no obligation under the preceding sentence if such Tax
Indemnitee, after receipt of Lessee's written request, shall have
failed to furnish Lessee with such information in a timely fashion
as is in such Tax Indemnitee's control and is not otherwise
reasonably available to Lessee and is necessary to file such
returns. Lessee shall either file such report, return or statement
so as to show the ownership of the Aircraft in the Owner Trustee and
send a copy of such report, return or statement to the Tax
Indemnitee and Owner Trustee or, where Lessee is not so permitted to
file such report, return or statement, it shall notify the Tax
Indemnitee of such requirement and prepare and deliver such report,
return or statement to the Tax Indemnitee in a manner satisfactory
to such Tax Indemnitee within a reasonable time prior to the time
such report, return or statement is to be filed. Lessee shall
provide to the Owner Participant upon request (or shall cause to be
provided to the Owner Participant upon request) such information
maintained in the regular course of Lessee's business and shall make
available for inspection and copying by the Owner Participant, at
Lessee's expense, such records as Lessee retains in the regular
course of its business, or is required under applicable law to
retain, as shall be reasonably necessary for the Owner Participant
to prepare or support any required Federal, state, local or foreign
tax returns or other filings, or to comply with audit or litigation
requirements. The Owner Participant shall provide to Lessee upon
request (or shall cause to be provided to Lessee on request) such
information related to the Overall Transaction maintained in the
regular course of the Owner Participant's business, and shall make
available (or shall cause to be made available) for inspection and
copying by Lessee, at the Owner Participant's expense, such records
related to the Overall Transaction as the Owner Participant or the
Owner Trustee retain in the regular course of their business or are
required by law to retain, as shall be necessary for Lessee to
prepare or support any required Federal, state, local or foreign
returns or other filings or to comply with audit or litigation
requirements.
(vi) Verification. At Lessee's written request after Lessee
receives a Tax Indemnitee's computations showing the amount of any
indemnity payable by Lessee to such Tax Indemnitee pursuant to this
Section 7(b) or any amount payable by any Tax Indemnitee to Lessee
pursuant to this Section 7(b), such computations shall be subject to
confidential verification in writing by any nationally recognized
firm of certified public accountants selected by Lessee and
reasonably acceptable to such Tax Indemnitee. The accounting firm
shall complete its review within thirty (30) days of Lessee's
receipt of such Tax Indemnitee's computations. The computations of
such accounting firm shall (i) be delivered simultaneously to Lessee
and such Tax Indemnitee and (ii) absent manifest error, be final,
binding and conclusive upon Lessee and such Tax Indemnitee. If
Lessee pays such indemnity in whole or in part before completion of
the verification procedure, appropriate adjustments will be made
promptly after completion of the verification procedure (and nothing
in this Section 7(b)(vi) shall be construed as changing the time
when any such indemnity is payable under this Section 7(b)) to take
into account any redetermination of the indemnity by the accounting
firm. The fee and disbursements of such firm shall be paid by Lessee
unless such verification shall disclose an error made by such Tax
Indemnitee in favor of such Tax Indemnitee exceeding the lesser of
five percent (5%) of the original claim or $10,000, in which case
such fee and disbursements shall be
EXHIBIT K - PAGE 7
paid by such Tax Indemnitee. Such Tax Indemnitee shall cooperate
with such accounting firm and (subject to such accounting firm's
execution of a confidentiality agreement satisfactory to such Tax
Indemnitee) shall supply such accounting firm with all information
reasonably necessary to permit accomplishment of such review and
determination. The sole responsibility of such accounting firm shall
be to verify the computations of the amount payable hereunder and
the interpretation of this Agreement shall not be within the scope
of such accounting firm's responsibilities.
(vii) General Tax Indemnity--Payment. Except as provided in
Section 7(b)(iv) hereof, Lessee shall pay any Tax for which it is
liable pursuant to this Section 7(b) directly to the appropriate
taxing authority if legally permissible or upon demand of a Tax
Indemnitee shall pay such Tax and any other amounts due hereunder to
such Tax Indemnitee within fifteen (15) Business Days of such
demand, but in no event shall any such payments be required to be
made by Lessee more than five (5) Business Days prior to the date
the Tax to which any such payment hereunder relates is due in
immediately available funds. Any such demand for payment from a Tax
Indemnitee shall specify in reasonable detail the payment and the
facts upon which the right to payment is based. Each Tax Indemnitee
shall promptly forward to Lessee any notice, xxxx or advice received
by it concerning any Tax, provided, however, that the failure of any
Tax Indemnitee to forward any such notice, xxxx or advice shall not
adversely affect or otherwise prejudice such Tax Indemnitee's rights
to indemnification under this Section 7(b) unless such failure
materially adversely affects the ability to contest any claim
reflected therein. Within thirty (30) days after the date of each
payment by Lessee of any Tax indemnified against hereunder, Lessee
shall furnish the appropriate Tax Indemnitee the original or a
certified copy of a receipt for Lessee's payment of such Tax or such
other evidence of payment of such Tax as is reasonably acceptable to
such Tax Indemnitee.
(viii) Application of Payments During Existence of Event of
Default. Any amount payable to Lessee pursuant to the terms of this
Section 7(b) shall not be paid to or retained by Lessee if at the
time of such payment or retention an Event of Default shall have
occurred and be continuing under the Lease. At such time as there
shall not be continuing any such Event of Default, such amount shall
be paid to Lessee to the extent not previously applied against
Lessee's obligations hereunder as and when due after the Owner
Trustee shall have declared the Lease in default pursuant to Section
15 thereof.
(ix) Reimbursements by Tax Indemnitees Generally. If, for any
reason, Lessee is required to make any payment with respect to any
Taxes imposed on any Tax Indemnitee, any Pass Through Trustee, any
Loan Participant or the Subordination Agent in respect of the
transactions contemplated by the Operative Documents or on the
Aircraft, the Airframe, the Engines or any Part, which Taxes are not
the responsibility of Lessee under this Section 7(b), then such Tax
Indemnitee, Pass Through Trustee, Loan Participant or the
Subordination Agent, as the case may be, shall pay to Lessee an
amount which equals the amount paid by Lessee with respect to such
Taxes plus interest thereon computed at an annual interest rate
equal to the Base Rate plus one percent from the date of payment by
Lessee.
EXHIBIT K - PAGE 8
(x) Forms, etc. Each Tax Indemnitee agrees to furnish to Lessee
from time to time such duly executed and properly completed forms
that may be necessary or appropriate in order to claim any reduction
of or exemption from any withholding tax imposed by any taxing
authority in respect of any payments otherwise required to be made
by Lessee pursuant to the Operative Documents, which reduction or
exemption may be available to such Tax Indemnitee.
(xi) Non-Parties. If a Tax Indemnitee is not a party to this
Agreement, Lessee may require the Tax Indemnitee to agree to the
terms of this Section 7(b) prior to making any payment to such Tax
Indemnitee under this Section 7(b).
EXHIBIT K - PAGE 9
EXHIBIT L
TO PARTICIPATION
AGREEMENT
[NW ____ _]
Section 7(c) - General Indemnity
--------------------------------
(c) General Indemnity. Lessee hereby agrees to indemnify each
Indemnitee against, and agrees to protect, defend, save and keep harmless each
thereof from (whether or not the transactions contemplated herein or in any of
the other Operative Documents are consummated), any and all liabilities,
obligations, losses, damages, penalties, claims, actions, suits, out-of-pocket
costs, expenses and disbursements (including reasonable legal fees and
expenses and Transaction Expenses to the extent not required to be paid by the
Owner Trustee or the Owner Participant pursuant to Section 16 hereof but
excluding internal costs and expenses such as salaries and overhead), of
whatsoever kind and nature (collectively called "Expenses") imposed on,
incurred by or asserted against any Indemnitee, in any way relating to or
arising out of (A) any of the Operative Documents or any sublease or
sub-sublease of the Aircraft or the enforcement of any of the terms thereof or
any amendment, modification or waiver in respect thereof and, only in the case
of the Indemnitee who is the Subordination Agent or the Primary Liquidity
Provider, the Intercreditor Agreement and the Primary Liquidity Facilities,
(B) the manufacture, purchase, acceptance or rejection of the Airframe or any
Engine, (C) the Aircraft (or any portion thereof or any Engine or engine
affixed to the Airframe) whether or not arising out of the finance, refinance,
ownership, delivery, nondelivery, storage, lease, sublease, sub-sublease,
possession, use, non-use, operation, maintenance, registration,
reregistration, condition, modification, alteration, replacement, repair,
substitution, sale, return or other disposition of the Aircraft (or any
portion thereof or any Engine or engine affixed to the Airframe) including,
without limitation, latent or other defects, whether or not discoverable,
strict tort liability and any claim for patent, trademark or copyright
infringement, (D) the offer, sale or delivery of the Secured Certificates (the
indemnity in this clause (D) to extend also to any person who controls an
Indemnitee within the meaning of Section 15 of the Securities Act of 1933, as
amended) or (E) the offer or sale of any interest in the Trust Estate or the
Trust Agreement or any similar interest with respect to the Aircraft on or
prior to the Delivery Date; provided that the foregoing indemnity as to any
Indemnitee shall not extend to any Expense resulting from or arising out of or
which would not have occurred but for one or more of the following: (A) any
representation or warranty by such Indemnitee (or any member of the Related
Indemnitee Group) in the Operative Documents, the Intercreditor Agreement, the
Primary Liquidity Facilities or any Pass Through Trust Agreement or in
connection therewith being incorrect in any material respect, or (B) the
failure by such Indemnitee (or any member of the Related Indemnitee Group) to
perform or observe any agreement, covenant or condition in any of the
Operative Documents, the Intercreditor Agreement, the Primary Liquidity
Facilities or any Pass Through Trust Agreement applicable to it including,
without limitation, the creation or existence of a Lessor Lien (including for
this purpose Liens which would be Lessor Liens but for the proviso in the
definition of Lessor Liens), a Loan Participant Lien or an Indenture Trustee's
Lien (except to the extent such failure was caused directly by the failure of
Lessee to perform any obligation under a Lessee Document), or (C) the willful
misconduct or the gross negligence of such Indemnitee (or any member of the
Related Indemnitee Group) (other than gross negligence imputed to such
EXHIBIT L - PAGE 1
Indemnitee (or any member of the Related Indemnitee Group) solely by reason of
its interest in the Aircraft), or (D) with respect to the Owner Trustee, a
disposition (voluntary or involuntary) by the Owner Trustee of all or any part
of its interest in the Airframe or any Engine (other than as contemplated by
the Lease or the Trust Indenture) or with respect to any Indemnitee, by such
Indemnitee of all or any part of such Indemnitee's interest in the Airframe,
any Engine or in the Operative Documents other than during the continuance of
an Event of Default under the Lease, or (E) any Tax whether or not Lessee is
required to indemnify for such Tax pursuant to Section 7(b) hereof (it being
understood that Section 7(b) hereof and the Tax Indemnity Agreement provide
for Lessee's liability with respect to Taxes), or (F) in the case of an
Indemnitee which is the Owner Participant or the Owner Trustee (in its
individual or trust capacity) (other than in connection with an Event of
Default) or, in connection with an exercise of remedies under the Trust
Indenture upon a default thereunder (other than a default under Section
4.02(a) of the Trust Indenture), the Indenture Trustee or a Loan Participant,
the offer or sale of any interest in the Trust Estate or the Trust Agreement
or any similar interest, or (G) in the case of an Indemnitee which is the
Owner Participant or the Owner Trustee (in its individual or trust capacity)
and the affiliates, successors and assigns thereof, a failure on the part of
the Owner Trustee to use ordinary care to distribute in accordance with the
Trust Agreement any amounts received and distributable by it thereunder, and
in the case of an Indemnitee which is a Loan Participant, a Certificate Holder
or the Indenture Trustee (in its individual or trust capacity) and the
affiliates, successors and assigns thereof, a failure on the part of the
Indenture Trustee to use ordinary care to distribute in accordance with the
Trust Indenture any amounts received and distributable by it thereunder, or
(H) the authorization or giving or withholding of any future amendments,
supplements, waivers or consents with respect to any of the Operative
Documents, the Intercreditor Agreement, the Primary Liquidity Facilities or
any Pass Through Trust Agreement other than such as have been consented to,
approved, authorized or requested by Lessee, or (I) subject to the next
succeeding paragraph, any loss of tax benefits or increase in tax liability
under any tax law whether or not Lessee is required to indemnify therefor
pursuant to this Agreement or the Tax Indemnity Agreement, or (J) except to
the extent fairly attributable to acts, omissions or events occurring prior
thereto, acts or events which occur with respect to the Airframe, any Engine
or any Part after the earliest of: (I) the return of possession of the
Airframe or such Engine or Part to the Owner Trustee or its designee pursuant
to the terms of the Lease, (II) the termination of the Lease in accordance
with Section 9 or Section 19 thereof or (III) the commencement of storage
pursuant to Section 5(d) of the Lease, or (K) any Expense which is specified
to be for the account of an Indemnitee pursuant to any Operative Document
without express right of reimbursement under any Operative Document, (L) as to
any Indemnitee the funding of such Indemnitee's participation in the
transaction contemplated by the Operative Documents giving rise to a
"prohibited transaction" within the meaning of the provisions of the Code or
the Regulations of the United States Department of Labor implementing ERISA or
any other violation of the fiduciary responsibility provisions of ERISA, or
(M) to the extent attributable to the offer or sale by such Indemnitee (or any
member of the Related Indemnitee Group) of any interest in the Aircraft, the
Secured Certificates, the Pass Through Certificates, or any similar interest,
in violation of the Securities Act of 1933, as amended, or other applicable
federal, state or foreign securities Laws (other than any thereof caused by
acts or omissions of the Owner or any of its Affiliates). The foregoing
indemnity shall not extend to any Expense to the extent that such Expense is
not caused by, or does not arise out of, an act, omission or event
EXHIBIT L - PAGE 2
which occurs prior to the termination of the Lease and the payment of all other
payments required to be paid by Lessee under the Operative Documents.
Lessee further agrees that any payment or indemnity pursuant to this
Section 7(c) in respect of any Expenses shall be in an amount which, after
deduction of all Taxes required to be paid by such recipient with respect to
such payment or indemnity under the laws of any Federal, state or local
government or taxing authority in the United States, or under the laws of any
taxing authority or governmental subdivision of a foreign country, or any
territory or possession of the United States or any international authority,
shall be equal to the excess, if any, of (A) the amount of such Expense over
(B) the net reduction in Taxes required to be paid by such recipient resulting
from the accrual or payment of such Expense.
If, by reason of any Expense payment made to or for the account of
an Indemnitee by Lessee pursuant to this Section 7(c), such Indemnitee
subsequently realizes a tax deduction or credit (including foreign tax credit
and any reduction in Taxes) not previously taken into account in computing
such payment, such Indemnitee shall promptly pay to Lessee, but only if Lessee
shall have made all payments then due and owing to such Indemnitee under the
Operative Documents, an amount equal to the sum of (I) the actual reduction in
Taxes realized by such Indemnitee which is attributable to such deduction or
credit, and (II) the actual reduction in Taxes realized by such Indemnitee as
a result of any payment made by such Indemnitee pursuant to this sentence.
Nothing in this Section 7(c) shall be construed as a guaranty by
Lessee of payments due pursuant to the Secured Certificates or of the residual
value of the Aircraft.
If a claim is made against an Indemnitee involving one or more
Expenses and such Indemnitee has notice thereof, such Indemnitee shall
promptly, upon receiving such notice, give notice of such claim to Lessee;
provided that the failure to provide such notice shall not release Lessee from
any of its obligations to indemnify hereunder, and no payment by Lessee to an
Indemnitee pursuant to this Section 7(c) shall be deemed to constitute a
waiver or release of any right or remedy which Lessee may have against such
Indemnitee for any actual damages as a result of the failure by such
Indemnitee to give Lessee such notice. Lessee shall be entitled, at its sole
cost and expense, acting through counsel acceptable to the respective
Indemnitee, (A) so long as Lessee has agreed in a writing acceptable to such
Indemnitee that Lessee is liable to such Indemnitee for such Expense hereunder
(unless such Expense is covered by the proviso to the first paragraph of this
Section 7(c)), in any judicial or administrative proceeding that involves
solely a claim for one or more Expenses, to assume responsibility for and
control thereof, (B) so long as Lessee has agreed in a writing acceptable to
such Indemnitee that Lessee is liable to such Indemnitee for such Expense
hereunder (unless such Expense is covered by the proviso to the first
paragraph of this Section 7(c)), in any judicial or administrative proceeding
involving a claim for one or more Expenses and other claims related or
unrelated to the transactions contemplated by the Operative Documents, to
assume responsibility for and control of such claim for Expenses to the extent
that the same may be and is severed from such other claims (and such
Indemnitee shall use its best efforts to obtain such severance), and (C) in
any other case, to be consulted by such Indemnitee with respect to judicial
proceedings subject to the control of such Indemnitee. Notwithstanding any of
the foregoing to the contrary, Lessee shall not be entitled to assume
responsibility for and control of any such judicial or administrative
EXHIBIT L - PAGE 3
proceedings (M) while an Event of Default shall have occurred and be
continuing, (N) if such proceedings will involve a material risk of the sale,
forfeiture or loss of, or the creation of any Lien (other than a Permitted
Lien) on the Aircraft, the Trust Indenture Estate or the Trust Estate or any
part thereof, or (O) if such proceeding could in the good faith opinion of
such Indemnitee entail any material risk of criminal liability or present a
conflict of interest making separate representation necessary. The affected
Indemnitee may participate at its own expense and with its own counsel in any
judicial proceeding controlled by Lessee pursuant to the preceding provisions.
The affected Indemnitee shall supply Lessee with such information
reasonably requested by Lessee as is necessary or advisable for Lessee to
control or participate in any proceeding to the extent permitted by this
Section 7(c). Such Indemnitee shall not enter into a settlement or other
compromise with respect to any Expense without the prior written consent of
Lessee, which consent shall not be unreasonably withheld or delayed, unless
such Indemnitee waives its right to be indemnified with respect to such
Expense under this Section 7(c).
Lessee shall supply the affected Indemnitee with such information
reasonably requested by such Indemnitee as is necessary or advisable for such
Indemnitee to control or participate in any proceeding to the extent permitted
by this Section 7(c).
When Lessee or the insurers under a policy of insurance maintained
by Lessee (or any Sublessee) undertakes the defense of an Indemnitee with
respect to an Expense, no additional legal fees or expenses of such Indemnitee
in connection with the defense of such Indemnitee shall be indemnified
hereunder unless such fees or expenses were incurred at the written request of
Lessee or such insurers, provided that no such defense shall be compromised or
settled on a basis that admits any gross negligence or willful misconduct on
the part of such Indemnitee without such Indemnitee's prior consent.
In the case of any Expense indemnified by Lessee hereunder which is
covered by a policy of insurance maintained by Lessee (or any Sublessee)
pursuant to Section 11 of the Lease or otherwise, it shall be a condition of
such indemnity with respect to any particular Indemnitee that such Indemnitee
shall cooperate with the insurers in the exercise of their rights to
investigate, defend or compromise such Expense as may be required to retain
the benefits of such insurance with respect to such Expense. Notwithstanding
any of the foregoing to the contrary, with respect to any Expense which is
covered under policies of insurance maintained by Lessee (or any Sublessee)
pursuant to Section 11 of the Lease or otherwise, the rights of an Indemnitee
to control or participate in any proceeding shall be modified to the extent
necessary to comply with the requirements of such policies and the rights of
the insurers thereunder.
Upon payment of any Expense or Tax pursuant to this Section 7,
Lessee or, if any Expense or Tax has been paid by insurers, the insurers,
without any further action, shall be subrogated to any claims the affected
Indemnitee may have relating thereto other than claims under Section 5.03 or
7.01 of the Trust Indenture or Section 5.03 or 7.01 of the Trust Agreement.
Such Indemnitee agrees to give such further assurances or agreements and to
cooperate with Lessee or the insurers to permit Lessee or the insurers to
pursue such claims, if any, to the extent reasonably requested by Lessee or
the insurers.
EXHIBIT L - PAGE 4
In the event that Lessee shall have paid an amount to an Indemnitee
pursuant to this Section 7(c), and such Indemnitee subsequently shall be
reimbursed in respect of such indemnified amount from any other Person, such
Indemnitee shall promptly pay to Lessee an amount equal to the amount of such
reimbursement (but in no event more than such payment from Lessee) plus any
net tax benefit (or minus any net tax detriment) realized by such Indemnitee
as a result of any reimbursement received and payment made by such Indemnitee
pursuant to this sentence, provided that (i) no Event of Default has occurred
and is continuing and (ii) such Indemnitee shall have no obligation to
reimburse Lessee if Lessee has not paid such Indemnitee all amounts required
pursuant to this Section 7(c) and any other amounts then due to such
Indemnitee from Lessee under any of the Operative Documents.
Lessee's obligations under the indemnities provided for in this
Agreement shall be those of a primary obligor, whether or not the Person
indemnified shall also be indemnified with respect to the same matter under
the terms of any other document or instrument, and the Person seeking
indemnification from Lessee pursuant to any provision of this Agreement may
proceed directly against Lessee without first seeking to enforce any other
right of indemnification.
Lessee agrees to pay the reasonable fees and expenses of the
Indenture Trustee and the Owner Trustee for acting as such, other than such
fees and expenses which constitute Transaction Expenses.
EXHIBIT L - PAGE 5
