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EXHIBIT 4.11
FIRST AMENDMENT TO
SALE AND LEASE AGREEMENT
dated as of May 1, 1998
between
FIRST UNION NATIONAL BANK,
as Owner Trustee,
Lessor
and
SOUTHWEST AIRLINES CO.,
Lessee
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One Boeing Model 737-3H4 Aircraft
(Southwest Airlines 1996 Trust N620SW)
All right, title and interest of Lessor in and to the Sale and Lease
Agreement, as amended, and the Aircraft (including the Engines), has been
assigned to and is subject to a security interest in favor of WILMINGTON TRUST
COMPANY, as Indenture Trustee. This First Amendment to Sale and Lease Agreement
has been executed in several counterparts. No security interest in Lessor's
right, title and interest in and to this First Amendment to Sale and Lease
Agreement may be created through the transfer or possession of any counterpart
other than the counterpart identified, for purposes of perfection of a security
interest in chattel paper (as such term is defined in the UCC), as the original
counterpart. This is not the original counterpart.
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THIS FIRST AMENDMENT TO SALE AND LEASE AGREEMENT, dated as of May 1,
1998 (this "Amendment"), between FIRST UNION NATIONAL BANK, a national banking
association, not in its individual capacity but solely as Owner Trustee under
that certain Trust Agreement establishing Southwest Airlines 1996 Trust N620SW
and dated as of June 1, 1996 ("Lessor"), and SOUTHWEST AIRLINES CO., a Texas
corporation ("Lessee"), amends that certain related Sale and Lease Agreement
dated as of June 1, 1996 (the "Original Lease") between Lessee and Lessor (the
Original Lease, as supplemented by Sale and Lease Agreement Supplement No. One
thereto relating to the Aircraft referred to below dated June 3, 1996 ("Lease
Supplement No. 1") between Lessor and Lessee, being referred to herein as the
"Lease"),
WITNESSETH:
WHEREAS, except as otherwise defined in this Amendment, the capitalized
terms used herein shall have the meanings attributed thereto in the Lease; and
WHEREAS, pursuant to the Lease, Lessee has leased from Lessor, the
Aircraft, which consists of the following components: (i) Airframe: One (1)
Boeing 737-3H4, FAA Registration No. N620SW, Manufacturer's serial no. 28036;
and (ii) Engines: Two (2) CFM International Model CFM56-3-B1 Engines bearing,
respectively, Manufacturer's serial numbers 858287 and 858292; and
WHEREAS, a counterpart of the Original Lease, to which was attached and
made a part thereof a counterpart of Lease Supplement No. 1, was recorded by the
Federal Aviation Administration on July 17, 1996 and assigned Conveyance No.
S098304; and
WHEREAS, in connection with the refinancing of the Certificates pursuant
to Section 18 of the Participation Agreement, the parties wish to recalculate
Basic Rent, Stipulated Loss Value percentages, Termination Value percentages and
Special Purchase Price; and
WHEREAS, Lessor and Lessee desire to amend the Lease in certain
respects;
NOW, THEREFORE, in consideration of the mutual agreements contained
herein, the parties hereto agree as follows:
Section 1. Amendments to Exhibits X-0, X-0, X xxx X. Xxxxxxxx X-0, X-0
and C to the Lease are hereby deleted in their entirety and replaced with
Exhibits X-0, X-0 and C, respectively, to this Amendment. Exhibit E to the Lease
is hereby deleted in its entirety.
Section 2. Amendments to Section 1. Section 1 of the Lease is hereby
amended in the following manner:
(a) The following defined terms are hereby added to Section 1 in
alphabetical order:
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"'First Amendment to Sale and Lease Agreement' means that certain First
Amendment to Sale and Lease Agreement dated as of May 1, 1998 by and between
Lessee and Lessor relating to the Aircraft."
"'First Amendment to Participation Agreement' means that certain First
Amendment to Participation Agreement dated as of May 1, 1998 by and among
Lessee, Owner Participant, Owner Trustee, Indenture Trustee and Pass Through
Trustee relating to the Aircraft."
"'First Amendment to Trust Indenture' means that certain First Amendment
to Trust Indenture and Security Agreement, dated as of May 1, 1998 between Owner
Trustee and Indenture Trustee relating to the Aircraft."
"'Pass Through Certificates' is defined in Section 1.01(b) of the Trust
Indenture."
"'Pass Through Trust Agreement' is defined in Section 1.01(b) of the
Trust Indenture."
"'Pass Through Trustee' is defined in Section 1.01(b) of the Trust
Indenture."
"'Pass Through Trust Supplement' means Trust Supplement No. 1998-A dated
as of May 1, 1998 between Lessee and Pass Through Trustee."
"'Refinancing Agreement' means that certain Refinancing Agreement
relating to the Aircraft dated as of May 1, 1998 by and among Lessee, Owner
Participant, Original Loan Participant, Owner Trustee, Indenture Trustee and
Pass Through Trustee."
(b) The definition of "Indemnified Parties" is hereby amended to
be and read in its entirety as follows:
"'Indemnified Parties' means (i) First Union National Bank, in its
individual capacity and as Owner Trustee, (ii) Wilmington Trust Company, in its
individual capacity and as Indenture Trustee, (iii) the Owner Participant, (iv)
each Holder of a Series SWA 1996 Trust N620SW Certificate (including without
limitation the Pass Through Trustee), (v) the Estate and the Trust Indenture
Estate, (vi) the Original Loan Participant, (vii) the respective Affiliates,
successors and assigns of the foregoing and (viii) the respective directors,
officers, employees, agents, partners and servants of the foregoing."
(c) The definition of "Lease", "this Lease", "this Agreement",
"hereby", "herein", "hereof", and "hereunder" is hereby amended to be and read
in its entirety as follows:
"'Lease', 'this Lease', 'this Agreement', 'hereby' 'herein' 'hereof"
'hereunder' or other words mean this Sale and Lease Agreement as amended by the
First Amendment to Sale and Lease Agreement, and as supplemented by one or more
Lease Supplements and as may be further amended from time to time."
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(d) The definition of "Operative Agreements" is hereby amended
to be and read in its entirety as follows:
"'Operative Agreements' means this Lease, each Lease Supplement, the
Participation Agreement, the Trust Agreement, the Purchase Agreement, the
Purchase Agreement Assignment, the Engine Purchase Agreement Assignment (if
any), the Trust Indenture, the Certificates, each Indenture and Trust
Supplement, the Bills of Sale, the Tax Indemnity Agreement, the Manufacturer's
Consent and the Refinancing Agreement, including any consents included in or
attached to any thereof."
(e) The definition of "Participant" is hereby amended to be and
read in its entirety as follows:
"'Participant' means Owner Participant and its successors and permitted
assigns."
(f) The definition of "Participation Agreement" is hereby amended
to be and read in its entirety as follows:
"'Participation Agreement' means the Participation Agreement relating to
the Aircraft, dated as of June 1, 1996, among Lessee, Owner Participant,
Original Loan Participant, Lessor and Indenture Trustee as amended by the First
Amendment to Participation Agreement and as may be further amended from time to
time."
(g) The definition of "Special Purchase Price After-Tax Yield" is
hereby amended to be and read in its entirety as follows:
"'Special Purchase Price After-Tax Yield' means the net after-tax
economic yield, total aggregate after-tax cash flow and general pattern of book
earnings expected by the Owner Participant with respect to the Aircraft through
the Special Purchase Option Date if the Special Purchase Option were exercised
and the Special Purchase Option Price paid in installments, utilizing the
multiple investment sinking fund method of analysis and the same assumptions as
used by Owner Participant (including the Tax Assumptions set forth in Section 2
of the Tax Indemnity Agreement) in its economic analysis of the transaction as
of the Delivery Date."
(h) The definition of "Stipulated Loss Value" is hereby amended
to be and read in its entirety as follows:
"'Stipulated Loss Value' means the sum of (i) the amount determined by
multiplying the Lessor's Cost of the Aircraft by the percentage set forth in
Exhibit B-1 hereto opposite the SLV Determination Date next preceding the date
on which Stipulated Loss Value is being paid (or, if such payment date is an SLV
Determination Date, by the percentage set forth opposite such SLV Determination
Date), and (ii) interest on such amount described in clause (i) above calculated
at the Certificate Rate from and including such SLV Determination Date to but
excluding the date of such payment. Stipulated Loss Value may be subject to
adjustment in accordance with Section 3.7 and Section 18.2(d) of this
Agreement."
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(i) The definition of "Termination Value" is hereby amended to be
and read in its entirety as follows:
"'Termination Value' means the amount determined by multiplying the
Lessor's Cost of the Aircraft by the percentage set forth in Exhibit B-2 hereto
opposite the TV Determination Date as of which Termination Value is being
determined. Termination Value may be subject to adjustment in accordance with
Section 3.7 of this Agreement."
(j) The definition of "Trust Indenture" is hereby amended to be
and read in its entirety as follows:
"'Trust Indenture' means the Trust Indenture and Security Agreement,
dated as of June 1, 1996, between Owner Trustee and Indenture Trustee, relating
to the Aircraft, as supplemented by the Trust Agreement and Trust Indenture and
Security Agreement Supplement, dated June 3, 1996, and as amended by the First
Amendment to Trust Indenture and as may be further amended or supplemented from
time to time."
(k) The definitions of "Assumed Interest Amount" and "Rent
Differential Amount" are hereby deleted in their entirety.
Section 3. Amendments to Section 3. Section 3 of the Lease is hereby
amended in the following manner:
(a) Section 3.3 is hereby amended to be and read in its entirety
as follows:
"3.3 Basic Rent. No Basic Rent shall be paid during the Interim
Lease Term. Lessee hereby agrees to pay to Lessor Basic Rent for the Base Lease
Term with respect to the Aircraft on each Rent Payment Date set forth in Part I
of Exhibit C, in each case in an amount equal to the percentage of Lessor's Cost
of the Aircraft set forth in Part I of Exhibit C opposite such Rent Payment
Date, subject to the terms of the next succeeding paragraph of this Section 3.3
and Section 3.7. Each installment (or portion of an installment) of Basic Rent
under the heading `Advance' in Part I of Exhibit C payable on a Rent Payment
Date shall relate to the respective Lease Period immediately following such Rent
Payment Date, and each installment (or portion of an installment) of Basic Rent
under the heading `Arrears' in Part I of Exhibit C payable on a Rent Payment
Date shall relate to the respective Lease Period immediately preceding such Rent
Payment Date.
"Anything contained in the Participation Agreement or this Lease
or any other Operative Agreement to the contrary notwithstanding, (a) each
installment of Basic Rent payable under this Lease, whether or not adjusted in
accordance with the provisions of Section 3.7 hereof, shall be, under any
circumstances and in any event, in an amount at least sufficient to pay in full,
on such Rent Payment Date, any scheduled payments then required to be made on
account of the principal of and interest on the Certificates, and (b) Stipulated
Loss Value, Termination Value and, unless Lessee shall have assumed the
Certificates pursuant to Section 18.2(c) hereof, the Special Purchase Price and
the initial installment of the Special Purchase Price if paid in installments,
in each case whether or not adjusted in accordance with the provisions of
Section 3.7, as of any date
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of determination thereof, together with any amount of Basic Rent required to be
paid on such date and all other amounts payable on such date, shall equal under
any circumstances and in any event, an amount at least sufficient to pay in full
any payments then required to be made on account of the principal of and
interest (including, without limitation any interest on overdue principal and,
to the extent permitted by applicable law, interest), and Premium, if any, on
the Certificates and all amounts which would be payable prior thereto or on a
parity therewith if Section 3.03 of the Trust Indenture were applicable at the
time of such payment."
(b) Section 3.4 of the Lease is hereby amended to be and read in
its entirety as follows:
"3.4 Variable Amounts on Certificates. Lessee shall pay (or cause to be
paid) to or on behalf of Lessor an amount of Supplemental Rent equal to the
Premium (if any) payable on the Certificates, amounts due pursuant to Section
15.05 of the Trust Indenture and each other amount required to be paid (other
than principal and interest on the Certificates) by Lessor as Owner Trustee
under the Trust Indenture, on the same date that such amounts are due under the
Trust Indenture and as provided in Section 3.6."
(c) Section 3.7.1 of the Lease is hereby amended to be and read
in its entirety as follows:
"3.7.1 Adjustments upon Payment by Lessor of Transaction Costs,
Etc. If (a) the Transaction Costs referred to in Section 16(a) of the
Participation Agreement paid by Owner Participant in connection with the closing
of this transaction on the Delivery Date are equal to an amount which is other
than 0.332897% of Lessor's Cost, (b) the Transaction Costs referred to in
Section 16(a) of the Participation Agreement paid by Owner Participant in
connection with the initial refinancing or refunding of the Certificates
pursuant to Section 18 of the Participation Agreement are equal to an amount
which is other than 0.643305% of Lessor's Cost, (c) a refinancing or refunding
of the Certificates pursuant to Section 17 of the Participation Agreement
occurs, or (d) any recalculation of Basic Rent, Stipulated Loss Value,
Termination Value and the Special Purchase Price is required by the terms of the
Tax Indemnity Agreement, then in each case, the Basic Rent percentages set forth
in Exhibit C, the Stipulated Loss Value percentages set forth in Exhibit B-1 and
the Termination Value percentages set forth in Exhibit B-2 shall be recalculated
by Owner Participant (i) in the case of a recalculation pursuant to clause (b),
on or prior to January 2, 1999 (ii) in the case of a recalculation pursuant to
clause (c), prior to the relevant Refinancing Date or (iii) in the case of a
recalculation pursuant to clause (d), prior to the Rent Payment Date next
following the event described in clause (d), in each case in order to: (A)
maintain Net Economic Return and (B) minimize the Net Present Value of Rents to
the extent possible consistent with clause (A). In addition, in the event of an
adjustment pursuant to this Section 3.7, the Special Purchase Price (including
any installments thereof) shall be recalculated in accordance with the terms of
Section 18.2(b)."
Section 4. Amendment to Section 7. Section 7.3.3 of the Lease is hereby
amended to delete all references therein to the Original Loan Participant.
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Section 5. Amendment to Section 10. Section 10.1.3 of the Lease is
hereby amended to be and read in its entirety as follows:
"10.1.3 Payment of Stipulated Loss Value and Rent. On any Business Day
designated by Lessee upon 30 days' irrevocable notice to Lessor and the
Indenture Trustee, but in no event later than the earlier of (i) the 180th day
following the date of the occurrence of such Event of Loss or (ii) the later of
15 days following receipt of insurance proceeds with respect to such occurrence
or the date Lessee shall have made or shall have deemed to have made its
election under Section 10.1.1 to comply with Section 10.1.3, Lessee shall pay to
Lessor in the manner and in funds of the type specified in Section 3.6, (A) the
Stipulated Loss Value for the Aircraft, determined as of the date of payment (as
described in the definition of Stipulated Loss Value), (B) all unpaid Basic Rent
due on or prior to the SLV Determination Date with reference to which the
Stipulated Loss Value is computed (it being understood and agreed that Lessee
shall not be required to pay the portion, if any, of such Basic Rent designated
in Exhibit C hereto as payable in advance on such SLV Determination Date), and
(C) (without duplication) any other Rent which is due and payable through and
including the date of payment."
Section 6. Amendments to Section 11.
(a) Section 11.5 of the Lease is hereby amended to delete all
references therein to the Original Loan Participant.
(b) Section 11.6 of the Lease is hereby amended to be and read in
its entirety as follows:
"11.6 Lessor's Right to Maintain Insurance. In the event that Lessee
shall fail to maintain or cause to be maintained insurance as herein provided,
Lessor, Indenture Trustee, Owner Participant or, so long as Pass Through Trustee
is a Holder, Pass Through Trustee, may at its option (but shall not be obligated
to) provide such insurance and in such event, Lessee shall, upon demand,
reimburse such Person, as Supplemental Rent, for the cost thereof. No such
payment, performance or compliance shall be deemed to cure any Lease Default
hereunder or otherwise relieve Lessee of its obligations with respect thereto."
Section 7. Ratification. Except as amended hereby, the Lease continues
and shall remain in full force and effect in all respects.
Section 8. Counterparts. This Amendment may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered is
an original, but all such counterparts shall together constitute but one and the
same instrument.
Section 9. GOVERNING LAW. THIS AMENDMENT HAS BEEN DELIVERED IN THE STATE
OF NEW YORK AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, Lessor and Lessee have each caused this First
Amendment to Sale and Lease Agreement to be duly delivered in the State of New
York and executed as of the day and year first above written.
FIRST UNION NATIONAL BANK
not in its individual capacity, but
solely as Owner Trustee, Lessor
By:
--------------------------------------
Corporate Trust Officer
SOUTHWEST AIRLINES CO., Lessee
By:
--------------------------------------
Treasurer
Approved and Consented to:
WILMINGTON TRUST COMPANY,
not in its individual capacity, but
solely as Indenture Trustee
By:
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Senior Financial Services Officer
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EXHIBIT B-1 TO
SALE AND LEASE AGREEMENT
Stipulated Loss Value Schedule
[The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.]
SALE AND LEASE AMENDMENT [N620SW]
B-1
10
EXHIBIT B-2 TO
SALE AND LEASE AGREEMENT
Termination Value Schedule
[The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.]
SALE AND LEASE AMENDMENT [N620SW]
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EXHIBIT C TO
SALE AND LEASE AGREEMENT
Part I
Rent Payment Schedule
Part II
EBO Installment Payment Schedule
Part III
Special Purchase Price
Part IV
Lessor's Cost
[The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.]
SALE AND LEASE AMENDMENT [N620SW]
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