FN>
FINANCING AGREEMENT
This FINANCING AGREEMENT (this "Agreement"), dated as of
December 13, 2000, is entered into by and between AMERICAN TRANS AIR, INC.
("ATA"), an Indiana corporation, and GENERAL ELECTRIC CAPITAL CORPORATION
("GECC"), a New York corporation.
WHEREAS, ATA and GECC wish to set forth their understanding
regarding the leveraged lease financings or single investor lease financings of
(Confidential Material Omitted) new Boeing B737-800 aircraft, each equipped with
two CFM56-7 engines (collectively, the "Aircraft") to be delivered pursuant to
the Purchase Agreement No. 2262 dated as of June 30, 2000, as amended, between
ATA and The Boeing Company (the "ATA Purchase Contract") or pursuant to the
Purchase Agreement No. 1905 dated as of April 25, 1996, as amended, between GECC
and The Boeing Company (the "GE Purchase Contract" and, together with the ATA
Purchase Contract, the "Purchase Contracts"); and
WHEREAS, in furtherance thereof, ATA and GECC wish to commit
to execute and deliver certain agreed documents relating to such financing of
each Aircraft on or before the date (the "Tender Date") that such Aircraft is
tendered for delivery by The Boeing Company under the applicable Purchase
Contract (which date will, if the closing of the applicable financing
transaction as described herein occurs on such date, be the Delivery Date for
such Aircraft).
NOW, THEREFORE, the parties hereto agree as follows:
1. Leveraged Transactions. (a) ATA and GECC agree to enter into a leveraged
lease financing transaction, on and subject to the terms and conditions
described herein (a "Leveraged Transaction"), with respect to each of the
(Confidential Material Omitted) Aircraft identified on Exhibit A (the "Firm
Aircraft").
(b) (Confidential Material Omitted).
(c) Each of the Firm Aircraft. (Confidential Material Omitted) is referred
to herein as a "Leveraged Aircraft".
- 7 -
2. Single-Investor Transactions. ATA and GECC agree to enter into a single
investor lease financing transaction, on and subject to the terms and conditions
described herein (a "SIL Transaction"), with respect to each of the
(Confidential Material Omitted) Aircraft identified on Exhibit B (the "SIL
Aircraft"). The SIL Transactions and the Leveraged Transactions are referred to
collectively as the "Transactions".
3. Leveraged Documents. Attached as Exhibit C are the forms of the agreements
and other documents (collectively, the "Leveraged Documents") which the parties
have negotiated and agreed to utilize to effect each of the Leveraged
Transactions. Capitalized terms used in this Agreement without definition in
relation to the Leveraged Transactions shall have the meanings set forth in the
Leveraged Documents. Subject to the terms and conditions of this Agreement, ATA
agrees that, on or before the Tender Date of each Leveraged Aircraft, it shall,
with respect to such Aircraft, (a) execute and deliver, as Lessee, each of the
Leveraged Documents to which Lessee is to be a party as provided therein and (b)
procure that the parties identified therein as Owner Trustee and as Mortgagee
and Loan Participant, respectively (or other institutions reasonably acceptable
to GECC) execute and deliver the applicable Leveraged Documents in such
capacities. GECC agrees that, on the Tender Date of each Leveraged Aircraft, it
shall (or shall cause an Affiliate that is a Permitted Institution to), with
respect to such Aircraft, execute and deliver, as Owner Participant, each of the
Leveraged Documents to which Owner Participant is to be party as provided
therein.
The parties agree that the Leveraged Documents for each
Leveraged Aircraft shall be in the form set forth in Exhibit C, except as
modified only to incorporate (a) the Delivery Date (and other dates measured
with reference thereto), serial numbers and registration number applicable to
such Aircraft; (b) the actual Lessor's Cost, as determined in accordance with
Section 5 below; (c) the Actual Pricing, as determined in accordance with
Section 6 below; (d) changes to reflect the terms of the Debt Financing, to
the extent agreed by the parties, as contemplated in Section 7 below; (e)
changes, if requested by GECC, to effect a like kind exchange as described in
Exhibit E; and (f) the actual Payment Dates (which will correspond to the
interest payment dates under the Debt Financing).
4. SIL Documents. Attached as Exhibit D are the forms of agreements and other
documents (collectively, the "SIL Documents") which the parties have negotiated
and agreed to utilize to effect each of the SIL Transactions. Capitalized terms
used in this Agreement without definition in relation to the SIL Transactions
shall have the meanings set forth in the SIL Documents. Subject to the terms and
conditions of this Agreement, ATA agrees that, on the Tender Date of each SIL
Aircraft, it shall (a) execute, deliver and perform, as Lessee, each of the SIL
Documents to which Lessee is to be a party as provided therein and (b) procure
that the party identified therein as Owner Trustee (or another institution
reasonably acceptable to GECC) execute and deliver the applicable SIL Documents
in such capacity. GECC agrees that, on the Tender Date of each SIL Aircraft, it
shall (or shall cause a Permitted Institution to), with respect to such
Aircraft, execute, deliver and perform, as Owner Participant, each of the SIL
Documents to which Owner Participant is to be a party as provided therein.
The parties agree that the SIL Documents for each SIL Aircraft
shall be in the form set forth in Exhibit D, except as modified only to
incorporate (a) the Delivery Date (and other dates measured with reference
thereto), serial numbers and registration number applicable to such Aircraft;
(b) the actual Lessor's Cost, as determined in accordance with Section 5 below;
(c) the Actual Pricing, as determined in accordance with Section 6 below; (d)
changes, if requested by GECC, to effect a like kind exchange as described in
Exhibit E; and (e) the actual Payment Dates; provided that with respect to the
Aircraft identified on Exhibit B as "GE Purchase Contract" aircraft, the
additional changes described in Exhibit F shall be made.
5. Lessor's Cost. In the Pricing Assumptions, Lessor's Cost has been assumed to
be (Confidential Material Omitted) for each Aircraft to be delivered under the
ATA Purchase Contract and (Confidential Material Omitted) for each Aircraft to
be delivered under the GE Purchase Contract. Lessor's Cost for each Aircraft
shall be adjusted to be equal to the sum of (a) the actual purchase price of
such Aircraft under the applicable Purchase Contract (including any price
escalation provided for therein) and (b) capitalized interest.
6. Pricing. (a) The Basic Rent payments and allocations, Stipulated Loss Values,
Termination Values and EBO Price (collectively, the "Pricing") for each
Aircraft, based on the pricing assumptions set forth in Exhibit G (the "Pricing
Assumptions"), are set forth in Exhibit H (the "Assumed Pricing") for the
Leveraged Aircraft and the SIL Aircraft respectively. The actual Pricing
("Actual Pricing") for each Aircraft will be the Assumed Pricing adjusted as
provided in the following provisions of this Section 6.
(b) The Net Economic Return shall be adjusted by changing
the net after-tax book yield component thereof to reflect any difference between
(1) (Confidential Material Omitted) as quoted on the (Confidential Material
Omitted) page (ask side based on a 30/360 day convention) as of the second
Business Day prior to the Delivery Date and (2) (Confidential Material Omitted).
(c) The Assumed Pricing shall be recalculated (upwards or
downwards) as of the Delivery Date by GECC, in order to (i) maintain the Net
Economic Return (adjusted as provided in Secton 6(b) above) and (ii) to the
extent possible consistent with clause (i), to minimize the Net Present Value of
Rents to Lessee, to reflect (A) any change in:
(1) the Delivery Date; (2) the amount of Lessor's Cost; (3) the amount of
Transaction Expenses; or (4) in respect of the Leveraged Transactions, the
original principal amount, interest rate or amortization schedule of the Debt
Financing from that set forth in the Pricing Assumptions; (Confidential Material
Omitted)and (C) any Change in Tax Law enacted, adopted, issued or (to the extent
described as a "proposed change" in the following definition of a "Change in Tax
Law") proposed on or prior to the Delivery Date. "Change in Tax Law" means (i)
any change, or any proposed change that has a proposed effective date that is on
or prior to the Delivery Date, in the Code (provided that, in the case of a
proposed change in the Code, such change must have been "reported favorably" by
the House Ways and Means Committee or the Senate Finance Committee) or the
Treasury Regulations (provided that, in the case of a proposed change in the
Treasury Regulations, such change must have been issued by the Department of the
Treasury) or (ii) any change in the interpretation of the Code or Treasury
Regulations in a decision by the United States Supreme Court, the United States
Tax Court, the United States Court of Claims or any of the United States Courts
of Appeal or District Courts, or any issuance of a revenue ruling, revenue
procedure or any pronouncement by the Internal Revenue Service or the Department
of the Treasury (other than a change in the alternative minimum tax or other
change that results in Owner Participant's being subject to alternative minimum
tax or unable to use all tax benefits because of its particular tax situation).
Subject to the following paragraph, in the event of any such proposed change,
the parties hereto shall cooperate in order to determine the methodology for
taking into account in such recalculation the effect of such proposed change.
Any such recalculation shall be prepared by GECC, in compliance with the
provisions of ss. 3.2.1(e) of the Lease and subject to verification in the
manner provided in ss. 3.2.1(d) of the Lease, on the basis of the same
methodology and assumptions used by GECC in determining the Assumed Pricing,
except as such assumptions have been modified to reflect the events giving rise
to such recalculation and taking into account the law applicable at the time of
such recalculation (and, in respect of the EBO Price, subject to the constraints
set forth in ss. 3.2.1(b)(3) of the Lease). All recalculations (1) shall be made
so as to avoid characterization of the Lease as a "disqualified leaseback or
long-term agreement" within the meaning of Code ss. 467 and Treasury Regulations
thereunder and (2) shall be in compliance with the requirements of ss.4(1) and
ss. 4(6) of Revenue Procedure 75-21 and ss.ss. 4.02(5), 4.07(1) and 4.07(2) of
Revenue Procedure 75-28. In connection with any such recalculations to payments
and allocations of Basic Rent, appropriate corresponding adjustments shall be
made to the percentages set forth on the Schedules of Stipulated Loss Values and
Termination Values in the columns headed "Deferred Basic Rent Amount" and
"Prepaid Basic Rent Amount."
(d) In the event that any adjustment to the Pricing for an Aircraft
occasioned by a Change In Tax Law pursuant to clause (B) of Section 6(c) would
cause the Net Present Value of Rents (as defined in the applicable Lease) to
increase by more than (Confidential Material Omitted) in the case of an Aircraft
delivered under the GE Purchase Contract or (Confidential Material Omitted) in
the case of an Aircraft delivered under the ATA Purchase Contract, ATA may
terminate this Agreement with respect to such Aircraft by written notice to
GECC, unless GECC, in its sole discretion, by written notice to ATA given within
four Business Days after ATA gives such termination notice, agrees to revise
such adjustment so that such present value increase shall be (Confidential
Material Omitted) or (Confidential Material Omitted), respectively, or less. If
ATA terminates this Agreement with respect to any Aircraft pursuant to this
Section 6(d), ATA shall not effect any lease or other financing of such Aircraft
that would reflect a Net Present Value of Rents (or the equivalent) equal to or
greater than the Net Present Value of Rents that would have applied in the
transaction contemplated by this Agreement with respect to such Aircraft.
(e) In the event that any recalculation pursuant to Section
6(c) results in a "back-ended rent profile" for purposes of ss. 467 of the Code
and the Treasury Regulations thereunder, (i) the (Confidential Material Omitted)
requirement set forth in clause (A) of the definition of "Applicable Percentage"
shall apply to the first two Renewal Terms, and (ii) the provisions of Section
17 of the Lease shall be modified accordingly.
(Confidentail Material Omitted)
8. Dates. ATA shall give to GECC not less than five Business Days' prior notice
of the scheduled Delivery Date of each Aircraft, provided that ATA shall be
entitled to postpone the scheduled Delivery Date for an Aircraft by written
notice to GECC given at any time prior to 2:00 PM (New York time) on the
scheduled Delivery Date for such Aircraft, which notice may specify a new
scheduled Delivery Date on a subsequent Business Day. If notice of a
postponement does not specify a new scheduled Delivery Date, ATA shall give GECC
not less than two Business Days' notice of the new scheduled Delivery Date with
respect to such Aircraft.
9. Return of Funds. If the closing of a Transaction with respect to an Aircraft
fails to occur on the scheduled Delivery Date and GECC shall have made funds
available for such closing, ATA shall cause such funds to be returned to GECC in
immediately available funds by 3:30 p.m. (New York time) on such scheduled
Delivery Date, unless GECC shall have agreed otherwise in writing.
10. Expenses. If the applicable Transaction with respect to an Aircraft fails to
close for any reason prior to the termination of this Agreement, pursuant to
Section 12 below, ATA will pay all fees and expenses (including the reasonable
legal fees and expenses of GECC's counsel) incurred in connection with such
Transaction; provided that if the Transaction fails to close by reason of a
breach by GECC of its obligations under this Agreement or by the Owner
Participant of any of its obligations under the applicable Participation
Agreement, GECC shall pay all reasonable fees and expenses incurred in
connection with such Transaction (including the reasonable legal fees and
expenses of ATA's counsel) but excluding in any event any fees and expenses
related to the Debt Financing.
11. Conditions.
(a) The obligation of GECC to participate in the Transactions
with respect to each Aircraft as contemplated by this Agreement shall be subject
to the fulfillment or the waiver by GECC, on or before the Delivery Date of such
Aircraft, of the conditions set forth in ss. 5.1 (except subsections 5.1.15 and
5.1.16 thereof) of the applicable Participation Agreement with respect to such
Transaction and the further conditions that (Confidential Material Omitted) (ii)
the Delivery Date for such Aircraft shall have occurred on or before the date
contemplated by clause (ii) of Section 12 hereof and (Confidential Material
Omitted).
(b) The obligations of ATA to participate in the Transaction with respect
to each Aircraft as contemplated by this Agreement shall be subject to (i) the
satisfaction, or waiver by ATA, on or before the Delivery Date of such Aircraft,
of the conditions set forth in ss. 5.4 of the applicable Participation Agreement
and (ii) with respect to the Leveraged Transactions, the agreement of GECC and
the debt providers on debt/equity matters (to the extent different from those
reflected in the form of Mortgage included in Exhibit C) by the date set
contemplated by clause (ii) of Section 12 hereof.
12. Termination. The obligations of ATA and GECC under this Agreement with
respect to any Aircraft shall terminate and be of no further force or effect on
the earlier of (i) the consummation of the Transactions with respect to all of
the Aircraft and (ii) the Outside Date (as defined below) applicable to such
Aircraft, provided that the obligations of ATA and GECC under Section 10 hereof
shall survive, and remain in full force and effect following, the termination of
this Agreement. For purposes of this Section 12, "Outside Date" means December
31, 2002 with respect to the Firm Aircraft and the SIL (Confidential Material
Omitted) (such date, in each case, the "Expiry Date"), provided that if a labor
strike or similar event occurs at The Boeing Company prior to the applicable
Expiry Date and such strike or event causes the date of delivery under the
Purchase Agreement in respect of any of the Aircraft to be delayed, the "Outside
Date" shall be deemed to mean the earlier of (x) the date which follows the
applicable Expiry Date by the number of days that such strike or event has
continued in effect and (y) the date which is six months after the applicable
Expiry Date.
13. Related Matters. (a) Upon execution and delivery of this Agreement by
ATA, GECC shall return to ATA the letter of credit provided by ATA in connection
with leveraged lease transaction [ATA 1996 B] covering the Boeing 757-23N
aircraft having manufacturer's serial number 27974 and shall execute and deliver
an appropriate amendment to the Participation Agreement dated as of December 16,
1996 in such transaction releasing ATA from the provisions of Section 8(ee)
thereof that require such letter of credit.
(Confidential Material Omitted)
14. GE Purchase Contract. GECC confirms that the purchase price for each
Aircraft to be delivered under the GE Purchase Contract (with the specifications
set forth in Boeing Detail Specification Ref. (Confidential Material Omitted)
GECC agrees that it will not, in respect of any Aircraft that
is subject to this Agreement, further amend the price, specifications or other
terms of the GE Purchase Contract without ATA's written consent. GECC also
agrees that it will agree to reasonable change orders and amendments to the GE
Purchase Contract, with respect to any Aircraft that is subject to this
Agreement, that are requested by ATA and accepted by the Boeing Company.
15. Entire Agreement. This Agreement, as of the date hereof, constitutes
the entire agreement of the parties hereto with respect to the subject matter
hereof, and all prior understandings, written or oral (including without
limitation the letter of intent dated May 3, 2000 insofar as it relates to the
Aircraft), between the parties hereto with respect to such subject matter are
hereby superseded in their entireties.
16. Notices. All notices and other communications contemplated hereby shall
be in writing and shall be effective when delivered addressed to a party at its
address or facsimile number set forth under its signature hereto, or to such
other address or facsimile number as any such party shall specify.
17. Miscellaneous. This Agreement may be executed in any number of
counterparts, and each fully-executed counterpart of this Agreement shall be an
original and all of such counterparts together shall constitute one instrument.
Neither this Agreement nor any of the terms hereof may be amended, supplemented,
waived or modified orally, but only by an instrument in writing signed by the
party against which the enforcement of the amendment, supplement, waiver or
modification is sought. The parties intend that this Agreement shall be a
binding agreement with respect to matters set forth herein. The rights and
obligations of the parties hereto shall not be assignable, and any purported
assignment shall be voided.
18. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York applicable to contracts made
and to be performed wholly within such State.
IN WITNESS WHEREOF, the parties have executed and delivered
this Agreement as of the date first written above.
AMERICAN TRANS AIR, INC.
By: /s/ Charles T. Cleaver
__________________________________
Name: Charles T. Cleaver
Title: Treasurer
Address: 7337 West Washington Street
Indianapolis, IN 46231
Attention: Treasurer
Facsimile: 317-240-7091
GENERAL ELECTRIC CAPITAL CORPORATION
By: /s/ Norman Liu
_________________________________
Name: Norman Liu
Title: Vice President
Address: 201 High Ridge Road
Stamford, CT 06927
Attention: Contracts Leader
Facsimile: 203-357-3201
Exhibit A
Leveraged Aircraft
Aircraft Under ATA Purchase Contract Month of Scheduled Delivery
(Confidential Material Omitted)
Exhibit B
Single-Investor Lease Aircraft
Aircraft Under ATA Purchase Contract Month of Scheduled Delivery
(Confidential Material Omitted)
Aircraft Under GE Purchase Contract
(Confidential Material Omitted)
Exhibit B-1
(Confidential Material Omitted)
Exhibit C
Leveraged Lease Documents
Attached are forms of the following Leveraged Documents:
1. Participation Agreement (including Annex A - Definitions)
2. Lease
3. Trust Agreement
4. Tax Indemnity Agreement
5. Guarantee
6. Purchase Agreement Assignment
7. Consent and Agreement
8. Mortgage and Equipment Notes
Exhibit D
Single-Investor Lease Documents
Attached are forms of the following Single Investor Lease
Documents:
1. Participation Agreement (including Annex A - Definitions)
2. Lease
3. Trust Agreement
4. Tax Indemnity Agreement
5. Guarantee
6. Purchase Agreement Assignment
7. Consent and Agreement
Exhibit E
Like Kind Exchange
The Owner Participant may elect, with respect to any of the Aircraft, to fund
its equity investment pursuant to a like kind exchange arranged by the Owner
Participant with a qualified intermediary. If such an election is made, the
following new ss. 10.3 will be added to the applicable Participation Agreement:
"10.3 Like Kind Exchange
Notwithstanding anything to the contrary contained in any
of the Operative Agreements, upon notice to Lessee, each of Owner
Trustee's and Owner Participant's rights (but not any of its
obligations other than the obligation to pay Owner Participant's
Commitment for the Aircraft) under this Agreement to acquire the
Aircraft may be assigned to [the Intermediary] in connection with
a like kind exchange under Section 1031 of the Code and pursuant
to the Like Kind Exchange Documents (as defined in Schedule 3 to
this Agreement). Notwithstanding the first sentence of this
Section 10.3, Owner Participant shall be responsible to make its
Commitment available in accordance with the provisions of this
Agreement if the Intermediary fails to make such Commitment
available, and any such assignment shall not release Owner
Participant or Owner Trustee from any of their respective
obligations hereunder or under any other Operative Agreement. Any
Lessor Lien attributable to the Intermediary shall be deemed
attributable to Owner Participant for purposes of the Operative
Agreements."
The Like Kind Exchange Documents will consist of the following:
1. Assignment and Acceptance Replacement Property Contract, dated the
Delivery Date, among Owner Participant, Owner Trustee and Intermediary.
2. Notice of Assignment to Qualified Intermediary of Certain Rights in
Participation Agreement and Purchase Agreement, dated the Delivery Date, from
Owner Participant and Owner Trustee, with acknowledgment of receipt by Lessee,
Manufacturer, Mortgagee and Loan Participant.
3. Direction of Title Transfer dated the Delivery Date from the
Intermediary and acknowledged and agreed by Lessee and Manufacturer.
4. Reassignment and Reacceptance Replacement Property Contract dated the
Delivery Date among the Intermediary, Owner Participant and Owner Trustee,
acknowledged by Lessee and Manufacturer.
The Owner Participant shall indemnify Lessee, on a net after-tax basis, against
any obligation, liability, loss or expense (including legal fees) of any kind
that Lessee pays or incurs as a result of any like-kind exchange described in
this Exhibit E, and such like-kind exchange shall be excluded from the indemnity
obligations of Lessee under the applicable transaction documents.
ATA shall not be required to adjust the timing of delivery of any Aircraft in
order to permit GECC to effect any such like-kind exchange.
Exhibit F
GE PURCHASE CONTRACT AIRCRAFT
The Purchase Agreement Assignment and the Consent and
Agreement, as set forth in Exhibit D, with respect to the SIL Aircraft
identified on Exhibit B as Aircraft under the GE Purchase Contract, shall be
modified to reflect the fact that GECC, rather than ATA, is the purchaser under
the GE Purchase Contract and will be the party assigning rights under that
contract to the Owner Trustee, and references thereto in the Participation
Agreement shall be modified accordingly.
Exhibit G
Pricing Assumptions
SIL Transactions
Leveraged ATA GE
Assumptions Transactions Purchase Contract Purchase Contract
1. Delivery Date (Confidential Material Omitted)
2. Lessor's Cost
($ million)
3. Transaction
Expenses
(% of Lessor's
Cost)
4. Basic Lease Term
5. Tax Rate
(Confidential Material
Omitted)
7. Foreign Source
Usage
8. Pricing Files
Exhibit H
Assumed Pricing
The Assumed Pricing consists of the following:
For the Leveraged Aircraft:
1. Basic Rent Payments:
As set forth in Exhibit H-1
2. Basic Rent Allocations:
As set forth in Exhibit H-2
(Confidential Material Omitted)
5. Termination Values:
As set forth in Exhibit H-5
6. Stipulated Loss Values:
Identical to Termination Values as set forth in Exhibit
H-5
7. EBO:
As set forth in Exhibit H-6
For the SIL Aircraft (GE Contract):
1. Basic Rent Payments:
As set forth in Exhibit H-7
2. Basic Rent Allocations:
As set forth in Exhibit H-8
3. Termination Values:
As set forth in Exhibit H-9
4. Stipulated Loss Values:
Identical to Termination Values as set forth in Exhibit
H-9
5. EBO:
As set forth in Exhibit H-10
For the SIL Aircraft (ATA Contract):
1. Basic Rent Payments:
As set forth in Exhibit H-11
2. Basic Rent Allocations:
As set forth in Exhibit H-12
3. Termination Values:
As set forth in Exhibit H-13
4. Stipulated Loss Values:
Identical to Termination Values as set forth in
Exhibit H-13
5. EBO:
As set forth in Exhibit H-14
Exhibit H-1
Rent Schedule in Percentages of Total Cost
Rental Date Total Rent
(Confidential Material Omitted)
Jun 15 2001
Jul 15 2001
Oct 15 2001
Jan 15 2002
Apr 15 2002
Jul 15 2002
Oct 15 2002
Jan 15 2003
Apr 15 2003
Jul 15 2003
Oct 15 2003
Jan 15 2004
Apr 15 2004
Jul 15 2004
Oct 15 2004
Jan 15 2005
Apr 15 2005
Jul 15 2005
Oct 15 2005
Jan 15 2006
Apr 15 2006
Jul 15 2006
Oct 15 2006
Jan 15 2007
Apr 15 2007
Jul 15 2007
Oct 15 2007
Jan 15 2008
Apr 15 2008
Jul 15 2008
Oct 15 2008
Jan 15 2009
Apr 15 2009
Jul 15 2009
Oct 15 2009
Jan 15 2010
Apr 15 2010
Jul 15 2010
Oct 15 2010
Jan 15 2011
Apr 15 2011
Jul 15 2011
Oct 15 2011
Jan 15 2012
Apr 15 2012
Jul 15 2012
Oct 15 2012
Jan 15 2013
Apr 15 2013
Jul 15 2013
Oct 15 2013
Jan 15 2014
Apr 15 2014
Jul 15 2014
Oct 15 2014
Jan 15 2015
Apr 15 2015
Jul 15 2015
Oct 15 2015
Jan 15 2016
Apr 15 2016
Jul 15 2016
Oct 15 2016
Jan 15 2017
Apr 15 2017
Jul 15 2017
Oct 15 2017
Jan 15 2018
Apr 15 2018
Jul 15 2018
Oct 15 2018
Jan 15 2019
Apr 15 2019
Jul 15 2019
Oct 15 2019
Jan 15 2020
Apr 15 2020
Jul 15 2020
Oct 15 2020
Jan 15 2021
Apr 15 2021
Jun 15 2021
Exhibit H-2
Allocation to Cash Rent Report
Allocation Year Allocation Cash Rent Cash Rent Date
2001 (Confidential Material Omitted) 15-Jul-01
15-Oct-01
2002 15-Oct-01
15-Jan-02
15-Apr-02
2003 15-Apr-02
15-Jul-02
15-Oct-02
15-Jan-03
2004 15-Jan-03
15-Apr-03
15-Jul-03
15-Oct-03
15-Jan-04
2005 15-Jan-04
15-Apr-04
15-Jul-04
15-Oct-04
2006 15-Jan-05
15-Apr-05
15-Jul-05
15-Oct-05
2007 15-Jan-06
15-Apr-06
15-Jul-06
15-Oct-06
2008 15-Jan-07
15-Apr-07
15-Jul-07
15-Oct-07
2009 15-Jan-08
15-Apr-08
15-Jul-08
15-Oct-08
2010 15-Jan-09
15-Apr-09
15-Jul-09
15-Oct-09
2011 15-Jan-10
15-Apr-10
15-Jul-10
15-Oct-10
2012 15-Jan-11
15-Apr-11
15-Jul-11
15-Oct-11
2013 15-Jan-12
15-Apr-12
15-Jul-12
15-Oct-12
2014 15-Jan-13
15-Apr-13
15-Jul-13
15-Oct-13
2015 15-Jan-14
15-Apr-14
15-Jul-14
15-Oct-14
2016 15-Jan-15
15-Apr-15
15-Jul-15
15-Oct-15
2017 15-Jan-16
15-Apr-16
15-Jul-16
15-Oct-16
2018 15-Jan-17
15-Apr-17
15-Jul-17
15-Oct-17
2019 15-Jan-18
15-Apr-18
15-Jul-18
15-Oct-18
2020 15-Jan-19
15-Apr-19
15-Jul-19
15-Oct-19
2021 15-Jan-20
15-Apr-20
15-Jul-20
15-Oct-20
15-Jan-21
15-Apr-21
Exhibit H-3
(Confidential Material Omitted)
Exhibt H-4
(Confidential Material Omitted
Exhibit H-5
Termination Values
Date TV Rent Adjustment Net TV
Jun 15 2001 (Confidential Material Omitted)
Jul 15 2001
Oct 15 2001
Jan 15 2002
Apr 15 2002
Jul 15 2002
Oct 15 2002
Jan 15 2003
Apr 15 2003
Jul 15 2003
Oct 15 2003
Jan 15 2004
Apr 15 2004
Jul 15 2004
Oct 15 2004
Jan 15 2005
Apr 15 2005
Jul 15 2005
Oct 15 2005
Jan 15 2006
Apr 15 2006
Jul 15 2006
Oct 15 2006
Jan 15 2007
Apr 15 2007
Jul 15 2007
Oct 15 2007
Jan 15 2008
Apr 15 2008
Jul 15 2008
Oct 15 2008
Jan 15 2009
Apr 15 2009
Jul 15 2009
Oct 15 2009
Jan 15 2010
Apr 15 2010
Jul 15 2010
Oct 15 2010
Jan 15 2011
Apr 15 2011
Jul 15 2011
Oct 15 2011
Jan 15 2012
Apr 15 2012
Jul 15 2012
Oct 15 2012
Jan 15 2013
Apr 15 2013
Jul 15 2013
Oct 15 2013
Jan 15 2014
Apr 15 2014
Jul 15 2014
Oct 15 2014
Jan 15 2015
Apr 15 2015
Jul 15 2015
Oct 15 2015
Jan 15 2016
Apr 15 2016
Jul 15 2016
Oct 15 2016
Jan 15 2017
Apr 15 2017
Jul 15 2017
Oct 15 2017
Jan 15 2018
Apr 15 2018
Jul 15 2018
Oct 15 2018
Jan 15 2019
Apr 15 2019
Jul 15 2019
Oct 15 2019
Jan 15 2020
Apr 15 2020
Jul 15 2020
Oct 15 2020
Jan 15 2021
Apr 15 2021
Jun 15 2021
Exhibit H-6
EBO Amount
EBO EBO Price Rent Adjustment EBO Amount*
Payment Date (Percentage of (Percentage of (Percentage of
Lessor's Cost) Lessor's Cost) Lessor's Cost)
(Confidential Material Omitted)
Exhibit H-7
Rent Schedule in Percentages of Total Cost
Rental Date Total Rent
Jun 15 2001 (Confidential Material Omitted)
Jul 15 2001
Oct 15 2001
Jan 15 2002
Apr 15 2002
Jul 15 2002
Oct 15 2002
Jan 15 2003
Apr 15 2003
Jul 15 2003
Oct 15 2003
Jan 15 2004
Apr 15 2004
Jul 15 2004
Oct 15 2004
Jan 15 2005
Apr 15 2005
Jul 15 2005
Oct 15 2005
Jan 15 2006
Apr 15 2006
Jul 15 2006
Oct 15 2006
Jan 15 2007
Apr 15 2007
Jul 15 2007
Oct 15 2007
Jan 15 2008
Apr 15 2008
Jul 15 2008
Oct 15 2008
Jan 15 2009
Apr 15 2009
Jul 15 2009
Oct 15 2009
Jan 15 2010
Apr 15 2010
Jul 15 2010
Oct 15 2010
Jan 15 2011
Apr 15 2011
Jul 15 2011
Oct 15 2011
Jan 15 2012
Apr 15 2012
Jul 15 2012
Oct 15 2012
Jan 15 2013
Apr 15 2013
Jul 15 2013
Oct 15 2013
Jan 15 2014
Apr 15 2014
Jul 15 2014
Oct 15 2014
Jan 15 2015
Apr 15 2015
Jul 15 2015
Oct 15 2015
Jan 15 2016
Apr 15 2016
Jul 15 2016
Oct 15 2016
Jan 15 2017
Apr 15 2017
Jul 15 2017
Oct 15 2017
Jan 15 2018
Apr 15 2018
Jul 15 2018
Oct 15 2018
Jan 15 2019
Apr 15 2019
Jul 15 2019
Oct 15 2019
Jan 15 2020
Apr 15 2020
Jul 15 2020
Oct 15 2020
Jan 15 2021
Apr 15 2021
Jun 15 2021
Exhibit H-8
Allocation to Cash Rent Report
Allocation Allocation Cash Rent Cash Rent Date
Year
(Confidential Material Omitted)
2001 15-Jul-01
15-Oct-01
2002 15-Oct-01
15-Jan-02
2003 15-Jan-02
15-Apr-02
15-Jul-02
15-Oct-02
15-Jan-03
2004 15-Jan-03
15-Apr-03
15-Jul-03
15-Oct-03
15-Jan-04
2005 15-Jan-04
15-Apr-04
15-Jul-04
15-Oct-04
15-Jan-05
2006 15-Jan-05
15-Apr-05
15-Jul-05
15-Oct-05
15-Jan-06
2007 15-Jan-06
15-Apr-06
15-Jul-06
15-Oct-06
2008 15-Jan-07
15-Apr-07
15-Jul-07
15-Oct-07
2009 15-Jan-08
15-Apr-08
15-Jul-08
15-Oct-08
2010 15-Jan-09
15-Apr-09
15-Jul-09
15-Oct-09
2011 15-Jan-10
15-Apr-10
15-Jul-10
15-Oct-10
2012 15-Jan-11
15-Apr-11
15-Jul-11
15-Oct-11
2013 15-Jan-12
15-Apr-12
15-Jul-12
15-Oct-12
2014 15-Jan-13
15-Apr-13
15-Jul-13
15-Oct-13
2015 15-Jan-14
15-Apr-14
15-Jul-14
15-Oct-14
2016 15-Jan-15
15-Apr-15
15-Jul-15
15-Oct-15
2017 15-Jan-16
15-Apr-16
15-Jul-16
15-Oct-16
2018 15-Jan-17
15-Apr-17
15-Jul-17
15-Oct-17
2019 15-Jan-18
15-Apr-18
15-Jul-18
15-Oct-18
2020 15-Jan-19
15-Apr-19
15-Jul-19
15-Oct-19
2021 15-Jan-20
15-Apr-20
15-Jul-20
15-Oct-20
15-Jan-21
15-Apr-21
Exhibit 9
Termination Values
Date TV Rent Adjustment Net TV
Jun 15 2001 (Confidential Material Omitted)
Jul 15 2001
Oct 15 2001
Jan 15 2002
Apr 15 2002
Jul 15 2002
Oct 15 2002
Jan 15 2003
Apr 15 2003
Jul 15 2003
Oct 15 2003
Jan 15 2004
Apr 15 2004
Jul 15 2004
Oct 15 2004
Jan 15 2005
Apr 15 2005
Jul 15 2005
Oct 15 2005
Jan 15 2006
Apr 15 2006
Jul 15 2006
Oct 15 2006
Jan 15 2007
Apr 15 2007
Jul 15 2007
Oct 15 2007
Jan 15 2008
Apr 15 2008
Jul 15 2008
Oct 15 2008
Jan 15 2009
Apr 15 2009
Jul 15 2009
Oct 15 2009
Jan 15 2010
Apr 15 2010
Jul 15 2010
Oct 15 2010
Jan 15 2011
Apr 15 2011
Jul 15 2011
Oct 15 2011
Jan 15 2012
Apr 15 2012
Jul 15 2012
Oct 15 2012
Jan 15 2013
Apr 15 2013
Jul 15 2013
Oct 15 2013
Jan 15 2014
Apr 15 2014
Jul 15 2014
Oct 15 2014
Jan 15 2015
Apr 15 2015
Jul 15 2015
Oct 15 2015
Jan 15 2016
Apr 15 2016
Jul 15 2016
Oct 15 2016
Jan 15 2017
Apr 15 2017
Jul 15 2017
Oct 15 2017
Jan 15 2018
Apr 15 2018
Jul 15 2018
Oct 15 2018
Jan 15 2019
Apr 15 2019
Jul 15 2019
Oct 15 2019
Jan 15 2020
Apr 15 2020
Jul 15 2020
Oct 15 2020
Jan 15 2021
Apr 15 2021
Jun 15 2021
Exhibit H-10
EBO Amount
EBO EBO Price Rent Adjustment EBO Amount*
Payment Date (Percentage of (Percentage of (Percentage of
Lessor's Cost) Lessor's Cost) Lessor's Cost)
(Confidential Material Omitted)
Exhibit H-11
Rent Schedule in Percentages of Total Cost
Rental Date Total Rent
Jun 15 2001 (Confidential Material Omitted)
Jul 15 2001
Oct 15 2001
Jan 15 2002
Apr 15 2002
Jul 15 2002
Oct 15 2002
Jan 15 2003
Apr 15 2003
Jul 15 2003
Oct 15 2003
Jan 15 2004
Apr 15 2004
Jul 15 2004
Oct 15 2004
Jan 15 2005
Apr 15 2005
Jul 15 2005
Oct 15 2005
Jan 15 2006
Apr 15 2006
Jul 15 2006
Oct 15 2006
Jan 15 2007
Apr 15 2007
Jul 15 2007
Oct 15 2007
Jan 15 2008
Apr 15 2008
Jul 15 2008
Oct 15 2008
Jan 15 2009
Apr 15 2009
Jul 15 2009
Oct 15 2009
Jan 15 2010
Apr 15 2010
Jul 15 2010
Oct 15 2010
Jan 15 2011
Apr 15 2011
Jul 15 2011
Oct 15 2011
Jan 15 2012
Apr 15 2012
Jul 15 2012
Oct 15 2012
Jan 15 2013
Apr 15 2013
Jul 15 2013
Oct 15 2013
Jan 15 2014
Apr 15 2014
Jul 15 2014
Oct 15 2014
Jan 15 2015
Apr 15 2015
Jul 15 2015
Oct 15 2015
Jan 15 2016
Apr 15 2016
Jul 15 2016
Oct 15 2016
Jan 15 2017
Apr 15 2017
Jul 15 2017
Oct 15 2017
Jan 15 2018
Apr 15 2018
Jul 15 2018
Oct 15 2018
Jan 15 2019
Apr 15 2019
Jul 15 2019
Oct 15 2019
Jan 15 2020
Apr 15 2020
Jul 15 2020
Oct 15 2020
Jan 15 2021
Apr 15 2021
Jun 15 2021
Exhibit H-12
Allocation to Cash Rent Report
Allocation Year Allocation Cash Rent Cash Rent Date
(Confidential Material Omitted)
2001 15-Jul-01
15-Oct-01
2002 15-Oct-01
15-Jan-02
2003 15-Jan-02
15-Apr-02
15-Jul-02
15-Oct-02
15-Jan-03
2004 15-Jan-03
15-Apr-03
15-Jul-03
15-Oct-03
15-Jan-04
2005 15-Jan-04
15-Apr-04
15-Jul-04
15-Oct-04
15-Jan-05
2006 15-Jan-05
15-Apr-05
15-Jul-05
15-Oct-05
) 15-Jan-06
2007 15-Jan-06
15-Apr-06
15-Jul-06
15-Oct-06
2008 15-Jan-07
15-Apr-07
15-Jul-07
15-Oct-07
2009 15-Jan-08
15-Apr-08
15-Jul-08
15-Oct-08
2010 15-Jan-09
15-Apr-09
15-Jul-09
15-Oct-09
2011 15-Jan-10
15-Apr-10
15-Jul-10
15-Oct-10
2012 15-Jan-11
15-Apr-11
15-Jul-11
15-Oct-11
2013 15-Jan-12
15-Apr-12
15-Jul-12
15-Oct-12
2014 15-Jan-13
15-Apr-13
15-Jul-13
15-Oct-13
2015 15-Jan-14
15-Apr-14
15-Jul-14
15-Oct-14
2016 15-Jan-15
15-Apr-15
15-Jul-15
15-Oct-15
2017 15-Jan-16
15-Apr-16
15-Jul-16
15-Oct-16
2018 15-Jan-17
15-Apr-17
15-Jul-17
15-Oct-17
2019 15-Jan-18
15-Apr-18
15-Jul-18
15-Oct-18
2020 15-Jan-19
15-Apr-19
15-Jul-19
15-Oct-19
2021 15-Jan-20
15-Apr-20
15-Jul-20
15-Oct-20
15-Jan-21
15-Apr-21
Exhibit H-13
Termination Values
Date TV Rent Adjustment Net TV
Jun 15 2001 (Confidential Material Omitted)
Jul 15 2001
Oct 15 2001
Jan 15 2002
Apr 15 2002
Jul 15 2002
Oct 15 2002
Jan 15 2003
Apr 15 2003
Jul 15 2003
Oct 15 2003
Jan 15 2004
Apr 15 2004
Jul 15 2004
Oct 15 2004
Jan 15 2005
Apr 15 2005
Jul 15 2005
Oct 15 2005
Jan 15 2006
Apr 15 2006
Jul 15 2006
Oct 15 2006
Jan 15 2007
Apr 15 2007
Jul 15 2007
Oct 15 2007
Jan 15 2008
Apr 15 2008
Jul 15 2008
Oct 15 2008
Jan 15 2009
Apr 15 2009
Jul 15 2009
Oct 15 2009
Jan 15 2010
Apr 15 2010
Jul 15 2010
Oct 15 2010
Jan 15 2011
Apr 15 2011
Jul 15 2011
Oct 15 2011
Jan 15 2012
Apr 15 2012
Jul 15 2012
Oct 15 2012
Jan 15 2013
Apr 15 2013
Jul 15 2013
Oct 15 2013
Jan 15 2014
Apr 15 2014
Jul 15 2014
Oct 15 2014
Jan 15 2015
Apr 15 2015
Jul 15 2015
Oct 15 2015
Jan 15 2016
Apr 15 2016
Jul 15 2016
Oct 15 2016
Jan 15 2017
Apr 15 2017
Jul 15 2017
Oct 15 2017
Jan 15 2018
Apr 15 2018
Jul 15 2018
Oct 15 2018
Jan 15 2019
Apr 15 2019
Jul 15 2019
Oct 15 2019
Jan 15 2020
Apr 15 2020
Jul 15 2020
Oct 15 2020
Jan 15 2021
Apr 15 2021
Jun 15 2021
Exhibit H-14
EBO Amount
EBO EBO Price Rent Adjustment EBO Amount*
Payment Date (Percentage of (Percentage of (Percentage of
Lessor's Cost) Lessor's Cost) Lessor's Cost)
(Confidential Material Omitted)
PARTICIPATION AGREEMENT N___AT
dated as of __________, 200_
among
AMERICAN TRANS AIR, INC.,
Lessee,
GENERAL ELECTRIC CAPITAL CORPORATION,
Owner Participant,
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
NOT IN ITS INDIVIDUAL CAPACITY EXCEPT AS EXPRESSLY PROVIDED HEREIN,
BUT SOLELY AS OWNER TRUSTEE, Owner Trustee,
and
WILMINGTON TRUST COMPANY, NOT IN ITS INDIVIDUAL CAPACITY EXCEPT AS
EXPRESSLY PROVIDED HEREIN, BUT SOLELY AS MORTGAGEE, SUBORDINATION AGENT UNDER
THE INTERCREDITOR AGREEMENT, AND PASS-THROUGH TRUSTEE UNDER EACH OF THE
PASS-THROUGH TRUST AGREEMENTS, Mortgagee and Loan Participant
One Boeing model 737-800 aircraft bearing manufacturer's serial no. _____
and U.S. registration no. N___AT
CONTENTS
1. DEFINITIONS AND CONSTRUCTION......................................2
2. PARTICIPATION IN LESSOR'S COST; ISSUANCE OF EQUIPMENT NOTES; .....2
TERMINATION OF OBLIGATION TOPARTICIPATE
2.1 Participation in Lessor's Cost...................................2
2.2 Nature of Obligations of Participants..........................3
2.3 Termination of Obligation to Participate.......................3
3. LEASE OF AIRCRAFT.................................................3
4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST;
POSTPONEMENT OF SCHEDULED DELIVERY DATE..............................4
4.1 Notices of Scheduled Delivery Date.............................4
4.2 Payment of Lessor's Cost.......................................4
4.3 Postponement of Scheduled Delivery Date........................5
4.4 Closing........................................................5
5. CLOSING CONDITIONS................................................5
5.1 Conditions to Participants'Obligations.........................6
5.2 Conditions to Owner Trustee's Obligations.....................11
5.3 Conditions to Mortgagee's Obligations.........................12
5.4 Conditions to Lessee's Obligations............................12
5.5 Post-Registration Opinion.....................................13
6. REPRESENTATIONS AND WARRANTIES............... ...................13
6.1 Lessee's Representations and Warranties.......................13
6.2 Owner Participant's Representations and Warranties............17
6.3 FSB's Representations and Warranties..........................20
6.4 WTC's Representations and Warranties..........................22
7. COVENANTS........................................................25
7.1 Lessee's Covenants............................................25
7.2 Owner Participant's Covenants.................................27
7.3 FSB's and Owner Trustee's Covenants...........................30
7.4 WTC's Covenants...............................................32
7.5 Note Holders'Covenants........................................33
7.6 Other Agreements..............................................34
8. CONFIDENTIALITY..................................................41
9. INDEMNIFICATION AND EXPENSES....................................42
9.1 General Indemnity.............................................42
9.2 Expenses......................................................49
9.3 General Tax Indemnity.........................................50
9.4 Payments......................................................61
9.5 Interest......................................................62
9.6 Benefit of Indemnities........................................62
10. ASSIGNMENT OR TRANSFER OF INTERESTS.............................62
10.1 Participants, Owner Trustee, and Note Holders....... ........62
10.2 Effect of Transfer...........................................64
11. RE-FUNDING AND CERTAIN OTHER MATTERS............................65
11.1 Re-Funding Generally.........................................65
11.2 Limitations on Obligation to Refund..........................67
11.3 Execution of Facilitating Documents..........................68
11.4 ERISA........................................................68
11.5 Consent to Optional Redemptions..............................68
11.6 Lessee's Assumption of Equipment Notes.......................68
12. SECTION 1110....................................................72
13. CHANGE OF CITIZENSHIP...........................................72
13.1 Generally....................................................72
13.2 Owner Participant............................................72
13.3 Owner Trustee................................................73
13.4 Mortgagee....................................................73
14. CONCERNING OWNER TRUSTEE........................................73
15. MISCELLANEOUS...................................................74
15.1 Amendments...................................................74
15.2 Severability.................................................74
15.3 Survival.....................................................74
15.4 Reproduction of Documents....................................74
15.5 Counterparts.................................................75
15.6 No Waiver....................................................75
15.7 Notices......................................................75
15.8 Governing Law; Submission to Jurisdiction; Venue... .........76
15.9 Third-Party Beneficiary......................................77
15.10 Entire Agreement............................................77
15.11 Further Assurances..........................................77
ANNEX A Definitions
SCHEDULE 1 Accounts; Addresses
SCHEDULE 2 Commitments
SCHEDULE 3 Certain Terms
EXHIBIT A Opinion of special counsel to Lessee
EXHIBIT B Opinion of corporate counsel to Lessee
EXHIBIT C Opinion of corporate counsel to Airframe
Manufacturer Trustee
EXHIBIT D Opinion of special counsel to Owner
EXHIBIT E Opinion of special counsel to Mortgagee and Loan
Participants
EXHIBIT F Opinion of special counsel to Owner Participant
EXHIBIT G Opinion of FAA Counsel
EXHIBIT H Opinion of corporate counsel to Owner Participant
EXHIBIT I Form of Assignment and Assumption Agreement
EXHIBIT J Form of Owner Participant Guaranty
PARTICIPATION AGREEMENT N___AT
This Participation Agreement N___AT (this "AGREEMENT"), dated as of
__________, 200_, is entered into by and among (1) American Trans Air, Inc.
("LESSEE"), an Indiana corporation, (2) General Electric Capital Corporation
("OWNER PARTICIPANT"), a New York corporation, (3) First Security Bank, National
Association, a national banking association, not in its individual capacity
(except as expressly provided herein), but solely as Owner Trustee (in its
capacity as Owner Trustee, "OWNER TRUSTEE" or "LESSOR", and in its individual
capacity, "FSB"), (4) Wilmington Trust Company, a Delaware banking corporation,
not in its individual capacity (except as expressly provided herein), but solely
as mortgagee (in its capacity as Mortgagee, "MORTGAGEE", and in its individual
capacity, "WTC"), (5) Wilmington Trust Company, not in its individual capacity
(except as expressly provided herein) but solely as trustee under each of the
Pass-Through Trust Agreements (each, a "PASS-THROUGH TRUSTEE"), and (6)
Wilmington Trust Company, not in its individual capacity (except as expressly
provided herein), but solely as subordination agent under the Intercreditor
Agreement ("SUBORDINATION AGENT").
RECITALS
A...........Owner Participant and FSB are entering into the Trust
Agreement, pursuant to which Owner Trustee agrees to hold the Trust Estate for
the use and benefit of Owner Participant.
B...........Lessee and Airframe Manufacturer entered into the Purchase
Agreement, pursuant to which Airframe Manufacturer agreed to manufacture certain
aircraft (including the Aircraft) and sell them to Lessee, and Lessee agreed to
buy certain aircraft (including the Aircraft) from Airframe Manufacturer.
C...........Seller will sell the Aircraft to Owner Trustee pursuant to the
terms of this Participation Agreement.
D...........Lessee and Owner Trustee are entering into the Purchase
Agreement Assignment and the Engine Manufacturer Warranty Agreement, pursuant to
which Lessee assigns to Owner Trustee certain of Lessee's rights under the
Purchase Agreement and the Engine Manufacturer Warranty Agreement.
E...........Pursuant to each of the Pass-Through Trust Agreements, on the
Issuance Date, the Pass-Through Trusts were created and the Pass-Through
Certificates were issued and sold.
F...........Pursuant to the Note Purchase Agreement, each Pass-Through
Trustee agreed to use a portion of the proceeds from the issuance and sale of
the Pass-Through Certificates issued by each Pass-Through Trust to purchase from
Owner Trustee, on behalf of the related Pass-Through Trust, the Equipment Note
bearing the same interest rate as the Pass-Through Certificates issued by such
Pass-Through Trust.
G...........Owner Trustee and Mortgagee are entering into the Mortgage for
the benefit of the Note Holders, pursuant to which Owner Trustee agrees (1) to
issue Equipment Notes, in the amounts and otherwise as provided in the Mortgage,
the proceeds of which will be used to pay a portion of Lessor's Cost, and (2) to
mortgage, pledge, and assign to Mortgagee all of Owner Trustee's right, title,
and interest in the Collateral to secure the Secured Obligations, including
Owner Trustee's obligations under the Equipment Notes.
H...........Lessor and Lessee are entering into the Lease, pursuant to
which Lessor is leasing the Aircraft to Lessee and Lessee is leasing the
Aircraft from Lessor.
I...........The parties to this Agreement want to set forth in this
Agreement the terms and conditions upon and subject to which the foregoing
transactions shall be effected.
The parties hereto agree as follows:
1. DEFINITIONS AND CONSTRUCTION
The terms defined in Annex A, when capitalized as in Annex A, have the same
meanings when used in this Agreement. Annex A also contains rules of usage that
control construction in this Agreement.
2. PARTICIPATION IN LESSOR'S COST; ISSUANCE OF EQUIPMENT NOTES; TERMINATION
OF OBLIGATION TO PARTICIPATE
2.1 PARTICIPATION IN LESSOR'S COST
Subject to the terms and conditions of this Agreement, on the Delivery
Date, Owner Participant and each Pass-Through Trustee shall participate in the
payment of Lessor's Cost as follows: (a) Owner Participant shall finance, in
part, Owner Trustee's payment of Lessor's Cost for the Aircraft by making an
equity investment in the beneficial ownership of the Aircraft in the amount in
Dollars equal to Owner Participant's Percentage multiplied by Lessor's Cost; and
(b) each Pass-Through Trustee shall make a non-recourse secured loan to Owner
Trustee to finance, in part, Owner Trustee's payment of Lessor's Cost in the
amount in Dollars equal to such Pass-Through Trustee's PTT Percentage multiplied
by Lessor's Cost, such loan to be evidenced by one or more Equipment Notes,
dated the Delivery Date, issued to Subordination Agent as the registered holder
on behalf of each such Pass-Through Trustee for the related Pass-Through Trust
by Owner Trustee in accordance with this Agreement and the Mortgage, in an
aggregate principal amount equal to the Commitment of each such Pass-Through
Trustee.
2.2 NATURE OF OBLIGATIONS OF PARTICIPANTS
The obligations hereunder of each Participant are several, and not joint,
and a Participant shall have no obligation to make available to Owner Trustee
any portion of any amount not paid hereunder by any other Participant. The
failure by any Participant to perform its obligations hereunder shall not affect
the obligations of Lessee toward any other Participant, except to the extent
provided in ss. 5.4.
2.3 TERMINATION OF OBLIGATION TO PARTICIPATE
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, IF THE CLOSING DOES
NOT OCCUR ON OR BEFORE THE COMMITMENT TERMINATION DATE, THE COMMITMENT OF EACH
PARTICIPANT AND ITS OBLIGATION TO PARTICIPATE IN THE PAYMENT OF LESSOR'S COST
SHALL EXPIRE AND BE OF NO FURTHER FORCE AND EFFECT; PROVIDED, THAT THE LIABILITY
OF ANY PARTICIPANT THAT HAS DEFAULTED IN THE PAYMENT OF ITS COMMITMENT SHALL NOT
BE RELEASED.
3. LEASE OF AIRCRAFT
Subject to the terms and conditions of this Agreement, concurrently with
the issuance of the Equipment Notes on the Delivery Date, Owner Trustee shall
purchase and accept delivery of the Aircraft from Seller under and pursuant to
the Purchase Agreement and the Purchase Agreement Assignment, and thereupon
Owner Trustee shall lease the Aircraft to Lessee, and Lessee shall lease the
Aircraft from Owner Trustee, under the Lease.
4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST; POSTPONEMENT OF
SCHEDULED DELIVERY DATE
4.1 NOTICES OF SCHEDULED DELIVERY DATE
Without limiting its obligations to the Loan Participant under ss. 1(b) of
the Note Purchase Agreement, Lessee agrees to give Participants, Owner Trustee,
and Mortgagee at least one Business Day's written notice of the Scheduled
Delivery Date, which notice shall set forth Lessor's Cost and the amount of each
Participant's Commitment. Each Participant agrees that making its Commitment
available shall constitute a waiver of such notice. Owner Trustee and Mortgagee
shall be deemed to have waived such notice if WTC receives from each Participant
funds in the full amount of its respective Commitment.
4.2 PAYMENT OF LESSOR'S COST
(a).........Each Participant agrees, subject to the terms and conditions of
this Agreement, to make the Dollar amount of its respective Commitment
available, by wire transfer of immediately available funds to WTC's account at
Wilmington Trust Company, ABA No. __________, account no. __________, reference
American Trans Air, Inc. Lease N5__AT, at or before 12:00 noon, New York City
time, on the Scheduled Delivery Date. All such funds made available by each
Participant to WTC shall, until payment thereof to Seller as provided in ss.
4.2(b)(2) or return thereof to the respective Participant as provided in ss.
4.3.2, be held by WTC in trust for the benefit of the respective Participant, as
the sole and exclusive property of the respective Participant and not as part of
the Trust Estate or the Collateral.
(b).........Subject to the satisfaction, or waiver by the applicable party,
of the conditions precedent set forth in ss. 5, and simultaneously with the
receipt by the parties hereto of all amounts to be paid to them on the Delivery
Date pursuant to this ss. 4.2, Owner Trustee shall:
(1) purchase, take title to, and accept delivery of the Aircraft;
(2) in consideration of the transfer of title to the Aircraft to Owner
Trustee, direct WTC to pay, from the funds made available to WTC hereunder by
the Participants, all of the Commitments of the Participants to Seller, which
payments in the aggregate shall be equal to Lessor's Cost, by wire transfer of
immediately available funds to Seller's account set forth in Schedule 1 or as
otherwise directed by Seller;
(3) execute an application for registration of the Aircraft with the FAA;
(4) execute the Mortgage and issue the Equipment Notes to Subordination
Agent in accordance withss. 2.1(b);
(5) lease the Aircraft to Lessee pursuant to the Lease; and
(6) take such other action as may be required to be taken by Owner Trustee
on the Delivery Date by the terms of any Operative Agreement.
4.3 POSTPONEMENT OF SCHEDULED DELIVERY DATE
4.3.1 POSTPONEMENT
If for any reason whatsoever the Closing is not consummated on the
Scheduled Delivery Date, Lessee may, subject to the provisions of 1(e) of the
Note Purchase Agreement, by telephonic notice, given by 5:00 p.m. New York City
time (such telephonic notice to be promptly confirmed in writing by personal
delivery or facsimile) on the Scheduled Delivery Date, to each Participant,
Owner Trustee, and Mortgagee, designate a Delayed Delivery Date, in which case
Owner Participant will keep its funds available, and each Loan Participant shall
comply with its obligations under ss. 5.01 of each applicable Pass-Through Trust
Agreement.
4.3.2 RETURN OF FUNDS
WTC shall promptly return to each Participant that makes funds available to
it in accordance with ss. 4.2(a) such funds, together with interest or income
earned thereon, if the Closing fails to occur on the Scheduled Delivery Date,
PROVIDED, that any such funds made available by the Loan Participant shall be
returned on such Scheduled Delivery Date.
4.4 CLOSING
The Closing shall occur at the offices of Troutman Sanders LLP, 5200 Bank
of America Plaza, Atlanta, GA (with a set of Operative Agreements also being
delivered in New York City), or such other place as the parties shall agree.
5. CLOSING CONDITIONS
5.1 CONDITIONS TO PARTICIPANTS' OBLIGATIONS
Each Participant's obligation to make the Dollar amount of its Commitment
available for payment as directed by Owner Trustee on the Delivery Date is
subject to the satisfaction or such Participant's waiver, on or before the
Delivery Date, of the conditions in this ss. 5.1; PROVIDED, that it shall not be
a condition to the obligation of any Participant that any document be produced
or action taken that is to be produced or taken by such Participant or by a
Person within such Participant's control; PROVIDED, FURTHER, that ss. 5.1.2 (a),
(m), and (u)(8) shall not be conditions to the Loan Participants' obligations
and ss. 5.1.15 and ss. 5.1.16 shall not be conditions to Owner Participant's
obligations.
5.1.1 NOTICE
Such Participant received the notice described in ss. 4.1 or, in the case
of a Delayed Delivery Date, ss. 4.3, when and as required thereby.
5.1.2 DELIVERY OF DOCUMENTS
Except as otherwise provided in this ss. 5.1.2, such Participant receives
executed counterparts of the following documents, and such counterparts (x) have
been duly authorized, executed, and delivered by the party or parties thereto,
(y) are reasonably satisfactory in form and substance to such Participant, and
(z) are in full force and effect:
(a) the Lease (Mortgagee to receive the sole executed chattel paper
original thereof);
(b) the Tax Indemnity Agreement; PROVIDED, that only Owner Participant and
Lessee shall receive copies of the Tax Indemnity Agreement;
(c) the Trust Agreement;
(d) the Mortgage;
(e) the Purchase Agreement Assignment;
(f) the Consent and Agreement and the Engine Manufacturer Warranty
Agreement;
(g) the Equipment Notes dated the Delivery Date; PROVIDED, that only the
Subordination Agent shall receive the authenticated Equipment Notes;
(h) an excerpted copy of the Purchase Agreement to the extent relating to
Airframe Manufacturer's or Engine Manufacturer's warranties or related
obligations or any right in the Purchase Agreement assigned to Owner Trustee
pursuant to the Purchase Agreement Assignment; PROVIDED, that only Owner Trustee
and Mortgagee shall receive copies of such agreement (copies of which may be
inspected by Participants and their respective special counsel on the Delivery
Date, but after the Delivery Date such copies shall be retained by Owner Trustee
and Mortgagee and may be inspected and reviewed by Owner Participant or Loan
Participant or their counsel if and only if a Lease Default exists);
(i) the Bills of Sale;
(j) the Guarantee;
(k) an invoice from Seller specifying the amount due to Seller in respect
of the Aircraft, which amount shall equal Lessor's Cost of the Aircraft;
(l) the broker's report and insurance certificates required byss. 11 of the
Lease;
(m) an appraisal or appraisals from an Appraiser, which appraisal or
appraisals shall be reasonably satisfactory in form and substance to Owner
Participant; PROVIDED, that only Owner Participant shall receive copies of such
appraisal(s);
(n) (1) a copy of Lessee's articles of incorporation, by-laws, and
resolutions, in each case certified as of the Delivery Date by the Secretary or
an Assistant Secretary of Lessee, duly authorizing Lessee's execution, delivery,
and performance of the Lessee Operative Agreements required to be executed and
delivered by Lessee on or before the Delivery Date in accordance with the
provisions hereof and thereof; (2) a copy of Guarantor's articles of
incorporation, by-laws, and resolutions, in each case certified as of the
Delivery Date by the Secretary or an Assistant Secretary of Guarantor, duly
authorizing Guarantor's execution, delivery, and performance of the Guarantee;
(3) incumbency certificates of Lessee, Guarantor, Owner Participant, FSB, and
WTC as to the person(s) authorized to execute and deliver the relevant Operative
Agreements on behalf of such party; and (4) copies of the certificate or
articles of incorporation, by-laws, and general authorizing resolutions of the
boards of directors (or executive committees) or other satisfactory evidence of
authorization of Owner Participant, FSB, and WTC, certified as of the Delivery
Date by the Secretary or an Assistant or Attesting Secretary of Owner
Participant, FSB, and WTC, respectively, which authorize the execution, delivery
and performance by Owner Participant, FSB, and WTC, respectively, of each of the
Operative Agreements to which it is a party, together with such other documents
and evidence with respect to it as Lessee or any Participant reasonably requests
in order to establish the consummation of the transactions contemplated by this
Agreement and the taking of all corporate proceedings in connection therewith;
(o) an Officer's Certificate of Lessee, dated the Delivery Date, stating
that its representations and warranties in this Agreement are true and correct
as of the Delivery Date (or, to the extent that any such representation and
warranty expressly relates to an earlier date, true and correct as of such
earlier date);
(p) an Officer's Certificate of FSB, dated the Delivery Date, stating that
its representations and warranties, in its individual capacity and as Owner
Trustee, in this Agreement are true and correct as of the Delivery Date (or, to
the extent that any such representation and warranty expressly relates to an
earlier date, true and correct as of such earlier date);
(q) an Officer's Certificate of Owner Participant, dated the Delivery Date,
stating that its representations and warranties in this Agreement are true and
correct as of the Delivery Date (or, to the extent that any such representation
and warranty expressly relates to an earlier date, true and correct as of such
earlier date);
(r) an Officer's Certificate of WTC, dated the Delivery Date, stating that
its representations and warranties, in its individual capacity, or as Mortgagee,
a Pass-Through Trustee, or Subordination Agent (as applicable) in this Agreement
are true and correct as of the Delivery Date (or, to the extent that any such
representation and warranty expressly relates to an earlier date, true and
correct as of such earlier date);
(s) an application for registration of the Aircraft with the FAA in the
name of Owner Trustee (FAA Counsel to receive the sole executed copy thereof,
for filing with the FAA);
(t) the Financing Statements;
(u) the following opinions of counsel, in each case dated the Delivery
Date:
(1) an opinion of Troutman Sanders LLP, special counsel to Lessee and
Guarantor, substantially in the form of Exhibit A;
(2) an opinion of Lessee's and Guarantor's Legal Department, substantially
in the form of Exhibit B;
(3) an opinion of corporate counsel to Airframe Manufacturer, substantially
in the form of Exhibit C;
(4) an opinion of Ray, Quinney & Nebeker, special counsel to Owner Trustee,
substantially in the form of Exhibit D;
(5) an opinion of Richards, Layton & Finger, special counsel to Mortgagee
and the Loan Participants, substantially in the form of Exhibit E;
(6) an opinion of Dewey Ballantine LLP, special counsel to Owner
Participant, substantially in the form of Exhibit F;
(7) an opinion of FAA Counsel, substantially in the form of Exhibit G;
(8) an opinion of Dewey Ballantine LLP, special tax counsel to Owner
Participant, with respect to certain tax consequences of the transactions
contemplated hereby; PROVIDED, that only Owner Participant shall receive such
opinion; and
(9) an opinion of corporate counsel of Owner Participant, substantially in
the form of Exhibit H, and
(v) each Participant receives copies of such other documents as it
reasonably requests, except as provided in clauses (b), (h), (m), and (u)(8) of
this ss. 5.1.2.
5.1.3 OTHER COMMITMENTS
Each other Participant makes available the Dollar amount of its Commitment
in accordance with ss. 4.
5.1.4 VIOLATION OF LAW
No change occurs after the date of this Agreement in any applicable
Law that makes it a violation of Law for (a) Lessee, any Participant,
Subordination Agent, Owner Trustee, or Mortgagee to execute, deliver, and
perform the Operative Agreements to which it is a party or to be a party subject
to the obligations of the Operative Agreements to which such Participant is
bound, or (b) any Participant to make the Dollar amount of its Commitment
available or, in the case of any Loan Participant, to acquire an Equipment Note,
or to realize the benefits of the security afforded by the Mortgage.
5.1.5 PERFECTED SECURITY INTEREST
After giving effect to the filing of the FAA-Filed Documents and the
Financing Statements, Mortgagee shall have a duly-perfected first-priority
security interest in all of Owner Trustee's right, title, and interest in the
Aircraft and the Lease, subject only to Permitted Liens.
5.1.6 REPRESENTATIONS, WARRANTIES, AND COVENANTS
The representations and warranties of each other party to this Agreement
made, in each case, in any Operative Agreement to which it is a party, are true
and accurate in all material respects as of the Delivery Date (unless any such
representation and warranty was made with reference to a specified date, in
which case such representation and warranty was true and accurate as of such
specified date), and each other party to this Agreement has performed and
observed, in all material respects, all of its covenants, obligations, and
agreements in each Operative Agreement to which it is a party to be observed or
performed by it as of the Delivery Date.
5.1.7 NO DEFAULT
On the Delivery Date, no Lease Default or Mortgage Default exists or would
result from the sale, mortgage, or lease of the Aircraft.
5.1.8 NO EVENT OF LOSS
No Event of Loss with respect to the Airframe or any Engine has occurred,
and no circumstance, condition, act, or event has occurred that, with the giving
of notice or lapse of time, would give rise to or constitute an Event of Loss
with respect to the Airframe or any Engine.
5.1.9 TITLE
Owner Trustee has good title (subject to filing and recordation of the FAA
Bill of Sale with the FAA) to the Aircraft, free and clear of Liens, except (a)
the rights of Lessee under the Lease, (b) the Lien created by the Mortgage, (c)
the beneficial interest of Owner Participant created by the Trust Agreement, (d)
Liens permitted by clause (d) (solely for taxes not yet due) of ss. 6 of the
Lease, and (e) Liens permitted by clause (e) of ss. 6 of the Lease.
5.1.10 CERTIFICATION
The Aircraft has been duly certificated by the FAA as to type, and upon
registration in Owner Trustee's name will be eligible for an FAA airworthiness
certificate.
5.1.11 SECTION 1110
Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee of
Owner Trustee under the Mortgage), is entitled to the benefits of Section 1110
(as currently in effect) with respect to the right to take possession of the
Airframe and Engines as provided in the Lease in the event of a case under
Chapter 11 of the Bankruptcy Code in which Lessee is a debtor.
5.1.12 FILING
The FAA-Filed Documents are on the Delivery Date duly filed for recordation
with the FAA in accordance with the Transportation Code, and each Financing
Statement has been duly filed or is in the process of being duly filed in the
appropriate jurisdiction.
5.1.13 NO PROCEEDINGS
No action or proceeding has been instituted, nor is any action threatened
in writing, before any Government Entity, nor has any order, judgment, or decree
been issued or proposed to be issued by any Government Entity, to set aside,
restrain, enjoin, or prevent the completion and consummation of any Operative
Agreement or the Transactions.
5.1.14 GOVERNMENTAL ACTION
All appropriate action required to have been taken before the Delivery Date
by the FAA, or any other Government Entity of the United States, in connection
with the Transactions has been taken, and all orders, permits, waivers,
authorizations, exemptions, and approvals of such entities required to be in
effect on the Delivery Date in connection with the Transactions have been
issued.
5.1.15 NOTE PURCHASE AGREEMENT
The conditions precedent to the obligations of the Loan Participants and
the other requirements relating to the Aircraft and the Equipment Notes in the
Note Purchase Agreement have been satisfied.
5.2 CONDITIONS TO OWNER TRUSTEE'S OBLIGATIONS
Owner Trustee's obligation to direct WTC to apply the Commitments to pay
Lessor's Cost on the Delivery Date is subject to the satisfaction or Owner
Trustee's waiver, on or before the Delivery Date, of the conditions in this ss.
5.2.
5.2.1 NOTICE
Owner Trustee receives the notice described in ss. 4.1 or, in the case of a
Delayed Delivery Date, ss. 4.3, when and as required thereby.
5.2.2 DOCUMENTS
Owner Trustee receives executed originals of the documents described in ss.
5.1.2, except as otherwise provided therein, unless the failure to receive any
such document is the result of any action or inaction by Owner Trustee.
5.2.3 OTHER CONDITIONS PRECEDENT
Each of the conditions in ss.ss. 5.1.4, 5.1.6, 5.1.7, and 5.1.11 is
satisfied, unless the failure of any such condition to be satisfied is the
result of any action or inaction by Owner Trustee.
5.3 CONDITIONS TO MORTGAGEE'S OBLIGATIONS
Mortgagee's obligation to authenticate the Equipment Notes on the Delivery
Date is subject to the satisfaction or Mortgagee's waiver, on or before the
Delivery Date, of the conditions in this ss. 5.3.
5.3.1 NOTICE
Mortgagee receives the notice described in ss. 4.1 or, in the case of a
Delayed Delivery Date, ss. 4.3, when and as required thereby.
5.3.2 DOCUMENTS
Mortgagee receives executed originals of the documents described in ss.
5.1.2, except as otherwise provided therein, unless the failure to receive any
such document is the result of any action or inaction by Mortgagee.
5.3.3 OTHER CONDITIONS PRECEDENT
Each of the conditions in ss.ss. 5.1.4, 5.1.6, 5.1.7, and 5.1.11 has been
satisfied, unless the failure of any such condition to be satisfied is the
result of any action or inaction by Mortgagee.
5.4 CONDITIONS TO LESSEE'S OBLIGATIONS
Lessee's obligation to lease the Aircraft on the Delivery Date is subject
to the satisfaction or Lessee's waiver, on or before the Delivery Date, of the
conditions in this ss. 5.4.
5.4.1 DOCUMENTS
Lessee receives executed originals of the documents described in ss. 5.1.2,
except as otherwise provided therein, and they are satisfactory to Lessee,
unless the failure to receive any such document is the result of any action or
inaction by Lessee.
5.4.2 TAXES
Lessee is satisfied that no sales, use, value-added, goods-and-services, or
like tax, and no stamp tax duty, is payable with respect to the delivery of the
Aircraft on the Delivery Date (to the extent that Lessee could be liable
therefor under ss. 9.3).
5.4.3 OTHER CONDITIONS
Each of the conditions in ss.ss. 5.1.3 (as to all Participants), 5.1.4,
5.1.6, 5.1.7 (as to Mortgage Defaults' not constituting Lease Defaults), 5.1.8,
5.1.9, 5.1.10, 5.1.11, 5.1.12, 5.1.13, and 5.1.14 has been satisfied or waived
by Lessee, unless the failure of any such condition to be satisfied is the
result of any action or inaction by Lessee.
5.5 POST-REGISTRATION OPINION
Promptly after the registration of the Aircraft and the recordation of the
FAA-Filed Documents pursuant to the Transportation Code, Lessee will cause FAA
Counsel to deliver to Lessee, each Participant, Subordination Agent, Owner
Trustee, and Mortgagee a favorable opinion or opinions addressed to each of them
with respect to such recordation.
6. REPRESENTATIONS AND WARRANTIES
6.1 LESSEE'S REPRESENTATIONS AND WARRANTIES
Lessee represents and warrants to each Participant, Owner Trustee,
Subordination Agent, and Mortgagee that:
6.1.1 ORGANIZATION; QUALIFICATION
Lessee is a corporation duly incorporated, validly existing, and in good
standing under the Laws of Indiana, and has the corporate power and authority to
conduct the business in which it is currently engaged and to own or hold under
lease its properties and to enter into and perform its obligations under the
Lessee Operative Agreements. Lessee is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction in which the nature
and extent of the business conducted by it, or the ownership of its properties,
requires such qualification, except where the failure to be so qualified would
not give rise to a Materially Adverse Change to Lessee.
6.1.2 CORPORATE AUTHORIZATION
Lessee has taken, or caused to be taken, all necessary corporate action
(including obtaining any consent or approval of stockholders required by its
articles of incorporation or by-laws) to authorize its execution, delivery, and
performance of its obligations under each of the Lessee Operative Agreements.
6.1.3 NO VIOLATION
Lessee's execution, delivery, and performance of its obligations under the
Lessee Operative Agreements do not and will not (a) violate any provision of
Lessee's articles of incorporation or by-laws, (b) violate any Law applicable to
or binding on Lessee, or (c) violate or constitute any default under (other than
any violation or default that would not result in a Materially Adverse Change to
Lessee), or result in the creation of any Lien (other than as permitted under
the Lease) upon the Aircraft under, any lease, loan, or other material agreement
to which Lessee is a party or by which Lessee or any of its properties is bound.
6.1.4 APPROVALS
Lessee's execution and delivery of, and performance of its obligations
under, the Lessee Operative Agreements do not and will not require the consent
or approval of, the giving of notice to, the registration with, the recording or
filing of any documents with, or the taking of any other action in respect of
(a) any trustee or other holder of any Debt of Lessee, (b) any Government
Entity, or (c) any other Person, other than (x) the FAA-Filed Documents and the
Financing Statements (and continuation statements periodically), and (y)
filings, recordings, notices, corporate approvals of Lessee (which have been
duly obtained) or other ministerial actions pursuant to any routine recording,
contractual, or regulatory requirements.
6.1.5 VALID AND BINDING AGREEMENTS
The Lessee Operative Agreements have been duly authorized, executed, and
delivered by Lessee, and (assuming their due authorization, execution, and
delivery by the other parties thereto) constitute legal, valid, and binding
obligations of Lessee and are enforceable against Lessee in accordance with
their terms, except as such enforceability may be limited by bankruptcy,
insolvency, and other similar Laws affecting the rights of creditors generally
and general principles of equity.
6.1.6 LITIGATION
Except as set forth in Guarantor's most recent Annual Report on Form 10-K,
filed by Lessee with the SEC on or before the Delivery Date, or in any Quarterly
Report on Form 10-Q or Current Report on Form 8-K filed by Guarantor with the
SEC subsequent to such Form 10-K and on or before the Delivery Date, no action,
claim, or proceeding is now pending or, to Lessee's Actual Knowledge,
threatened, against Lessee, Guarantor, or any of their Affiliates, before any
Government Entity or any arbitrator, that is reasonably likely to be determined
adversely to Lessee and if determined adversely to Lessee would result in a
Materially Adverse Change.
6.1.7 FINANCIAL CONDITION
Guarantor's audited consolidated balance sheet for its most-recent fiscal
year, included in Guarantor's Annual Report on Form 10-K filed by Guarantor with
the SEC for such fiscal year, and the related consolidated statements of
operations and cash flows for the period then ended, have been prepared in
accordance with GAAP and fairly present in all material respects the financial
condition of Guarantor and its consolidated subsidiaries as of such date and the
results of its operations and cash flows for such period, and since the date of
such balance sheet, there has been no Materially Adverse Change in such
financial condition or operations, except for matters disclosed in (a) the
financial statements referred to above, or (b) any subsequent Quarterly Report
on Form 10-Q or Current Report on Form 8-K filed by Guarantor with the SEC on or
before the Delivery Date.
6.1.8 REGISTRATION AND RECORDATION
Except for (a) registering the Aircraft with the FAA pursuant to the
Transportation Code in the name of Owner Trustee, (b) filing for recordation
(and recording) the FAA-Filed Documents, (c) filing the Financing Statements
(and continuation statements relating thereto at periodic intervals), (d)
Mortgagee's taking possession and retaining the chattel paper original
counterpart of the Lease, and (e) affixing the placards referred to in ss. 7.1.3
of the Lease, no further action, including filing or recording any document
(including any financing statement under UCC Article 9) is necessary in order to
establish and perfect Owner Trustee's right, title, and interest, and
Mortgagee's security interest, in the Aircraft and the Lease, as against Lessee
and any other Person, in any applicable jurisdiction in the United States.
6.1.9 CHIEF EXECUTIVE OFFICE
Lessee's chief executive office (as defined in UCC Article 9) is located at
7337 West Washington Street, Indianapolis, Indiana, 46231.
6.1.10 NO DEFAULT
No Lease Default exists.
6.1.11 NO EVENT OF LOSS
No Event of Loss has occurred with respect to the Airframe or any Engine,
and, to Lessee's Actual Knowledge, no circumstance, condition, act, or event has
occurred that, with the giving of notice or lapse of time, gives or would give
rise to or constitutes or would constitute an Event of Loss to the Airframe or
any Engine.
6.1.12 COMPLIANCE WITH LAWS
(a) Lessee is a Citizen of the United States and a U.S. Air Carrier.
(b) Lessee holds all licenses, permits, and franchises from the appropriate
Government Entities necessary to authorize Lessee lawfully to engage in air
transportation and to carry on scheduled commercial passenger service as
currently conducted, except to the extent that the failure to hold any such
license, permit, or franchise would not give rise to a Materially Adverse Change
to Lessee.
(c) Lessee is not an "investment ompany" or a company controlled by an
"investment company" within the meaning of the Investment Company Act of 1940.
6.1.13 SECURITIES LAWS
Neither Lessee nor any Person authorized to act on its behalf has directly
or indirectly offered any beneficial interest or Security relating to the
ownership of the Aircraft or the Lease or any interest in the Trust Estate and
the Trust Agreement, or any of the Equipment Notes or any other interest in or
security under the Mortgage, for sale to, or solicited any offer to acquire any
such interest or security from, or has sold any such interest or security to,
any Person in violation of the Securities Act.
6.1.14 BROKER'S FEES
No Person acting on behalf of Lessee is or will be entitled to any broker's
fee, commission, or finder's fee in connection with the Transactions, except for
fees payable to Lessee's Advisor(s), if any.
6.1.15 SECTION 1110
Owner Trustee, as lessor under the Lease (and Mortgagee, as assignee under
the Mortgage), will be entitled to the benefits of Section 1110 (as currently in
effect), with respect to the right to take possession of the Airframe and
Engines as provided in the Lease, in the event of a case under Chapter 11 of the
Bankruptcy Code in which Lessee is a debtor.
6.1.16 NO GOVERNMENT CONSENTS
Neither Lessee's execution and delivery of any of the Lessee Operative
Agreements nor Lessee's performance of its obligations hereunder requires the
consent or approval of, the giving of notice to, or the registration with, or
the taking of any other action in respect of any Government Entity, except for
(a) the orders, permits, waivers, exemptions, authorizations and approvals of
the regulatory authorities having jurisdiction over the operation of the
Aircraft by Lessee, which orders, permits, waivers, exemptions, authorizations
and approvals have been duly obtained and are, or will on the Delivery Date be,
in full force and effect, and the registration and filings referred to herein
and (b) any normal periodic and other reporting requirements under the
applicable rules of the FAA to the extent required to be given or obtained only
on or after the Delivery Date.
6.1.17 PAYMENT OF TAXES
Lessee and its Affiliates have filed or caused to be filed all federal,
state, and material local and non-U.S. tax returns that are required to be filed
and have paid or caused to be paid all taxes shown to be due on such returns or
on any assessment received by Lessee or its Affiliates, except any that are
being contested diligently and in good faith by appropriate proceedings and for
which adequate provision for payment has been made in accordance with GAAP.
There is no ongoing audit or, to the knowledge of Lessee, other investigation by
any Government Entity of the tax liability of Lessee or its Affiliates and there
is no unresolved claim by a taxing authority concerning Lessee's or any
Affiliate's tax liability, for any period for which returns have been filed or
were due, that, in either case, reasonably may be expected to result in
liability of Lessee which could have a materially adverse effect on the
business, operations or financial condition of Lessee or the ability of Lessee
to perform its obligations under the Operative Agreements.
6.2 OWNER PARTICIPANT'S REPRESENTATIONS AND WARRANTIES
Owner Participant represents and warrants to Lessee, the Loan Participants,
Subordination Agent, Owner Trustee, and Mortgagee that:
6.2.1 ORGANIZATION, ETC.
Owner Participant (a) is a corporation duly incorporated, validly existing
and in good standing under the Laws of the OP Jurisdiction, (b) has the
corporate power and authority to conduct the business in which it is currently
engaged, to own or hold under lease its properties, and to enter into and
perform its obligations under the Owner Participant Agreements, and (c) has a
tangible net worth (exclusive of goodwill) greater than $50 million.
6.2.2 CORPORATE AUTHORIZATION
Owner Participant has taken (or caused to be taken) all necessary corporate
action (including obtaining any consent or approval of stockholders required by
its certificate of incorporation or by-laws) to authorize its execution,
delivery, and performance of its obligations under each of the Owner Participant
Agreements.
6.2.3 NO VIOLATION
Owner Participant's execution, delivery, and performance of its obligations
under each of the Owner Participant Agreements do not and will not (a) violate
any provision of Owner Participant's certificate of incorporation or by-laws,
(b) violate any Law applicable to or binding on Owner Participant (no
representation or warranty is made with respect to ERISA, other than as set
forth in ss. 6.2.9) or (c) violate or constitute any default under (other than
any violation or default that would not result in a Materially Adverse Change to
Owner Participant), or result in the creation of any Lien (other than as
provided for or otherwise permitted in the Operative Agreements) upon the Trust
Estate under, any lease, loan, or other material agreement to which Owner
Participant is a party or by which Owner Participant or any of its properties is
bound.
6.2.4 APPROVALS
Owner Participant's execution, delivery, and performance of its obligations
under each of the Owner Participant Agreements do not and will not require the
consent or approval of, the giving of notice to, the registration with, the
recording or filing of any documents with, or the taking of any other action in
respect of (a) any trustee or other holder of any Debt of Owner Participant, and
(b) any Government Entity, other than filing the FAA-Filed Documents and the
Financing Statements and routine regulatory filings.
6.2.5 VALID AND BINDING AGREEMENTS
The Owner Participant Agreements have been duly authorized, executed, and
delivered by Owner Participant, and (assuming the due authorization, execution,
and delivery by the other parties thereto) constitute legal, valid, and binding
obligations of Owner Participant and are enforceable against Owner Participant
in accordance with their terms, except as such enforceability may be limited by
bankruptcy, insolvency, and other similar Laws affecting the rights of creditors
generally and general principles of equity.
6.2.6 CITIZENSHIP
Owner Participant is a Citizen of the United States.
6.2.7 NO LIENS
There are no Lessor Liens attributable to Owner Participant on all or any
part of the Trust Estate.
6.2.8 INVESTMENT BY OWNER PARTICIPANT
Owner Participant is acquiring its beneficial interest in the Trust Estate
for its own account, for investment and not with a view to any resale or
distribution thereof; PROVIDED, that, subject to the transfer restrictions in
ss. 10, its disposition of its beneficial interest in the Trust Estate shall at
all times be within its control.
6.2.9 ERISA
No part of the funds to be used by Owner Participant to acquire or hold its
interests in the Trust Estate directly or indirectly constitutes assets of a
Plan.
6.2.10 LITIGATION
There are no pending or, to Owner Participant's Actual Knowledge,
threatened actions or proceedings against Owner Participant before any
Government Entity that, if determined adversely to Owner Participant, would
materially adversely affect Owner Participant's ability to perform its
obligations under the Owner Participant Agreements.
6.2.11 SECURITIES LAWS
Neither Owner Participant nor any Person Owner Participant has authorized
to act on its behalf has directly or indirectly offered any beneficial interest
in or Security relating to the ownership of the Aircraft or any interest in the
Trust Estate, or any of the Equipment Notes or any other interest in or Security
under the Mortgage, for sale to, or solicited any offer to acquire any of the
same from, any Person in violation of the Securities Act or applicable state
securities Laws (with the understanding that Owner Participant shall not be
deemed to have authorized Lessee's Advisor(s) to act on Owner Participant's
behalf).
6.2.12 BROKER'S FEES
No Person acting on behalf of Owner Participant is or will be entitled to
any broker's fee, commission, or finder's fee in connection with the
Transactions.
6.3 FSB'S REPRESENTATIONS AND WARRANTIES
FSB represents and warrants to Lessee, Owner Participant, the Loan
Participants, Subordination Agent, and Mortgagee that:
6.3.1 ORGANIZATION, ETC.
FSB is a national banking association duly organized, validly existing and
in good standing under the Laws of the United States, holding a valid
certificate to do business as a national banking association with banking
authority to execute, deliver, and perform its obligations under the Owner
Trustee Agreements.
6.3.2 CORPORATE AUTHORIZATION
FSB has taken (or caused to be taken) all necessary corporate action
(including obtaining any consent or approval of stockholders required by Law or
by its articles of association or by-laws) to authorize the execution and
delivery by FSB or Owner Trustee, of each of the Owner Trustee Agreements, and
the performance of its obligations thereunder.
6.3.3 NO VIOLATION
FSB's and Owner Trustee's execution, delivery, and performance of their
respective obligations under the Owner Trustee Agreements do not and will not
(a) violate any provision of FSB's articles of association or by-laws, (b)
violate any Utah Law or federal banking Law applicable to or binding on Owner
Trustee or FSB, or (c) violate or constitute any default under (other than any
violation or default that would not result in a Materially Adverse Change to FSB
or Owner Trustee), or result in the creation of any Lien (other than the Lien of
the Mortgage) upon any property of FSB, Owner Trustee, or any of FSB's
subsidiaries under, any lease, loan, or other material agreement to which FSB or
Owner Trustee is a party or by which FSB, Owner Trustee, or any of their
properties is or may be bound or affected.
6.3.4 APPROVALS
FSB's and Owner Trustee's execution, delivery, and performance of their
respective obligations under the Owner Trustee Agreements do not and will not
require the consent, approval, or authorization of, the giving of notice to, the
registration with, the recording or filing of any documents with, or the taking
of any other action in respect of, (a) any trustee or other holder of any Debt
of FSB, or (b) any Government Entity governing banking and trust powers, other
than filing the FAA-Filed Documents and the Financing Statements.
6.3.5 VALID AND BINDING AGREEMENTS
The Owner Trustee Agreements have been duly authorized, executed, and
delivered by FSB and Owner Trustee, and (assuming the due authorization,
execution, and delivery thereof by the other parties thereto) constitute legal,
valid, and binding obligations of FSB and Owner Trustee and are enforceable
against FSB and Owner Trustee in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency, and other similar Laws
affecting the rights of creditors generally and general principles of equity.
6.3.6 CITIZENSHIP
FSB is a Citizen of the United States.
6.3.7 CHIEF EXECUTIVE OFFICE
The chief executive office (as defined in UCC Article 9) of Owner Trustee
is located at 79 South Main Street, Salt Lake City, Utah 84111.
6.3.8 TITLE
On the Delivery Date, Owner Trustee shall have received whatever title to
the Aircraft as was conveyed to it by Seller.
6.3.9 NO LIENS; FINANCING STATEMENTS
There are no Lessor Liens attributable to FSB or Owner Trustee in respect
of all or any part of the Aircraft, Trust Estate, or the Collateral. Except for
the Financing Statements, neither FSB nor Owner Trustee has executed any UCC
financing statement relating to the Aircraft or the Lease.
6.3.10 LITIGATION
There are no pending or, to FSB's Actual Knowledge, threatened actions or
proceedings against FSB or Owner Trustee before any Government Entity that, if
determined adversely to FSB, would materially adversely affect the ability of
FSB or Owner Trustee to perform its obligations under the Owner Trustee
Agreements.
6.3.11 SECURITIES LAWS
Neither FSB, nor any Person authorized to act on its behalf, has directly
or indirectly offered any beneficial interest or Security relating to the
ownership of the Aircraft or any interest in the Trust Estate or any of the
Equipment Notes or any other interest in or security under the Mortgage for sale
to, or solicited any offer to acquire any such interest or security from, or has
sold any such interest or security to, any Person other than the Participants,
except for the offering and sale of the Pass-Through Certificates.
6.3.12 EXPENSES AND TAXES
There are no Expenses or Taxes that may be imposed on or asserted against
the Trust, the Trust Estate, or any part thereof or any interest therein, the
Collateral, Lessee, Owner Participant, any Pass-Through Trustee, Subordination
Agent, Owner Trustee, or Mortgagee (except as to Owner Trustee, Taxes imposed on
the fees payable to Owner Trustee) under the laws of Utah in connection with
Owner Trustee's execution, delivery, or performance of any Operative Agreement
or in connection with the issuance of the Equipment Notes, which Expenses or
Taxes would not have been imposed if Owner Trustee had not (x) had its principal
place of business in Utah, (y) performed (in its individual capacity or as Owner
Trustee) any or all of its duties under the Operative Agreements in Utah, or (z)
engaged in any activities unrelated to the transactions contemplated by the
Operative Agreements in Utah.
6.4 WTC'S REPRESENTATIONS AND WARRANTIES
WTC, Mortgagee, Pass-Through Trustee and Subordination Agent, each as to
itself, represent and warrant (with respect to ss. 6.4.10, solely in its
capacity as Subordination Agent) to Lessee, Owner Participant, and Owner Trustee
that:
6.4.1 ORGANIZATION, ETC.
WTC is a Delaware banking corporation duly organized, validly existing and
in good standing under the Laws of the State of Delaware, and authorized to do
business as a Delaware banking corporation with banking authority to execute,
deliver, and perform its obligations under the Mortgagee Agreements, the
Pass-Through Trustee Agreements, and the Subordination Agent Agreements.
6.4.2 CORPORATE AUTHORIZATION
WTC has taken (or caused to be taken) all necessary corporate action
(including obtaining any consent or approval of stockholders required by Law or
by its certificate of incorporation or by-laws) to authorize the execution and
delivery by WTC, Mortgagee, each Pass-Through Trustee, and Subordination Agent
(as applicable) of the Mortgagee Agreements, the Pass-Through Trustee
Agreements, and the Subordination Agent Agreements and the performance by WTC,
Mortgagee, each Pass-Through Trustee, and Subordination Agent (as applicable) of
its obligations thereunder.
6.4.3 NO VIOLATION
The execution and delivery by WTC, Mortgagee, each Pass-Through Trustee,
and Subordination Agent (as applicable) of the Mortgagee Agreements, the
Pass-Through Trustee Agreements, and the Subordination Agent Agreements, and the
performance by WTC, Mortgagee, each Pass-Through Trustee, and Subordination
Agent (as applicable) of its obligations thereunder, do not and will not (a)
violate any provision of WTC's certificate of incorporation or by-laws, (b)
violate any Law of the United States or of Delaware applicable to or binding on
WTC or (except in the case of any Law relating to any Plan) Mortgagee, any
Pass-Through Trustee, or Subordination Agent, or (c) violate or constitute any
default under (other than any violation or default that would not result in a
Materially Adverse Change to WTC, Mortgagee, any Pass-Through Trustee, or
Subordination Agent), or result in the creation of any Lien (other than the Lien
of the Mortgage) upon any property of WTC, Mortgagee, any Pass-Through Trustee,
Subordination Agent, or any of WTC's subsidiaries under any lease, loan, or
other agreement to which WTC, Mortgagee, any Pass-Through Trustee, or
Subordination Agent is a party or by which WTC, Mortgagee, any Pass-Through
Trustee, Subordination Agent, or any of their properties is bound.
6.4.4 APPROVALS
The execution and delivery by WTC, Mortgagee, each Pass-Through Trustee,
and Subordination Agent (as applicable) of the Mortgagee Agreements, the
Pass-Through Trustee Agreements, and the Subordination Agent Agreements to which
it is a party, and the performance by WTC, Mortgagee, each Pass-Through Trustee,
and Subordination Agent (as applicable) of its obligations thereunder, do not
and will not require the consent, approval, or authorization of, the giving of
notice to, the registration with, the recording or filing of any document with,
or the taking of any other action in respect of (a) any trustee or other holder
of any Debt of WTC, or (b) any Government Entity of the United States or of
Delaware, other than filing the FAA-Filed Documents and the Financing
Statements.
6.4.5 VALID AND BINDING AGREEMENTS
The Mortgagee Agreements, the Pass-Through Trustee Agreements, and the
Subordination Agent Agreements have been duly authorized, executed, and
delivered by WTC, Mortgagee, each Pass-Through Trustee, and Subordination Agent
(as applicable), and (assuming the due authorization, execution, and delivery by
the other parties thereto) constitute legal, valid, and binding obligations of
WTC, Mortgagee, each Pass-Through Trustee, and Subordination Agent (as
applicable) and are enforceable against WTC, Mortgagee, each Pass-Through
Trustee, and Subordination Agent (as applicable) in accordance with their terms,
except as such enforceability may be limited by bankruptcy, insolvency, or other
similar Laws affecting the rights of creditors generally and general principles
of equity.
6.4.6 CITIZENSHIP
WTC is a Citizen of the United States.
6.4.7 NO LIENS
There are no Lessor Liens attributable to WTC in respect of all or any part
of the Trust Estate or the Collateral.
6.4.8 LITIGATION
There are no pending or, to WTC's Actual Knowledge, threatened actions or
proceedings against WTC, Mortgagee, any Pass-Through Trustee, or Subordination
Agent (as applicable) before any Government Entity that, if determined adversely
to WTC, Mortgagee, any Pass-Through Trustee, and Subordination Agent (as
applicable), would materially adversely affect the ability of WTC, Mortgagee,
any Pass-Through Trustee, or Subordination Agent to perform its obligations
under any of the Mortgagee Agreements, the Pass-Through Trustee Agreements, or
the Subordination Agent Agreements.
6.4.9 SECURITIES LAWS
Other than as contemplated herein and in the Operative Agreements, neither
WTC nor any Person authorized to act on its behalf has directly or indirectly
offered any beneficial interest or Security relating to the ownership of the
Aircraft or any interest in the Collateral or any of the Equipment Notes or any
other interest in or security under the Mortgage for sale to, or solicited any
offer to acquire any such interest or security from, or has sold any such
interest or security to, any Person other than the Participants, except for the
offering and sale of the Pass-Through Certificates.
6.4.10 INVESTMENT
THE EQUIPMENT NOTES TO BE ACQUIRED BY SUBORDINATION AGENT ARE BEING
ACQUIRED BY IT FOR THE ACCOUNT OF THE PASS-THROUGH TRUSTEES, FOR INVESTMENT AND
NOT WITH A VIEW TO ANY RESALE OR DISTRIBUTION THEREOF; PROVIDED THAT, SUBJECT TO
THE TRANSFER RESTRICTIONS IN SS. 10.1.3, ITS DISPOSITION OF ITS EQUIPMENT NOTES
SHALL AT ALL TIMES BE WITHIN ITS CONTROL.
6.4.11 TAXES
There are no Taxes payable by any Pass-Through Trustee or WTC imposed by
Delaware or any political subdivision or taxing authority thereof in connection
with such Pass-Through Trustee's or WTC's execution, delivery, and performance
of this Agreement or any Pass-Through Trustee Agreement (other than franchise or
other taxes based on or measured by any fees or compensation received by any
such Pass-Through Trustee or WTC for services rendered in connection with the
transactions contemplated by any of the Pass-Through Trust Agreements), and
there are no Taxes payable by any Pass-Through Trustee or WTC imposed by
Delaware or any political subdivision thereof in connection with the
acquisition, possession, or ownership by any such Pass-Through Trustee of any of
the Equipment Notes (other than franchise or other taxes based on or measured by
any fees or compensation received by any such Pass-Through Trustee or WTC for
services rendered in connection with the transactions contemplated by any of the
Pass-Through Trust Agreements), and, assuming that the trusts created by the
Pass-Through Trust Agreements will not be taxable as corporations, but, rather,
that each will be characterized as a grantor trust under Part I, subpart E of
Subchapter J of the Code or as a partnership under Subchapter K of the Code,
such trusts will not be subject to any Taxes imposed by Delaware or any
political subdivision thereof.
6.4.12 CONTROL
WTC is not an Affiliate of Owner Participant or Owner Trustee.
6.4.13 BROKER'S FEES
No Person acting on behalf of WTC, Mortgagee, any Pass-Through Trustee, or
Subordination Agent is or will be entitled to any broker's fee, commission, or
finder's fee in connection with the Transactions.
7. COVENANTS
7.1 LESSEE'S COVENANTS
Lessee agrees for the benefit of Owner Participant, the Loan Participants,
Owner Trustee, and Mortgagee as follows:
7.1.1 CORPORATE EXISTENCE; U.S. AIR CARRIER
Lessee shall at all times maintain its corporate existence, except as
permitted byss. 13.2 of the Lease, and shall at all times remain a U.S. Air
Carrier.
7.1.2 NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE
Lessee will give to Owner Participant, Owner Trustee, and Mortgagee timely
written notice of (but in any event within 90 days after) any relocation of its
chief executive office (as defined in UCC Article 9), and will promptly take any
action required by ss. 7.1.3(c) as a result of sucH relocation.
7.1.3 CERTAIN ASSURANCES
(a) Lessee shall duly execute, acknowledge, and deliver (or cause to be
executed, acknowledged, and delivered) all such further documents, and shall do
and cause to be done such further things, as Owner Participant, Owner Trustee,
or Mortgagee reasonably requests to accomplish the purposes of the Operative
Agreements, provided that no document so executed by Lessee will expand any
obligations or limit any rights of Lessee in respect of the Transactions.
(b) Lessee shall promptly take such action with respect to the recording,
filing, re-recording, and refiling of the Lease, the Trust Agreement, and the
Mortgage, and any supplements thereto, as shall be necessary to establish,
perfect, and protect Owner Trustee's interests and rights in and to the Aircraft
and under the Lease and the perfection and priority of the Lien created by the
Mortgage. Lessee shall furnish to Owner Participant or Owner Trustee such
information (other than with respect to the citizenship of Owner Participant and
Owner Trustee) in Lessee's possession or otherwise reasonably available to
Lessee and required to enable Owner Participant or Owner Trustee to apply to
register the Aircraft under the Transportation Code (subject to Lessee's rights
under ss. 7.1.2 of the Lease), and shall pay or cause to be paid all
out-of-pocket costs and expenses thereof (includinG reasonable attorneys' fees
and disbursements).
(c) Lessee will cause the FAA-Filed Documents, the Financing Statements,
and all continuation statements (and any amendments necessitated by any
combination, consolidation, or merger pursuant to ss. 13.2 of the Lease, or any
relocation of its chief executive office) in respect oF the Financing Statements
to be prepared and, subject only to the execution and delivery thereof by Owner
Trustee or Mortgagee (as applicable), duly and timely filed and recorded, or
filed for recordation, to the extent permitted under the Transportation Code
(with respect to the FAA-Filed Documents) or the UCC or similar law of any other
applicable jurisdiction (with respect to such other documents).
(d) If the Aircraft is registered in a country other than the United States
pursuant to ss. 7.1.2 of the Lease, Lessee will furnish tO Owner Trustee,
Mortgagee, and each Participant annually while the Aircraft is not
U.S.-registered (starting with the calendar year after such registration is
effected) an opinion of special counsel reasonably satisfactory to Owner
Participant and Mortgagee stating that, in the opinion of such counsel, either
(1) such action has been taken with respect to the recording, filing,
re-recording, and re-filing of the Operative Agreements and any supplements and
amendments thereto as is necessary to establish, perfect, and protect Owner
Trustee's and Mortgagee's right, title and interest in and to the Aircraft and
the Operative Agreements, reciting the details of such actions, or (2) no such
action is necessary to maintain the perfection of such right, title, and
interest.
7.1.4 SECURITIES LAWS
Neither Lessee nor any Person authorized to act on its behalf will directly
or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or the Lease or any interest in the Trust Estate and
Trust Agreement or any of the Equipment Notes or any other interest in or
security under the Mortgage for sale to, or solicit any offer to acquire any
such interest or security from, or sell any such interest or security to, any
Person in violation of the Securities Act or applicable state or foreign
securities Laws.
7.1.5 CERTIFICATION
Lessee shall cause the Aircraft to be duly certified by the FAA as to
airworthiness and shall, immediately upon registration of the Aircraft in Owner
Trustee's name, obtain an FAA airworthiness certificate for the Aircraft.
7.2 OWNER PARTICIPANT'S COVENANTS
Owner Participant agrees for the benefit of Lessee, and (except with
respect to ss. 7.2.4) Loan Participants, Owner Trustee, and Mortgagee, aS
follows:
7.2.1 LIENS
Owner Participant (a) (1) will not directly or indirectly create, incur,
assume, or suffer to exist any Lessor Lien attributable to it on or with respect
to all or any part of the Trust Estate, the Collateral, or the Aircraft, and (2)
will, at its own cost and expense, promptly take such action as is necessary to
discharge any Lessor Lien attributable to Owner Participant on all or any part
of the Trust Estate, the Collateral or the Aircraft; PROVIDED, that Owner
Participant shall not be required to comply with the foregoing provisions of
this clause (a) if it shall in good faith by appropriate proceedings contest
claims or charges resulting in any such Lien as long as such contest does not
involve any material danger of the sale, forfeiture, loss, or loss of use of the
Aircraft or the interest of Lessor, Mortgagee, or any Participant therein; and
(b) will hold harmless and indemnify Lessee, Owner Trustee, each Note Holder,
Mortgagee, each of their respective Affiliates, successors, and permitted
assigns, the Trust Estate, and the Collateral from and against (1) any and all
Expenses, (2) any reduction in the amount payable out of the Trust Estate or the
Collateral, and (3) any interference with the possession, operation, or other
use of all or any part of the Aircraft, in each case imposed on, incurred by, or
asserted against any of the foregoing as a consequence of any such Lessor Lien
(without regard to the proviso to the foregoing clause (a)).
7.2.2 REVOCATION OF TRUST AGREEMENT
(a) Owner Participant will comply with the provisions of the Trust
Agreement applicable to it, will not terminate or revoke the Trust Agreement or
the trusts created thereunder without the prior written consent of Lessee and
Mortgagee, and will not amend, modify, or supplement the Trust Agreement, or
waive any of the provisions thereof, if such amendment, modification,
supplement, or waiver would have any adverse effect (1) on Lessee, without the
consent of Lessee, or (2) on Mortgagee or any Note Holder, without the consent
of Mortgagee.
(b) Notwithstanding ss. 7.2.2(a), Owner Participant may at any time remove
Owner Trustee pursuant to ss. 9.1 of the Trust Agreement or terminate the Trust
Agreement pursuant to ss. 11.2 of the Trust Agreement.
7.2.3 CHANGE OF SITUS OF OWNER TRUST
If, at any time, any Tax Indemnitee or the Trust Estate becomes subject to
any Taxes for which it is indemnified pursuant to ss. 9.3 of thiS Agreement and
if, as a consequence thereof, Lessee requests that the situs of the Trust be
moved to another state in the United States from the state in which it is then
located, the situs of the Trust may be moved with the written consent of Owner
Participant (which consent shall not be unreasonably withheld) and Owner
Participant will take whatever action is reasonably necessary to accomplish such
removal; PROVIDED, that, in any event, (a) Lessee shall provide such additional
tax indemnification as Owner Participant and the Note Holders or the
Pass-Through Trustees reasonably request to cover any additional unindemnified
Taxes or loss of Tax benefits described in the assumptions in the Tax Indemnity
Agreement resulting from such change in situs, (b) the rights and obligations
under the Operative Agreements of Owner Participant, the Note Holders,
Pass-Through Trustees, and Mortgagee shall not be adversely affected as a result
of the taking of such action, (c) the Lien of the Mortgage, on the Collateral
shall not be adversely affected by such action, and Lessee and Owner Trustee
shall execute and deliver such documents as Mortgagee reasonably requests to
protect and maintain the perfection and priority of such Lien, (d) Owner
Participant, the Pass-Through Trustees, and Mortgagee shall receive an opinion
or opinions of counsel (which counsel is reasonably satisfactory to Owner
Participant, the Pass-Through Trustees, and Mortgagee), in scope, form, and
substance reasonably satisfactory to Owner Participant, the Pass-Through
Trustees, and Mortgagee, to the effect that (1) the Trust, as thus removed,
remains a validly-established trust, (2) any amendments to the Trust Agreement
necessitated by such removal have been duly authorized, executed, and delivered
and constitute valid and binding obligations of such parties, enforceable in
accordance with their terms, (3) covering such other matters as Owner
Participant, the Pass-Through Trustees, or Mortgagee reasonably request, (e) if
such removal involves the replacement of Owner Trustee, then Owner Participant,
the Pass-Through Trustees, and Mortgagee shall receive an opinion of counsel to
such successor Owner Trustee, in form and substance reasonably satisfactory to
Owner Participant, the Pass-Through Trustees, and Mortgagee, covering the
matters described in the opinion delivered pursuant to ss. 5.1.2(u)(4), and (f)
Lessee shall indemnify anD hold harmless Owner Participant, the Note Holders,
Pass-Through Trustees, FSB, and Owner Trustee, on a net after-tax basis, against
any and all reasonable out-of-pocket costs and expenses (including attorneys'
fees and disbursements), fees and expenses of any new owner trustee,
registration, recording, or filing fees, and taxes incurred by Owner
Participant, the Note Holders, Pass-Through Trustees, or Owner Trustee in
connection with such change of situs. Owner Participant agrees, for Lessee's
benefit, that Owner Participant will not consent to or direct a change in the
situs of the Trust Estate without Lessee's prior written consent.
7.2.4 COMPLIANCE WITH LEASE PROVISIONS
Owner Participant agrees, solely for Lessee's benefit, to comply with the
express provisions applicable to Owner Participant in the Lease.
7.2.5 SECURITIES ACT
Owner Participant will not directly or indirectly offer any beneficial
interest or security relating to the ownership of the Aircraft or any interest
in the Trust Estate or any of the Equipment Notes or any other interest in or
security under the Mortgage for sale to, or solicit any offer to acquire any
such interest or security from, or sell any such interest or security to, any
Person in violation of the Securities Act or applicable state or foreign
securities Laws, PROVIDED, that this ss. 7.2.5 shall not impose on Owner
Participant any responsibility with respect to any such offer, sale, oR
solicitation by any other party hereto.
7.2.6 REGARDING OWNER TRUSTEE
Owner Participant will direct Owner Trustee to perform its obligations
under each Owner Trustee Agreement.
7.3 FSB'S AND OWNER TRUSTEE'S COVENANTS
FSB and Owner Trustee agree for the benefit of Lessee, Owner Participant,
each Note Holder, and Mortgagee as follows:
7.3.1 LIENS
FSB (a) will not directly or indirectly create, incur, assume, or suffer to
exist any Lessor Lien attributable to it or Owner Trustee on all or any part of
the Trust Estate, the Collateral, or the Aircraft, (b) will, at its own cost and
expense, promptly take such action as is necessary to discharge any Lessor Lien
attributable to FSB or Owner Trustee on all or any part of the Trust Estate, the
Collateral, or the Aircraft, and (c) will personally hold harmless and indemnify
Lessee, Owner Participant, each Note Holder, Mortgagee, each of their
Affiliates, successors, and permitted assigns, the Trust Estate, and the
Collateral from and against (1) any and all Expenses, (2) any reduction in the
amount payable out of the Trust Estate or the Collateral, and (3) any
interference with the possession, operation, or other use of all or any part of
the Aircraft imposed on, incurred by, or asserted against any of the foregoing
as a consequence of any such Lessor Lien.
7.3.2 OTHER BUSINESS
Owner Trustee will not enter into any business or other activity except as
contemplated by the Operative Agreements.
7.3.3 NOTICE OF CHANGE OF CHIEF EXECUTIVE OFFICE
FSB and Owner Trustee will give to Lessee, each Participant, and Mortgagee
30 days' prior written notice of any relocation of its chief executive office
(as defined in UCC Article 9), and will promptly take any action required by ss.
7.3.8 as a result of such relocation.
7.3.4 SECURITIES ACT
Neither FSB nor Owner Trustee will directly or indirectly offer any
beneficial interest or Security relating to the ownership of the Aircraft or any
interest in the Trust Estate or any of the Equipment Notes or any other interest
in or security under the Mortgage for sale to, or solicit any offer to acquire
any such interest or security from, or sell any such interest or security to,
any Person in violation of the Securities Act or applicable state or foreign
securities Laws, PROVIDED, that the foregoing shall not impose on FSB or Owner
Trustee any responsibility with respect to any such offer, sale, or solicitation
by any other party hereto.
7.3.5 PERFORMANCE OF AGREEMENTS
Owner Trustee shall perform its obligations under the Owner Trustee
Agreements in accordance with the terms thereof.
7.3.6 RELEASE OF LIEN OF MORTGAGE
In each instance referred to in the Lease in which a transfer of any
property is required to be made by Owner Trustee to Lessee or any other Person
(other than Mortgagee or Owner Participant), Owner Trustee shall, at Lessee's
request and expense, use reasonable efforts to procure from Mortgagee the prompt
release of the Lien of the Mortgage with respect to such property.
7.3.7 NOTICES; DOCUMENTS
If any claim with respect to any liabilities is filed against Owner Trustee
and Owner Trustee has Actual Knowledge thereof, then Owner Trustee shall
promptly notify Lessee in writing thereof. Owner Trustee further agrees to
provide to Lessee promptly any documents (including the certificate of aircraft
registration) that it receives from the FAA with respect to the Aircraft.
7.3.8 FILINGS
After the Delivery Date, Owner Trustee shall duly execute and deliver to
Lessee all filings and recordings (including all filings and UCC financing
statements under the Transportation Code and the UCC and any amendments to UCC
financing statements necessitated by any relocation of its chief executive
office), prepared and delivered to it by Lessee, required to perfect Owner
Trustee's title to the Aircraft and the liens of and security interests granted
by the Mortgage (or to maintain such perfection) and to make such title, liens,
and security interests valid and enforceable.
7.3.9 TRUST AGREEMENT
FSB and Owner Trustee hereby (a) agree for the benefit of Lessee, Loan
Participants, and Mortgagee not to amend, supplement, terminate, or otherwise
modify any provision of the Trust Agreement in a manner that adversely affects
the rights of any such party without the prior written consent of such party,
and (b) agree for the benefit of Lessee, Loan Participant, and Mortgagee not to
revoke the trust created by the Trust Agreement so long as the Mortgage remains
undischarged or if such revocation would have an adverse effect on Lessee.
Nothing in this Agreement shall impair any right under the Trust Agreement of
FSB to resign as Owner Trustee in accordance with the provisions of the Trust
Agreement.
7.4 WTC'S COVENANTS
WTC, Mortgagee, each Pass-Through Trustee, and Subordination Agent, each as
to itself, agree for the benefit of Lessee, Owner Participant, and Owner Trustee
as follows:
7.4.1 LIENS
Other than Liens arising in connection with the transactions contemplated
in the Operative Agreements, WTC (a) will not directly or indirectly create,
incur, assume, or suffer to exist any Lessor Lien attributable to it on or with
respect to all or any part of the Trust Estate, the Collateral, or the Aircraft,
(b) will, at its own cost and expense, promptly take such action as is necessary
to discharge any Lessor Lien attributable to WTC on all or any part of the Trust
Estate, the Collateral, or the Aircraft, and (c) will personally hold harmless
and indemnify Lessee, Owner Participant, each Note Holder, Owner Trustee, each
of their respective Affiliates, successors, and permitted assigns, the Trust
Estate, and the Collateral from and against (1) any and all Expenses, (2) any
reduction in the amount payable out of the Trust Estate or the Collateral, and
(3) any interference with the possession, operation, or other use of all or any
part of the Aircraft, imposed on, incurred by, or asserted against any of the
foregoing as a consequence of any such Lessor Lien.
7.4.2 SECURITIES ACT
WTC, Mortgagee, each Pass-Through Trustee, and Subordination Agent
(respectively) will not offer any beneficial interest or Security relating to
the ownership of the Aircraft or any interest in the Collateral or any of the
Equipment Notes or any other interest in or security under the Mortgage for sale
to, or solicit any offer to acquire any such interest or security from, or sell
any such interest or security to, any Person in violation of the Securities Act
or applicable state or foreign securities Laws, PROVIDED, that the foregoing
shall not impose on WTC any responsibility with respect to any such offer, sale,
or solicitation by any other party hereto.
7.4.3 PERFORMANCE OF AGREEMENTS
WTC, Mortgagee, each Pass-Through Trustee, and Subordination Agent
(respectively) shall perform its obligations under the Mortgage Agreements, the
Pass-Through Trustee Agreements, and the Subordination Agent Agreements in
accordance with their terms.
7.4.4 WITHHOLDING TAXES
WTC shall indemnify (on an after-tax basis) and hold harmless Lessee,
Lessor, and Owner Participant against any United States withholding taxes (and
related interest, penalties, and additions to tax) as a result of WTC's failure
to withhold on payments to any Note Holder who does not provide to Mortgagee
necessary certificates or forms to substantiate the right to exemption from such
withholding tax.
7.5 NOTE HOLDERS' COVENANTS
Each Note Holder (including Subordination Agent), as to itself only, agrees
for the benefit of Lessee, Owner Participant, Owner Trustee, and Mortgagee as
follows:
7.5.1 WITHHOLDING TAXES
Such Note Holder (if it is a Non-U.S. Person) agrees to indemnify (on an
after-tax basis) and hold harmless Lessee, Lessor, Owner Participant, and
Mortgagee against any United States withholding taxes (and related interest,
penalties, and additions to tax) as a result of the inaccuracy or invalidity of
any certificate or form provided by such Note Holder to Mortgagee in connection
with such withholding taxes. Any amount payable under this ss. 7.5.1 shall be
paid within 30 days after the pertinent Note Holder receives a written demand
therefor.
7.5.2 TRANSFER; COMPLIANCE
(a) Such Note Holder will (1) not transfer any Equipment Note or interest
therein in violation of the Securities Act or applicable state or foreign
securities Law; PROVIDED, that the foregoing provisions of this ss. 7.5.2(a)
shall not impose on such Note Holder any responsibility for any such offer,
sale, or solicitation by any other party hereto, and (2) perform and comply with
the obligations specified to be imposed on it (as a Note Holder) under the
Mortgage and the Equipment Note.
(b) Except as otherwise required by the terms of ss. 2.13 of the Mortgage
or ss. 11 hereof, such Note Holder will not sell, assign, convEy, exchange, or
otherwise transfer any Equipment Note or any interest in, or represented by, any
Equipment Note (this provision not being applicable to the Pass-Through
Certificates) unless the proposed transferee thereof first provides Lessee and
Owner Participant with both of the following:
(1) a written representation and covenant that either (aa) no portion of
the funds it uses to purchase, acquire, and hold such Equipment Note or interest
directly or indirectly constitutes, or may be deemed under the Code or ERISA or
any rulings, regulations, or court decisions thereunder to constitute, the
assets of any Plan, or (bb) the transfer, and subsequent holding, of such
Equipment Note or interest shall not involve or give rise to a transaction that
constitutes a prohibited transaction within the meaning of ERISA ss. 406 or CodE
ss. 4975(c)(1) involving Lessee, Owner Participant, a Pass-Through Trustee,
Subordination Agent, or the proposed transferee (other than A transaction that
is exempted from the prohibitions of such sections by applicable provisions of
ERISA or the Code or administrative exemptions or regulations issued
thereunder); and
(2) a written covenant that it will not transfer any Equipment Note or any
interest in, or represented by, any Equipment Note unless the subsequent
transferee also makes the representation described in clause (1) of this ss.
7.5.2(b) and agrees to comply with thiS clause (2).
7.6 OTHER AGREEMENTS
7.6.1 OWNER TRUSTEE IS OWNER FOR ALL PURPOSES
Lessee, Owner Participant, and Owner Trustee agree that for all purposes,
after the Closing, Owner Trustee will be the owner of the Aircraft (except that
Owner Participant will be the owner for income tax purposes) and Lessee will be
the lessee thereof. No transfer, by operation of Law or otherwise, of Owner
Participant's beneficial interest in and to the Trust Estate shall operate to
transfer legal title to any part of the Trust Estate to any transferee thereof.
7.6.2 COMMENCEMENT OF BANKRUPTCY PROCEEDINGS
Lessee, each Participant, each Note Holder, FSB, Owner Trustee, WTC, and
Mortgagee agree for the benefit of each of the others that it will not commence
or join in any proceeding under the Bankruptcy Code to commence a case under ss.
303 of the Bankruptcy Code against the Trust Estate. NothinG contained herein
shall be deemed to preclude any Participant, any Note Holder, FSB, Owner
Trustee, WTC, or Mortgagee from filing any claim against the Trust Estate in any
case commenced against the Trust Estate.
7.6.3 CERTAIN BANKRUPTCY MATTERS
If (a) all or any part of the Trust Estate becomes the property of, or
Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (b) pursuant to such
reorganization provisions (including Bankruptcy Code ss. 1111(b)), FSB or OwneR
Participant is required, by reason of FSB's or Owner Participant's being held to
have recourse liability to any Note Holder or Mortgagee directly or indirectly
(other than the recourse liability of FSB or Owner Participant under this
Agreement or the Mortgage or by separate agreement), to make payment on account
of any amount payable as principal, Make-Whole Amount (if any), interest, or
other amounts on the Equipment Notes, and (c) any Note Holder or Mortgagee
actually receives any Excess Amount (as defined below) which reflects any
payment by FSB or Owner Participant on account of clause (b) of this paragraph,
then such Note Holder or Mortgagee shall promptly refund to FSB or Owner
Participant (whichever shall have made such payment) such Excess Amount.
For purposes of this ss. 7.6.3, "EXCESS AMOUNT" means the amount by which
such payment exceeds the amount that would have been received by a NotE Holder
or Mortgagee if FSB or Owner Participant had not become subject to the recourse
liability referred to in clause (b) of the preceding paragraph. Nothing in this
ss. 7.6.3 shall prevent a Note Holder or Mortgagee from enforcing any personal
recourse obligation (and retaining the proceeds thereof) oF FSB or Owner
Participant under this Agreement (other than as referred to in clause (b) of the
preceding paragraph) or the Mortgage (including any exhibits or annexes thereto)
or from retaining any amount paid by Owner Participant under ss. 2.13 or ss.
4.03 of the Mortgage.
7.6.4 QUIET ENJOYMENT; SALE BY OWNER TRUSTEE BINDING
(a) Each of Owner Participant, each Pass-Through Trustee, Subordination
Agent, each Note Holder, Owner Trustee, and Mortgagee agrees (as to itself) for
the benefit of Lessee that, unless a Lease Event of Default exists, such Person
shall not interfere (and shall not permit any Affiliate or other Person claiming
by, through, or under it to interfere) with Lessee's rights in accordance with
the Lease to the quiet enjoyment, possession, and use of the Aircraft during the
Term.
(b) Any assignment, sale, transfer, or other conveyance of the Aircraft by
Owner Trustee made pursuant to the terms of this Agreement or the Lease shall
bind Owner Participant, and shall be effective to transfer or convey all right,
title, and interest of Owner Trustee and Owner Participant in and to the
Aircraft. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency, or regularity of such assignment, sale,
transfer, or conveyance, or as to the application of any sale or other proceeds
with respect thereto by Owner Trustee, as regards Owner Participant.
7.6.5 RELEASE OF LIEN OF MORTGAGE
Each of Lessee, Lessor, and Mortgagee agrees that in each instance referred
to in the Lease in which a transfer of any property is required to be made by
Lessor to Lessee or any other Person (other than Mortgagee), Mortgagee shall,
upon request of Lessor and compliance with the applicable provisions of the
Lease and the Mortgage (including payment of all amounts then due and payable to
each Liquidity Provider and the Policy Provider as Supplemental Rent), promptly
execute (at Lessee's cost and expense) such instruments as Lessor or Lessee
reasonably requests to evidence the release of the Lien of the Mortgage on such
property.
7.6.6 NON-RECOURSE
Loan Participant and Mortgagee agree that (a) obligations of Owner Trustee
under the Mortgage or any other Operative Agreement and with respect to the
Equipment Notes shall be non-recourse to Owner Participant and to FSB, and (b)
they will look solely to the income and proceeds from the Trust Estate and the
Collateral to the extent available for distribution to Note Holder or Mortgagee
as provided in the Mortgage, and neither Owner Participant nor FSB will be
personally liable to Loan Participant or Mortgagee for any amounts payable by
Owner Trustee under the Mortgage or any other Operative Agreement; PROVIDED,
that the foregoing is not intended nor shall it be construed to limit any
recourse liability of Owner Participant or FSB to the extent that such liability
is expressly set forth in this Agreement or in any of the Operative Agreements
or arises by reason of the breach of any representation or warranty or covenant
given by such Person (in the case of FSB, in its individual capacity).
7.6.7 OTHER DOCUMENTS; AMENDMENT
(a) Each of Owner Participant and Owner Trustee hereby agrees for the
benefit of Lessee, the Loan Participants, and Mortgagee not to amend,
supplement, or otherwise modify any provision of the Trust Agreement in a manner
that could adversely affect such party, without the prior written consent of
such party. Notwithstanding the foregoing, so long as the Lease has not been
terminated or expired, each Participant, Mortgagee, and Owner Trustee hereby
agree for the benefit of Lessee that, without Lessee's consent, they will not
amend, supplement, or otherwise modify (1) ss. 3, ss. 9, or ss. 2.05 of the
Mortgage, (2) any provision of any Operative Agreement that will affect the
stated principal amount of or premium or interest on the Equipment Notes, or (3)
any other provision of the Mortgage or Equipment Notes in a manner that could
adversely affect Lessee. Mortgagee and Owner Trustee agree to furnish promptly
to Lessee copies of any supplement, amendment, waiver, or modification of any of
the Operative Agreements to which Lessee is not a party. Each Loan Participant
agrees that it will not take any action in respect of the Collateral except
through Mortgagee pursuant to the Mortgage or as otherwise permitted by
Mortgage.
(b) Owner Trustee agrees to join with Lessee to the extent that action on
its part is necessary or appropriate (1) to cause the following to be duly
accomplished in accordance with applicable United States federal Law by the time
the Aircraft is delivered under this Agreement and the Lease: (aa) to apply to
register the Aircraft in Owner Trustee's name, and (bb) all related action
necessary in order for Lessee to have temporary or permanent authority to
operate the Aircraft as contemplated by the Lease, and (2) forthwith upon
delivery of the Aircraft under this Agreement and the Lease, to cause all
necessary documents to be duly filed for recording in accordance with applicable
United States federal Law.
7.6.8 CONSENTS
Each of each Participant, each Pass-Through Trustee, Subordination Agent,
Owner Trustee, and Mortgagee covenants and agrees, for Lessee's benefit, that it
shall not unreasonably withhold its consent to any consent or approval requested
of it or of Owner Trustee or Mortgagee under the terms of any of the Operative
Agreements which by its terms is not to be unreasonably withheld.
7.6.9 INSURANCE
Each of Owner Participant, the Pass-Through Trustees, Subordination Agent,
and Owner Trustee agrees not to obtain or maintain insurance for its own account
as permitted by ss. 11.2 of the Lease if such insurance would limit, increase
the cost of, or otherwise adversely affect the coverage of anY insurance
required to be obtained or maintained by Lessee pursuant to ss. 11 and Annex D
of the Lease.
7.6.10 EXTENT OF NOTE HOLDER'S INTEREST
A Note Holder shall not, as such, have any further interest in, or other
right with respect to, the Trust Estate or the Collateral when and if the
principal and Make-Whole Amount (if any) of and interest on the Equipment Note
held by such Note Holder, and all other sums, then due and payable to such Note
Holder under any Operative Agreement, have been paid in full.
7.6.11 FOREIGN REGISTRATION
(a) Each Participant, Owner Trustee, and Mortgagee hereby agree for
Lessee's benefit that, subject to ss. 7.1.2 of the Lease, LesseE shall be
entitled to register the Aircraft or cause the Aircraft to be registered in a
country other than the United States, if:
(1) such registration is made only after the Tax Attribute Period, unless
Lessee prepays on a lump-sum basis any liability that would be due under the Tax
Indemnity Agreement as a result of such registration based upon the assumption
that such registration would continue for the remainder of the term of the
Permitted Sublease described in clause (3) below;
(2) no Special Default or Lease Event of Default exists at the time of such
registration;
(3) such proposed change of registration is made in connection with a
Permitted Sublease to a Permitted Air Carrier, and such country is such
Permitted Air Carrier's domicile;
(4) such country is a country with which the United States then maintains
normal diplomatic relations (or, if Taiwan, the United States then maintains
diplomatic relations at least as good as those in effect on the Delivery Date,
PROVIDED that Lessee may not effect such registration in Taiwan unless it has
obtained the prior written consent of Owner Participant, which Owner Participant
may withhold in its sole and absolute discretion); and
(5) Owner Participant, Owner Trustee, and Mortgagee receive an opinion of
counsel (subject to customary exceptions) reasonably satisfactory to Owner
Participant (and, while the Policy is in effect, the Policy Provider), addressed
to each such party, to the effect that:
(aa) such country recognizes Owner Trustee's ownership interest in the
Aircraft;
(bb) Lessee's obligations, and Owner Trustee's rights and remedies, under
the Lease are valid, binding, and enforceable under the laws of such
jurisdiction;
(cc) after giving effect to such change in registration, (x) Owner
Trustee's title continues as a valid and protected interest, (y) the Lien of the
Mortgage on Owner Trustee's right, title, and interest in and to the Aircraft
and the Lease continue as a valid and duly-perfected first-priority security
interest, and (z) all filing, recording, or other action necessary to protect
those matters addressed in (x) and (y) above have been accomplished (or, if such
opinion cannot be given at the time of such proposed change in registration
because such change in registration is not yet effective, (1) the opinion shall
detail what filing, recording, or other action is necessary, and (2) Owner
Participant, Owner Trustee and Mortgagee shall receive a certificate from Lessee
that all possible preparations to accomplish such filing, recording, and other
action are done, and such filing, recording, and other action are accomplished,
and a supplemental opinion to that effect shall be delivered to Owner
Participant, Owner Trustee and Mortgagee promptly after the effective date of
such change in registration;
(dd) it is not necessary, solely as a consequence of such change in
registration and without giving effect to any other activity of Owner Trustee,
Owner Participant, or Mortgagee (or any Affiliate thereof), for Owner Trustee,
Owner Participant, or Mortgagee (respectively) to qualify to do business in such
jurisdiction as a result of such reregistration or in order to exercise any
rights or remedies with respect to the Aircraft pursuant to the Lease;
(ee) there is no tort liability of the owner or lessor of an aircraft not
in possession thereof under the laws of such jurisdiction (it being agreed that,
if such latter opinion cannot be given in a form satisfactory to Owner
Participant, such opinion shall be waived if insurance reasonably satisfactory
to Owner Participant is provided to cover such risk); and
(ff) unless Lessee agrees to provide insurance covering the risk of
requisition of use of the Aircraft by the government of such country (so long as
the Aircraft is registered under the laws of such country), the laws of such
country require fair compensation by the government of such country payable in
currency freely convertible into Dollars and freely removable from such country
(without license or permit, unless Lessee before such proposed reregistration
has obtained such license or permit) for the taking or requisition by such
government of such use.
(b) In addition, as a condition precedent to any change in registration,
Lessee shall give to Owner Participant and Mortgagee assurances reasonably
satisfactory to each of them:
(1) that the provisions ofss. 11 of the Lease have been complied with after
giving effect to such change of registration;
(2) of Lessee's payment, on an after-tax basis, of all reasonable
out-of-pocket expenses of Lessor, each Participant, and Mortgagee in connection
with such change of registry, including (aa) the reasonable fees and
disbursements of counsel to Lessee, Lessor, and Mortgagee, (bb) any filing or
recording fees, Taxes, or similar payments incurred in connection with the
change of registration of the Aircraft and the creation and perfection of the
security interest therein in favor of Mortgagee for the benefit of Note Holders,
and (cc) all costs and expenses incurred in connection with any filings
necessary to continue in the United States the perfection of the security
interest in the Aircraft and the Lease in favor of Mortgagee for the benefit of
Note Holders; and
(3) that the tax and other indemnities in favor of each Person named as an
indemnitee under any other Operative Agreement afford to each such Person
substantially the same protection as provided before such change of registration
(or Lessee agrees to provide, or cause to be provided, additional indemnities
that, together with such original indemnities, in the reasonable judgment of
Owner Participant, Lessor, and Mortgagee, afford such protection).
7.6.12 OTHER COMMERCIAL RELATIONS UNAFFECTED
Notwithstanding anything to the contrary set forth in any Operative
Agreement:
(a) except as set forth in the Purchase Agreement Assignment, nothing in
the Operative Agreements shall constitute or be deemed to be a waiver by Lessee
of any rights, remedies, or claims it may have against Airframe Manufacturer or
Engine Manufacturer or any subcontractor or supplier of either; and the
Operative Agreements do not and shall not be construed or deemed to create any
rights, waivers, immunities, or indemnities in favor of Airframe Manufacturer,
Engine Manufacturer, or any subcontractor or supplier of either with respect to
any such rights, remedies, or claims of Lessee; and
(b) neither Airframe Manufacturer, by its execution and delivery of the
Consent and Agreement, nor Engine Manufacturer, by its execution and delivery of
the Engine Manufacturer Warranty Agreement, shall be deemed to have waived any
rights, remedies, or claims which Airframe Manufacturer or Engine Manufacturer
(or any subcontractor or supplier of either) has against Lessee; and the
Operative Agreements do not and shall not be construed or deemed to create any
rights, waivers, immunities, or indemnities in favor of Lessee with respect to
any such rights, remedies, or claims of Airframe Manufacturer or Engine
Manufacturer (or any subcontractor or supplier of either).
7.6.13 INTEREST IN CERTAIN ENGINES
Each Participant, Owner Trustee, and Mortgagee agree, for the benefit of
each lessor, conditional seller, or secured party of any airframe or engine
leased to, purchased by, or owned by Lessee or any Permitted Sublessee subject
to a lease, conditional sale, or other security agreement that it will not
acquire or claim, as against such lessor, conditional seller, or secured party,
any right, title, or interest in any engine as the result of the installation of
such engine on the Airframe at any time while such engine is subject to such
lease, conditional sale, or other security agreement and owned by such lessor or
conditional seller or subject to a security interest in favor of such secured
party.
8. CONFIDENTIALITY
Lessee, Owner Participant, Note Holders, Owner Trustee, and Mortgagee shall
keep Annexes B, C, and D and Schedules 1, 2, 3, and 4 to the Lease, the
Participation Agreement, the Purchase Agreement Assignment, and the Tax
Indemnity Agreement confidential, and shall not disclose them, or cause them to
be disclosed, to any Person, except (a) to prospective and permitted transferees
of Lessee's, Owner Participant's, a Note Holder's, each Liquidity Provider's,
Policy Provider's, Owner Trustee's, Mortgagee's, or other Mortgage Indemnitee's
interest or their counsel, independent insurance brokers, auditors, or other
agents who agree to hold such information confidential, (b) to Lessee's, Owner
Participant's, a Note Holder's, each Liquidity Provider's, Policy Provider's, a
Pass-Through Trustee's, Owner Trustee's, Mortgagee's, or other Mortgage
Indemnitee's counsel, independent insurance brokers, auditors, or other agents,
Affiliates, or investors who agree to hold such information confidential, (c) as
may be required by any statute, court, or administrative order or decree, legal
process, or governmental ruling or regulation, including those of any applicable
insurance regulatory bodies (including the National Association of Insurance
Commissioners), federal or state banking examiners, Internal Revenue Service
auditors, or any stock exchange, (d) with respect to Lessee and Owner
Participant, by mutual agreement of such parties, (e) with respect to a Note
Holder or any Pass-Through Trustee, to a nationally-recognized rating agency for
the purpose of obtaining a rating on the Equipment Notes or the Pass-Through
Trust Certificates or to support an NAIC rating for the Equipment Notes, or (f)
to such other Persons as are reasonably deemed necessary by the disclosing party
in order to protect the interests of such party or for the purposes of enforcing
such documents by such party; PROVIDED, that any and all disclosures permitted
by clauses (c), (d), (e), and (f) above shall be made only to the extent
necessary to meet the specific requirements or needs of the Persons making such
disclosures.
9. INDEMNIFICATION AND EXPENSES
9.1 GENERAL INDEMNITY
9.1.1 INDEMNITY
Whether or not any of the Transactions are consummated, Lessee shall
indemnify, protect, defend, and hold harmless each Indemnitee from, against, and
in respect of, and shall pay on a net after-tax basis, any and all Expenses of
any kind or nature whatsoever, including those imposed on, incurred or suffered
by, or asserted against any Indemnitee, relating to, based on, resulting from,
or arising out of or in connection with, in each case directly or indirectly,
any one or more of the following:
(a) the Operative Agreements, the Pass-Through Agreements, or the
enforcement of any of the terms of any of the Operative Agreements or the
Pass-Through Agreements;
(b) the Aircraft, the Airframe, any Engine, or any Part, including, with
respect thereto, (1) the manufacture, design, purchase, acceptance,
nonacceptance, rejection, ownership, registration, reregistration,
deregistration, delivery, nondelivery, lease, sublease, assignment, possession,
use, non-use, operation, maintenance, testing, repair, overhaul, condition,
alteration, modification, addition, improvement, storage, airworthiness,
replacement, repair, sale, substitution, return, abandonment, redelivery, or
other disposition of the Aircraft, any Engine, or any Part, (2) any claim or
penalty arising out of violations of applicable Laws, (3) tort liability,
whether or not arising out of the negligence of any Indemnitee (whether active,
passive, or imputed, and including strict liability and liability without
fault), (4) death or property damage of passengers, shippers, or others, (5)
environmental control, noise, or pollution, (6) any claim for patent, trademark,
or copyright infringement and (7) any Liens in respect of the Aircraft, any
Engine, or any Part;
(c) the offer, sale, or delivery of any Equipment Notes, Pass-Through
Certificates, or any interest therein or represented thereby; and
(d) any breach of or failure to perform or observe, or any other
noncompliance with, any covenant, agreement, or other obligation to be performed
by Lessee under any Lessee Operative Agreement, or any Pass-Through Agreement,
or the falsity of any representation or warranty of Lessee in any Lessee
Operative Agreement or any Pass-Through Agreement, other than in the Tax
Indemnity Agreement.
9.1.2 EXCEPTIONS
Notwithstanding anything in ss. 9.1.1, Lessee shall not be required
to indemnify, protect, defend, and hold harmless any Indemnitee pursuant tO ss.
9.1.1 against any Expense of such Indemnitee:
(a) for any Taxes or a loss of Tax benefit, whether or not Lessee is
required to indemnify therefor pursuant to ss. 9.3 or the TaX Indemnity
Agreement (other than amounts required to be paid to render the payment of any
Expense payable under ss. 9.1.1 on aN after-tax basis);
(b) except to the extent attributable to acts or events occurring prior
thereto, acts or events (other than acts or events related to Lessee's
performance of its obligations pursuant to the terms of the Lessee Operative
Agreements) that occur after: (1) with respect to the Airframe, any Engine, or
any Part, the return of possession (which, if the Aircraft is placed in storage
as provided inss. 5 of the Lease, is the date that the Aircraft is placed in
storage) of such Airframe, Engine, or Part pursuant to the Lease (other than
pursuant toss. 15 thereof, in which case Lessee's liability under thisss. 9.1
shall survive for so long as Lessor iS entitled to exercise remedies under
suchss. 15 or in connection with Lessee in the event of exercise of its early
termination option underss. 9 of the Lease or its purchase options underss. 17.3
of the Lease), and (2) the termination of the Term in accordance witH the Lease;
(c) to the extent attributable to any Transfer (voluntary or involuntary)
by or on behalf of such Indemnitee of any Equipment Note or interest therein,
except (1) for out-of-pocket costs and expenses incurred as a result of any such
Transfer pursuant to the exercise of remedies under any Operative Agreement
resulting from a Lease Event of Default, and (2) as otherwise required by the
terms of ss. 2.15 of the Mortgage or ss. 11 hereof;
(d) to the extent attributable to any Transfer (voluntary or involuntary)
by or on behalf of Owner Participant of any interest in the Aircraft or the
Trust Estate, except for out-of-pocket costs and expenses incurred as a result
of such Transfer during the existence of a Lease Event of Default (or in
connection with Lessee in the event of exercise of its early termination option
under ss. 9 of the Lease or its purchase options under ss. 17.3 of the Lease);
(e) to the extent attributable to the gross negligence or willful
misconduct of such Indemnitee or any related Indemnitee (as defined below)
(other than gross negligence or willful misconduct imputed to such Person by
reason of its interest in the Aircraft or any Operative Agreement);
(f) in the case of FSB, to the extent attributable to matters enumerated in
the proviso toss. 14;
(g) to the extent attributable to the incorrectness or breach of any
representation or warranty of such Indemnitee or any related Indemnitee
contained in or made pursuant to any Operative Agreement or any Pass-Through
Agreement;
(h) to the extent attributable to the failure, by such Indemnitee or any
related Indemnitee, to perform or observe any agreement, covenant, or condition
on its part to be performed or observed in any Operative Agreement or any
Pass-Through Agreement;
(i) to the extent attributable to the offer or sale by such Indemnitee or
any related Indemnitee of any interest in the Aircraft, the Equipment Notes, the
Pass-Through Trust Certificates, the Trust Estate, or the Trust Agreement, or
any similar interest, in violation of the Securities Act or other applicable
federal, state, or foreign securities Laws (other than any thereof caused by the
acts or omissions of Lessee or any person acting on behalf of Lessee);
(j) (1) with respect to Mortgagee, to the extent attributable to its
negligence or willful misconduct in the distribution of funds received and
distributable by it in accordance with the Mortgage, (2) with respect to Owner
Trustee, to the extent attributable to its negligence or willful misconduct in
the distribution of funds received and distributable by it in accordance with
the Trust Agreement, (3) with respect to Subordination Agent, to the extent
attributable to its negligence or willful misconduct in the distribution of
funds received and distributable by it in accordance with the Intercreditor
Agreement, (4) with respect to the Pass-Through Trustees, to the extent
attributable to its negligence or willful misconduct in the distribution of
funds received and distributable by it in accordance with the Pass-Through Trust
Agreements, (5) with respect to Escrow Agent, to the extent attributable to its
negligence or willful misconduct in the payment of funds received and payable by
it in accordance with any Escrow Agreement, (6) with respect to Depository, to
the extent attributable to Depository's failure to pay funds payable by it in
accordance with any Deposit Agreement, and (7) with respect to Paying Agent, to
the extent attributable to its negligence or willful misconduct in the
distribution of funds received and distributable by it in accordance with any
Escrow Agreement,
(k) other than during the existence of a Lease Event of Default, to the
extent attributable to the authorization or giving or withholding of any future
amendments, supplements, waivers, or consents with respect to any Operative
Agreement or Pass-Through Agreement, other than any requested by Lessee or
required by or made pursuant to the terms of the Operative Agreements or
Pass-Through Agreements (unless such requirement results from the actions of an
Indemnitee not required by or made pursuant to the Operative Agreements or the
Pass-Through Agreements);
(l) to the extent attributable to any amount which any Indemnitee expressly
agrees to pay or such Indemnitee expressly agrees shall not be paid by or be
reimbursed by Lessee;
(m) to the extent that it is an ordinary and usual operating or overhead
expense of such Indemnitee;
(n) with respect to Owner Participant or Owner Trustee, or any related
Indemnitee, to the extent attributable to the deregistration of the Aircraft
under the Transportation Code as a result of the failure of such Person (or any
related Indemnitee of such Person) to be a Citizen of the United States as a
result of any act (other than reregistration of the Aircraft pursuant to ss.
7.1.2 of thE Lease) of Owner Participant or Owner Trustee or any related
Indemnitee of such Person (not taken at the request of Lessee);
(o) for any Lessor Lien attributable to such Indemnitee or any related
Indemnitee;
(p) to the extent constituting principal, Make-Whole Amount, or interest on
the Equipment Notes attributable solely to a Mortgage Event of Default not
constituting a Lease Event of Default; or
(q) to the extent incurred by or asserted against an Indemnitee other than
Owner Participant (but without limiting the other provisions of this ss. 9.1.2,
including clauses (g) and (h), as to Owner Participant) as a result of any
"prohibited transaction", within thE meaning of ERISA ss. 406 or Code ss.
4975(c)(1).
With respect to the Pass-Through Indemnitees, Lessee's obligations under
this ss. 9.1 shall be limited to the same extent that Lessee'S obligations are
limited in clause (5) of the definition of Supplemental Rent. In addition,
"Expenses" payable by Lessee pursuant to this ss. 9.1 shall bE deemed not to
include amounts payable under clauses (2), (3), (4), and (5) of the definition
of Supplemental Rent in the Lease, the "Lease" for any other "Leased Aircraft",
or the third paragraph of ss. 2.02 of any "Owned Aircraft Indenture" (each as
defined in the Note Purchase Agreement), in each case, assuming each such
definition or third paragraph is in the form attached as Exhibit A-1 or C-2, as
the case may be, to the Note Purchase Agreement as originally in effect (which
amounts shall be payable as Supplemental Rent or "Supplemental Rent" under a
"Lease", or pursuant to ss. 2.02 of the Mortgage, aS applicable).
For purposes of this ss. 9.1, a Person shall be considered a
"related Indemnitee" of an Indemnitee if that Person is an Affiliate or employer
oF such Indemnitee, a director, officer, employee, or agent of such Indemnitee
or any such Affiliate, or a successor or permitted assignee of any of the
foregoing; PROVIDED, that Owner Trustee and FSB shall not be deemed to be
related Indemnitees of Owner Participant merely because of their trust or
fiduciary relationships.
9.1.3 SEPARATE AGREEMENT
This Agreement constitutes a separate agreement with respect to each
Indemnitee, and is enforceable directly by each such Indemnitee.
9.1.4 NOTICE
If an Indemnitee makes a claim for any Expense indemnifiable under this ss.
9.1, such Indemnitee shall give prompt written notice thereof tO Lessee.
Notwithstanding the foregoing, any Indemnitee's failure to notify Lessee as
provided in this ss. 9.1.4, or in ss. 9.1.5, shall not release Lessee fRom any
of its obligations to indemnify such Indemnitee hereunder, except to the extent
that such failure results in an additional Expense to Lessee (in which event
Lessee shall not be responsible for such additional expense) or materially
impairs Lessee's ability to contest such claim.
9.1.5 NOTICE OF PROCEEDINGS; DEFENSE OF CLAIMS; LIMITATIONS
(a) If any action, suit, or proceeding for which Lessee is responsible
under this ss. 9.1 is brought against any Indemnitee, such Indemnitee shall
notify Lessee of the commencement thereof, and Lessee may, at its expense,
participate in and, to the extent that it so desires (subject to the provisions
of the following paragraph), assume and control its defense and, subject to ss.
9.1.5(c), settle or compromise it. Unless OwneR Participant agrees in writing
otherwise, no settlement of any claim hereunder may require Owner Participant to
agree to any remedy apart from the payment of money damages (for which such
payment of money damages Lessee will in any event indemnify the Indemnitees).
(b) Lessee or its insurer(s) shall have the right, at its or their expense,
to investigate or, if Lessee or its insurer(s) agree not to dispute liability to
the Indemnitee giving notice of such action, suit, or proceeding under this ss.
9.1.5 for indemnification hereunder or under anY insurance policies pursuant to
which coverage is sought, control the defense of, any action, suit, or
proceeding, relating to any Expense for which indemnification is sought pursuant
to this ss. 9.1, and each Indemnitee shall cooperate with Lessee or its
insurer(s) with respect thereto; PROVIDED, thaT Lessee shall not be entitled to
control the defense of any such action, suit, or proceeding, or to settle or
compromise any such Expense, (i) while any Special Default or Lease Event of
Default under ss. 14.1 of the Lease exists, or (ii) if such action, suit, or
proceeding will involve a material risk of thE sale, forfeiture, or loss of, or
the creation of any Lien (other than a Permitted Lien) on the Aircraft, the
Trust Estate, or any part thereof, unless Lessee shall have posted a bond or
other security or collateral satisfactory to Owner Participant and Mortgagee in
respect to such risk, or (iii) if such action, suit, or proceeding could in the
good faith opinion of such Indemnitee entail any risk of criminal liability or
material civil liability or present a conflict of interest making separate
representation necessary. In connection with any such Lessee-controlled action,
suit, or proceeding, such Indemnitee shall have the right to participate
therein, at its sole cost and expense, with counsel reasonably satisfactory to
Lessee, provided that such Indemnitee's participation does not, in the
reasonable opinion of the independent counsel appointed by Lessee or its
insurers to conduct such proceedings, interfere with the defense of such case.
(c) In no event shall any Indemnitee enter into a settlement or other
compromise with respect to any Expense without Lessee's prior written consent
(which shall not be unreasonably withheld or delayed), unless such Indemnitee
waives its right to be indemnified with respect to such Expense under this ss.
9.1.
(d) To the extent that any Expense indemnified by Lessee hereunder may be
covered by insurance maintained by Lessee, at Lessee's expense, each Indemnitee
agrees to cooperate with the insurers in the exercise of their rights to
investigate, defend, or compromise that Expense as may be required to retain the
benefits of the insurance for that Expense.
(e) If an Indemnitee is not a party to this Agreement, Lessee may require
that Indemnitee to agree in writing to the terms of this ss. 9 and ss. 15.8
before making any payment to such Indemnitee under this ss. 9.
(f) Nothing herein shall be deemed to be an assumption by Lessee of
obligations of Owner Trustee with respect to, or a guarantee by Lessee of, any
amounts payable by Owner Trustee upon Equipment Notes or a guarantee of any
residual value of the Aircraft.
(g) Nothing in this ss. 9.1.5 shall require an Indemnitee to contest any
Expense or to assume responsibility for or control of any judicial proceeding
with respect thereto.
9.1.6 INFORMATION
Lessee will provide the relevant Indemnitee with such information not
within the control of such Indemnitee (but in Lessee's control or reasonably
available to Lessee) which such Indemnitee reasonably requests, and will
otherwise cooperate with such Indemnitee so as to enable such Indemnitee to
fulfill its obligations under ss. 9.1.5 and to control or participate in any
proceeding to the extent permitted by ss. 9.1.5. The IndemniTee shall supply
Lessee with such information not within the control of Lessee (but in such
Indemnitee's control or reasonably available to such Indemnitee) which Lessee
reasonably requests to control or participate in any proceeding to the extent
permitted by ss. 9.1.5.
9.1.7 EFFECT OF OTHER INDEMNITIES; SUBROGATION; FURTHER ASSURANCES
Upon payment in full by or on behalf of Lessee of any indemnity provided
for under this Agreement, without any further action and to the full extent
permitted by Law, Lessee will be subrogated to all rights and remedies of the
Person indemnified (other than with respect to any of such Indemnitee's
insurance policies or in connection with any indemnity claim of such Indemnitee
under ss. 5.03 or ss. 7 of the Mortgage or ss. 5.3 or ss. 7 of the Trust
Agreement) in respect of the matter as to which such indemnity was paid. Each
Indemnitee will give such further assurances or agreements and cooperate with
Lessee to permit Lessee to pursue any such claims, to the extent reasonably
requested by Lessee and at Lessee's expense.
9.1.8 REFUNDS
If an Indemnitee receives any refund, in whole or in part, with respect to
any Expense paid by or on behalf of Lessee hereunder, that Indemnitee will
promptly pay the amount refunded (but not an amount in excess of the amount
Lessee or any of its insurers has paid in respect of such Expense) over to
Lessee unless a Lease Event of Default exists, in which case such amount shall
be paid over to Owner Trustee (or, if the Mortgage has not been discharged, to
Mortgagee) to hold as security for Lessee's obligations under the Lessee
Operative Agreements or, if requested by Lessee, applied to satisfy those
obligations. Any subsequent loss of such recovery or tax benefit or refund shall
be subject to the provisions of ss. 9.1 and ss. 9.3.
9.2 EXPENSES
9.2.1 INVOICES AND PAYMENT
Each of Owner Trustee, Mortgagee, Owner Participant, the Pass-Through
Trustees, and Subordination Agent shall promptly submit to Lessee for its prompt
approval (which shall not be unreasonably withheld) copies of invoices in
reasonable detail of the Transaction Expenses for which it is responsible for
providing information as they are received (and not later than the 90th day
after the Delivery Date). If so submitted and approved, Owner Participant agrees
promptly (and not later than the later of (i) the 105th day after the Delivery
Date and (ii) the tenth Business Day following such approval) to pay such
Transaction Expenses . Notwithstanding the foregoing, Lessee at its sole option
shall have the right to pay directly any and all Transaction Expenses payable to
Lessee Advisor or Lessee's counsel or (if such payment does not result in
adverse tax consequences to Owner Participant) to any other Person. If Owner
Participant fails to pay any Transaction Expense that it is obligated to pay
hereunder, Lessee shall pay such Transaction Expense. Any such payment by Lessee
shall not affect Owner Participant's obligations or Lessee's rights against
Owner Participant for its failure to make any such payment.
9.2.2 PAYMENT OF OTHER EXPENSES
Lessee shall pay (a) the ongoing fees and expenses of Owner Trustee and
Mortgagee, and (b) all reasonable out-of-pocket costs and expenses (including
the reasonable fees and disbursements of counsel) incurred by any Participant
attributable to (1) any transfer of title to the Aircraft or any Engine
contemplated by ss. 4.5 of the Lease, or (2) any waiver, amendment, or
modification of any Operative Agreement to the extent requested by Lessee.
9.2.3 INDEMNIFICATION INTEREST
Lessee will pay to each Indemnitee upon demand, to the extent permitted by
applicable Law, interest at the Past Due Rate on any amount of indemnity not
paid when due pursuant to this ss. 9 until the same shall be paid.
9.3 GENERAL TAX INDEMNITY
9.3.1 GENERAL
Except as provided in ss. 9.3.2, Lessee agrees that each payment of Rent
paid by Lessee pursuant to the Lease, and any other payment or indemnitY paid by
Lessee to a Tax Indemnitee under any Operative Agreement, shall be free of all
withholdings or deductions with respect to Taxes of any nature, and if Lessee is
required by applicable law to make any such withholding or deduction for any
such payment, (a) Lessee shall make all such withholdings or deductions, (b) the
amount payable by Lessee shall be increased so that, after making all required
withholdings or deductions, such Tax Indemnitee receives the same amount that it
would have received had no such withholdings or deductions been made, and (c)
Lessee shall pay the full amount withheld or deducted to the relevant Taxing
Authority in accordance with applicable law. Lessee further agrees that, if it
is required to withhold from any payment of Basic Rent, Stipulated Loss Value
(and amounts determined by reference thereto), and amounts payable upon exercise
of Lessee's purchase option pursuant to ss. 17.3 of the Lease, any Tax imposed
upon Owner Participant or Owner Trustee (including any withholding Tax based on
income or receipts of Owner Participant or Owner Trustee), and such Tax is
excluded from indemnification pursuant to ss. 9.3.2, Lessee shall pay such
additional amount (if any) required so that thE total amount paid by Lessee
(after making all required withholdings) is equal to (assuming timely payment of
the Equipment Notes before the relevant Payment Date) the aggregate principal
amount of scheduled installments due on the Equipment Notes outstanding on the
relevant Payment Date, together with accrued and unpaid interest, due on the
Equipment Notes; and Owner Participant or Owner Trustee (as applicable) shall
reimburse Lessee for any such additional amounts within two Business Days after
demand therefor. Except as provided in ss. 9.3.2, and whether or not any of the
Transactions arE consummated, Lessee shall pay, indemnify, protect, defend, and
hold harmless on an after-tax basis each Tax Indemnitee from all Taxes imposed
by any Taxing Authority imposed on or asserted against any Tax Indemnitee or the
Aircraft, the Airframe, any Engine, or any Part, or any interest in any of the
foregoing (whether or not indemnified against by any other Person), upon or with
respect to the Operative Agreements and the Pass-Through Agreements, their
execution, or the transactions or payments contemplated thereby, including any
Tax imposed upon or with respect to (w) the Aircraft, the Airframe, any Engine,
any Part, any Operative Agreement (including any Equipment Notes, their
issuance, acquisition, transfer or refinancing or the payment of principal,
interest, premium or other amounts with respect thereto), any Pass-Through
Agreement, any data, or any other thing delivered or to be delivered under an
Operative Agreement, (x) the purchase, manufacture, acceptance, rejection, sale,
transfer of title, return, ownership, mortgaging, delivery, transport, charter,
rental, lease, re-lease, sublease, assignment, possession, repossession,
presence, use, condition, storage, preparation, maintenance, modification,
alteration, improvement, operation, registration, transfer or change of
registration, reregistration, repair, replacement, overhaul, location, control,
imposition of any Lien (other than a Lessor Lien), financing, refinancing
requested by Lessee, abandonment, or other disposition of the Aircraft, the
Airframe, any Engine, any Part, any data, or any other thing delivered or to be
delivered under an Operative Agreement, (y) rent, interest, fees, or other
income, proceeds, receipts, or earnings, whether actual or deemed, arising upon,
in connection with, or in respect of any of the Operative Agreements (including
the property or income or other proceeds with respect to property held as part
of the Trust Estate) or the transactions contemplated thereby, or (z) the
Pass-Through Certificates, their issuance or acquisition, or the payment of any
amounts thereof.
9.3.2 CERTAIN EXCEPTIONS
The provisions of ss. 9.3.1 shall not apply to, and Lessee shall have no
liability hereunder for, Taxes:
(a) imposed on a Tax Indemnitee by the federal government of the United
States or any Taxing Authority or governmental subdivision of the United States
or any state or local Taxing Authority (1) on, based on, or measured by gross or
net income or gross or net receipts, including capital gains taxes, excess
profits taxes, minimum taxes from tax preferences, alternative minimum taxes,
branch profits taxes, accumulated earnings taxes, personal holding company
taxes, succession taxes and estate taxes, and any withholding taxes on, based
on, or measured by gross or net income or receipts, or (2) on, or with respect
to, or measured by capital or net worth or in the nature of a franchise tax or a
tax for the privilege of doing business (other than, in the case of clause (1)
or (2), Taxes in the nature of sales, use, license, value added (to the extent
not imposed as a substitute for an income tax), transfer, stamp, ad valorem, or
property Taxes);
(b) imposed on a Tax Indemnitee by any Taxing Authority or governmental
subdivision thereof or therein outside of the United States (including any
Taxing Authority in or of a territory, possession, or commonwealth of the United
States) (1) on, based on, or measured by gross or net income or receipts,
including capital gains taxes, excess profits taxes, minimum taxes from tax
preferences, alternative minimum taxes, branch profits taxes, accumulated
earnings taxes, personal holding company taxes, succession taxes and estate
taxes, and any withholding taxes on, based on, or measured by gross or net
income or receipts, or (2) on, or with respect to, or measured by capital or net
worth or in the nature of a franchise tax or a tax for the privilege of doing
business (other than, in the case of clause (1) or (2), Taxes in the nature of
(aa) sales, use, license, value added (to the extent not imposed as a substitute
for an income tax), transfer, stamp, ad valorem, or property Taxes, or (bb) any
Taxes imposed by any Taxing Authority (other than a Taxing Authority within
whose jurisdiction such Tax Indemnitee is incorporated or organized or maintains
its principal place of business) if such Tax Indemnitee would not have been
subject to such Taxes by such jurisdiction but for (i) the location,
registration, use, or operation of the Aircraft, the Airframe, any Engine, or
any Part thereof by a Lessee Person within the jurisdiction of the Taxing
Authority imposing such Tax, or (ii) the activities of any Lessee Person (except
for activities of a Lessee Person who is not an Affiliate, successor, or assign
of Lessee acting in its capacity other than as a Lessee Person, which activities
are unrelated to the transactions contemplated by the Operative Agreements) in
such jurisdiction, including use of any other aircraft by Lessee in such
jurisdiction, (iii) the status of any Lessee Person as a foreign entity or as an
entity owned in whole or in part by foreign persons, (iv) Lessee's having made
(or having been deemed to have made) payments to such Tax Indemnitee from the
relevant jurisdiction, or (v) in the case of the Pass-Through Trustees, any
Participant, or any related Tax Indemnitee, Lessee's being incorporated,
organized, or maintaining a place of business in such jurisdiction);
(c) on, with respect to, or measured by any trustee fees, commissions,
premiums, or compensation received by Owner Trustee, Pass-Through Trustee,
Subordination Agent, Policy Provider or Mortgagee;
(d) on the Trust or the Trust Estate that result from treatment of the
Trust or the Trust Estate as an entity, such as a corporation, separate and
apart from Owner Participant;
(e) that are being contested as provided inss. 9.3.4 during the pendency of
such contest;
(f) imposed on any Tax Indemnitee to the extent that such Taxes result from
the gross negligence or willful misconduct of such Tax Indemnitee or any
Affiliate thereof (other than the gross negligence or willful misconduct imputed
to such Tax Indemnitee by reason of such Tax Indemnitee's participation in the
transactions contemplated by the Operative Agreements);
(g) imposed on or with respect to a Tax Indemnitee (including the
transferee in those cases in which the Tax on transfer is imposed on, or is
collected from, the transferee) as a result of a transfer or other disposition
(including a deemed transfer or disposition) by such Tax Indemnitee or a related
Tax Indemnitee (or, in the case of Owner Participant, by Owner Trustee, or, in
the case of Taxes imposed on a transferee, by the transferor) of any interest in
the Aircraft, the Airframe, any Engine, or any Part, the Rent (other than the
assignment of Rent to Mortgagee pursuant to the Mortgage), the Trust, the Trust
Estate, the Collateral, the Lease, or any interest arising under the Operative
Agreements or any Equipment Note or a transfer or disposition (including a
deemed transfer or disposition) of any interest in a Tax Indemnitee (other than
(1) a substitution, replacement, modification, pooling, or improvement of the
Aircraft, the Airframe, any Engine or any Part by a Lessee Person that is
treated for Tax purposes as a transfer or disposition, (2) a transfer pursuant
to an exercise of remedies upon a then-existing Lease Event of Default, (3) a
transfer pursuant toss. 17.3 orss. 9 of the Lease, or (4) a transfer pursuant to
an Event of Loss);
(h) in excess of those that would have been imposed had there not been a
transfer or other disposition by or to such Tax Indemnitee or a related Tax
Indemnitee described in clause (g) of this ss. 9.3.2;
(i) imposed on Owner Participant and indemnified by Lessee pursuant to the
Tax Indemnity Agreement;
(j) imposed with respect to any period after the expiration or earlier
termination of the Term and, if required pursuant to the terms of the Lease, the
return of possession of the Aircraft to Lessor or placement in storage at the
request of Lessor in accordance with the Lease (PROVIDED, that this clause (j)
shall not apply to Taxes imposed after such period arising as a result of
payments by Lessee under the Operative Agreements after such period or are
attributable to events occurring prior to or coincident with such expiration or
earlier termination of the Term);
(k) consisting of any interest, penalties, or additions to tax imposed on a
Tax Indemnitee as a result (in whole or in part) of a failure of such Tax
Indemnitee or a related Tax Indemnitee to file any return properly and timely,
unless such failure is caused by Lessee's failure to fulfill its obligations, if
any, under ss. 9.3.6 with respect to such return;
(l) resulting from, or that would not have been imposed but for, any Lessor
Liens arising as a result of claims against, or acts or omissions of, or
otherwise attributable to such Tax Indemnitee or a related Tax Indemnitee;
(m) imposed on any Tax Indemnitee as a result of the breach by such Tax
Indemnitee or a related Tax Indemnitee of any covenant of such Tax Indemnitee or
any Affiliate thereof contained in any Operative Agreement or the inaccuracy of
any representation or warranty by such Tax Indemnitee or any Affiliate thereof
in any Operative Agreement;
(n) in the nature of an intangible or similar Tax (1) upon or with respect
to the value or principal amount of the interest of any Loan Participant or any
Note Holder in any Equipment Note or the loan evidenced thereby, or (2) upon or
with respect to the value of the interest of Owner Participant in the Trust
Estate or the Trust, in each case only if such Taxes are in the nature of
franchise Taxes or result from the conduct of business by such Tax Indemnitee in
the taxing jurisdiction and are imposed because of the place of incorporation or
the activities unrelated to the Transactions in the taxing jurisdiction of such
Tax Indemnitee;
(o) that is included in Lessor's Cost and paid to the appropriate Taxing
Authority;
(p) other than any Tax described in ss. 9.3.2(b) hereof, imposed on a Tax
Indemnitee by a Taxing Authority of a jurisdiction outside thE United States, to
the extent that such Taxes would not have been imposed but for a connection
between the Tax Indemnitee or a related Tax Indemnitee and such jurisdiction
imposing such Tax unrelated to the Transactions; or
(q) relating to ERISA or to Codess. 4975.
For purposes hereof, a Tax Indemnitee and any other Tax Indemnitees
who are successors, assigns, agents, or Affiliates of such Tax Indemnitee shall
be related Tax Indemnitees; PROVIDED, that neither Mortgagee nor any Loan
Participant shall be deemed a related Tax Indemnitee as to Lessor or Owner
Participant merely because of the assignment made in the Mortgage.
9.3.3 PAYMENT
(a) Without regard to ss. 9.3.2(a), (b), or (h) hereof, Lessee's indemnity
obligation to a Tax Indemnitee under this ss. 9.3 shall be The amount which,
after taking into account any Tax imposed upon the receipt or accrual of the
amounts payable under this ss. 9.3 and any tax benefits actuallY recognized by
such Tax Indemnitee as a result of the indemnifiable Tax (including any benefits
recognized as a result of such Tax Indemnitee's use of an indemnifiable Tax as a
credit against Taxes not indemnifiable under this ss. 9.3), equals the amount of
the Tax indemnifiable under this ss. 9.3.
(b) At Lessee's request, the computation of the amount of any indemnity
payment owed by Lessee or any amount owed by a Tax Indemnitee to Lessee pursuant
to this ss. 9.3 shall be verified and certified by an independent public
accounting firm selected by such Tax Indemnitee and reasonablY satisfactory to
Lessee. Such verification shall be binding. The costs of such verification
(including the fee of such public accounting firm) shall be borne by Lessee
unless such verification results in an adjustment in Lessee's favor of 5% or
more of the net present value of the payment as computed by such Tax Indemnitee,
in which case such Tax Indemnitee shall pay those costs.
(c) Each Tax Indemnitee shall provide Lessee with such certifications, and
such information and documentation in such Tax Indemnitee's possession, as
Lessee reasonably requests to minimize any indemnity payment pursuant to this
ss. 9.3; PROVIDED, that notwithstanding anything to the contrarY in this ss.
9.3.3(c), no Tax Indemnitee shall be required to provide Lessee with any Tax
returns.
(d) Each Tax Indemnitee shall promptly forward to Lessee any written
notice, bill, or advice that such Tax Indemnitee receives from any Taxing
Authority concerning any Tax for which it seeks indemnification under this ss.
9.3. Lessee shall pay any amount for which it is liable pursuant tO this ss. 9.3
directly to the appropriate Taxing Authority if legally permissible, or upon
demand of a Tax Indemnitee, to such Tax Indemnitee within 30 dayS of such demand
(or, if a contest occurs in accordance with ss. 9.3.4, within 30 days after a
Final Determination (as defined below)), but in no event morE than one Business
Day before the related Tax is due. If requested by a Tax Indemnitee in writing,
Lessee shall furnish to the appropriate Tax Indemnitee the original or a
certified copy of a receipt for Lessee's payment of any Tax paid by Lessee, or
such other evidence of payment of such Tax as is acceptable to such Tax
Indemnitee. Lessee shall also furnish promptly upon written request such data as
any Tax Indemnitee reasonably requires to enable such Tax Indemnitee to comply
with the requirements of any taxing jurisdiction, unless such data are not
reasonably available to Lessee or (unless such data are specifically requested
by a Taxing Authority) are not customarily furnished by domestic air carriers
under similar circumstances. For purposes of this ss. 9.3, a "FINAL
DETERMINATION" is (1) a decision, judgment, decree, or other order by any court
of competent jurisdiction that occurs pursuant to thE provisions of ss. 9.3.4,
which decision, judgment, decree, or other order has become final and
unappealable, (2) a closing agreement or settlement agreemenT entered into in
accordance with ss. 9.3.4 that has become binding and is not subject to further
review or appeal (absent fraud, misrepresentation, etc.), oR (3) the termination
of administrative proceedings and the expiration of the time for instituting a
claim in a court proceeding.
(e) If any Tax Indemnitee actually realizes a tax savings by reason of any
Tax paid or indemnified by Lessee pursuant to this ss. 9.3 (whether such tax
savings arise by means of a foreign tax credit, depreciation or cost recovery
deduction, or otherwise), and such savings are not otherwise taken into account
in computing such payment or indemnity, such Tax Indemnitee shall pay to Lessee
an amount equal to the lesser of (1) the amount of such tax savings, plus any
additional net tax savings recognized as the result of any payment made pursuant
to this sentence, when, as, if, and to the extent realized, and (2) the amount
of all payments pursuant to this ss. 9.3 by Lessee to such Tax Indemnitee (less
any payments previously made bY such Tax Indemnitee to Lessee pursuant to this
ss. 9.3.3(e)) (and the excess, if any, of the amount described in clause (1)
over the amount described iN clause (2) shall be carried forward and applied to
reduce PRO TANTO any subsequent obligations of Lessee to make payments to such
Tax Indemnitee pursuant to this ss. 9.3); PROVIDED, that such Tax Indemnitee
shall not be required to make any payment pursuant to this sentence so long as a
Special Default or A Lease Event of Default of a monetary nature exists. If a
tax benefit is later disallowed or denied, the disallowance or denial shall be
treated as a Tax indemnifiable under ss. 9.3.1 without regard to the provisions
of ss. 9.3.2 (other than ss. 9.3.2(f)). Each such Tax Indemnitee shall in good
faitH use reasonable efforts in filing its tax returns and in dealing with
Taxing Authorities to seek and claim any such tax benefit.
9.3.4 CONTEST
(a) If a written claim is made against a Tax Indemnitee for Taxes that
Lessee could be liable to pay or indemnify for hereunder, or if a Tax Indemnitee
determines that a Tax is due and that Lessee could have an indemnity obligation
for that Tax hereunder, such Tax Indemnitee shall promptly notify Lessee in
writing of such claim (PROVIDED, that failure so to notify Lessee shall not
relieve Lessee of its indemnity obligations hereunder unless the failure to
notify effectively forecloses Lessee's rights to require a contest of such
claim), and shall take no action with respect to such claim without Lessee's
prior written consent for 30 days following Lessee's receipt of such notice;
PROVIDED, that, if applicable Law requires such Tax Indemnitee to take action
before the end of such 30-day period, such Tax Indemnitee shall, in such notice
to Lessee, so inform Lessee, and such Tax Indemnitee shall take no action for as
long as it is legally able to avoid taking action (and a Tax Indemnitee shall be
entitled to pay the Tax claimed and sue for a refund before the end of such
30-day period if (1)(aa) the failure to pay the Tax would result in substantial
penalties (unless immediately reimbursed by Lessee) and the act of paying the
Tax would not materially prejudice the right to contest, or (bb) the failure to
pay would result in criminal penalties, and (2) such Tax Indemnitee shall take
any action so required in connection with so paying the Tax in a manner that is
the least prejudicial to the pursuit of the contest). In addition, such Tax
Indemnitee shall (provided that Lessee shall have agreed to keep such
information confidential other than to the extent necessary in order to contest
the claim) furnish Lessee with copies of any requests for information from any
Taxing Authority relating to such Taxes with respect to which Lessee may be
required to indemnify hereunder. If requested by Lessee in writing within 30
days after its receipt of such notice, such Tax Indemnitee shall, at Lessee's
expense (including all reasonable costs, expenses, and reasonable attorneys' and
accountants' fees and disbursements), in good faith contest (or, if permitted by
applicable law, allow Lessee to contest) through appropriate administrative and
judicial proceedings the validity, applicability, or amount of such Taxes by (x)
resisting payment thereof, (y) not paying the Taxes except under protest if
protest is necessary and proper, or (z) if the payment is made, using reasonable
efforts to obtain a refund thereof in an appropriate administrative or judicial
proceeding. If requested to do so by Lessee, the Tax Indemnitee shall appeal any
adverse administrative or judicial decision, except that the Tax Indemnitee
shall not be required to pursue any appeals to the United States Supreme Court.
If and to the extent that the Tax Indemnitee is able to separate the contested
issue(s) from other issues arising in the same administrative or judicial
proceeding that are unrelated to the Transactions without (in such Tax
Indemnitee's good faith judgment) adversely affecting such Tax Indemnitee, such
Tax Indemnitee shall permit Lessee to control the conduct of any such proceeding
and shall provide to Lessee (at Lessee's cost and expense) with such information
or data in such Tax Indemnitee's control or possession and reasonably necessary
to conduct such contest (other than such Tax Indemnitee's federal income Tax
returns) in which case Lessee shall keep such Tax Indemnitee reasonably informed
concerning the progress of such contest. If the contest is being controlled by a
Tax Indemnitee, such Tax Indemnitee shall consult with Lessee in good faith
regarding the manner of contesting such claim and shall keep Lessee reasonably
informed regarding the progress of such contest. A Tax Indemnitee shall not fail
to take any action expressly required by this ss. 9.3.4 (including anY action
regarding any appeal of an adverse determination with respect to any claim) or
settle or compromise any claim without Lessee's prior written consent (except as
contemplated by ss. 9.3.4(b) or (c)).
(b) Notwithstanding the foregoing, in no event shall a Tax Indemnitee be
required to pursue any contest (or to permit Lessee to pursue any contest)
unless (1) Lessee agrees to pay to such Tax Indemnitee on demand and on an
after-tax basis all reasonable costs and expenses that such Tax Indemnitee
incurs in connection with contesting such Taxes, including all reasonable
out-of-pocket costs and expenses and reasonable attorneys' and accountants' fees
and disbursements, (2) if such contest involves the payment of the claim, Lessee
advances the amount thereof (to the extent indemnified hereunder) plus interest,
penalties, and additions to tax with respect thereto that are required to be
paid before commencing the contest on an interest-free net after-Tax basis to
such Tax Indemnitee, (3) such Tax Indemnitee does not reasonably determine that
the action to be taken will result in any material risk of forfeiture, sale, or
loss of the Aircraft (unless Lessee makes provisions to protect the interests of
any such Tax Indemnitee in a manner reasonably satisfactory to such Tax
Indemnitee) (PROVIDED, that such Tax Indemnitee shall notify Lessee in writing
promptly after it becomes aware of any such risk), (4) no Lease Event of Default
exists, unless Lessee has provided security for its obligations hereunder by
advancing to such Tax Indemnitee, before proceeding or continuing with such
contest, the amount of the Tax being contested, plus any interest and penalties
and an amount estimated in good faith by such Tax Indemnitee for expenses, (5)
before commencing any judicial action controlled by Lessee, Lessee acknowledges
its liability for such claim hereunder in writing, PROVIDED, that Lessee shall
not be bound by its acknowledgment if the Final Determination articulates
conclusions of law and fact that demonstrate that Lessee has no liability for
the contested amounts hereunder, (6) such Tax Indemnitee shall have received at
Lessee's sole expense, an opinion independent tax counsel, such counsel to be
selected by Lessee and reasonably satisfactory to such Tax Indemnitee ("Tax
Counsel"), to the effect that a reasonable basis, within the meaning of ABA
Formal Opinion No. 85-352, exists for contesting such claim, (7) the amount of
payments or indemnification that would be required as a result of such
adjustment, when aggregated with further potential payments or adjustments where
the subject matter of the proposed adjustment is of a continuing nature, as to
the Aircraft and all other aircraft operated by Lessee, shall be at least
$10,000, and (8) the issue shall not be substantially identical as an issue
previously contested hereunder and decided adversely, unless such Tax Indemnitee
shall have received, at Lessee's sole expense, a written opinion, in form and
substance reasonably satisfactory to such Tax Indemnitee, of Tax Counsel to the
effect that the applicable circumstances or law have changed and in light
thereof, there is reasonable basis under ABA Formal Opinion No. 85-352 that the
tax treatment of the item which is the subject of the claim will be upheld in
litigation if the claimed tax treatment is challenged by a Taxing Authority.
Notwithstanding the foregoing, if any Tax Indemnitee releases, waives,
compromises, or settles any claim that may be indemnifiable by Lessee pursuant
to this ss. 9.3 and which such Tax Indemnitee is otherwise obligated to contest
under this ss. 9.3.4 without Lessee's written permissiOn, Lessee's obligation to
indemnify such Tax Indemnitee with respect to such claim (and all
directly-related claims, and claims based on the outcome of such claim) shall
terminate, subject to ss. 9.3.4(c), and subject to ss. 9.3.4(c), such Tax
Indemnitee shall repay to Lessee any amount previously paid or advanCed to such
Tax Indemnitee with respect to such claim, plus interest at the rate that would
have been payable by the relevant Taxing Authority on a refund of such Tax.
(c) Notwithstanding anything in this ss. 9.3, a Tax Indemnitee will not be
required to contest the imposition of any Tax, and shall bE permitted to settle
or compromise any claim without Lessee's consent, if such Tax Indemnitee (1)
waives its right to indemnity under this ss. 9.3 witH respect to such Tax (and
any directly-related claim, and any claim the outcome of which is determined
based upon the outcome of such claim), (2) pays to Lessee any amount previously
paid or advanced by Lessee pursuant to this ss. 9.3 with respect to such Tax,
plus interest at the rate that would have beeN payable by the relevant Taxing
Authority on a refund of such Tax, and (3) agrees to discuss with Lessee the
views or positions of any relevant Taxing Authority with respect to the
imposition of such Tax PROVIDED, that if Lessee has agreed in writing to settle
a claim for a stated amount and the relevant Tax Indemnitee settles the claim on
more favorable terms, such Tax Indemnitee shall not be required to waive the
indemnity for such claim to the extent of the amount agreed to by Lessee.
9.3.5 REFUND
If any Tax Indemnitee receives a refund of, or becomes entitled to a credit
against other liability for, all or any part of any Taxes paid, reimbursed, or
advanced by Lessee, such Tax Indemnitee shall pay to Lessee within 30 days of
such receipt an amount equal to the lesser of (a) the amount of such refund or
credit plus any net tax benefit (taking into account any Taxes incurred by such
Tax Indemnitee by reason of the receipt of such refund or realization of such
credit) actually realized by such Tax Indemnitee as a result of any payment by
such Tax Indemnitee made pursuant to this sentence (including this clause (a)),
and (b) such tax payment, reimbursement, or advance by Lessee to such Tax
Indemnitee theretofore made pursuant to this ss. 9.3 (and the excess, if any, of
the amount described in clause (a) over the amount described in clause (b) shall
be carried forward and applied to reduce PRO TANTO any subsequent obligation of
Lessee to make payments to such Tax Indemnitee pursuant to this ss. 9.3). If, in
addition to such refund or credit, sucH Tax Indemnitee receives (or is credited
with) an amount representing interest on the amount of such refund or credit,
such Tax Indemnitee shall pay to Lessee within 30 days after receiving or
realizing such credit the portion of such interest fairly attributable to Taxes
paid, reimbursed, or advanced by Lessee before the receipt of such refund or
realization of such credit. Notwithstanding the foregoing, a Tax Indemnitee
shall not be obligated to make any payment to Lessee pursuant to this ss. 9.3.5
if a Special Default or a Lease Event of Default has occurred and is continuing.
If it is later determined thaT such Tax Indemnitee was not entitled to such
refund or credit, the portion of the refund or credit repaid, recaptured or
disallowed (and any interest and tax savings paid by such Tax Indemnitee to
Lessee with respect thereto) shall be treated as Taxes for which Lessee must
indemnify such Tax Indemnitee pursuant to this ss. 9.3 without regard to ss.
9.3.2 hereof other than ss. 9.3.2(f).
9.3.6 TAX FILING
Lessee shall timely file any report, return, or statement that is required
to be filed with respect to any Tax which is subject to indemnification under
this ss. 9.3 (except for any such report, return, or statement which a Tax
Indemnitee has timely notified Lessee in writing that sucH Tax Indemnitee
intends to file, or for which such Tax Indemnitee is required by law to file, in
its own name); PROVIDED, that the relevant Tax Indemnitee shall furnish Lessee
with any information in such Tax Indemnitee's possession or control that is
reasonably necessary to file any such return, report, or statement and that
Lessee reasonably requests in writing (but the Tax Indemnitee shall not be
required to furnish copies of its actual tax returns, although it may be
required to furnish relevant information contained therein). Lessee shall either
file such report, return, or statement and send a copy to such Tax Indemnitee
(and to Owner Trustee, if the Tax Indemnitee is not Owner Trustee), or, if
Lessee is not permitted to file such report, return, or statement, it shall
notify such Tax Indemnitee of such requirement and prepare and deliver such
report, return, or statement to such Tax Indemnitee in a manner reasonably
satisfactory to such Tax Indemnitee within a reasonable time before the time
such report, return, or statement is to be filed.
9.3.7 FORMS
Each Tax Indemnitee agrees to furnish from time to time to Lessee,
Mortgagee, or such other Person as Lessee or Mortgagee shall designate, at
Lessee's or Mortgagee's request, such duly-executed and properly-completed forms
as may be necessary or appropriate in order to claim any reduction of or
exemption from any withholding or other Tax imposed by any Taxing Authority, if
(a) such reduction or exemption is available to such Tax Indemnitee, and (b)
Lessee has provided such Tax Indemnitee with any information necessary to
complete such form not otherwise reasonably available to such Tax Indemnitee.
9.3.8 NON-PARTIES
If a Tax Indemnitee is not a party to this Agreement, Lessee may require
the Tax Indemnitee to agree in writing, in a form reasonably acceptable to
Lessee, to the terms of this ss. 9.3 and ss. 15.8 before making any payment to
such Tax Indemnitee under this ss. 9.3.
9.3.9 FOREIGN TAX ON LOAN PAYMENTS
If an Owner Participant is incorporated or organized, or maintains a place
of business in a country other than the United States or in a territory,
possession, or commonwealth of the United States (within the meaning of the tax
law of that foreign jurisdiction), and if as a result thereof any foreign Taxes
(including withholding Taxes) are imposed on the Pass-Through Trustees,
Pass-Through Trusts, or Note Holders, then such Owner Participant shall
reimburse Lessee for any payments that Lessee is required to make to or on
behalf of any Pass-Through Trustee, Pass-Through Trust, or Note Holder under
this ss. 9.3 as a result of the imposition of such Taxes. The amount payable by
Owner Participant to Lessee shall be an amount which, after takinG into account
any such Taxes, any Tax imposed upon the receipt or accrual by Lessee of such
payment by such Owner Participant, and any tax benefits or tax savings realized
by Lessee with respect to the payment of such withholding Tax or the payment
hereunder, shall equal the amount of Lessee's payment to or on behalf of such
Pass-Through Trustee or Note Holder.
9.4 PAYMENTS
Any payments made pursuant to ss. 9.1 or ss. 9.3 shall be due on the 30th
day after demand, and shall be made directly to the relevant IndemniTee or Tax
Indemnitee or to Lessee, in immediately available funds at such bank or to such
account as specified by such Indemnitee or Tax Indemnitee or Lessee (as
applicable) in written directives to the payor, or, if no such direction has
been given, by check of the payor payable to the order of, and mailed to, such
Indemnitee or Tax Indemnitee or Lessee (as applicable) by certified mail,
postage prepaid, at its address as set forth in this Agreement.
9.5 INTEREST
If any amount, payable by Lessee, any Indemnitee, or any Tax Indemnitee
under ss. 9.1 or ss. 9.3 is not paid when due, the Person obligated to mAke such
payment shall pay on demand, to the extent permitted by Law, to the Person
entitled thereto, interest on any such amount for the period from and including
the due date for such amount to but excluding the date the amount is paid, at
the Past-Due Rate. Such interest shall be paid in the same manner as the unpaid
amount in respect of which such interest is due.
9.6 BENEFIT OF INDEMNITIES
Lessee's obligations for indemnities, obligations, adjustments, and
payments in ss. 9.1 or ss. 9.3 are expressly made for the benefit of, and shAll
be enforceable by, the Indemnitee or Tax Indemnitee entitled thereto, without
declaring the Lease to be in default or taking other action thereunder, and
notwithstanding any provision of the Mortgage.
10. ASSIGNMENT OR TRANSFER OF INTERESTS
10.1 PARTICIPANTS, OWNER TRUSTEE, AND NOTE HOLDERS
10.1.1 OWNER PARTICIPANT
(a) During the Term, Owner Participant shall not Transfer any or all of its
right, title, or interest in the Trust Estate or the Trust Agreement or to this
Agreement unless:
(1) the Transferee has full power, authority, and legal right to execute,
deliver, and perform the obligations of Owner Participant under the Owner
Participant Agreements and provides reasonably satisfactory evidence of such
power and authority to Lessee, Owner Trustee, and Mortgagee;
(2) the Transferee enters into a legal, valid, binding, and enforceable
agreement, substantially in the form of Exhibit I hereto (or otherwise in form
and substance reasonably satisfactory to Lessee and Mortgagee), effective to
confirm that such Transferee agrees to be bound by all the terms of, and to
undertake all of the obligations arising after such transfer of, the
transferring Owner Participant in the Owner Participant Agreements, and in which
it makes representations and warranties substantially the same as those in ss.
6.2 of thiS Agreement;
(3) upon such Transfer Lessee shall not be obligated to pay any greater
amount or incur any greater obligation than that which it would have been
obliged to pay or incur under the Lease or other Lessee Operative Agreement if
no transfer or assignment had taken place, and upon such Transfer the terms and
conditions of the Lessee Operative Agreements insofar as they relate to the
rights and obligations of Lessee or the Loan Participant are not altered;
(4) Owner Participant shall deliver to Lessee, Owner Trustee, and Mortgagee
an opinion of counsel reasonably satisfactory to each of them to the effect that
such agreement or agreements referred to in ss. 10.1.1(a)(2) and, if applicable,
ss. 10.1.1(a)(6) or (a)(7) Are legal, binding, and enforceable in accordance
with its or their terms and that such transfer will not violate the
Transportation Code, the registration provisions of the Securities Act, or any
other applicable Federal law;
(5) the Transfer shall relate to Owner Participant's entire interest as
Owner Participant; or, if it relates to less than its entire interest as Owner
Participant, then (aa) Lessee shall have given its prior written consent to the
partial Transfer, and (bb) all amendments to the Operative Agreements,
reasonably requested by Lessee or Owner Participant, that are necessary or
appropriate to accommodate the existence of multiple Owner Participants, shall
be agreed to and executed by the parties thereto, all at the expense of the
Owner Participants under ss. 10.1.1(c);
(6) the Transferee is a Citizen of the United States (such status to be
determined without considering FAR ss. 47.9 or anY other provision that may
restrict Lessee's use or operation of the Aircraft), or shall use a voting
powers trust or similar arrangement in order to hold an interest in the Trust
Estate such that the Aircraft can be registered in the United States (without
considering FAR ss. 47.9 oR any other provision that may restrict Lessee's use
or operation of the Aircraft); and
(7) the Transferee is a single Person and is either (aa) a Permitted
Institution, (bb) or an Affiliate of a Permitted Institution, if such
Affiliate's obligations under the Owner Participant Agreements are guaranteed by
such Permitted Institution pursuant to a written guaranty, substantially in the
form of Exhibit J hereto (or otherwise in form and substance reasonably
satisfactory to Lessee, Owner Trustee and Mortgagee), or (cc) with Lessee's
prior written consent, any other Person the obligations of whom under the Owner
Participant Agreements are guaranteed by a Permitted Institution pursuant to a
written guaranty, in form and substance reasonably satisfactory to Lessee, Owner
Trustee, and Mortgagee.
(b) Owner Participant shall give written notice to Lessee,
Mortgagee, and Owner Trustee at least 10 days before any such Transfer,
specifying the name and address of the proposed Transferee, and providing
financial statements of the proposed Transferee or guarantor evidencing
satisfaction of the requirements described in ss. 10.1.1(a)(7)(aa) or (bb).
(c) Any reasonable fees, charges, and expenses, including the
reasonable legal fees, charges, and expenses incurred by Lessee, Owner
Participant, Mortgagee, any Note Holder, or Owner Trustee in connection with any
Transfer by Owner Participant permitted by this ss. 10.1.1, or by thE Transferee
in any such case, will be paid for by Owner Participant.
10.1.2 OWNER TRUSTEE
Owner Trustee may transfer its interests in the Trust Agreement pursuant to
ss. 9 thereof.
10.1.3 NOTE HOLDERS
Subject to ss. 7.5.2 hereof and ss. 2.07 of the Mortgage, any Note Holder
may, at any time, Transfer or grant participations in all or any portIon of the
Equipment Notes or all or any portion of its beneficial interest in its
Equipment Notes and the Collateral to any Person (the sale or issuance of
Pass-Through Certificates by a Pass-Through Trustee not being considered a
Transfer or participation); PROVIDED, that any participant in any such
participations shall not have any direct rights under the Operative Agreements
or any Lien on all or any part of the Aircraft or Collateral, and Lessee shall
not have any increased liability or obligations as a result of any such
participation. In the case of any such Transfer, the Transferee, by acceptance
of Equipment Notes in connection with such Transfer, shall be bound by all of
the covenants of Note Holders in the Operative Agreements.
10.2 EFFECT OF TRANSFER
Upon any Transfer in accordance with ss. 10.1.1, ss. 10.1.2, or ss. 10.1.3
(other than any Transfer by any Note Holder, to the extent it only gRants
participations in Equipment Notes or in its beneficial interest therein), the
Transferee shall be deemed "Owner Participant", "Owner Trustee", or a "Note
Holder", respectively, for all purposes of the Operative Agreements and, in the
case of a Transferee of Owner Participant or any Note Holder, shall be deemed to
have paid its ratable portion of Lessor's Cost previously made by Owner
Participant or Loan Participant, respectively, making such conveyance and
represented by the interest being conveyed, and each reference herein to Owner
Participant, Owner Trustee, or Note Holder, respectively, shall thereafter be
deemed a reference to such Transferee for all purposes, and the transferring
Owner Participant, Owner Trustee, Loan Participant, or Note Holder shall be
released (including, in the case of Owner Participant, any Guarantor with
respect to any guaranty provided by it under ss. 10.1.1(a)(7)) from all of itS
liabilities and obligations under the Operative Agreements to the extent such
liabilities and obligations arise after such Transfer and, in each case, to the
extent such liabilities and obligations are assumed by the Transferee; PROVIDED,
that such transferring Owner Participant, Owner Trustee, or Note Holder (and its
Affiliates, successors, assigns, agents, representatives, directors, and
officers) will continue to have the benefit of any rights or indemnities under
any Operative Agreement vested or relating to circumstances, conditions, acts,
or events before such Transfer.
11. RE-FUNDING AND CERTAIN OTHER MATTERS
11.1 RE-FUNDING GENERALLY
Subject to ss. 11.2 and ss. 11.4, if at any time Lessee notifies Owner
Participant, Owner Trustee, and Mortgagee that Lessee requests that OwNer
Trustee voluntary redeem all (but not less than all) of the outstanding
Equipment Notes (in compliance with ss. 2.11 and ss. 2.12 of the Mortgage) as
part oF a re-funding transaction, Owner Participant will negotiate in good faith
and promptly conclude an agreement with Lessee as to the terms of such
re-funding transaction (including the terms of any debt to be issued in
connection with such re-funding transaction and the documentation to be executed
in connection therewith), and after Lessee and Owner Participant shall have
concluded such an agreement:
11.1.1 RE-FUNDING CERTIFICATE
Within 10 Business Days after reaching such agreement, Owner Participant
will deliver a Re-Funding Certificate to Lessee. Within 10 Business Days after
receiving the Re-Funding Certificate, Lessee may demand a verification (pursuant
to ss. 3.2.1(d) of the Lease) of the information in thE Re-Funding Certificate.
Upon Lessee's acceptance of the accuracy of the information in the Re-Funding
Certificate or the determination pursuant to such verification procedures of the
Re-Funding Information, the appropriate parties will take the actions specified
in ss. 11.1.2 through ss. 11.1.7.
11.1.2 FINANCING AGREEMENTS
The appropriate parties will enter into appropriate documentation (which
may include an underwriting agreement or similar private placement agreement)
with the institution or institutions to be named therein providing for (a) Owner
Trustee's issuance and sale of the New Debt to such institution(s) on the
Re-Funding Date, and (b) the application of the proceeds of the sale of the New
Debt to the redemption of all such Equipment Notes on the Re-Funding Date.
Lessee, acting on behalf of Owner Trustee, shall give Mortgagee at least 30
days' revocable prior written notice of the proposed date of the optional
redemption.
11.1.3 LEASE AMENDMENTS
As a condition to the closing of the re-funding transaction, Lessee and
Owner Trustee will amend the Lease, as contemplated by ss. 3.2.1(b) oF the
Lease, to provide that (a) Basic Rent payments and allocations for the period
from and after the Re-Funding Date shall be as provided in the Re-Funding
Information, and (b) Stipulated Loss Values, Termination Values, and the EBO
Price, from and after the Re-Funding Date, shall be as provided in the
Re-Funding Information.
11.1.4 SECURITY AGREEMENTS
Owner Trustee will enter into an agreement to provide for securing the New
Debt similarly to the Equipment Notes, and will enter into such amendments and
supplements to the Mortgage (or such new indenture or other security agreement)
and the other Operative Agreements as are appropriate to effect such re-funding.
11.1.5 EXPENSES
Whether or not such re-funding transaction is consummated, Lessee shall pay
or reimburse on a net after tax basis all of the reasonable out-of-pocket
expenses of all parties to such re-funding transaction, including any
underwriting or placement fees and the reasonable fees and expenses of such
parties' counsel and any related loan or commitment fees.
11.1.6 MAKE WHOLE AMOUNT
At the closing of such re-funding, Owner Trustee shall pay to Mortgagee
(for the account of each Note Holder), upon receipt of the same from Lessee
(which Lessee shall pay as Supplemental Rent, as a condition to the closing to
the re-funding transaction, at no after-tax cost to Owner Trustee or Owner
Participant), any Make-Whole Amount payable to such Note Holder under ss. 2.11
of the Mortgage.
11.1.7 RETURN OF EQUIPMENT NOTES
Subject to Owner Trustee's and Lessee's compliance with all applicable
terms and conditions for voluntary prepayment under the Mortgage and this
Agreement, each Note Holder will transfer to Owner Trustee the Equipment Notes
held by such Note Holder for cancellation (and Owner Trustee shall cancel them),
against receipt by such Note Holder of the then-outstanding principal amount of
such Equipment Notes, accrued and unpaid interest and any Make-Whole Amount
thereon, and all other amounts then payable to such Note Holder and Mortgagee
hereunder or under the Mortgage.
11.2 LIMITATIONS ON OBLIGATION TO REFUND
Notwithstanding the foregoing, Owner Participant shall have no obligation
to proceed with any re-funding transaction as contemplated by this ss. 11:
(a) if such transaction would have, or creates a risk of, an adverse tax
consequence to Owner Participant (as determined by Owner Participant in good
faith), unless Lessee agrees to indemnify Owner Participant, or to cause Owner
Participant to be indemnified, against such adverse tax consequence by a written
agreement in form and substance and from a Person (if not Lessee) reasonably
satisfactory to Owner Participant, and such indemnification would not give rise
to a Materially Adverse Change with respect to Lessee;
(b) unless Lessee indemnifies Owner Participant for any liability,
obligation (other than the obligation to pay principal and interest and related
payments in respect of the New Debt), cost, or expense (including reasonable
attorneys' fees) related to or arising out of any such re-funding, and such
indemnification would not give rise to a Materially Adverse Change with respect
to Lessee;
(c) if a Special Default or Lease Event of Default exists;
(d) if two re-funding transactions have previously been consummated at
Lessee's request pursuant to thisss. 11;
(e) if such re-funding would cause (i) the principal amount of the New Debt
to exceed the then-outstanding principal amount of the Equipment Notes, or (ii)
the Weighted Average Life to Maturity of the New Debt to exceed the Weighted
Average Life to Maturity of the Equipment Notes, or (iii) the final maturity to
the New Debt to be later than the final maturity of the Equipment Notes; or
(f) if the structure or documentation for such re-funding results in
greater obligations or liabilities, or lesser rights, of Owner Trustee or Owner
Participant, compared to those contained in the structure and documentation for
the original Equipment Notes.
11.3 EXECUTION OF FACILITATING DOCUMENTS
Lessee, Owner Participant, Owner Trustee, and Mortgagee will execute any
document necessary or advisable to implement this ss. 11 (includinG executing,
delivering, or providing any appropriate additional or modified amendment,
representation, warranty, certificate, opinion, or other document that Lessee or
any other Person reasonably requests).
11.4 ERISA
Owner Participant shall not be obligated to conclude the proposed
re-funding transaction unless the agreements used to effect it contain an
agreement by the initial holders of the New Debt substantially the same as ss.
7.5.2(b) of this Agreement (unless the New Debt is sold in a public offerinG
under the Securities Act or a private placement intended for resale pursuant to
Rule 144A under the Securities Act, in which case the holders of the New Debt
shall be subject to the restrictions relating to ERISA substantially the same as
those generally applicable to purchasers of pass-through certificates issued by
U.S. airlines and sold to the public in SEC-registered form).
11.5 CONSENT TO OPTIONAL REDEMPTIONS
Each of Owner Participant, Owner Trustee, and Mortgagee agrees for Lessee's
benefit not to cause an optional redemption of the Equipment Notes without
Lessee's consent except as set forth in ss. 2.13 of the Mortgage or elsewhere
herein.
11.6 LESSEE'S ASSUMPTION OF EQUIPMENT NOTES
11.6.1 LESSEE'S ELECTION; DOCUMENTATION
If no Special Default exists, upon exercising a purchase option under ss.
17.3 of the Lease, Lessee may elect to assume and apply as part of thE Purchase
Price the debt evidenced by all of the outstanding Equipment Notes, subject to
this ss. 11.6 and ss. 2.15 of the Mortgage. Lessee shall notify OwNer Trustee,
each Participant, and Mortgagee of such election no later than 30 days before
the effective date of such assumption. Subject to this ss. 11.6 anD ss. 2.15 of
the Mortgage, the parties agree to cooperate and to enter into such amendments
or supplemental agreements as may be necessary to effectuate thE transaction
contemplated by this ss. 11.6.
If Lessee so elects, then, upon compliance with ss. 17.3 of the Lease,
Owner Trustee will transfer to Lessee, without recourse or warrantY (except as
to the absence of Lessor Liens) but subject to the Lien of the Mortgage, all of
Owner Trustee's right, title, and interest in and to the Aircraft, and each of
the parties hereto shall execute and deliver appropriate documentation
permitting Lessee to assume such obligations on the basis of full recourse to
Lessee, maintaining for the benefit of the Note Holders the security interest in
the Aircraft created by the Mortgage, and upon compliance with this ss. 11.6 and
ss. 2.15 of the Mortgage, such documentation shall become effective and Owner
Participant and Owner Trustee shall be released from All future obligations in
respect of the Equipment Notes, the Mortgage, and all other Operative
Agreements, except any obligations arising (or with respect to events occurring)
before such assumption, and take all such other actions as are reasonably
necessary to permit such assumption by Lessee.
11.6.2 CLOSING CONDITIONS
In connection with such assumption:
(1) Lessee shall execute and deliver an instrument, reasonably satisfactory
in form and substance to Mortgagee and Owner Trustee, (aa) pursuant to which
Lessee irrevocably and unconditionally assumes and undertakes, with full
recourse to Lessee, to pay when due (at the stated maturity thereof, by
acceleration, or otherwise) the principal of, and any Make-Whole Amount,
interest, and other Secured Obligations owing on, all Equipment Notes then
outstanding in accordance with their terms and punctually to perform and observe
all of the covenants and obligations (monetary or otherwise) hereunder and under
the Mortgage and the Equipment Notes (as amended in connection with such
assumption) to be performed or observed by Owner Trustee, which obligations
shall be secured by a first-priority lien under the Mortgage, and (bb) which
contains amendments to the Mortgage, in form and substance reasonably
satisfactory to Mortgagee and Owner Trustee, that incorporate therein such
provisions from the Lease and this Agreement as are appropriate, including
events of default substantially identical in scope and effect to those in the
Lease but including any such additional defaults as Mortgagee reasonably
requests to provide the same level of protection as in the Mortgage and
covenants substantially identical to the covenants of Lessee hereunder and under
the Lease.
(2) The instrument referred to in clause (1), any Uniform Commercial Code
financing statements relating thereto, and any other documents that are
necessary (or reasonably requested by Mortgagee) to establish Lessee's title to
and interest in the Aircraft or to reflect the substitution of Lessee for Owner
Trustee under the Operative Agreements or to continue the perfection of the
security interests in the Aircraft and the other rights and interests of the
registered owners of the Equipment Notes (or Lessee's substituted obligations)
shall be filed in such form, manner, and places as are necessary or, in
Mortgagee's or Owner Trustee's reasonable opinion, advisable for such purpose.
(3) Mortgagee and Owner Trustee shall receive an insurance report, dated
the effective date of such assumption, of an independent insurance broker, and
certificates of insurance, each in form and substance reasonably satisfactory to
such Person, as to the due compliance as of the effective date of such
assumption with ss. 11 of the Lease (as incorporated into the instrument
referred to in (1) of this ss. 11.6.2) as it relates to the Note Holders, each
Certificate Holder, and Mortgagee relating to the insurance with respect to the
Aircraft.
(4) Mortgagee and Owner Trustee shall receive evidence that, as of the
effectiveness of such assumption, the Aircraft is free and clear of all Liens
other than the Lien of the Mortgage and other
Permitted Liens (other than Lessor Liens).
(5) Mortgagee and Owner Trustee shall receive a certificate from Lessee
that no Special Default exists on the effective date of such assumption.
(6) Mortgagee receives (aa) a Guarantor Confirmation under which Holdings
expressly acknowledges and agrees that each of the Assumed Obligations
constitute Guaranteed Obligations (as defined in the Guarantee) for all purposes
of the Guarantee, and (bb) restated Equipment Notes showing Lessee as issuer
(which Mortgagee shall also authenticate) evidencing such assumption and the
full recourse nature of Lessee's obligations thereunder.
(7) Mortgagee receives such other documentation or evidence reasonably
requested by Mortgagee to establish the authority of Lessee, Owner Trustee, and
Owner Participant to consummate the transactions contemplated by the assumption
and the taking of all corporate proceedings in connection therewith.
(8) Each Loan Participant and Pass-Through Certificate holder ("HOLDER")
shall receive (by delivery to its Pass-Though Trustee, in the case of each
Holder) (aa) an opinion of Troutman Sanders LLP, or other independent tax
counsel chosen by Lessee and reasonably acceptable to each Loan Participant
(Troutman Sanders LLP or such other counsel being the "TAX COUNSEL"), to the
effect that the Pass-Through Trusts will not be subject to U.S. federal income
tax as a result of Lessee's assumption of the Equipment Notes, and (bb) either
(i) an opinion of Tax Counsel to the effect that the Loan Participants and
Holders will not recognize income, gain, or loss for federal income tax purposes
as a result of Lessee's assumption of the Equipment Notes, 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, or (ii)
(x) an opinion of Tax Counsel to the effect that the Loan Participants and
Holders should not recognize income, gain, or loss for federal income tax
purposes as a result of Lessee's assumption of the Equipment Notes, and should
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 (y) an indemnity on an After-Tax Basis from Lessee for any adverse tax
consequences to each Loan Participant and Holder resulting from such assumption,
such indemnity to be in form and substance reasonably acceptable to each Loan
Participant.
(9) Each Note Holder, each Pass-Through Certificate holder, Mortgagee, and
Owner Trustee shall receive (by delivery to its Pass-Though Trustee, in the case
of each Holder): (aa) a legal opinion from counsel for Lessee (which may be
in-house counsel), in form and substance reasonably satisfactory to each Note
Holder, Mortgagee, and Owner Trustee, to the effect that the assumption
contemplated by this ss. 11.6 does noT contravene Lessee's certificate of
incorporation or by-laws, or any agreement or instrument known to such counsel
to which Lessee is a party or by which it is bound, and as to (x) the compliance
of the assumption contemplated by this ss. 11.6 with the terms and conditions of
this ss. 11.6 and ss. 2.15 oF the Mortgage, (y) the due authorization,
execution, delivery, validity, and enforceability of the instruments referred to
in clauses (1) and (6), and (z) the continued perfection of the first-priority
Lien on the Aircraft for the benefit of the registered owners of the Equipment
Notes, and the due filing of the Uniform Commercial Code financing statements
and the other documents referred to in clause (2), (bb) from counsel to
Mortgagee, counsel to Lessee and Guarantor, counsel to Owner Trustee, and
special aviation counsel, a legal opinion comparable to the respective opinions
delivered on the Delivery Date (including, in the case of Lessee's counsel, a
favorable opinion regarding the availability of the protections available under
Section 1110 of the Bankruptcy Code), with such changes therein as may be
appropriate in light of such assumption, and (cc) in the case of each opinion
described in subclause (aa) or (bb) of this clause (9), covering such additional
matters as Mortgagee, Owner Trustee, or any Note Holder reasonably requests.
(10) Each Note Holder and Mortgagee receive a copy of the
Application for Aircraft Registration filed with the FAA (or any other
registration application filed with the applicable Aviation Authority) in
connection with such assumption.
12. SECTION 1110
Lessee, Owner Participant, Loan Participants, the Note Holders (such
intention being evidenced by each of their acceptance of an Equipment Note),
Owner Trustee, and Mortgagee intend that Owner Trustee, as lessor under the
Lease (and Mortgagee as assignee of Owner Trustee under the Mortgage), shall be
entitled to the benefits of Section 1110 in the event of a case under Chapter 11
of the Bankruptcy Code in which Lessee is a debtor.
13. CHANGE OF CITIZENSHIP
13.1 GENERALLY
Without prejudice to the representations, warranties, or covenants as to
any party's status as a Citizen of the United States:
(a) Each of Lessee, FSB, WTC, and Mortgagee agrees that, immediately upon
obtaining knowledge of any facts that would cast doubt upon its continuing
status as a Citizen of the United States, and promptly upon public disclosure of
negotiations in respect of any transaction which would or might adversely affect
such status, it will notify all parties hereto of all relevant matters in
connection therewith; and
(b) Owner Participant agrees that, if its status is to change or has
changed as a Citizen of the United States, or it makes public disclosure of
circumstances as a result of which it believes that such status is likely to
change, it will notify all the other parties to this Participation Agreement of
(1) such change in status promptly after obtaining Actual Knowledge thereof, and
(2) such belief as soon as practicable after such public disclosure (but in any
event within 10 Business Days after such public disclosure).
13.2 OWNER PARTICIPANT
Owner Participant agrees, solely for the benefit of Lessee and the Note
Holders, that if, when the Aircraft is registered in the United States, (a)
Owner Participant is not be a Citizen of the United States, and (b) the Aircraft
shall be, or would therefore become, ineligible for registration in the name of
Owner Trustee under the Transportation Code and regulations then applicable
thereunder (without considering FAR ss. 47.9 or any other provisioN that may
restrict Lessee's or any Permitted Sublessee's use or operation of the
Aircraft), then Owner Participant shall as soon as is reasonably practicable
(but in any event within 30 days after obtaining Actual Knowledge of such
ineligibility and of such loss of citizenship), (y) effect voting trust or other
similar arrangements (in which case any provisions contained in the Operative
Agreements restricting Owner Participant's or Owner Trustee's ability to amend
the Trust Agreement shall not apply to the extent necessary to permit the use of
such a voting trust or other similar arrangement) or take any other action
necessary to prevent any deregistration or maintain the United States
registration of the Aircraft, or (z) transfer in accordance with the terms of
this Agreement all its right, title, and interest in and to this Agreement, the
Trust Estate, and the Trust Agreement in accordance with ss. 10.1.
13.3 OWNER TRUSTEE
Upon FSB's giving any notice in accordance with ss. 13.1(a), Owner Trustee
shall, subject to ss. 9.1.1 of the Trust Agreement, resign as OwNer Trustee.
Upon its receipt of such notice, Owner Participant shall as promptly as
practicable appoint a Citizen of the United States as successor Owner Trustee
pursuant to ss. 9.1 of the Trust Agreement.
13.4 MORTGAGEE
If WTC gives any notice under ss. 13.1(a), WTC shall (if such citizenship
is necessary under the Transportation Code or, if it is not necessary, if
Mortgagee's citizenship could have any adverse effect on Lessee, any
Participant, or any Note Holder), subject to ss. 8.02 of the Mortgage, resign aS
Mortgagee promptly upon its ceasing to be such a citizen.
14. CONCERNING OWNER TRUSTEE
Except as otherwise expressly provided herein, in the Trust Agreement, or
in the Mortgage, Owner Trustee is entering into this Agreement solely in its
capacity as trustee as provided in the Trust Agreement and not in its individual
capacity, and in no case whatsoever will it be liable or accountable in its
individual capacity for any of the statements, representations, warranties,
agreements, or obligations of Owner Trustee hereunder, or for any loss in
respect thereof, as to all of which the parties agree to look solely to the
Trust Estate; PROVIDED, that nothing in this ss. 14 shall limiT in scope or
substance the personal liability of FSB (a) to Owner Participant as expressly
set forth in the Trust Agreement, (b) in respect of the representations,
warranties, and agreements of FSB expressly made as such herein or in any other
Operative Agreement to which it is a party, and (c) for the consequences of its
own gross negligence, willful misconduct, and, in receiving, handling or
remitting of funds only, its willful misconduct or simple negligence as a
trustee.
15. MISCELLANEOUS
15.1 AMENDMENTS
No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated, or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to amend, supplement, waive, modify, discharge,
terminate, or otherwise vary and is signed by the party against whom the
enforcement of the amendment, supplement, waiver, modification, discharge,
termination, or variance is sought. Each such amendment, supplement, waiver,
modification, discharge, termination, or variance shall be effective only in the
specific instance and for the specific purpose for which it is given. No
provision of this Agreement shall be varied or contradicted by oral
communication, course of dealing or performance, or other manner not set forth
in writing and signed by the party against whom enforcement of the same is
sought.
15.2 SEVERABILITY
If any provision of this Agreement is held invalid, illegal, or
unenforceable in any respect in any jurisdiction, then, to the extent permitted
by Law, (a) all other provisions hereof shall remain in full force and effect in
such jurisdiction, and (b) such invalidity, illegality, or unenforceability
shall not affect the validity, legality, or enforceability of such provision in
any other jurisdiction. If, however, any Law pursuant to which such provisions
are held invalid, illegal, or unenforceable may be waived, the parties hereto
hereby waive that Law to the full extent permitted, to the end that this
Agreement shall be a valid and binding agreement in all respects, enforceable in
accordance with its terms.
15.3 SURVIVAL
The indemnities in this Agreement shall survive the delivery or return of
the Aircraft, the Transfer of any interest of Owner Participant in this
Agreement, the Trust Estate, and the Trust Agreement, the Transfer of any
interest by any Note Holder of its Equipment Note, and the expiration or other
termination of any Operative Agreement, except to the extent otherwise provided
therein.
15.4 REPRODUCTION OF DOCUMENTS
This Agreement (including all annexes, schedules, and exhibits hereto) and
all documents relating hereto, including (a) future consents, waivers, and
modifications, and (b) past and future financial statements, certificates, and
other information furnished to any party hereto, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic, or
other similar process, and any party may destroy any original documents so
reproduced. Any such reproduction shall be as admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original exists and whether or not such party made the reproduction in the
regular course of business), and any enlargement, facsimile, or further
reproduction of such reproduction also shall be so admissible in evidence.
15.5 COUNTERPARTS
This Agreement and any amendments, waivers, consents, or supplements hereto
may be executed in any number of counterparts (or upon separate signature pages
bound together into one or more counterparts), each fully-executed set of which
shall be deemed to be an original.
15.6 NO WAIVER
No failure on the part of any party hereto to exercise, and no delay by any
party hereto in exercising, any of its rights, powers, remedies, or privileges
under this Agreement or otherwise available shall impair, prejudice, or waive
any such right, power, remedy, or privilege or be construed as a waiver of any
breach hereof or default hereunder or as an acquiescence therein, nor shall any
single or partial exercise of any such right, power, remedy, or privilege
preclude any other or further exercise thereof by it or the exercise of any
other right, power, remedy, or privilege by it. No notice to or demand on any
party hereto in any case shall, unless otherwise required under this Agreement,
entitle such party to any other or further notice or demand in similar or other
circumstances, or waive the rights of any party hereto to any other or further
action in any circumstances without notice or demand.
15.7 NOTICES
Unless otherwise expressly permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers, and other
communications required or permitted to be made, given, furnished, or filed
hereunder shall be in writing (and the specification of a writing in certain
instances and not in others does not imply an intention that a writing is not
required as to the latter), shall refer specifically to this Agreement, and
shall be personally delivered, sent by fax or telecommunication transmission
(which in either case provides written confirmation to the sender of its
delivery), sent by registered mail or certified mail, return receipt requested,
or sent by next-business-day courier service, in each case to the address or fax
number set forth for such party in Schedule 1, or to such other address or
number as such party hereafter specifies by notice to the other parties hereto.
Each such notice, request, demand, authorization, direction, consent, waiver, or
other communication shall be effective when received or, if made, given,
furnished, or filed by fax or telecommunication transmission, when confirmed.
15.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE
(A) THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY, AND PERFORMANCE.
(B) EACH PARTY HERETO HEREBY IRREVOCABLY AGREES, ACCEPTS, AND SUBMITS
ITSELF TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK
IN THE CITY AND COUNTY OF NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN
DISTRICT OF NEW YORK, IN CONNECTION WITH ANY LEGAL ACTION, SUIT, OR PROCEEDING
WITH RESPECT TO ANY MATTER RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH
THE OPERATIVE AGREEMENTS.
(C) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES TO THE SERVICE
OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES, AND DOCUMENTS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION, OR PROCEEDING MAY BE MADE BY
DELIVERING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT
THE ADDRESS SET FORTH PURSUANT TO SS. 15.7. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS SS.
15.8(C), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON SUCH PARTY,
AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS TO
GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT IN
ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED IN
ANY ACTION OR PROCEEDING BASED THEREON.
(D) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A DEFENSE, OR
OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN ANY OF THE
ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER, OR THAT ANY
OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH COURTS.
(E) EACH PARTY HERETO HEREBY WAIVES ITS RIGHT TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION IN ANY COURT IN ANY JURISDICTION BASED UPON OR ARISING
OUT OF OR RELATING TO THE OPERATIVE AGREEMENTS.
15.9 THIRD-PARTY BENEFICIARY
This Agreement is not intended to provide (and shall not provide) any
Person not a party hereto (other than each Liquidity Provider, Policy Provider,
Escrow Agent, and Paying Agent, each of which is an intended third-party
beneficiary with respect to the provisions of ss. 9.1 (and any otheR provision
hereunder pursuant to which any such party is expressly granted rights
hereunder) with any rights of any nature whatsoever against any of the parties
hereto, and no Person not a party hereto (other than each Liquidity Provider,
Policy Provider, Escrow Agent, and Paying Agent, with respect to the provisions
of ss. 9.1 (and any other provision hereunder pursuant to which any such party
is expressly granted rights hereunder) shall have any right, power, or privilege
in respect of any party hereto, or have any benefit or interest, arising out of
this Agreement.
15.10 ENTIRE AGREEMENT
This Agreement, together with the other Operative Agreements, on and as of
the date hereof, constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof, and all prior understandings or
agreements, whether written or oral, among any of the parties hereto with
respect to such subject matter are hereby superseded in their entireties.
15.11 FURTHER ASSURANCES
Each party hereto shall execute, acknowledge, and deliver (or cause to be
executed, acknowledged, and delivered) all such further agreements, instruments,
certificates, or other documents, and shall do and cause to be done such further
things, as any other party hereto reasonably requests in connection with the
administration of, or to carry out more effectively the purposes of, or to
assure and confirm better to such other party the rights and benefits to be
provided under, this Agreement and the other Operative Agreements.
[THIS REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have executed this Participation
Agreement N___AT.
AMERICAN TRANS AIR, INC., Lessee
By: ____________________________
Name:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION, Owner Participant
By: ____________________________
Name:
Title:
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
NOT IN ITS INDIVIDUAL CAPACITY
(EXCEPT AS EXPRESSLY PROVIDED HEREIN), e
BUT SOLELY AS TRUSTEE, Owner Truste
By: _____________________________
Name:
Title:
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
IN ITS INDIVIDUAL CAPACITY
(AS EXPRESSLY PROVIDED HEREIN)
By: _________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
NOT IN ITS INDIVIDUAL CAPACITY
(EXCEPT AS EXPRESSLY PROVIDED HEREIN),
BUT SOLELY AS TRUSTEE, Mortgagee
By: _________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
NOT IN ITS INDIVIDUAL CAPACITY
(EXCEPT AS EXPRESSLY PROVIDED HEREIN),
BUT SOLELY AS TRUSTEE, Pass-Through Trustee
under the Pass-Through Trust Agreement
for the American Trans Air, Inc.
Pass-Through Trust, 200_-1G
By: _________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
NOT IN ITS INDIVIDUAL CAPACITY
(EXCEPT AS EXPRESSLY PROVIDED HEREIN),
BUT SOLELY AS TRUSTEE, Pass-Through Trustee
under the Pass-Through Trust Agreement
for the American Trans Air, Inc.
Pass-Through Trust, 200_-1C
` By: ________________________________
Name:
Title:
WILMINGTON TRUST COMPANY,
NOT IN ITS INDIVIDUAL CAPACITY
(EXCEPT AS EXPRESSLY PROVIDED HEREIN),
BUT SOLELY AS SUBORDINATION AGENT
By: _________________________________________
Name:
Title:
ACCOUNTS; ADDRESSES
Account for Payments Address for Notices
AMERICAN (Confidential Material American Trans Air, Inc.
TRANS AIR, INC Omitted) 7337 West Washington Street
Indianapolis, Indiana 46231
Attention: Exec. VP and CFO
fax: (317) 240-7091
OWNER General Electric Capital
PARTICIPANT Corp.
_______________________
Attention: _________________
fax: (____) __________
THE BOEING The Boeing Company
COMPANY P.O. Box 3707
Seattle, WA 98124-3707
Attention: Treasurer
M/S 68-34
fax: (206) 237-8746
FIRST SECURITY First Security Bank, N.A.
BANK,NATIONAL 79 South Main Street
ASSOCIATION Salt Lake City, UT 84111
Attention: Corporate Trust
Department
fax: (801) 246-5053
WILMINGTON Wilmington Trust Company
TRUST COMPANY, Rodney Square North
AS MORTGAGEE 1100 North Market Street
Wilmington, DE 19890-0001
Attention:Corporate Trust
Administration
fax: (302)651-8882
WILMINGTON TRUST Wilmington Trust Company
COMPANY, AS Rodney Square North
SUBORDINATION AGENT 1100 North Market Street
Wilmington, DE 19890-0001
Attention: Corporate Trust
Administration
fax: (302) 651-8882
WILMINGTON TRUST Wilmington Trust Company
COMPANY, AS Rodney Square North
PASS-THROUGH TRUSTEE 1100 North Market Street
FOR THE 200_-1G Wilmington, DE 19890-0001
PASS-THROUGH TRUST Attention: Corporate Trust
Administration
fax: (302) 651-8882
WILMINGTON TRUST Wilmington Trust Company
COMPANY, AS Rodney Square North
PASS-THROUGH TRUSTEE 1100 North Market Street
FOR THE 200_-1c Wilmington, DE 19890-0001
PASS-THROUGH TRUST Attention: Corporate Trust
Administration
fax: (302) 651-8882
AMBAC ASSURANCE Ambac Assurance Corporation
CORPORATION 1 State Street Plaza
New York, NY 10004
Attention: David Nemschoff
fax: (212) 208-3113
COMMITMENTS
PARTICIPANT PERCENTAGE OF LESSOR'S COST DOLLAR AMOUNT
OWNER PARTICIPANT OWNER PARTICIPANT'S PERCENTAGE
PERCENTAGE
General Electric Capital __________% $__________
Corporation
PASS-THROUGH TRUSTEE LOAN PARTICIPANT'S PTT PERCENTAGE
200_-1G Pass-Through Trustee __________% $__________
200_-1C Pass-Through Trustee __________% $__________
TOTAL 100% $__________
CERTAIN TERMS
DEFINED TERM DEFINITION
Commitment Termination Date __________, 200_
Lessee's Advisor(s) Capstar Partners, LLC
Lessor's Cost $_______________
OP Jurisdiction New York
Owner Participant's Special Counsel Dewey Ballantine LLP
Trust Company Jurisdiction Utah
PARTICIPATION AGREEMENT N___AT
dated as of __________, 200_
among
AMERICAN TRANS AIR, INC.,
Lessee,
GENERAL ELECTRIC CAPITAL CORPORATION,
Owner Participant,
and
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity except as expressly provided herein,
but solely as Owner Trustee,
Owner Trustee
One Boeing model 737-800
aircraft bearing manufacturer's
serial no. _____
and U.S. registration no. N___AT
CONTENTS
1. DEFINITIONS AND CONSTRUCTION................................................1
2. PARTICIPATION IN LESSOR'S COST; ............................................2
ISSUANCE OF EQUIPMENT NOTES; TERMINATION OF OBLIGATION TO PARTICIPATE
2.1 Participation in Lessor's Cost....................................2
2.2 Termination of Obligation to Participate..........................2
3. LEASE OF AIRCRAFT...........................................................2
4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST; ...................3
POSTPONEMENT OF SCHEDULED DELIVERY DATE
4.1 Notices of Scheduled Delivery Date................................3
4.2 Payment of Lessor's Cost..........................................3
4.3 Postponement of Scheduled Delivery Date...........................4
4.4 Closing...........................................................4
5. CLOSING CONDITIONS..........................................................4
5.1 Conditions to Participants' Obligations...........................4
5.2 Conditions to Owner Trustee's Obligations.........................9
5.4 Conditions to Lessee's Obligations...............................10
5.5 Post-Registration Opinion........................................10
6. REPRESENTATIONS AND WARRANTIES.............................................11
6.1 Lessee's Representations and Warranties..........................11
6.2 Owner Participant's Representations and Warranties...............15
6.3 FSB's Representations and Warranties.............................17
7. COVENANTS..................................................................19
7.1 Lessee's Covenants...............................................19
7.2 Owner Participant's Covenants....................................21
7.3 FSB's and Owner Trustee's Covenants..............................23
7.6 Other Agreements.................................................25
8. CONFIDENTIALITY............................................................30
9. INDEMNIFICATION AND EXPENSES...............................................30
9.1 General Indemnity................................................30
9.2 Expenses.........................................................36
9.3 General Tax Indemnity............................................37
9.4 Payments.........................................................48
9.5 Interest.........................................................48
9.6 Benefit of Indemnities...........................................48
10. ASSIGNMENT OR TRANSFER OF INTERESTS.......................................49
10.1 Participants, Owner Trustee, and Note Holders...................49
10.2 Effect of Transfer..............................................50
11. RE-FUNDING AND CERTAIN OTHER MATTERS......................................51
12. SECTION 1110..............................................................51
13. CHANGE OF CITIZENSHIP.....................................................51
13.1 Generally.......................................................51
13.2 Owner Participant...............................................52
13.3 Owner Trustee...................................................52
14. CONCERNING OWNER TRUSTEE..................................................52
15. MISCELLANEOUS 53
15.1 Amendments......................................................53
15.2 Severability....................................................53
15.3 Survival........................................................53
15.4 Reproduction of Documents.......................................53
15.5 Counterparts....................................................54
15.6 No Waiver.......................................................54
15.7 Notices.........................................................54
15.8 Governing Law; Submission to Jurisdiction; Venue................55
15.9 Third-Party Beneficiary.........................................56
15.10 Entire Agreement...............................................56
15.11 Further Assurances.............................................56
ANNEX A Definitions
SCHEDULE 1 Accounts; Addresses
SCHEDULE 2 Commitments
SCHEDULE 3 Certain Terms
EXHIBIT A Opinion of special counsel to Lessee
EXHIBIT B Opinion of corporate counsel to Lessee
EXHIBIT C Opinion of corporate counsel to Airframe Manufacturer
EXHIBIT D Opinion of special counsel to Owner Trustee
EXHIBIT E Opinion of special counsel to Owner Participant
EXHIBIT F Opinion of FAA Counsel
EXHIBIT G Opinion of corporate counsel to Owner Participant
EXHIBIT H Form of Assignment and Assumption Agreement
EXHIBIT I Form of Owner Participant Guaranty
PARTICIPATION AGREEMENT N___AT
This Participation Agreement N___AT (this "Agreement"), dated as of
__________, 200_, is entered into by and among (1) American Trans Air, Inc.
("Lessee"), an Indiana corporation, (2) General Electric Capital Corporation
("Owner Participant"), a New York corporation, and (3) First Security Bank,
National Association, a national banking association, not in its individual
capacity (except as expressly provided herein), but solely as Owner Trustee (in
its capacity as Owner Trustee, "Owner Trustee" or "Lessor", and in its
individual capacity, "FSB").
RECITALS
A........Owner Participant and FSB are entering into the Trust
Agreement, pursuant to which Owner Trustee agrees to hold the Trust Estate for
the use and benefit of Owner Participant.
B........Lessee and Airframe Manufacturer entered into the Purchase
Agreement, pursuant to which Airframe Manufacturer agreed to manufacture certain
aircraft (including the Aircraft) and sell them to Lessee, and Lessee agreed to
buy certain aircraft (including the Aircraft) from Airframe Manufacturer.
C........Seller will sell the Aircraft to Owner Trustee pursuant to the
terms of this Participation Agreement.
D........Lessee and Owner Trustee are entering into the Purchase
Agreement Assignment and the Engine Manufacturer Warranty Agreement, pursuant to
which Lessee assigns to Owner Trustee certain of Lessee's rights under the
Purchase Agreement and the Engine Manufacturer Warranty Agreement.
E........Lessor and Lessee are entering into the Lease, pursuant to
which Lessor is leasing the Aircraft to Lessee and Lessee is leasing the
Aircraft from Lessor.
F........The parties to this Agreement want to set forth in this
Agreement the terms and conditions upon and subject to which the foregoing
transactions shall be effected.
The parties hereto agree as follows:
1. DEFINITIONS AND CONSTRUCTION
The terms defined in Annex A, when capitalized as in Annex A, have the same
meanings when used in this Agreement. Annex A also contains rules of usage that
control construction in this Agreement.
2. PARTICIPATION IN LESSOR'S COST; TERMINATION OF OBLIGATION TO PARTICIPATE
2.1 Participation in Lessor's Cost
Subject to the terms and conditions of this Agreement, on the Delivery
Date, Owner Participant shall participate in the payment of Lessor's Cost as
follows:
Owner Participant shall finance Owner Trustee's payment of Lessor's Cost
for the Aircraft by making an equity investment in the beneficial ownership of
the Aircraft in the amount in Dollars equal to Lessor's Cost.
2.2 Termination of Obligation to Participate
Notwithstanding any other provision of this Agreement, if the Closing does
not occur on or before the Commitment Termination Date, the Commitment of Owner
Participant and its obligation to participate in the payment of Lessor's Cost
shall expire and be of no further force and effect; provided, that the liability
of Owner Participant if it has defaulted in the payment of its Commitment shall
not be released.
3. LEASE OF AIRCRAFT
Subject to the terms and conditions of this Agreement, on the Delivery
Date, Owner Trustee shall purchase and accept delivery of the Aircraft from
Seller under and pursuant to the Purchase Agreement and the Purchase Agreement
Assignment, and thereupon Owner Trustee shall lease the Aircraft to Lessee, and
Lessee shall lease the Aircraft from Owner Trustee, under the Lease.
4. PROCEDURE FOR PARTICIPATION IN PAYMENT OF LESSOR'S COST; POSTPONEMENT OF
SCHEDULED DELIVERY DATE
4.1 Notices of Scheduled Delivery Date
Lessee agrees to give Owner Participant and Owner Trustee at least one
Business Day's written notice of the Scheduled Delivery Date, which notice shall
set forth Lessor's Cost and the amount of Owner Participant's Commitment. Owner
Participant agrees that making its Commitment available shall constitute a
waiver of such notice.
4.2 Payment of Lessor's Cost
(a) Owner Participant agrees, subject to the terms and conditions of this
Agreement, to make the Dollar amount of its Commitment available, by wire
transfer of immediately available funds to FSB's account at First Security Bank,
National Association, ABA No. _______, account no. ______, reference American
Trans Air, Inc. Lease N___AT, at or before 12:00 noon, New York City time, on
the Scheduled Delivery Date. All such funds made available by Owner Participant
to FSB shall, until payment thereof to Seller as provided in ss. 4.2(b)(2) or
return thereof to Owner Participant as provided in ss. 4.3.2, be held by FSB in
trust for the benefit of the Owner Participant as the sole and exclusive
property of the Owner Participant and not as part of the Trust Estate.
(b) Subject to the satisfaction, or waiver by the applicable party, of the
conditions precedent set forth in ss. 5, and simultaneously with the receipt by
the parties hereto of all amounts to be paid to them on the Delivery Date
pursuant to this ss. 4.2, Owner Trustee shall:
(1) purchase, take title to, and accept delivery of the Aircraft;
(2) in consideration of the transfer of title to the Aircraft to Owner
Trustee, direct FSB to pay, from the funds made available to FSB hereunder by
Owner Participant, all such funds, which payments in the aggregate shall be
equal to Lessor's Cost, by wire transfer of immediately available funds to
Seller's account set forth in Schedule 1 or as otherwise directed by Seller;
(3) execute an application for registration of the Aircraft with the FAA;
(4) lease the Aircraft to Lessee pursuant to the Lease; and
(5) take such other action as may be required to be taken by Owner Trustee
on the Delivery Date by the terms of any Operative Agreement.
4.3 Postponement of Scheduled Delivery Date
4.3.1 Postponement
If for any reason whatsoever the Closing is not consummated on the
Scheduled Delivery Date, Lessee may, subject to the provisions of 1(e) of the
Note Purchase Agreement, by telephonic notice, given by 5:00 p.m. New York City
time (such telephonic notice to be promptly confirmed in writing by personal
delivery or facsimile) on the Scheduled Delivery Date, to Owner Participant and
Owner Trustee, designate a Delayed Delivery Date, in which case Owner
Participant will keep its funds available.
FSB shall promptly return to Owner Participant all funds made available to
FSB in accordance with ss. 4.2(a), together with interest or income earned
thereon, if the Closing fails to occur on the Scheduled Delivery Date.
4.4 Closing
The Closing shall occur at the offices of Troutman Sanders LLP, 5200 Bank
of America Plaza, Atlanta, GA (with a set of Operative Agreements also being
delivered in New York City), or such other place as the parties shall agree.
5. CLOSING CONDITIONS
5.1 Conditions to Owner Participant's Obligations
Owner Participant's obligation to make the Dollar amount of its Commitment
available for payment as directed by Owner Trustee on the Delivery Date is
subject to the satisfaction or such Owner Participant's waiver, on or before the
Delivery Date, of the conditions in this ss. 5.1; provided, that it shall not be
a condition to the obligation of Owner Participant that any document be produced
or action taken that is to be produced or taken by such Owner Participant or by
a Person within Owner Participant's control.
5.1.1 Notice
Owner Participant received the notice described in ss. 4.1 or, in the
case of a Delayed Delivery Date, ss. 4.3, when and as required thereby.
5.1.2 Delivery of Documents
Except as otherwise provided in this ss. 5.1.2, Owner Participant receives
executed counterparts of the following documents, and such counterparts (x) have
been duly authorized, executed, and delivered by the party or parties thereto,
(y) are reasonably satisfactory in form and substance to Owner Participant, and
(z) are in full force and effect:
(a) the Lease (Lessor to receive the sole executed chattel paper original
thereof);
(b) the Tax Indemnity Agreement; provided, that only Owner Participant and
Lessee shall receive copies of the Tax Indemnity Agreement;
(c) the Trust Agreement;
(d) the Purchase Agreement Assignment;
(e) the Consent and Agreement and the Engine Manufacturer Warranty
Agreement;
(f) an excerpted copy of the Purchase Agreement to the extent relating to
Airframe Manufacturer's or Engine Manufacturer's warranties or related
obligations or any right in the Purchase Agreement assigned to Owner Trustee
pursuant to the Purchase Agreement Assignment; provided, that only Owner Trustee
shall receive copies of such agreement (copies of which may be inspected by
Owner Participant and its special counsel on the Delivery Date, but after the
Delivery Date such copies shall be retained by Owner Trustee and may be
inspected and reviewed by Owner Participant or its counsel if and only if a
Default exists);
(g) the Bills of Sale;
(h) the Guarantee;
(i) an invoice from Seller specifying the amount due to Seller in respect
of the Aircraft, which amount shall equal Lessor's Cost of the Aircraft;
(j) the broker's report and insurance certificates required byss. 11 of the
Lease;
(k) an appraisal or appraisals from an Appraiser, which appraisal or
appraisals shall be reasonably satisfactory in form and substance to Owner
Participant; provided, that only Owner Participant shall receive copies of such
appraisal(s);
(l) (1) a copy of Lessee's articles of incorporation, by-laws, and
resolutions, in each case certified as of the Delivery Date by the Secretary or
an Assistant Secretary of Lessee, duly authorizing Lessee's execution, delivery,
and performance of the Lessee Operative Agreements required to be executed and
delivered by Lessee on or before the Delivery Date in accordance with the
provisions hereof and thereof; (2) a copy of Guarantor's articles of
incorporation, by-laws, and resolutions, in each case certified as of the
Delivery Date by the Secretary or an Assistant Secretary of Guarantor, duly
authorizing Guarantor's execution, delivery, and performance of the Guarantee;
(3) incumbency certificates of Lessee, Guarantor, Owner Participant, and FSB as
to the person(s) authorized to execute and deliver the relevant Operative
Agreements on behalf of such party; and (4) copies of the certificate or
articles of incorporation, by-laws, and general authorizing resolutions of the
boards of directors (or executive committees) or other satisfactory evidence of
authorization of Owner Participant and FSB, certified as of the Delivery Date by
the Secretary or an Assistant or Attesting Secretary of Owner Participant and
FSB, which authorize the execution, delivery and performance by Owner
Participant and FSB, respectively, of each of the Operative Agreements to which
it is a party, together with such other documents and evidence with respect to
it as Lessee or Owner Participant reasonably requests in order to establish the
consummation of the transactions contemplated by this Agreement and the taking
of all corporate proceedings in connection therewith;
(m) an Officer's Certificate of Lessee, dated the Delivery Date, stating
that its representations and warranties in this Agreement are true and correct
as of the Delivery Date (or, to the extent that any such representation and
warranty expressly relates to an earlier date, true and correct as of such
earlier date);
(n) an Officer's Certificate of FSB, dated the Delivery Date, stating that
its representations and warranties, in its individual capacity and as Owner
Trustee, in this Agreement are true and correct as of the Delivery Date (or, to
the extent that any such representation and warranty expressly relates to an
earlier date, true and correct as of such earlier date);
(o) an Officer's Certificate of Owner Participant, dated the Delivery Date,
stating that its representations and warranties in this Agreement are true and
correct as of the Delivery Date (or, to the extent that any such representation
and warranty expressly relates to an earlier date, true and correct as of such
earlier date);
(p) an application for registration of the Aircraft with the FAA in the
name of Owner Trustee (FAA Counsel to receive the sole executed copy thereof,
for filing with the FAA);
(q) the Financing Statements;
(r) the following opinions of counsel, in each case dated the Delivery
Date:
(1) an opinion of Troutman Sanders LLP, special counsel to Lessee and
Guarantor, substantially in the form of Exhibit A;
(2) an opinion of Lessee's and Guarantor's Legal Department, substantially
in the form of Exhibit B;
(3) an opinion of corporate counsel to Airframe Manufacturer, substantially
in the form of Exhibit C;
(4) an opinion of Ray, Quinney & Nebeker, special counsel to Owner Trustee,
substantially in the form of Exhibit D;
(5) an opinion of Dewey Ballantine LLP, special counsel to Owner
Participant, substantially in the form of Exhibit E;
(6) an opinion of FAA Counsel, substantially in the form of Exhibit F;
(7) an opinion of Dewey Ballantine LLP, special tax counsel to Owner
Participant, with respect to certain tax consequences of the transactions
contemplated hereby; provided, that only Owner Participant shall receive such
opinion; and
(8) an opinion of corporate counsel of Owner Participant, substantially in
the form of Exhibit G, and
(s) Owner Participant receives copies of such other documents as it
reasonably requests, except as provided in clause (f) of this ss. 5.1.2.
5.1.3 Violation of Law
No change occurs after the date of this Agreement in any applicable Law
that makes it a violation of Law for (a) Lessee, Owner Participant, or Owner
Trustee to execute, deliver, and perform the Operative Agreements to which it is
a party or to be a party subject to the obligations of the Operative Agreements
to which Owner Participant is bound, or (b) Owner Participant to make the Dollar
amount of its Commitment available.
5.1.4 Representations, Warranties, and Covenants
The representations and warranties of each other party to this Agreement
made, in each case, in any Operative Agreement to which it is a party, are true
and accurate in all material respects as of the Delivery Date (unless any such
representation and warranty was made with reference to a specified date, in
which case such representation and warranty was true and accurate as of such
specified date), and each other party to this Agreement has performed and
observed, in all material respects, all of its covenants, obligations, and
agreements in each Operative Agreement to which it is a party to be observed or
performed by it as of the Delivery Date.
5.1.5 No Default
On the Delivery Date, no Default exists or would result from the sale or
lease of the Aircraft.
5.1.6 No Event of Loss
No Event of Loss with respect to the Airframe or any Engine has occurred,
and no circumstance, condition, act, or event has occurred that, with the giving
of notice or lapse of time, would give rise to or constitute an Event of Loss
with respect to the Airframe or any Engine.
5.1.7 Title
Owner Trustee has good title (subject to filing and recordation of the FAA
Bill of Sale with the FAA) to the Aircraft, free and clear of Liens, except (a)
the rights of Lessee under the Lease, (b) the beneficial interest of Owner
Participant created by the Trust Agreement, (c) Liens permitted by clause (d)
(solely for taxes not yet due) of ss. 6 of the Lease, and (d) Liens permitted by
clause (e) of ss. 6 of the Lease.
5.1.8 Certification
The Aircraft has been duly certificated by the FAA as to type, and upon
registration in Owner Trustee's name will be eligible for an FAA
airworthiness
certificate.
5.1.9 Section 1110
Owner Trustee, as lessor under the Lease, is entitled to the benefits of
Section 1110 (as currently in effect) with respect to the right to take
possession of the Airframe and Engines as provided in the Lease in the event of
a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor.
5.1.10 Filing
The FAA-Filed Documents are on the Delivery Date duly filed for recordation
with the FAA in accordance with the Transportation Code, and each Financing
Statement has been duly filed or is in the process of being duly filed in the
appropriate jurisdiction.
5.1.11 No Proceedings
No action or proceeding has been instituted, nor is any action threatened
in writing, before any Government Entity, nor has any order, judgment, or decree
been issued or proposed to be issued by any Government Entity, to set aside,
restrain, enjoin, or prevent the completion and consummation of any Operative
Agreement or the Transactions.
5.1.12 Governmental Action
All appropriate action required to have been taken before the Delivery Date
by the FAA, or any other Government Entity of the United States, in connection
with the Transactions has been taken, and all orders, permits, waivers,
authorizations, exemptions, and approvals of such entities required to be in
effect on the Delivery Date in connection with the Transactions have been
issued.
5.2 Conditions to Owner Trustee's Obligations
Owner Trustee's obligation to apply the Commitments to pay Lessor's Cost on
the Delivery Date is subject to the satisfaction or Owner Trustee's waiver, on
or before the Delivery Date, of the conditions in this ss. 5.2.
5.2.1 Notice
Owner Trustee receives the notice described in ss. 4.1 or, in the case of a
Delayed Delivery Date, ss. 4.3, when and as required thereby.
5.2.2 Documents Owner Trustee receives executed originals of the documents
described in ss. 5.1.2, except as otherwise provided therein, unless the failure
to receive any such document is the result of any action or inaction by Owner
Trustee.
5.2.3 Other Conditions Precedent
Each of the conditions in ss.ss. 5.1.3, 5.1.4, 5.1.5, and 5.1.9 is
satisfied, unless the failure of any such condition to be satisfied is the
result of any action or inaction by Owner Trustee.
5.3 Conditions to Lessee's Obligations
Lessee's obligation to lease the Aircraft on the Delivery Date is subject
to the satisfaction or Lessee's waiver, on or before the Delivery Date, of the
conditions in this ss. 5.3.
5.3.1 Documents
Lessee receives executed originals of the documents described in ss. 5.1.2,
except as otherwise provided therein, and they are satisfactory to Lessee,
unless the failure to receive any such document is the result of any action or
inaction by Lessee.
5.3.2 Taxes
Lessee is satisfied that no sales, use, value-added, goods-and-services, or
like tax, and no stamp tax duty, is payable with respect to the delivery of the
Aircraft on the Delivery Date (to the extent that Lessee could be liable
therefor under ss. 9.3).
5.3.3 Other Conditions
Each of the conditions in ss.ss. 5.1.3, 5.1.4, 5.1.5, 5.1.6, 5.1.7, 5.1.8,
5.1.9, 5.1.10, 5.1.11, and 5.1.12 has been satisfied or waived by Lessee, unless
the failure of any such condition to be satisfied is the result of any action or
inaction by Lessee.
5.4 Post-Registration Opinion
Promptly after the registration of the Aircraft and the recordation of the
FAA-Filed Documents pursuant to the Transportation Code, Lessee will cause FAA
Counsel to deliver to Lessee, Owner Participant, and Owner Trustee a favorable
opinion or opinions addressed to each of them with respect to such recordation.
6. REPRESENTATIONS AND WARRANTIES
6.1 Lessee's Representations and Warranties
Lessee represents and warrants to Owner Participant and Owner Trustee that:
6.1.1 Organization; Qualification
Lessee is a corporation duly incorporated, validly existing, and in good
standing under the Laws of Indiana, and has the corporate power and authority to
conduct the business in which it is currently engaged and to own or hold under
lease its properties and to enter into and perform its obligations under the
Lessee Operative Agreements. Lessee is duly qualified to do business as a
foreign corporation in good standing in each jurisdiction in which the nature
and extent of the business conducted by it, or the ownership of its properties,
requires such qualification, except where the failure to be so qualified would
not give rise to a Materially Adverse Change to Lessee.
6.1.2 Corporate Authorization
Lessee has taken, or caused to be taken, all necessary corporate action
(including obtaining any consent or approval of stockholders required by its
articles of incorporation or by-laws) to authorize its execution, delivery, and
performance of its obligations under each of the Lessee Operative Agreements.
6.1.3 No Violation
Lessee's execution, delivery, and performance of its obligations under the
Lessee Operative Agreements do not and will not (a) violate any provision of
Lessee's articles of incorporation or by-laws, (b) violate any Law applicable to
or binding on Lessee, or (c) violate or constitute any default under (other than
any violation or default that would not result in a Materially Adverse Change to
Lessee), or result in the creation of any Lien (other than as permitted under
the Lease) upon the Aircraft under, any lease, loan, or other material agreement
to which Lessee is a party or by which Lessee or any of its properties is bound.
6.1.4 Approvals
Lessee's execution and delivery of, and performance of its obligations
under, the Lessee Operative Agreements do not and will not require the consent
or approval of, the giving of notice to, the registration with, the recording or
filing of any documents with, or the taking of any other action in respect of
(a) any trustee or other holder of any Debt of Lessee, (b) any Government
Entity, or (c) any other Person, other than (x) the FAA-Filed Documents and the
Financing Statements (and continuation statements periodically), and (y)
filings, recordings, notices, corporate approvals of Lessee (which have been
duly obtained) or other ministerial actions pursuant to any routine recording,
contractual, or regulatory requirements.
6.1.5 Valid and Binding Agreements
The Lessee Operative Agreements have been duly authorized, executed, and
delivered by Lessee, and (assuming their due authorization, execution, and
delivery by the other parties thereto) constitute legal, valid, and binding
obligations of Lessee and are enforceable against Lessee in accordance with
their terms, except as such enforceability may be limited by bankruptcy,
insolvency, and other similar Laws affecting the rights of creditors generally
and general principles of equity.
6.1.6 Litigation
Except as set forth in Guarantor's most recent Annual Report on Form 10-K,
filed by Lessee with the SEC on or before the Delivery Date, or in any Quarterly
Report on Form 10-Q or Current Report on Form 8-K filed by Guarantor with the
SEC subsequent to such Form 10-K and on or before the Delivery Date, no action,
claim, or proceeding is now pending or, to Lessee's Actual Knowledge,
threatened, against Lessee, Guarantor, or any of their Affiliates, before any
Government Entity or any arbitrator, that is reasonably likely to be determined
adversely to Lessee and if determined adversely to Lessee would result in a
Materially Adverse Change.
6.1.7 Financial Condition
Guarantor's audited consolidated balance sheet for its most-recent fiscal
year, included in Guarantor's Annual Report on Form 10-K filed by Guarantor with
the SEC for such fiscal year, and the related consolidated statements of
operations and cash flows for the period then ended, have been prepared in
accordance with GAAP and fairly present in all material respects the financial
condition of Guarantor and its consolidated subsidiaries as of such date and the
results of its operations and cash flows for such period, and since the date of
such balance sheet, there has been no Materially Adverse Change in such
financial condition or operations, except for matters disclosed in (a) the
financial statements referred to above, or (b) any subsequent Quarterly Report
on Form 10-Q or Current Report on Form 8-K filed by Guarantor with the SEC on or
before the Delivery Date.
6.1.8 Registration and Recordation
Except for (a) registering the Aircraft with the FAA pursuant to the
Transportation Code in the name of Owner Trustee, (b) filing for recordation
(and recording) the FAA-Filed Documents, (c) filing the Financing Statements
(and continuation statements relating thereto at periodic intervals), (d)
Lessor's taking possession and retaining the chattel paper original counterpart
of the Lease, and (e) affixing the placards referred to in ss. 7.1.3 of the
Lease, no further action, including filing or recording any document (including
any financing statement under UCC Article 9) is necessary in order to establish
and perfect Owner Trustee's right, title, and interest, in the Aircraft and the
Lease, as against Lessee and any other Person, in any applicable jurisdiction in
the United States.
6.1.9 Chief Executive Office
Lessee's chief executive office (as defined in UCC Article 9) is located at
7337 West Washington Street, Indianapolis, Indiana, 46231.
6.1.10 No Default
No Default exists.
6.1.11 No Event of Loss
No Event of Loss has occurred with respect to the Airframe or any Engine,
and, to Lessee's Actual Knowledge, no circumstance, condition, act, or event has
occurred that, with the giving of notice or lapse of time, gives or would give
rise to or constitutes or would constitute an Event of Loss to the Airframe or
any Engine.
6.1.12 Compliance With Laws
(a) Lessee is a Citizen of the United States and a U.S. Air Carrier.
(b) Lessee holds all licenses, permits, and franchises from the appropriate
Government Entities necessary to authorize Lessee lawfully to engage in air
transportation and to carry on scheduled commercial passenger service as
currently conducted, except to the extent that the failure to hold any such
license, permit, or franchise would not give rise to a Materially Adverse Change
to Lessee.
(c) Lessee is not an "investment company" or a company controlled by an
"investment company" within the meaning of the Investment Company Act of 1940.
6.1.13 Securities Laws
Neither Lessee nor any Person authorized to act on its behalf has directly
or indirectly offered any beneficial interest or Security relating to the
ownership of the Aircraft or the Lease or any interest in the Trust Estate and
the Trust Agreement for sale to, or solicited any offer to acquire any such
interest or security from, or has sold any such interest or security to, any
Person in violation of the Securities Act.
6.1.14 Broker's Fees
No Person acting on behalf of Lessee is or will be entitled to any broker's
fee, commission, or finder's fee in connection with the Transactions, except for
fees payable to Lessee's Advisor(s), if any.
6.1.15 Section 1110
Owner Trustee, as lessor under the Lease, will be entitled to the benefits
of Section 1110 (as currently in effect), with respect to the right to take
possession of the Airframe and Engines as provided in the Lease, in the event of
a case under Chapter 11 of the Bankruptcy Code in which Lessee is a debtor.
6.1.16 No Government Consents
Neither Lessee's execution and delivery of any of the Lessee Operative
Agreements nor Lessee's performance of its obligations hereunder requires the
consent or approval of, the giving of notice to, or the registration with, or
the taking of any other action in respect of any Government Entity, except for
(a) the orders, permits, waivers, exemptions, authorizations and approvals of
the regulatory authorities having jurisdiction over the operation of the
Aircraft by Lessee, which orders, permits, waivers, exemptions, authorizations
and approvals have been duly obtained and are, or will on the Delivery Date be,
in full force and effect, and the registration and filings referred to herein
and (b) any normal periodic and other reporting requirements under the
applicable rules of the FAA to the extent required to be given or obtained only
on or after the Delivery Date.
6.1.17 Payment of Taxes
Lessee and its Affiliates have filed or caused to be filed all federal,
state, and material local and non-U.S. tax returns that are required to be filed
and have paid or caused to be paid all taxes shown to be due on such returns or
on any assessment received by Lessee or its Affiliates, except any that are
being contested diligently and in good faith by appropriate proceedings and for
which adequate provision for payment has been made in accordance with GAAP.
There is no ongoing audit or, to the knowledge of Lessee, other investigation by
any Government Entity of the tax liability of Lessee or its Affiliates and there
is no unresolved claim by a taxing authority concerning Lessee's or any
Affiliate's tax liability, for any period for which returns have been filed or
were due, that, in either case, reasonably may be expected to result in
liability of Lessee which could have a materially adverse effect on the
business, operations or financial condition of Lessee or the ability of Lessee
to perform its obligations under the Operative Agreements.
6.2 Owner Participant's Representations and Warranties
Owner Participant represents and warrants to Lessee and Owner Trustee that:
6.2.1 Organization, etc.
Owner Participant (a) is a corporation duly incorporated, validly existing
and in good standing under the Laws of the OP Jurisdiction, (b) has the
corporate power and authority to conduct the business in which it is currently
engaged, to own or hold under lease its properties, and to enter into and
perform its obligations under the Owner Participant Agreements, and (c) has a
tangible net worth (exclusive of goodwill) greater than $50 million.
6.2.2 Corporate Authorization
Owner Participant has taken (or caused to be taken) all necessary corporate
action (including obtaining any consent or approval of stockholders required by
its certificate of incorporation or by-laws) to authorize its execution,
delivery, and performance of its obligations under each of the Owner Participant
Agreements.
6.2.3 No Violation
Owner Participant's execution, delivery, and performance of its obligations
under each of the Owner Participant Agreements do not and will not (a) violate
any provision of Owner Participant's certificate of incorporation or by-laws,
(b) violate any Law applicable to or binding on Owner Participant (no
representation or warranty is made with respect to ERISA, other than as set
forth in ss. 6.2.9) or (c) violate or constitute any default under (other than
any violation or default that would not result in a Materially Adverse Change to
Owner Participant), or result in the creation of any Lien (other than as
provided for or otherwise permitted in the Operative Agreements) upon the Trust
Estate under, any lease, loan, or other material agreement to which Owner
Participant is a party or by which Owner Participant or any of its properties is
bound.
6.2.4 Approvals
Owner Participant's execution, delivery, and performance of its obligations
under each of the Owner Participant Agreements do not and will not require the
consent or approval of, the giving of notice to, the registration with, the
recording or filing of any documents with, or the taking of any other action in
respect of (a) any trustee or other holder of any Debt of Owner Participant, and
(b) any Government Entity, other than filing the FAA-Filed Documents and the
Financing Statements and routine regulatory filings.
6.2.5 Valid and Binding Agreements
The Owner Participant Agreements have been duly authorized, executed, and
delivered by Owner Participant, and (assuming the due authorization, execution,
and delivery by the other parties thereto) constitute legal, valid, and binding
obligations of Owner Participant and are enforceable against Owner Participant
in accordance with their terms, except as such enforceability may be limited by
bankruptcy, insolvency, and other similar Laws affecting the rights of creditors
generally and general principles of equity.
6.2.6 Citizenship
Owner Participant is a Citizen of the United States.
6.2.7 No Liens
There are no Lessor Liens attributable to Owner Participant on all or any
part of the Trust Estate.
6.2.8 Investment by Owner Participant
Owner Participant is acquiring its beneficial interest in the Trust Estate
for its own account, for investment and not with a view to any resale or
distribution thereof; provided, that, subject to the transfer restrictions in
ss. 10, its disposition of its beneficial interest in the Trust Estate shall at
all times be within its control.
6.2.9 ERISA
No part of the funds to be used by Owner Participant to acquire or hold its
interests in the Trust Estate directly or indirectly constitutes assets of a
Plan.
6.2.10 Litigation
There are no pending or, to Owner Participant's Actual Knowledge,
threatened actions or proceedings against Owner Participant before any
Government Entity that, if determined adversely to Owner Participant, would
materially adversely affect Owner Participant's ability to perform its
obligations under the Owner Participant Agreements.
6.2.11 Securities Laws
Neither Owner Participant nor any Person Owner Participant has authorized
to act on its behalf has directly or indirectly offered any beneficial interest
in or Security relating to the ownership of the Aircraft or any interest in the
Trust Estate for sale to, or solicited any offer to acquire any of the same
from, any Person in violation of the Securities Act or applicable state
securities Laws (with the understanding that Owner Participant shall not be
deemed to have authorized Lessee's Advisor(s) to act on Owner Participant's
behalf).
6.2.12 Broker's Fees
No Person acting on behalf of Owner Participant is or will be entitled to
any broker's fee, commission, or finder's fee in connection with the
Transactions.
6.3 FSB's Representations and Warranties
FSB represents and warrants to Lessee and Owner Participant that:
6.3.1 Organization, etc.
FSB is a national banking association duly organized, validly existing and
in good standing under the Laws of the United States, holding a valid
certificate to do business as a national banking association with banking
authority to execute, deliver, and perform its obligations under the Owner
Trustee Agreements.
6.3.2 Corporate Authorization
FSB has taken (or caused to be taken) all necessary corporate action
(including obtaining any consent or approval of stockholders required by Law or
by its articles of association or by-laws) to authorize the execution and
delivery by FSB or Owner Trustee, of each of the Owner Trustee Agreements, and
the performance of its obligations thereunder.
6.3.3 No Violation
FSB's and Owner Trustee's execution, delivery, and performance of their
respective obligations under the Owner Trustee Agreements do not and will not
(a) violate any provision of FSB's articles of association or by-laws, (b)
violate any Utah Law or federal banking Law applicable to or binding on Owner
Trustee or FSB, or (c) violate or constitute any default under (other than any
violation or default that would not result in a Materially Adverse Change to FSB
or Owner Trustee), or result in the creation of any Lien upon any property of
FSB, Owner Trustee, or any of FSB's subsidiaries under, any lease, loan, or
other material agreement to which FSB or Owner Trustee is a party or by which
FSB, Owner Trustee, or any of their properties is or may be bound or affected.
6.3.4 Approvals
FSB's and Owner Trustee's execution, delivery, and performance of their
respective obligations under the Owner Trustee Agreements do not and will not
require the consent, approval, or authorization of, the giving of notice to, the
registration with, the recording or filing of any documents with, or the taking
of any other action in respect of, (a) any trustee or other holder of any Debt
of FSB, or (b) any Government Entity governing banking and trust powers, other
than filing the FAA-Filed Documents and the Financing Statements.
6.3.5 Valid and Binding Agreements
The Owner Trustee Agreements have been duly authorized, executed, and
delivered by FSB and Owner Trustee, and (assuming the due authorization,
execution, and delivery thereof by the other parties thereto) constitute legal,
valid, and binding obligations of FSB and Owner Trustee and are enforceable
against FSB and Owner Trustee in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency, and other similar Laws
affecting the rights of creditors generally and general principles of equity.
6.3.6 Citizenship
FSB is a Citizen of the United States.
6.3.7 Chief Executive Office
The chief executive office (as defined in UCC Article 9) of Owner Trustee
is located at 79 South Main Street, Salt Lake City, Utah 84111.
6.3.8 Title
On the Delivery Date, Owner Trustee shall have received whatever title to
the Aircraft as was conveyed to it by Seller.
6.3.9 No Liens; Financing Statements
There are no Lessor Liens attributable to FSB or Owner Trustee in respect
of all or any part of the Aircraft, or the Trust Estate. Except for the
Financing Statements, neither FSB nor Owner Trustee has executed any UCC
financing statement relating to the Aircraft or the Lease.
6.3.10 Litigation
There are no pending or, to FSB's Actual Knowledge, threatened actions or
proceedings against FSB or Owner Trustee before any Government Entity that, if
determined adversely to FSB, would materially adversely affect the ability of
FSB or Owner Trustee to perform its obligations under the Owner Trustee
Agreements.
6.3.11 Securities Laws
Neither FSB, nor any Person authorized to act on its behalf, has directly
or indirectly offered any beneficial interest or Security relating to the
ownership of the Aircraft or any interest in the Trust Estate, for sale to, or
solicited any offer to acquire any such interest or security from, or has sold
any such interest or security to, any Person other than Owner Participant.
6.3.12 Expenses and Taxes
There are no Expenses or Taxes that may be imposed on or asserted against
the Trust, the Trust Estate, or any part thereof or any interest therein, Lessee
or Owner Participant (except as to Owner Trustee, Taxes imposed on the fees
payable to Owner Trustee) under the laws of Utah in connection with Owner
Trustee's execution, delivery, or performance of any Operative Agreement, which
Expenses or Taxes would not have been imposed if Owner Trustee had not (x) had
its principal place of business in Utah, (y) performed (in its individual
capacity or as Owner Trustee) any or all of its duties under the Operative
Agreements in Utah, or (z) engaged in any activities unrelated to the
transactions contemplated by the Operative Agreements in Utah.
7. COVENANTS
7.1 Lessee's Covenants
Lessee agrees for the benefit of Owner Participant and Owner Trustee as
follows:
7.1.1 Corporate Existence; U.S. Air Carrier
Lessee shall at all times maintain its corporate existence, except as
permitted byss. 13.2 of the Lease, and shall at all times remain a U.S. Air
Carrier.
7.1.2 Notice of Change of Chief Executive Office
Lessee will give to Owner Participant and Owner Trustee timely written
notice of (but in any event within 90 days after) any relocation of its chief
executive office (as defined in UCC Article 9), and will promptly take any
action required by ss. 7.1.3(c) as a result of such relocation.
7.1.3 Certain Assurances
(a) Lessee shall duly execute, acknowledge, and deliver (or cause to be
executed, acknowledged, and delivered) all such further documents, and shall do
and cause to be done such further things, as Owner Participant or Owner Trustee
reasonably requests to accomplish the purposes of the Operative Agreements,
provided that no document so executed by Lessee will expand any obligations or
limit any rights of Lessee in respect of the Transactions.
(b) Lessee shall promptly take such action with respect to the recording,
filing, re-recording, and refiling of the Lease and the Trust Agreement, and any
supplements thereto, as shall be necessary to establish, perfect, and protect
Owner Trustee's interests and rights in and to the Aircraft and under the Lease.
Lessee shall furnish to Owner Participant or Owner Trustee such information
(other than with respect to the citizenship of Owner Participant and Owner
Trustee) in Lessee's possession or otherwise reasonably available to Lessee and
required to enable Owner Participant or Owner Trustee to apply to register the
Aircraft under the Transportation Code (subject to Lessee's rights under ss.
7.1.2 of the Lease), and shall pay or cause to be paid all out-of-pocket costs
and expenses thereof (including reasonable attorneys' fees and disbursements).
(c) Lessee will cause the FAA-Filed Documents, the Financing Statements,
and all continuation statements (and any amendments necessitated by any
combination, consolidation, or merger pursuant to ss. 13.2 of the Lease, or any
relocation of its chief executive office) in respect of the Financing Statements
to be prepared and, subject only to the execution and delivery thereof by Owner
Trustee, duly and timely filed and recorded, or filed for recordation, to the
extent permitted under the Transportation Code (with respect to the FAA-Filed
Documents) or the UCC or similar law of any other applicable jurisdiction (with
respect to such other documents).
(d) If the Aircraft is registered in a country other than the United States
pursuant to ss. 7.1.2 of the Lease, Lessee will furnish to Owner Trustee and
Owner Participant annually while the Aircraft is not U.S.-registered (starting
with the calendar year after such registration is effected) an opinion of
special counsel reasonably satisfactory to Owner Participant stating that, in
the opinion of such counsel, either (1) such action has been taken with respect
to the recording, filing, re-recording, and re-filing of the Operative
Agreements and any supplements and amendments thereto as is necessary to
establish, perfect, and protect Owner Trustee's right, title and interest in and
to the Aircraft and the Operative Agreements, reciting the details of such
actions, or (2) no such action is necessary to maintain the perfection of such
right, title, and interest.
7.1.4 Securities Laws
Neither Lessee nor any Person authorized to act on its behalf will directly
or indirectly offer any beneficial interest or Security relating to the
ownership of the Aircraft or the Lease or any interest in the Trust Estate and
Trust Agreement for sale to, or solicit any offer to acquire any such interest
or security from, or sell any such interest or security to, any Person in
violation of the Securities Act or applicable state or foreign securities Laws.
7.1.5 Certification
Lessee shall cause the Aircraft to be duly certified by the FAA as to
airworthiness and shall, immediately upon registration of the Aircraft in Owner
Trustee's name, obtain an FAA airworthiness certificate for the Aircraft.
7.2 Owner Participant's Covenants
Owner Participant agrees for the benefit of Lessee and Owner Trustee as
follows:
7.2.1 Liens
Owner Participant (a) (1) will not directly or indirectly create, incur,
assume, or suffer to exist any Lessor Lien attributable to it on or with respect
to all or any part of the Trust Estate or the Aircraft, and (2) will, at its own
cost and expense, promptly take such action as is necessary to discharge any
Lessor Lien attributable to Owner Participant on all or any part of the Trust
Estate or the Aircraft; provided, that Owner Participant shall not be required
to comply with the foregoing provisions of this clause (a) if it shall in good
faith by appropriate proceedings contest claims or charges resulting in any such
Lien as long as such contest does not involve any material danger of the sale,
forfeiture, loss, or loss of use of the Aircraft or the interest of Lessor or
Owner Participant therein; and (b) will hold harmless and indemnify Lessee,
Owner Trustee, each of their respective Affiliates, successors, and permitted
assigns, and the Trust Estate from and against (1) any and all Expenses, (2) any
reduction in the amount payable out of the Trust Estate, and (3) any
interference with the possession, operation, or other use of all or any part of
the Aircraft, in each case imposed on, incurred by, or asserted against any of
the foregoing as a consequence of any such Lessor Lien (without regard to the
proviso to the foregoing clause (a)).
7.2.2 Revocation of Trust Agreement
(a) Owner Participant will comply with the provisions of the Trust
Agreement applicable to it, will not terminate or revoke the Trust Agreement or
the trusts created thereunder without the prior written consent of Lessee, and
will not amend, modify, or supplement the Trust Agreement, or waive any of the
provisions thereof, if such amendment, modification, supplement, or waiver would
have any adverse effect on Lessee, without the consent of Lessee.
(b) Notwithstanding ss. 7.2.2(a), Owner Participant may at any time remove
Owner Trustee pursuant to ss. 9.1 of the Trust Agreement or terminate the Trust
Agreement pursuant to ss. 11.2 of the Trust Agreement.
7.2.3 Change of Situs of Owner Trust
If, at any time, any Tax Indemnitee or the Trust Estate becomes subject to
any Taxes for which it is indemnified pursuant to ss. 9.3 of this Agreement and
if, as a consequence thereof, Lessee requests that the situs of the Trust be
moved to another state in the United States from the state in which it is then
located, the situs of the Trust may be moved with the written consent of Owner
Participant (which consent shall not be unreasonably withheld) and Owner
Participant will take whatever action is reasonably necessary to accomplish such
removal; provided, that, in any event, (a) Lessee shall provide such additional
tax indemnification as Owner Participant reasonably requests to cover any
additional unindemnified Taxes or loss of Tax benefits described in the
assumptions in the Tax Indemnity Agreement resulting from such change in situs,
(b) the rights and obligations under the Operative Agreements of Owner
Participant shall not be adversely affected as a result of the taking of such
action, (c) Owner Participant shall receive an opinion or opinions of counsel
(which counsel is reasonably satisfactory to Owner Participant), in scope, form,
and substance reasonably satisfactory to Owner Participant, to the effect that
(1) the Trust, as thus removed, remains a validly-established trust, (2) any
amendments to the Trust Agreement necessitated by such removal have been duly
authorized, executed, and delivered and constitute valid and binding obligations
of such parties, enforceable in accordance with their terms, (3) covering such
other matters as Owner Participant reasonably requests, (d)if such removal
involves the replacement of Owner Trustee, then Owner Participant shall receive
an opinion of counsel to such successor Owner Trustee, in form and substance
reasonably satisfactory to Owner Participant, covering the matters described in
the opinion delivered pursuant to ss. 5.1.2(r)(4), and (e) Lessee shall
indemnify and hold harmless Owner Participant, FSB, and Owner Trustee, on a net
after-tax basis, against any and all reasonable out-of-pocket costs and expenses
(including attorneys' fees and disbursements), fees and expenses of any new
owner trustee, registration, recording, or filing fees, and taxes incurred by
Owner Participant or Owner Trustee in connection with such change of situs.
Owner Participant agrees, for Lessee's benefit, that Owner Participant will not
consent to or direct a change in the situs of the Trust Estate without Lessee's
prior written consent.
7.2.4 Compliance with Lease Provisions
Owner Participant agrees, solely for Lessee's benefit, to comply with the
express provisions applicable to Owner Participant in the Lease.
7.2.5 Securities Act
Owner Participant will not directly or indirectly offer any beneficial
interest or security relating to the ownership of the Aircraft or any interest
in the Trust Estate for sale to, or solicit any offer to acquire any such
interest or security from, or sell any such interest or security to, any Person
in violation of the Securities Act or applicable state or foreign securities
Laws, provided, that this ss. 7.2.5 shall not impose on Owner Participant any
responsibility with respect to any such offer, sale, or solicitation by any
other party hereto.
7.2.6 Regarding Owner Trustee
Owner Participant will direct Owner Trustee to perform its obligations
under each Owner Trustee Agreement.
7.3 FSB's and Owner Trustee's Covenants
FSB and Owner Trustee agree for the benefit of Lessee and Owner Participant
as follows:
7.3.1 Liens
FSB (a) will not directly or indirectly create, incur, assume, or suffer to
exist any Lessor Lien attributable to it or Owner Trustee on all or any part of
the Trust Estate or the Aircraft, (b) will, at its own cost and expense,
promptly take such action as is necessary to discharge any Lessor Lien
attributable to FSB or Owner Trustee on all or any part of the Trust Estate or
the Aircraft, and (c) will personally hold harmless and indemnify Lessee, Owner
Participant, each of their Affiliates, successors, and permitted assigns, and
the Trust Estate from and against (1) any and all Expenses, (2) any reduction in
the amount payable out of the Trust Estate, and (3) any interference with the
possession, operation, or other use of all or any part of the Aircraft imposed
on, incurred by, or asserted against any of the foregoing as a consequence of
any such Lessor Lien.
7.3.2 Other Business
Owner Trustee will not enter into any business or other activity except as
contemplated by the Operative Agreements.
7.3.3 Notice of Change of Chief Executive Office
FSB and Owner Trustee will give to Lessee and Owner Participant 30 days'
prior written notice of any relocation of its chief executive office (as defined
in UCC Article 9), and will promptly take any action required by ss. 7.3.7 as a
result of such relocation.
7.3.4 Securities Act
Neither FSB nor Owner Trustee will directly or indirectly offer any
beneficial interest or Security relating to the ownership of the Aircraft or any
interest in the Trust Estate for sale to, or solicit any offer to acquire any
such interest or security from, or sell any such interest or security to, any
Person in violation of the Securities Act or applicable state or foreign
securities Laws, provided, that the foregoing shall not impose on FSB or Owner
Trustee any responsibility with respect to any such offer, sale, or solicitation
by any other party hereto.
7.3.5 Performance of Agreements
Owner Trustee shall perform its obligations under the Owner Trustee
Agreements in accordance with the terms thereof.
7.3.6 Notices; Documents
If any claim with respect to any liabilities is filed against Owner Trustee
and Owner Trustee has Actual Knowledge thereof, then Owner Trustee shall
promptly notify Lessee in writing thereof. Owner Trustee further agrees to
provide to Lessee promptly any documents (including the certificate of aircraft
registration) that it receives from the FAA with respect to the Aircraft.
7.3.7 Filings
After the Delivery Date, Owner Trustee shall duly execute and deliver to
Lessee all filings and recordings (including all filings and UCC financing
statements under the Transportation Code and the UCC and any amendments to UCC
financing statements necessitated by any relocation of its chief executive
office), prepared and delivered to it by Lessee, required to perfect Owner
Trustee's title to the Aircraft and to make such title, liens, and security
interests valid and enforceable.
7.3.8 Trust Agreement
FSB and Owner Trustee hereby (a) agree for the benefit of Lessee not to
amend, supplement, terminate, or otherwise modify any provision of the Trust
Agreement in a manner that adversely affects the rights of any such party
without the prior written consent of such party, and (b) agree for the benefit
of Lessee not to revoke the trust created by the Trust Agreement if such
revocation would have an adverse effect on Lessee. Nothing in this Agreement
shall impair any right under the Trust Agreement of FSB to resign as Owner
Trustee in accordance with the provisions of the Trust Agreement.
7.4 Other Agreements
7.4.1 Owner Trustee Is Owner for All Purposes
Lessee, Owner Participant, and Owner Trustee agree that for all purposes,
after the Closing, Owner Trustee will be the owner of the Aircraft (except that
Owner Participant will be the owner for income tax purposes) and Lessee will be
the lessee thereof. No transfer, by operation of Law or otherwise, of Owner
Participant's beneficial interest in and to the Trust Estate shall operate to
transfer legal title to any part of the Trust Estate to any transferee thereof.
7.4.2 Commencement of Bankruptcy Proceedings
Lessee, Owner Participant, FSB, and Owner Trustee agree for the benefit of
each of the others that it will not commence or join in any proceeding under the
Bankruptcy Code to commence a case under ss. 303 of the Bankruptcy Code against
the Trust Estate. Nothing contained herein shall be deemed to preclude Owner
Participant, FSB, or Owner Trustee from filing any claim against the Trust
Estate in any case commenced against the Trust Estate.
7.4.3 Quiet Enjoyment; Sale by Owner Trustee Binding
(a) Owner Participant and Owner Trustee agree for the benefit of Lessee
that, unless an Event of Default exists, such Person shall not interfere (and
shall not permit any Affiliate or other Person claiming by, through, or under it
to interfere) with Lessee's rights in accordance with the Lease to the quiet
enjoyment, possession, and use of the Aircraft during the Term.
(b) Any assignment, sale, transfer, or other conveyance of the Aircraft by
Owner Trustee made pursuant to the terms of this Agreement or the Lease shall
bind Owner Participant, and shall be effective to transfer or convey all right,
title, and interest of Owner Trustee and Owner Participant in and to the
Aircraft. No purchaser or other grantee shall be required to inquire as to the
authorization, necessity, expediency, or regularity of such assignment, sale,
transfer, or conveyance, or as to the application of any sale or other proceeds
with respect thereto by Owner Trustee, as regards Owner Participant.
7.4.4 Other Documents; Amendment
(a) Each of Owner Participant and Owner Trustee hereby agrees for the
benefit of Lessee not to amend, supplement, or otherwise modify any provision of
the Trust Agreement in a manner that could adversely affect such party, without
the prior written consent of such party. Owner Trustee agrees to furnish
promptly to Lessee copies of any supplement, amendment, waiver, or modification
of any of the Operative Agreements to which Lessee is not a party.
(b) Owner Trustee agrees to join with Lessee to the extent that action on
its part is necessary or appropriate (1) to cause the following to be duly
accomplished in accordance with applicable United States federal Law by the time
the Aircraft is delivered under this Agreement and the Lease: (aa) to apply to
register the Aircraft in Owner Trustee's name, and (bb) all related action
necessary in order for Lessee to have temporary or permanent authority to
operate the Aircraft as contemplated by the Lease, and (2) forthwith upon
delivery of the Aircraft under this Agreement and the Lease, to cause all
necessary documents to be duly filed for recording in accordance with applicable
United States federal Law.
7.4.5 Consents
Each of Owner Participant and Owner Trustee covenants and agrees, for
Lessee's benefit, that it shall not unreasonably withhold its consent to any
consent or approval requested of it or of Owner Trustee under the terms of any
of the Operative Agreements which by its terms is not to be unreasonably
withheld.
7.4.6 Insurance
Each of Owner Participant and Owner Trustee agrees not to obtain or
maintain insurance for its own account as permitted by ss. 11.2 of the Lease if
such insurance would limit, increase the cost of, or otherwise adversely affect
the coverage of any insurance required to be obtained or maintained by Lessee
pursuant to ss. 11 and Annex D of the Lease.
7.4.7 Foreign Registration
(a) Owner Participant and Owner Trustee hereby agree for Lessee's benefit
that, subject to ss. 7.1.2 of the Lease, Lessee shall be entitled to register
the Aircraft or cause the Aircraft to be registered in a country other than the
United States, if:
(1) such registration is made only after the Tax Attribute Period, unless
Lessee prepays on a lump-sum basis any liability that would be due under the Tax
Indemnity Agreement as a result of such registration based upon the assumption
that such registration would continue for the remainder of the term of the
Permitted Sublease described in clause (3) below;
(2) no Special Default or Event of Default exists at the time of such
registration;
(3) such proposed change of registration is made in connection with a
Permitted Sublease to a Permitted Air Carrier, and such country is such
Permitted Air Carrier's domicile;
(4) such country is a country with which the United States then maintains
normal diplomatic relations (or, if Taiwan, the United States then maintains
diplomatic relations at least as good as those in effect on the Delivery Date,
provided that Lessee may not effect such registration in Taiwan unless it has
obtained the prior written consent of Owner Participant, which Owner Participant
may withhold in its sole and absolute discretion); and
(5) Owner Participant and Owner Trustee receive an opinion of counsel
(subject to customary exceptions) reasonably satisfactory to Owner Participant,
addressed to each such party, to the effect that:
(aa) such country recognizes Owner Trustee's ownership interest in the
Aircraft;
(bb) Lessee's obligations, and Owner Trustee's rights and remedies, under
the Lease are valid, binding, and enforceable under the laws of such
jurisdiction;
(cc) after giving effect to such change in registration, Owner Trustee's
title continues as a valid and protected interest, and all filing, recording, or
other action necessary to protect Owner Trustee's interest have been
accomplished (or, if such opinion cannot be given at the time of such proposed
change in registration because such change in registration is not yet effective,
(1) the opinion shall detail what filing, recording, or other action is
necessary, and (2) Owner Participant and Owner Trustee shall receive a
certificate from Lessee that all possible preparations to accomplish such
filing, recording, and other action are done, and such filing, recording, and
other action are accomplished, and a supplemental opinion to that effect shall
be delivered to Owner Participant and Owner Trustee promptly after the effective
date of such change in registration;
(dd) it is not necessary, solely as a consequence of such change in
registration and without giving effect to any other activity of Owner Trustee or
Owner Participant, for Owner Trustee or Owner Participant to qualify to do
business in such jurisdiction as a result of such reregistration or in order to
exercise any rights or remedies with respect to the Aircraft pursuant to the
Lease;
(ee) there is no tort liability of the owner or lessor of an aircraft not
in possession thereof under the laws of such jurisdiction (it being agreed that,
if such latter opinion cannot be given in a form satisfactory to Owner
Participant, such opinion shall be waived if insurance reasonably satisfactory
to Owner Participant is provided to cover such risk); and
(ff) unless Lessee agrees to provide insurance covering the risk of
requisition of use of the Aircraft by the government of such country (so long as
the Aircraft is registered under the laws of such country), the laws of such
country require fair compensation by the government of such country payable in
currency freely convertible into Dollars and freely removable from such country
(without license or permit, unless Lessee before such proposed reregistration
has obtained such license or permit) for the taking or requisition by such
government of such use.
(b) In addition, as a condition precedent to any change in
registration, Lessee shall give to Owner Participant assurances reasonably
satisfactory to each of them:
(1) that the provisions ofss. 11 of the Lease have been complied with after
giving effect to such change of registration;
(2) of Lessee's payment, on an after-tax basis, of all reasonable
out-of-pocket expenses of Lessor and Owner Participant in connection with such
change of registry, including (aa) the reasonable fees and disbursements of
counsel to Lessee and Lessor, (bb) any filing or recording fees, Taxes, or
similar payments incurred in connection with the change of registration of the
Aircraft; and
(3) that the tax and other indemnities in favor of each Person named as an
indemnitee under any other Operative Agreement afford to each such Person
substantially the same protection as provided before such change of registration
(or Lessee agrees to provide, or cause to be provided, additional indemnities
that, together with such original indemnities, in the reasonable judgment of
Owner Participant and Lessor, afford such protection).
7.4.8 Other Commercial Relations Unaffected
Notwithstanding anything to the contrary set forth in any Operative
Agreement:
(a) except as set forth in the Purchase Agreement Assignment, nothing in
the Operative Agreements shall constitute or be deemed to be a waiver by Lessee
of any rights, remedies, or claims it may have against Airframe Manufacturer or
Engine Manufacturer or any subcontractor or supplier of either; and the
Operative Agreements do not and shall not be construed or deemed to create any
rights, waivers, immunities, or indemnities in favor of Airframe Manufacturer,
Engine Manufacturer, or any subcontractor or supplier of either with respect to
any such rights, remedies, or claims of Lessee; and
(b) neither Airframe Manufacturer, by its execution and delivery of the
Consent and Agreement, nor Engine Manufacturer, by its execution and delivery of
the Engine Manufacturer Warranty Agreement, shall be deemed to have waived any
rights, remedies, or claims which Airframe Manufacturer or Engine Manufacturer
(or any subcontractor or supplier of either) has against Lessee; and the
Operative Agreements do not and shall not be construed or deemed to create any
rights, waivers, immunities, or indemnities in favor of Lessee with respect to
any such rights, remedies, or claims of Airframe Manufacturer or Engine
Manufacturer (or any subcontractor or supplier of either).
7.4.9 Interest in Certain Engines
Owner Participant and Owner Trustee agree, for the benefit of each lessor,
conditional seller, or secured party of any airframe or engine leased to,
purchased by, or owned by Lessee or any Permitted Sublessee subject to a lease,
conditional sale, or other security agreement that it will not acquire or claim,
as against such lessor, conditional seller, or secured party, any right, title,
or interest in any engine as the result of the installation of such engine on
the Airframe at any time while such engine is subject to such lease, conditional
sale, or other security agreement and owned by such lessor or conditional seller
or subject to a security interest in favor of such secured party.
8. CONFIDENTIALITY
Lessee, Owner Participant, and Owner Trustee shall keep Annexes B, C, and D
and Schedules 1, 2, 3, and 4 to the Lease, the Participation Agreement, the
Purchase Agreement Assignment, and the Tax Indemnity Agreement confidential, and
shall not disclose them, or cause them to be disclosed, to any Person, except
(a) to prospective and permitted transferees of Lessee's, Owner Participant's,
or Owner Trustee's interest or their counsel, independent insurance brokers,
auditors, or other agents who agree to hold such information confidential, (b)
to Lessee's, Owner Participant's, or Owner Trustee's counsel, independent
insurance brokers, auditors, or other agents, Affiliates, or investors who agree
to hold such information confidential, (c) as may be required by any statute,
court, or administrative order or decree, legal process, or governmental ruling
or regulation, including those of any applicable insurance regulatory bodies
(including the National Association of Insurance Commissioners), federal or
state banking examiners, Internal Revenue Service auditors, or any stock
exchange, (d) with respect to Lessee and Owner Participant, by mutual agreement
of such parties, or (e) to such other Persons as are reasonably deemed necessary
by the disclosing party in order to protect the interests of such party or for
the purposes of enforcing such documents by such party; provided, that any and
all disclosures permitted by clauses (c), (d), and (e) above shall be made only
to the extent necessary to meet the specific requirements or needs of the
Persons making such disclosures.
9. INDEMNIFICATION AND EXPENSES
9.1 General Indemnity
9.1.1 Indemnity
Whether or not any of the Transactions are consummated, Lessee shall
indemnify, protect, defend, and hold harmless each Indemnitee from, against, and
in respect of, and shall pay on a net after-tax basis, any and all Expenses of
any kind or nature whatsoever, including those imposed on, incurred or suffered
by, or asserted against any Indemnitee, relating to, based on, resulting from,
or arising out of or in connection with, in each case directly or indirectly,
any one or more of the following:
(a) the Operative Agreements, or the enforcement of any of the terms of any
of the Operative Agreements;
(b) the Aircraft, the Airframe, any Engine, or any Part, including, with
respect thereto, (1) the manufacture, design, purchase, acceptance,
nonacceptance, rejection, ownership, registration, reregistration,
deregistration, delivery, nondelivery, lease, sublease, assignment, possession,
use, non-use, operation, maintenance, testing, repair, overhaul, condition,
alteration, modification, addition, improvement, storage, airworthiness,
replacement, repair, sale, substitution, return, abandonment, redelivery, or
other disposition of the Aircraft, any Engine, or any Part, (2) any claim or
penalty arising out of violations of applicable Laws, (3) tort liability,
whether or not arising out of the negligence of any Indemnitee (whether active,
passive, or imputed, and including strict liability and liability without
fault), (4) death or property damage of passengers, shippers, or others, (5)
environmental control, noise, or pollution, (6) any claim for patent, trademark,
or copyright infringement and (7) any Liens in respect of the Aircraft, any
Engine, or any Part; and
(c) any breach of or failure to perform or observe, or any other
noncompliance with, any covenant, agreement, or other obligation to be performed
by Lessee under any Lessee Operative Agreement, or the falsity of any
representation or warranty of Lessee in any Lessee Operative Agreement, other
than in the Tax Indemnity Agreement.
9.1.2 Exceptions
Notwithstanding anything in ss. 9.1.1, Lessee shall not be required to
indemnify, protect, defend, and hold harmless any Indemnitee pursuant to ss.
9.1.1 against any Expense of such Indemnitee:
(a) for any Taxes or a loss of Tax benefit, whether or not Lessee is
required to indemnify therefor pursuant to ss. 9.3 or the Tax Indemnity
Agreement (other than amounts required to be paid to render the payment of any
Expense payable under ss. 9.1.1 on an after-tax basis);
(b) except to the extent attributable to acts or events occurring prior
thereto, acts or events (other than acts or events related to Lessee's
performance of its obligations pursuant to the terms of the Lessee Operative
Agreements) that occur after: (1) with respect to the Airframe, any Engine, or
any Part, the return of possession (which, if the Aircraft is placed in storage
as provided inss. 5 of the Lease, is the date that the Aircraft is placed in
storage) of such Airframe, Engine, or Part pursuant to the Lease (other than
pursuant toss. 15 thereof, in which case Lessee's liability under thisss. 9.1
shall survive for so long as Lessor is entitled to exercise remedies under
suchss. 15 or in connection with Lessee in the event of exercise of its early
termination option underss. 9 of the Lease or its purchase options underss. 17.3
of the Lease), and (2) the termination of the Term in accordance with the Lease;
(c) to the extent attributable to any Transfer (voluntary or involuntary)
by or on behalf of Owner Participant of any interest in the Aircraft or the
Trust Estate, except for out-of-pocket costs and expenses incurred as a result
of such Transfer during the existence of an Event of Default (or in connection
with Lessee in the event of exercise of its early termination option under ss. 9
of the Lease or its purchase options under ss. 17.3 of the Lease);
(d) to the extent attributable to the gross negligence or willful
misconduct of such Indemnitee or any related Indemnitee (as defined below)
(other than gross negligence or willful misconduct imputed to such Person by
reason of its interest in the Aircraft or any Operative Agreement);
(e) in the case of FSB, to the extent attributable to matters enumerated in
the proviso toss. 13;
(f) to the extent attributable to the incorrectness or breach of any
representation or warranty of such Indemnitee or any related Indemnitee
contained in or made pursuant to any Operative Agreement;
(g) to the extent attributable to the failure, by such Indemnitee or any
related Indemnitee, to perform or observe any agreement, covenant, or condition
on its part to be performed or observed in any Operative Agreement;
(h) to the extent attributable to the offer or sale by such Indemnitee or
any related Indemnitee of any interest in the Aircraft, the Trust Estate, or the
Trust Agreement, or any similar interest, in violation of the Securities Act or
other applicable federal, state, or foreign securities Laws (other than any
thereof caused by the acts or omissions of Lessee or any person acting on behalf
of Lessee);
(i) with respect to Owner Trustee, to the extent attributable to its
negligence or willful misconduct in the distribution of funds received and
distributable by it in accordance with the Trust Agreement,
(j) other than during the existence of an Event of Default, to the extent
attributable to the authorization or giving or withholding of any future
amendments, supplements, waivers, or consents with respect to any Operative
Agreement, other than any requested by Lessee or required by or made pursuant to
the terms of the Operative Agreements (unless such requirement results from the
actions of an Indemnitee not required by or made pursuant to the Operative
Agreements);
(k) to the extent attributable to any amount which any Indemnitee expressly
agrees to pay or such Indemnitee expressly agrees shall not be paid by or be
reimbursed by Lessee;
(l) to the extent that it is an ordinary and usual operating or overhead
expense of such Indemnitee;
(m) with respect to Owner Participant or Owner Trustee, or any related
Indemnitee, to the extent attributable to the deregistration of the Aircraft
under the Transportation Code as a result of the failure of such Person (or any
related Indemnitee of such Person) to be a Citizen of the United States as a
result of any act (other than reregistration of the Aircraft pursuant to ss.
7.1.2 of the Lease) of Owner Participant or Owner Trustee or any related
Indemnitee of such Person (not taken at the request of Lessee);
(n) for any Lessor Lien attributable to such Indemnitee or any related
Indemnitee; or
(o) to the extent incurred by or asserted against an Indemnitee other than
Owner Participant (but without limiting the other provisions of this ss. 9.1.2,
including clauses (f) and (g), as to Owner Participant) as a result of any
"prohibited transaction", within the meaning of ERISA ss. 406 or Code ss.
4975(c)(1).
For purposes of this ss. 9.1, a Person shall be considered a "related
Indemnitee" of an Indemnitee if that Person is an Affiliate or employer of such
Indemnitee, a director, officer, employee, or agent of such Indemnitee or any
such Affiliate, or a successor or permitted assignee of any of the foregoing;
provided, that Owner Trustee and FSB shall not be deemed to be related
Indemnitees of Owner Participant merely because of their trust or fiduciary
relationships.
9.1.3 Separate Agreement
This Agreement constitutes a separate agreement with respect to each
Indemnitee, and is enforceable directly by each such Indemnitee.
9.1.4 Notice
If an Indemnitee makes a claim for any Expense indemnifiable under this ss.
9.1, such Indemnitee shall give prompt written notice thereof to Lessee.
Notwithstanding the foregoing, any Indemnitee's failure to notify Lessee as
provided in this ss. 9.1.4, or in ss. 9.1.5, shall not release Lessee from any
of its obligations to indemnify such Indemnitee hereunder, except to the extent
that such failure results in an additional Expense to Lessee (in which event
Lessee shall not be responsible for such additional expense) or materially
impairs Lessee's ability to contest such claim.
9.1.5 Notice of Proceedings; Defense of Claims; Limitations
(a) If any action, suit, or proceeding for which Lessee is responsible
under this ss. 9.1 is brought against any Indemnitee, such Indemnitee shall
notify Lessee of the commencement thereof, and Lessee may, at its expense,
participate in and, to the extent that it so desires (subject to the provisions
of the following paragraph), assume and control its defense and, subject to ss.
9.1.5(c), settle or compromise it. Unless Owner Participant agrees in writing
otherwise, no settlement of any claim hereunder may require Owner Participant to
agree to any remedy apart from the payment of money damages (for which such
payment of money damages Lessee will in any event indemnify the Indemnitees).
(b) Lessee or its insurer(s) shall have the right, at its or their expense,
to investigate or, if Lessee or its insurer(s) agree not to dispute liability to
the Indemnitee giving notice of such action, suit, or proceeding under this ss.
9.1.5 for indemnification hereunder or under any insurance policies pursuant to
which coverage is sought, control the defense of, any action, suit, or
proceeding, relating to any Expense for which indemnification is sought pursuant
to this ss. 9.1, and each Indemnitee shall cooperate with Lessee or its
insurer(s) with respect thereto; provided, that Lessee shall not be entitled to
control the defense of any such action, suit, or proceeding, or to settle or
compromise any such Expense, (i) while any Special Default or Event of Default
under ss. 14.1 of the Lease exists, or (ii) if such action, suit, or proceeding
will involve a material risk of the sale, forfeiture, or loss of, or the
creation of any Lien (other than a Permitted Lien) on the Aircraft, the Trust
Estate, or any part thereof, unless Lessee shall have posted a bond or other
security or collateral satisfactory to Owner Participant in respect to such
risk, or (iii) if such action, suit, or proceeding could in the good faith
opinion of such Indemnitee entail any risk of criminal liability or material
civil liability or present a conflict of interest making separate representation
necessary. In connection with any such Lessee-controlled action, suit, or
proceeding, such Indemnitee shall have the right to participate therein, at its
sole cost and expense, with counsel reasonably satisfactory to Lessee, provided
that such Indemnitee's participation does not, in the reasonable opinion of the
independent counsel appointed by Lessee or its insurers to conduct such
proceedings, interfere with the defense of such case.
(c) In no event shall any Indemnitee enter into a settlement or other
compromise with respect to any Expense without Lessee's prior written consent
(which shall not be unreasonably withheld or delayed), unless such Indemnitee
waives its right to be indemnified with respect to such Expense under this ss.
9.1.
(d) To the extent that any Expense indemnified by Lessee hereunder may be
covered by insurance maintained by Lessee, at Lessee's expense, each Indemnitee
agrees to cooperate with the insurers in the exercise of their rights to
investigate, defend, or compromise that Expense as may be required to retain the
benefits of the insurance for that Expense.
(e) If an Indemnitee is not a party to this Agreement, Lessee may require
that Indemnitee to agree in writing to the terms of this ss. 9 and ss. 15.8
before making any payment to such Indemnitee under this ss. 9.
(f) Nothing herein shall be deemed to be a guarantee of any residual value
of the Aircraft.
(g) Nothing in this ss. 9.1.5 shall require an Indemnitee to contest any
Expense or to assume responsibility for or control of any judicial proceeding
with respect thereto.
9.1.6 Information
Lessee will provide the relevant Indemnitee with such information not
within the control of such Indemnitee (but in Lessee's control or reasonably
available to Lessee) which such Indemnitee reasonably requests, and will
otherwise cooperate with such Indemnitee so as to enable such Indemnitee to
fulfill its obligations under ss. 9.1.5 and to control or participate in any
proceeding to the extent permitted by ss. 9.1.5. The Indemnitee shall supply
Lessee with such information not within the control of Lessee (but in such
Indemnitee's control or reasonably available to such Indemnitee) which Lessee
reasonably requests to control or participate in any proceeding to the extent
permitted by ss. 9.1.5.
9.1.7 Effect of Other Indemnities; Subrogation; Further Assurances
Upon payment in full by or on behalf of Lessee of any indemnity provided
for under this Agreement, without any further action and to the full extent
permitted by Law, Lessee will be subrogated to all rights and remedies of the
Person indemnified (other than with respect to any of such Indemnitee's
insurance policies or in connection with any indemnity claim of such Indemnitee
under ss. 5.3 or ss. 7 of the Trust Agreement) in respect of the matter as to
which such indemnity was paid. Each Indemnitee will give such further assurances
or agreements and cooperate with Lessee to permit Lessee to pursue any such
claims, to the extent reasonably requested by Lessee and at Lessee's expense.
9.1.8 Refunds
If an Indemnitee receives any refund, in whole or in part, with respect to
any Expense paid by or on behalf of Lessee hereunder, that Indemnitee will
promptly pay the amount refunded (but not an amount in excess of the amount
Lessee or any of its insurers has paid in respect of such Expense) over to
Lessee unless an Event of Default exists, in which case such amount shall be
paid over to Owner Trustee to hold as security for Lessee's obligations under
the Lessee Operative Agreements or, if requested by Lessee, applied to satisfy
those obligations. Any subsequent loss of such recovery or tax benefit or refund
shall be subject to the provisions of ss. 9.1 and ss. 9.3.
9.2 Expenses
9.2.1 Invoices and Payment
Owner Trustee and Owner Participant shall promptly submit to Lessee for its
prompt approval (which shall not be unreasonably withheld) copies of invoices in
reasonable detail of the Transaction Expenses for which it is responsible for
providing information as they are received (and not later than the 90th day
after the Delivery Date). If so submitted and approved, Owner Participant agrees
promptly (and not later than the later of (i) the 105th day after the Delivery
Date and (ii) the tenth Business Day following such approval) to pay such
Transaction Expenses . Notwithstanding the foregoing, Lessee at its sole option
shall have the right to pay directly any and all Transaction Expenses payable to
Lessee Advisor or Lessee's counsel or (if such payment does not result in
adverse tax consequences to Owner Participant) to any other Person. If Owner
Participant fails to pay any Transaction Expense that it is obligated to pay
hereunder, Lessee shall pay such Transaction Expense. Any such payment by Lessee
shall not affect Owner Participant's obligations or Lessee's rights against
Owner Participant for its failure to make any such payment.
9.2.2 Payment of Other Expenses
Lessee shall pay (a) the ongoing fees and expenses of Owner Trustee, and
(b) all reasonable out-of-pocket costs and expenses (including the reasonable
fees and disbursements of counsel) incurred by Owner Participant attributable to
(1) any transfer of title to the Aircraft or any Engine contemplated by ss. 4.5
of the Lease, or (2) any waiver, amendment, or modification of any Operative
Agreement to the extent requested by Lessee.
9.2.3 Indemnification Interest
Lessee will pay to each Indemnitee upon demand, to the extent permitted by
applicable Law, interest at the Past Due Rate on any amount of indemnity not
paid when due pursuant to this ss. 9 until the same shall be paid.
9.3 General Tax Indemnity
9.3.1 General
Except as provided in ss. 9.3.2, Lessee agrees that each payment of Rent
paid by Lessee pursuant to the Lease, and any other payment or indemnity paid by
Lessee to a Tax Indemnitee under any Operative Agreement, shall be free of all
withholdings or deductions with respect to Taxes of any nature, and if Lessee is
required by applicable law to make any such withholding or deduction for any
such payment, (a) Lessee shall make all such withholdings or deductions, (b) the
amount payable by Lessee shall be increased so that, after making all required
withholdings or deductions, such Tax Indemnitee receives the same amount that it
would have received had no such withholdings or deductions been made, and (c)
Lessee shall pay the full amount withheld or deducted to the relevant Taxing
Authority in accordance with applicable law. Except as provided in ss. 9.3.2,
and whether or not any of the Transactions are consummated, Lessee shall pay,
indemnify, protect, defend, and hold harmless on an after-tax basis each Tax
Indemnitee from all Taxes imposed by any Taxing Authority imposed on or asserted
against any Tax Indemnitee or the Aircraft, the Airframe, any Engine, or any
Part, or any interest in any of the foregoing (whether or not indemnified
against by any other Person), upon or with respect to the Operative Agreements,
their execution, or the transactions or payments contemplated thereby, including
any Tax imposed upon or with respect to (w) the Aircraft, the Airframe, any
Engine, any Part, any Operative Agreement, any data, or any other thing
delivered or to be delivered under an Operative Agreement, (x) the purchase,
manufacture, acceptance, rejection, sale, transfer of title, return, ownership,
delivery, transport, charter, rental, lease, re-lease, sublease, assignment,
possession, repossession, presence, use, condition, storage, preparation,
maintenance, modification, alteration, improvement, operation, registration,
transfer or change of registration, reregistration, repair, replacement,
overhaul, location, control, imposition of any Lien (other than a Lessor Lien),
financing, refinancing requested by Lessee, abandonment, or other disposition of
the Aircraft, the Airframe, any Engine, any Part, any data, or any other thing
delivered or to be delivered under an Operative Agreement, or (y) rent,
interest, fees, or other income, proceeds, receipts, or earnings, whether actual
or deemed, arising upon, in connection with, or in respect of any of the
Operative Agreements (including the property or income or other proceeds with
respect to property held as part of the Trust Estate) or the transactions
contemplated thereby.
9.3.2 Certain Exceptions
The provisions of ss. 9.3.1 shall not apply to, and Lessee shall have no
liability hereunder for, Taxes:
(a) imposed on a Tax Indemnitee by the federal government of the United
States or any Taxing Authority or governmental subdivision of the United States
or any state or local Taxing Authority (1) on, based on, or measured by gross or
net income or gross or net receipts, including capital gains taxes, excess
profits taxes, minimum taxes from tax preferences, alternative minimum taxes,
branch profits taxes, accumulated earnings taxes, personal holding company
taxes, succession taxes and estate taxes, and any withholding taxes on, based
on, or measured by gross or net income or receipts, or (2) on, or with respect
to, or measured by capital or net worth or in the nature of a franchise tax or a
tax for the privilege of doing business (other than, in the case of clause (1)
or (2), Taxes in the nature of sales, use, license, value added (to the extent
not imposed as a substitute for an income tax), transfer, stamp, ad valorem, or
property Taxes);
(b) imposed on a Tax Indemnitee by any Taxing Authority or governmental
subdivision thereof or therein outside of the United States (including any
Taxing Authority in or of a territory, possession, or commonwealth of the United
States) (1) on, based on, or measured by gross or net income or receipts,
including capital gains taxes, excess profits taxes, minimum taxes from tax
preferences, alternative minimum taxes, branch profits taxes, accumulated
earnings taxes, personal holding company taxes, succession taxes and estate
taxes, and any withholding taxes on, based on, or measured by gross or net
income or receipts, or (2) on, or with respect to, or measured by capital or net
worth or in the nature of a franchise tax or a tax for the privilege of doing
business (other than, in the case of clause (1) or (2), Taxes in the nature of
(aa) sales, use, license, value added (to the extent not imposed as a substitute
for an income tax), transfer, stamp, ad valorem, or property Taxes, or (bb) any
Taxes imposed by any Taxing Authority (other than a Taxing Authority within
whose jurisdiction such Tax Indemnitee is incorporated or organized or maintains
its principal place of business) if such Tax Indemnitee would not have been
subject to such Taxes by such jurisdiction but for (i) the location,
registration, use, or operation of the Aircraft, the Airframe, any Engine, or
any Part thereof by a Lessee Person within the jurisdiction of the Taxing
Authority imposing such Tax, or (ii) the activities of any Lessee Person (except
for activities of a Lessee Person who is not an Affiliate, successor, or assign
of Lessee acting in its capacity other than as a Lessee Person, which activities
are unrelated to the transactions contemplated by the Operative Agreements) in
such jurisdiction, including use of any other aircraft by Lessee in such
jurisdiction, (iii) the status of any Lessee Person as a foreign entity or as an
entity owned in whole or in part by foreign persons, (iv) Lessee's having made
(or having been deemed to have made) payments to such Tax Indemnitee from the
relevant jurisdiction, or (v) in the case of Owner Participant, or any related
Tax Indemnitee, Lessee's being incorporated, organized, or maintaining a place
of business in such jurisdiction);
(c) on, with respect to, or measured by any trustee fees, commissions,
premiums, or compensation received by Owner Trustee;
(d) on the Trust or the Trust Estate that result from treatment of the
Trust or the Trust Estate as an entity, such as a corporation, separate and
apart from Owner Participant;
(e) that are being contested as provided inss. 9.3.4 during the pendency of
such contest;
(f) imposed on any Tax Indemnitee to the extent that such Taxes result from
the gross negligence or willful misconduct of such Tax Indemnitee or any
Affiliate thereof (other than the gross negligence or willful misconduct imputed
to such Tax Indemnitee by reason of such Tax Indemnitee's participation in the
transactions contemplated by the Operative Agreements);
(g) imposed on or with respect to a Tax Indemnitee (including the
transferee in those cases in which the Tax on transfer is imposed on, or is
collected from, the transferee) as a result of a transfer or other disposition
(including a deemed transfer or disposition) by such Tax Indemnitee or a related
Tax Indemnitee (or, in the case of Owner Participant, by Owner Trustee, or, in
the case of Taxes imposed on a transferee, by the transferor) of any interest in
the Aircraft, the Airframe, any Engine, or any Part, the Rent, the Trust, the
Trust Estate, the Lease, or any interest arising under the Operative Agreements
or a transfer or disposition (including a deemed transfer or disposition) of any
interest in a Tax Indemnitee (other than (1) a substitution, replacement,
modification, pooling, or improvement of the Aircraft, the Airframe, any Engine
or any Part by a Lessee Person that is treated for Tax purposes as a transfer or
disposition, (2) a transfer pursuant to an exercise of remedies upon a
then-existing Event of Default, (3) a transfer pursuant toss. 17.3 orss. 9 of
the Lease, or (4) a transfer pursuant to an Event of Loss);
(h) in excess of those that would have been imposed had there not been a
transfer or other disposition by or to such Tax Indemnitee or a related Tax
Indemnitee described in clause (g) of this ss. 9.3.2;
(i) imposed on Owner Participant and indemnified by Lessee pursuant to the
Tax Indemnity Agreement;
(j) imposed with respect to any period after the expiration or earlier
termination of the Term and, if required pursuant to the terms of the Lease, the
return of possession of the Aircraft to Lessor or placement in storage at the
request of Lessor in accordance with the Lease (provided, that this clause (j)
shall not apply to Taxes imposed after such period arising as a result of
payments by Lessee under the Operative Agreements after such period or are
attributable to events occurring prior to or coincident with such expiration or
earlier termination of the Term);
(k) consisting of any interest, penalties, or additions to tax imposed on a
Tax Indemnitee as a result (in whole or in part) of a failure of such Tax
Indemnitee or a related Tax Indemnitee to file any return properly and timely,
unless such failure is caused by Lessee's failure to fulfill its obligations, if
any, under ss. 9.3.6 with respect to such return;
(l) resulting from, or that would not have been imposed but for, any Lessor
Liens arising as a result of claims against, or acts or omissions of, or
otherwise attributable to such Tax Indemnitee or a related Tax Indemnitee;
(m) imposed on any Tax Indemnitee as a result of the breach by such Tax
Indemnitee or a related Tax Indemnitee of any covenant of such Tax Indemnitee or
any Affiliate thereof contained in any Operative Agreement or the inaccuracy of
any representation or warranty by such Tax Indemnitee or any Affiliate thereof
in any Operative Agreement;
(n) in the nature of an intangible or similar Tax upon or with respect to
the value of the interest of Owner Participant in the Trust Estate or the Trust,
only if such Taxes are in the nature of franchise Taxes or result from the
conduct of business by such Tax Indemnitee in the taxing jurisdiction and are
imposed because of the place of incorporation or the activities unrelated to the
Transactions in the taxing jurisdiction of such Tax Indemnitee;
(o) that is included in Lessor's Cost and paid to the appropriate Taxing
Authority;
(p) other than any Tax described in ss. 9.3.2(b) hereof, imposed on a Tax
Indemnitee by a Taxing Authority of a jurisdiction outside the United States, to
the extent that such Taxes would not have been imposed but for a connection
between the Tax Indemnitee or a related Tax Indemnitee and such jurisdiction
imposing such Tax unrelated to the Transactions; or
(q) relating to ERISA or to Codess. 4975.
For purposes hereof, a Tax Indemnitee and any other Tax Indemnitees who are
successors, assigns, agents, or Affiliates of such Tax Indemnitee shall be
related Tax Indemnitees.
9.3.3 Payment
(a) Without regard to ss. 9.3.2(a), (b), or (h) hereof, Lessee's indemnity
obligation to a Tax Indemnitee under this ss. 9.3 shall be the amount which,
after taking into account any Tax imposed upon the receipt or accrual of the
amounts payable under this ss. 9.3 and any tax benefits actually recognized by
such Tax Indemnitee as a result of the indemnifiable Tax (including any benefits
recognized as a result of such Tax Indemnitee's use of an indemnifiable Tax as a
credit against Taxes not indemnifiable under this ss. 9.3), equals the amount of
the Tax indemnifiable under this ss. 9.3.
(b) At Lessee's request, the computation of the amount of any indemnity
payment owed by Lessee or any amount owed by a Tax Indemnitee to Lessee pursuant
to this ss. 9.3 shall be verified and certified by an independent public
accounting firm selected by such Tax Indemnitee and reasonably satisfactory to
Lessee. Such verification shall be binding. The costs of such verification
(including the fee of such public accounting firm) shall be borne by Lessee
unless such verification results in an adjustment in Lessee's favor of 5% or
more of the net present value of the payment as computed by such Tax Indemnitee,
in which case such Tax Indemnitee shall pay those costs.
(c) Each Tax Indemnitee shall provide Lessee with such certifications, and
such information and documentation in such Tax Indemnitee's possession, as
Lessee reasonably requests to minimize any indemnity payment pursuant to this
ss. 9.3; provided, that notwithstanding anything to the contrary in this ss.
9.3.3(c), no Tax Indemnitee shall be required to provide Lessee with any Tax
returns.
(d) Each Tax Indemnitee shall promptly forward to Lessee any written
notice, bill, or advice that such Tax Indemnitee receives from any Taxing
Authority concerning any Tax for which it seeks indemnification under this ss.
9.3. Lessee shall pay any amount for which it is liable pursuant to this ss. 9.3
directly to the appropriate Taxing Authority if legally permissible, or upon
demand of a Tax Indemnitee, to such Tax Indemnitee within 30 days of such demand
(or, if a contest occurs in accordance with ss. 9.3.4, within 30 days after a
Final Determination (as defined below)), but in no event more than one Business
Day before the related Tax is due. If requested by a Tax Indemnitee in writing,
Lessee shall furnish to the appropriate Tax Indemnitee the original or a
certified copy of a receipt for Lessee's payment of any Tax paid by Lessee, or
such other evidence of payment of such Tax as is acceptable to such Tax
Indemnitee. Lessee shall also furnish promptly upon written request such data as
any Tax Indemnitee reasonably requires to enable such Tax Indemnitee to comply
with the requirements of any taxing jurisdiction, unless such data are not
reasonably available to Lessee or (unless such data are specifically requested
by a Taxing Authority) are not customarily furnished by domestic air carriers
under similar circumstances. For purposes of this ss. 9.3, a "Final
Determination" is (1) a decision, judgment, decree, or other order by any court
of competent jurisdiction that occurs pursuant to the provisions of ss. 9.3.4,
which decision, judgment, decree, or other order has become final and
unappealable, (2) a closing agreement or settlement agreement entered into in
accordance with ss. 9.3.4 that has become binding and is not subject to further
review or appeal (absent fraud, misrepresentation, etc.), or (3) the termination
of administrative proceedings and the expiration of the time for instituting a
claim in a court proceeding.
(e) If any Tax Indemnitee actually realizes a tax savings by reason of any
Tax paid or indemnified by Lessee pursuant to this ss. 9.3 (whether such tax
savings arise by means of a foreign tax credit, depreciation or cost recovery
deduction, or otherwise), and such savings are not otherwise taken into account
in computing such payment or indemnity, such Tax Indemnitee shall pay to Lessee
an amount equal to the lesser of (1) the amount of such tax savings, plus any
additional net tax savings recognized as the result of any payment made pursuant
to this sentence, when, as, if, and to the extent realized, and (2) the amount
of all payments pursuant to this ss. 9.3 by Lessee to such Tax Indemnitee (less
any payments previously made by such Tax Indemnitee to Lessee pursuant to this
ss. 9.3.3(e)) (and the excess, if any, of the amount described in clause (1)
over the amount described in clause (2) shall be carried forward and applied to
reduce pro tanto any subsequent obligations of Lessee to make payments to such
Tax Indemnitee pursuant to this ss. 9.3); provided, that such Tax Indemnitee
shall not be required to make any payment pursuant to this sentence so long as a
Special Default or an Event of Default of a monetary nature exists. If a tax
benefit is later disallowed or denied, the disallowance or denial shall be
treated as a Tax indemnifiable under ss. 9.3.1 without regard to the provisions
of ss. 9.3.2 (other than ss. 9.3.2(f)). Each such Tax Indemnitee shall in good
faith use reasonable efforts in filing its tax returns and in dealing with
Taxing Authorities to seek and claim any such tax benefit.
9.3.4 Contest
(a) If a written claim is made against a Tax Indemnitee for Taxes that
Lessee could be liable to pay or indemnify for hereunder, or if a Tax Indemnitee
determines that a Tax is due and that Lessee could have an indemnity obligation
for that Tax hereunder, such Tax Indemnitee shall promptly notify Lessee in
writing of such claim (provided, that failure so to notify Lessee shall not
relieve Lessee of its indemnity obligations hereunder unless the failure to
notify effectively forecloses Lessee's rights to require a contest of such
claim), and shall take no action with respect to such claim without Lessee's
prior written consent for 30 days following Lessee's receipt of such notice;
provided, that, if applicable Law requires such Tax Indemnitee to take action
before the end of such 30-day period, such Tax Indemnitee shall, in such notice
to Lessee, so inform Lessee, and such Tax Indemnitee shall take no action for as
long as it is legally able to avoid taking action (and a Tax Indemnitee shall be
entitled to pay the Tax claimed and sue for a refund before the end of such
30-day period if (1)(aa) the failure to pay the Tax would result in substantial
penalties (unless immediately reimbursed by Lessee) and the act of paying the
Tax would not materially prejudice the right to contest, or (bb) the failure to
pay would result in criminal penalties, and (2) such Tax Indemnitee shall take
any action so required in connection with so paying the Tax in a manner that is
the least prejudicial to the pursuit of the contest). In addition, such Tax
Indemnitee shall (provided that Lessee shall have agreed to keep such
information confidential other than to the extent necessary in order to contest
the claim) furnish Lessee with copies of any requests for information from any
Taxing Authority relating to such Taxes with respect to which Lessee may be
required to indemnify hereunder. If requested by Lessee in writing within 30
days after its receipt of such notice, such Tax Indemnitee shall, at Lessee's
expense (including all reasonable costs, expenses, and reasonable attorneys' and
accountants' fees and disbursements), in good faith contest (or, if permitted by
applicable law, allow Lessee to contest) through appropriate administrative and
judicial proceedings the validity, applicability, or amount of such Taxes by (x)
resisting payment thereof, (y) not paying the Taxes except under protest if
protest is necessary and proper, or (z) if the payment is made, using reasonable
efforts to obtain a refund thereof in an appropriate administrative or judicial
proceeding. If requested to do so by Lessee, the Tax Indemnitee shall appeal any
adverse administrative or judicial decision, except that the Tax Indemnitee
shall not be required to pursue any appeals to the United States Supreme Court.
If and to the extent that the Tax Indemnitee is able to separate the contested
issue(s) from other issues arising in the same administrative or judicial
proceeding that are unrelated to the Transactions without (in such Tax
Indemnitee's good faith judgment) adversely affecting such Tax Indemnitee, such
Tax Indemnitee shall permit Lessee to control the conduct of any such proceeding
and shall provide to Lessee (at Lessee's cost and expense) with such information
or data in such Tax Indemnitee's control or possession and reasonably necessary
to conduct such contest (other than such Tax Indemnitee's federal income Tax
returns) in which case Lessee shall keep such Tax Indemnitee reasonably informed
concerning the progress of such contest. If the contest is being controlled by a
Tax Indemnitee, such Tax Indemnitee shall consult with Lessee in good faith
regarding the manner of contesting such claim and shall keep Lessee reasonably
informed regarding the progress of such contest. A Tax Indemnitee shall not fail
to take any action expressly required by this ss. 9.3.4 (including any action
regarding any appeal of an adverse determination with respect to any claim) or
settle or compromise any claim without Lessee's prior written consent (except as
contemplated by ss. 9.3.4(b) or (c)).
(b) Notwithstanding the foregoing, in no event shall a Tax Indemnitee be
required to pursue any contest (or to permit Lessee to pursue any contest)
unless (1) Lessee agrees to pay to such Tax Indemnitee on demand and on an
after-tax basis all reasonable costs and expenses that such Tax Indemnitee
incurs in connection with contesting such Taxes, including all reasonable
out-of-pocket costs and expenses and reasonable attorneys' and accountants' fees
and disbursements, (2) if such contest involves the payment of the claim, Lessee
advances the amount thereof (to the extent indemnified hereunder) plus interest,
penalties, and additions to tax with respect thereto that are required to be
paid before commencing the contest on an interest-free net after-Tax basis to
such Tax Indemnitee, (3) such Tax Indemnitee does not reasonably determine that
the action to be taken will result in any material risk of forfeiture, sale, or
loss of the Aircraft (unless Lessee makes provisions to protect the interests of
any such Tax Indemnitee in a manner reasonably satisfactory to such Tax
Indemnitee) (provided, that such Tax Indemnitee shall notify Lessee in writing
promptly after it becomes aware of any such risk), (4) no Event of Default
exists, unless Lessee has provided security for its obligations hereunder by
advancing to such Tax Indemnitee, before proceeding or continuing with such
contest, the amount of the Tax being contested, plus any interest and penalties
and an amount estimated in good faith by such Tax Indemnitee for expenses, (5)
before commencing any judicial action controlled by Lessee, Lessee acknowledges
its liability for such claim hereunder in writing, provided, that Lessee shall
not be bound by its acknowledgment if the Final Determination articulates
conclusions of law and fact that demonstrate that Lessee has no liability for
the contested amounts hereunder, (6) such Tax Indemnitee shall have received at
Lessee's sole expense, an opinion independent tax counsel, such counsel to be
selected by Lessee and reasonably satisfactory to such Tax Indemnitee ("Tax
Counsel"), to the effect that a reasonable basis, within the meaning of ABA
Formal Opinion No. 85-352, exists for contesting such claim, (7) the amount of
payments or indemnification that would be required as a result of such
adjustment, when aggregated with further potential payments or adjustments where
the subject matter of the proposed adjustment is of a continuing nature, as to
the Aircraft and all other aircraft operated by Lessee, shall be at least
$10,000, and (8) the issue shall not be substantially identical as an issue
previously contested hereunder and decided adversely, unless such Tax Indemnitee
shall have received, at Lessee's sole expense, a written opinion, in form and
substance reasonably satisfactory to such Tax Indemnitee, of Tax Counsel to the
effect that the applicable circumstances or law have changed and in light
thereof, there is reasonable basis under ABA Formal Opinion No. 85-352 that the
tax treatment of the item which is the subject of the claim will be upheld in
litigation if the claimed tax treatment is challenged by a Taxing Authority.
Notwithstanding the foregoing, if any Tax Indemnitee releases, waives,
compromises, or settles any claim that may be indemnifiable by Lessee pursuant
to this ss. 9.3 and which such Tax Indemnitee is otherwise obligated to contest
under this ss. 9.3.4 without Lessee's written permission, Lessee's obligation to
indemnify such Tax Indemnitee with respect to such claim (and all
directly-related claims, and claims based on the outcome of such claim) shall
terminate, subject to ss. 9.3.4(c), and subject to ss. 9.3.4(c), such Tax
Indemnitee shall repay to Lessee any amount previously paid or advanced to such
Tax Indemnitee with respect to such claim, plus interest at the rate that would
have been payable by the relevant Taxing Authority on a refund of such Tax.
(c) Notwithstanding anything in this ss. 9.3, a Tax Indemnitee will not be
required to contest the imposition of any Tax, and shall be permitted to settle
or compromise any claim without Lessee's consent, if such Tax Indemnitee (1)
waives its right to indemnity under this ss. 9.3 with respect to such Tax (and
any directly-related claim, and any claim the outcome of which is determined
based upon the outcome of such claim), (2) pays to Lessee any amount previously
paid or advanced by Lessee pursuant to this ss. 9.3 with respect to such Tax,
plus interest at the rate that would have been payable by the relevant Taxing
Authority on a refund of such Tax, and (3) agrees to discuss with Lessee the
views or positions of any relevant Taxing Authority with respect to the
imposition of such Tax provided, that if Lessee has agreed in writing to settle
a claim for a stated amount and the relevant Tax Indemnitee settles the claim on
more favorable terms, such Tax Indemnitee shall not be required to waive the
indemnity for such claim to the extent of the amount agreed to by Lessee.
9.3.5 Refund
If any Tax Indemnitee receives a refund of, or becomes entitled to a credit
against other liability for, all or any part of any Taxes paid, reimbursed, or
advanced by Lessee, such Tax Indemnitee shall pay to Lessee within 30 days of
such receipt an amount equal to the lesser of (a) the amount of such refund or
credit plus any net tax benefit (taking into account any Taxes incurred by such
Tax Indemnitee by reason of the receipt of such refund or realization of such
credit) actually realized by such Tax Indemnitee as a result of any payment by
such Tax Indemnitee made pursuant to this sentence (including this clause (a)),
and (b) such tax payment, reimbursement, or advance by Lessee to such Tax
Indemnitee theretofore made pursuant to this ss. 9.3 (and the excess, if any, of
the amount described in clause (a) over the amount described in clause (b) shall
be carried forward and applied to reduce pro tanto any subsequent obligation of
Lessee to make payments to such Tax Indemnitee pursuant to this ss. 9.3). If, in
addition to such refund or credit, such Tax Indemnitee receives (or is credited
with) an amount representing interest on the amount of such refund or credit,
such Tax Indemnitee shall pay to Lessee within 30 days after receiving or
realizing such credit the portion of such interest fairly attributable to Taxes
paid, reimbursed, or advanced by Lessee before the receipt of such refund or
realization of such credit. Notwithstanding the foregoing, a Tax Indemnitee
shall not be obligated to make any payment to Lessee pursuant to this ss. 9.3.5
if a Special Default or an Event of Default has occurred and is continuing. If
it is later determined that such Tax Indemnitee was not entitled to such refund
or credit, the portion of the refund or credit repaid, recaptured or disallowed
(and any interest and tax savings paid by such Tax Indemnitee to Lessee with
respect thereto) shall be treated as Taxes for which Lessee must indemnify such
Tax Indemnitee pursuant to this ss. 9.3 without regard to ss. 9.3.2 hereof other
than ss. 9.3.2(f).
9.3.6 Tax Filing
Lessee shall timely file any report, return, or statement that is required
to be filed with respect to any Tax which is subject to indemnification under
this ss. 9.3 (except for any such report, return, or statement which a Tax
Indemnitee has timely notified Lessee in writing that such Tax Indemnitee
intends to file, or for which such Tax Indemnitee is required by law to file, in
its own name); provided, that the relevant Tax Indemnitee shall furnish Lessee
with any information in such Tax Indemnitee's possession or control that is
reasonably necessary to file any such return, report, or statement and that
Lessee reasonably requests in writing (but the Tax Indemnitee shall not be
required to furnish copies of its actual tax returns, although it may be
required to furnish relevant information contained therein). Lessee shall either
file such report, return, or statement and send a copy to such Tax Indemnitee
(and to Owner Trustee, if the Tax Indemnitee is not Owner Trustee), or, if
Lessee is not permitted to file such report, return, or statement, it shall
notify such Tax Indemnitee of such requirement and prepare and deliver such
report, return, or statement to such Tax Indemnitee in a manner reasonably
satisfactory to such Tax Indemnitee within a reasonable time before the time
such report, return, or statement is to be filed.
9.3.7 Forms
Each Tax Indemnitee agrees to furnish from time to time to Lessee, or such
other Person as Lessee shall designate, at Lessee's request, such duly-executed
and properly-completed forms as may be necessary or appropriate in order to
claim any reduction of or exemption from any withholding or other Tax imposed by
any Taxing Authority, if (a) such reduction or exemption is available to such
Tax Indemnitee, and (b) Lessee has provided such Tax Indemnitee with any
information necessary to complete such form not otherwise reasonably available
to such Tax Indemnitee.
9.3.8 Non-Parties
If a Tax Indemnitee is not a party to this Agreement, Lessee may require
the Tax Indemnitee to agree in writing, in a form reasonably acceptable to
Lessee, to the terms of this ss. 9.3 and ss. 15.8 before making any payment to
such Tax Indemnitee under this ss. 9.3.
9.4 Payments
Any payments made pursuant to ss. 9.1 or ss. 9.3 shall be due on the 30th
day after demand, and shall be made directly to the relevant Indemnitee or Tax
Indemnitee or to Lessee, in immediately available funds at such bank or to such
account as specified by such Indemnitee or Tax Indemnitee or Lessee (as
applicable) in written directives to the payor, or, if no such direction has
been given, by check of the payor payable to the order of, and mailed to, such
Indemnitee or Tax Indemnitee or Lessee (as applicable) by certified mail,
postage prepaid, at its address as set forth in this Agreement.
9.5 Interest
If any amount, payable by Lessee, any Indemnitee, or any Tax Indemnitee
under ss. 9.1 or ss. 9.3 is not paid when due, the Person obligated to make such
payment shall pay on demand, to the extent permitted by Law, to the Person
entitled thereto, interest on any such amount for the period from and including
the due date for such amount to but excluding the date the amount is paid, at
the Past-Due Rate. Such interest shall be paid in the same manner as the unpaid
amount in respect of which such interest is due.
9.6 Benefit of Indemnities
Lessee's obligations for indemnities, obligations, adjustments, and
payments in ss. 9.1 or ss. 9.3 are expressly made for the benefit of, and shall
be enforceable by, the Indemnitee or Tax Indemnitee entitled thereto, without
declaring the Lease to be in default or taking other action thereunder.
10. ASSIGNMENT OR TRANSFER OF INTERESTS
10.1 Owner Participant and Owner Trustee
10.1.1 Owner Participant
(a) During the Term, Owner Participant shall not Transfer any or all of its
right, title, or interest in the Trust Estate or the Trust Agreement or to this
Agreement unless:
(1) the Transferee has full power, authority, and legal right to execute,
deliver, and perform the obligations of Owner Participant under the Owner
Participant Agreements and provides reasonably satisfactory evidence of such
power and authority to Lessee and Owner Trustee;
(2) the Transferee enters into a legal, valid, binding, and enforceable
agreement, substantially in the form of Exhibit I hereto (or otherwise in form
and substance reasonably satisfactory to Lessee), effective to confirm that such
Transferee agrees to be bound by all the terms of, and to undertake all of the
obligations arising after such transfer of, the transferring Owner Participant
in the Owner Participant Agreements, and in which it makes representations and
warranties substantially the same as those in ss. 6.2 of this Agreement;
(3) upon such Transfer Lessee shall not be obligated to pay any greater
amount or incur any greater obligation than that which it would have been
obliged to pay or incur under the Lease or other Lessee Operative Agreement if
no transfer or assignment had taken place, and upon such Transfer the terms and
conditions of the Lessee Operative Agreements insofar as they relate to the
rights and obligations of Lessee are not altered;
(4) Owner Participant shall deliver to Lessee and Owner Trustee an opinion
of counsel reasonably satisfactory to each of them to the effect that such
agreement or agreements referred to in ss. 10.1.1(a)(2) and, if applicable, ss.
10.1.1(a)(6) or (a)(7) are legal, binding, and enforceable in accordance with
its or their terms and that such transfer will not violate the Transportation
Code, the registration provisions of the Securities Act, or any other applicable
Federal law;
(5) the Transfer shall relate to Owner Participant's entire interest as
Owner Participant; or, if it relates to less than its entire interest as Owner
Participant, then (aa) Lessee shall have given its prior written consent to the
partial Transfer, and (bb) all amendments to the Operative Agreements,
reasonably requested by Lessee or Owner Participant, that are necessary or
appropriate to accommodate the existence of multiple Owner Participants, shall
be agreed to and executed by the parties thereto, all at the expense of the
Owner Participants under ss. 10.1.1(c);
(6) the Transferee is a Citizen of the United States (such status to be
determined without considering FAR ss. 47.9 or any other provision that may
restrict Lessee's use or operation of the Aircraft), or shall use a voting
powers trust or similar arrangement in order to hold an interest in the Trust
Estate such that the Aircraft can be registered in the United States (without
considering FAR ss. 47.9 or any other provision that may restrict Lessee's use
or operation of the Aircraft); and
(7) the Transferee is a single Person and is either (aa) a Permitted
Institution, (bb) or an Affiliate of a Permitted Institution, if such
Affiliate's obligations under the Owner Participant Agreements are guaranteed by
such Permitted Institution pursuant to a written guaranty, substantially in the
form of Exhibit J hereto (or otherwise in form and substance reasonably
satisfactory to Lessee and Owner Trustee), or (cc) with Lessee's prior written
consent, any other Person the obligations of whom under the Owner Participant
Agreements are guaranteed by a Permitted Institution pursuant to a written
guaranty, in form and substance reasonably satisfactory to Lessee and Owner
Trustee.
(b) Owner Participant shall give written notice to Lessee and Owner Trustee
at least 10 days before any such Transfer, specifying the name and address of
the proposed Transferee, and providing financial statements of the proposed
Transferee or guarantor evidencing satisfaction of the requirements described in
ss. 10.1.1(a)(7)(aa) or (bb).
(c) Any reasonable fees, charges, and expenses, including the reasonable
legal fees, charges, and expenses incurred by Lessee, Owner Participant, or
Owner Trustee in connection with any Transfer by Owner Participant permitted by
this ss. 10.1.1, or by the Transferee in any such case, will be paid for by
Owner Participant.
10.1.2 Owner Trustee
Owner Trustee may transfer its interests in the Trust Agreement pursuant to
ss. 9 thereof.
10.2 Effect of Transfer
Upon any Transfer in accordance with ss. 10.1.1 or ss. 10.1.2, the
Transferee shall be deemed "Owner Participant" or "Owner Trustee", respectively,
for all purposes of the Operative Agreements and, in the case of a Transferee of
Owner Participant, shall be deemed to have paid its ratable portion of Lessor's
Cost previously made by Owner Participant, making such conveyance and
represented by the interest being conveyed, and each reference herein to Owner
Participant or Owner Trustee shall thereafter be deemed a reference to such
Transferee for all purposes, and the transferring Owner Participant or Owner
Trustee shall be released (including, in the case of Owner Participant, any
Guarantor with respect to any guaranty provided by it under ss. 10.1.1(a)(7))
from all of its liabilities and obligations under the Operative Agreements to
the extent such liabilities and obligations arise after such Transfer and, in
each case, to the extent such liabilities and obligations are assumed by the
Transferee; provided, that such transferring Owner Participant, or Owner Trustee
will continue to have the benefit of any rights or indemnities under any
Operative Agreement vested or relating to circumstances, conditions, acts, or
events before such Transfer.
11. SECTION 1110
Lessee, Owner Participant, and Owner Trustee intend that Owner Trustee, as
lessor under the Lease, shall be entitled to the benefits of Section 1110 in the
event of a case under Chapter 11 of the Bankruptcy Code in which Lessee is a
debtor.
12. CHANGE OF CITIZENSHIP
12.1 Generally
Without prejudice to the representations, warranties, or covenants as to
any party's status as a Citizen of the United States:
(a) Lessee and FSB agree that, immediately upon obtaining knowledge of any
facts that would cast doubt upon its continuing status as a Citizen of the
United States, and promptly upon public disclosure of negotiations in respect of
any transaction which would or might adversely affect such status, it will
notify all parties hereto of all relevant matters in connection therewith; and
(b) Owner Participant agrees that, if its status is to change or has
changed as a Citizen of the United States, or it makes public disclosure of
circumstances as a result of which it believes that such status is likely to
change, it will notify all the other parties to this Participation Agreement of
(1) such change in status promptly after obtaining Actual Knowledge thereof, and
(2) such belief as soon as practicable after such public disclosure (but in any
event within 10 Business Days after such public disclosure).
12.2 Owner Participant
Owner Participant agrees, solely for the benefit of Lessee, that if, when
the Aircraft is registered in the United States, (a) Owner Participant is not be
a Citizen of the United States, and (b) the Aircraft shall be, or would
therefore become, ineligible for registration in the name of Owner Trustee under
the Transportation Code and regulations then applicable thereunder (without
considering FAR ss. 47.9 or any other provision that may restrict Lessee's or
any Permitted Sublessee's use or operation of the Aircraft), then Owner
Participant shall as soon as is reasonably practicable (but in any event within
30 days after obtaining Actual Knowledge of such ineligibility and of such loss
of citizenship), (y) effect voting trust or other similar arrangements (in which
case any provisions contained in the Operative Agreements restricting Owner
Participant's or Owner Trustee's ability to amend the Trust Agreement shall not
apply to the extent necessary to permit the use of such a voting trust or other
similar arrangement) or take any other action necessary to prevent any
deregistration or maintain the United States registration of the Aircraft, or
(z) transfer in accordance with the terms of this Agreement all its right,
title, and interest in and to this Agreement, the Trust Estate, and the Trust
Agreement in accordance with ss. 10.1.
12.3 Owner Trustee
Upon FSB's giving any notice in accordance with ss. 12.1(a), Owner Trustee
shall, subject to ss. 9.1.1 of the Trust Agreement, resign as Owner Trustee.
Upon its receipt of such notice, Owner Participant shall as promptly as
practicable appoint a Citizen of the United States as successor Owner Trustee
pursuant to ss. 9.1 of the Trust Agreement.
13. CONCERNING OWNER TRUSTEE
Except as otherwise expressly provided herein, or in the Trust Agreement,
Owner Trustee is entering into this Agreement solely in its capacity as trustee
as provided in the Trust Agreement and not in its individual capacity, and in no
case whatsoever will it be liable or accountable in its individual capacity for
any of the statements, representations, warranties, agreements, or obligations
of Owner Trustee hereunder, or for any loss in respect thereof, as to all of
which the parties agree to look solely to the Trust Estate; provided, that
nothing in this ss. 13 shall limit in scope or substance the personal liability
of FSB (a) to Owner Participant as expressly set forth in the Trust Agreement,
(b) in respect of the representations, warranties, and agreements of FSB
expressly made as such herein or in any other Operative Agreement to which it is
a party, and (c) for the consequences of its own gross negligence, willful
misconduct, and, in receiving, handling or remitting of funds only, its willful
misconduct or simple negligence as a trustee.
14. MISCELLANEOUS
14.1 Amendments
No provision of this Agreement may be amended, supplemented, waived,
modified, discharged, terminated, or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this
Agreement that it purports to amend, supplement, waive, modify, discharge,
terminate, or otherwise vary and is signed by the party against whom the
enforcement of the amendment, supplement, waiver, modification, discharge,
termination, or variance is sought. Each such amendment, supplement, waiver,
modification, discharge, termination, or variance shall be effective only in the
specific instance and for the specific purpose for which it is given. No
provision of this Agreement shall be varied or contradicted by oral
communication, course of dealing or performance, or other manner not set forth
in writing and signed by the party against whom enforcement of the same is
sought.
14.2 Severability
If any provision of this Agreement is held invalid, illegal, or
unenforceable in any respect in any jurisdiction, then, to the extent permitted
by Law, (a) all other provisions hereof shall remain in full force and effect in
such jurisdiction, and (b) such invalidity, illegality, or unenforceability
shall not affect the validity, legality, or enforceability of such provision in
any other jurisdiction. If, however, any Law pursuant to which such provisions
are held invalid, illegal, or unenforceable may be waived, the parties hereto
hereby waive that Law to the full extent permitted, to the end that this
Agreement shall be a valid and binding agreement in all respects, enforceable in
accordance with its terms.
14.3 Survival
The indemnities in this Agreement shall survive the delivery or return of
the Aircraft, the Transfer of any interest of Owner Participant in this
Agreement, the Trust Estate, and the Trust Agreement, and the expiration or
other termination of any Operative Agreement, except to the extent otherwise
provided therein.
14.4 Reproduction of Documents
This Agreement (including all annexes, schedules, and exhibits hereto) and
all documents relating hereto, including (a) future consents, waivers, and
modifications, and (b) past and future financial statements, certificates, and
other information furnished to any party hereto, may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic, or
other similar process, and any party may destroy any original documents so
reproduced. Any such reproduction shall be as admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original exists and whether or not such party made the reproduction in the
regular course of business), and any enlargement, facsimile, or further
reproduction of such reproduction also shall be so admissible in evidence.
14.5 Counterparts
This Agreement and any amendments, waivers, consents, or supplements hereto
may be executed in any number of counterparts (or upon separate signature pages
bound together into one or more counterparts), each fully-executed set of which
shall be deemed to be an original.
14.6 No Waiver
No failure on the part of any party hereto to exercise, and no delay by any
party hereto in exercising, any of its rights, powers, remedies, or privileges
under this Agreement or otherwise available shall impair, prejudice, or waive
any such right, power, remedy, or privilege or be construed as a waiver of any
breach hereof or default hereunder or as an acquiescence therein, nor shall any
single or partial exercise of any such right, power, remedy, or privilege
preclude any other or further exercise thereof by it or the exercise of any
other right, power, remedy, or privilege by it. No notice to or demand on any
party hereto in any case shall, unless otherwise required under this Agreement,
entitle such party to any other or further notice or demand in similar or other
circumstances, or waive the rights of any party hereto to any other or further
action in any circumstances without notice or demand.
14.7 Notices
Unless otherwise expressly permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers, and other
communications required or permitted to be made, given, furnished, or filed
hereunder shall be in writing (and the specification of a writing in certain
instances and not in others does not imply an intention that a writing is not
required as to the latter), shall refer specifically to this Agreement, and
shall be personally delivered, sent by fax or telecommunication transmission
(which in either case provides written confirmation to the sender of its
delivery), sent by registered mail or certified mail, return receipt requested,
or sent by next-business-day courier service, in each case to the address or fax
number set forth for such party in Schedule 1, or to such other address or
number as such party hereafter specifies by notice to the other parties hereto.
Each such notice, request, demand, authorization, direction, consent, waiver, or
other communication shall be effective when received or, if made, given,
furnished, or filed by fax or telecommunication transmission, when confirmed.
14.8 Governing Law; Submission to Jurisdiction; Venue
(a) This Agreement shall in all respects be governed by and interpreted in
accordance with the laws of the state of New York, including all matters of
construction, validity, and performance.
(b) Each party hereto hereby irrevocably agrees, accepts, and submits
itself to the non-exclusive jurisdiction of the courts of the state of New York
in the city and county of New York and of the United States for the Southern
District of New York, in connection with any legal action, suit, or proceeding
with respect to any matter relating to or arising out of or in connection with
the Operative Agreements.
(c) Each party hereto hereby irrevocably consents and agrees to the service
of any and all legal process, summons, notices, and documents of any of the
aforementioned courts in any such suit, action, or proceeding may be made by
delivering copies thereof by registered or certified mail, postage prepaid, at
the address set forth pursuant to ss. 14.7. Each party hereto hereby agrees that
service upon it, or any of its agents, in each case in accordance with this ss.
14.8(c), shall constitute valid and effective personal service upon such party,
and each party hereto hereby agrees that the failure of any of its agents to
give any notice of such service to any such party shall not impair or affect in
any way the validity of such service on such party or any judgment rendered in
any action or proceeding based thereon.
(d) Each party hereto hereby irrevocably waives, to the extent permitted by
applicable law, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any legal action or proceeding brought hereunder in any of the
above-named courts, that such action or proceeding is brought in an inconvenient
forum, that venue for the action or proceeding is improper, or that any
Operative Agreement may not be enforced in or by such courts.
(e) Each party hereto hereby waives its right to a jury trial of any
claim or cause of action in any court in any jurisdiction based upon or arising
out of or relating to the Operative Agreements.
14.9 Third-Party Beneficiary
This Agreement is not intended to provide (and shall not provide) any
Person not a party hereto with any rights of any nature whatsoever against any
of the parties hereto, and no Person not a party hereto shall have any right,
power, or privilege in respect of any party hereto, or have any benefit or
interest, arising out of this Agreement.
14.10 Entire Agreement
This Agreement, together with the other Operative Agreements, on and as of
the date hereof, constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof, and all prior understandings or
agreements, whether written or oral, among any of the parties hereto with
respect to such subject matter are hereby superseded in their entireties.
14.11 Further Assurances
Each party hereto shall execute, acknowledge, and deliver (or cause to be
executed, acknowledged, and delivered) all such further agreements, instruments,
certificates, or other documents, and shall do and cause to be done such further
things, as any other party hereto reasonably requests in connection with the
administration of, or to carry out more effectively the purposes of, or to
assure and confirm better to such other party the rights and benefits to be
provided under, this Agreement and the other Operative Agreements.
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IN WITNESS WHEREOF, the parties have executed this Participation
Agreement N___AT.
AMERICAN TRANS AIR, INC., Lessee
By: ___________________________________________________
Name:
Title:
GENERAL ELECTRIC CAPITAL CORPORATION, Owner Participant
By: ___________________________________________________
Name:
Title:
FIRST SECURITY BANK,
NATIONAL ASSOCIATION, not
in its individual capacity
(except as expressly
provided herein), but
solely as trustee, Owner
Trustee
By: ___________________________________________________
Name:
Title:
FIRST SECURITY BANK, NATIONAL ASSOCIATION,(as
in its individual capacity
expressly provided herein)
By: ___________________________________________________
Name:
Title:
ACCOUNTS; ADDRESSES
Account for Payments Address for Notices
American American Trans Air, Inc.
Trans Air, Inc. 7337 West Washington Street
Indianapolis, Indiana 46231
Attention: Exec. VP and CFO
fax: (317) 240-7091
Owner Participant General Electric Capital
Corp.
Attention: _________________
Fax: (____) __________
The Boeing The Boeing Company
Company P.O. Box 3707
Seattle, WA 98124-3707
Attention: Treasurer
M/S 68-34
fax: (206) 237-8746
First Security First Security Bank, N.A.
Bank,National 79 South Main Street
Association Salt Lake City, UT 84111
Attention: Corporate
Trust Department
fax: (801) 246-5053
COMMITMENTS
Participant Percentage of Lessor's Cost Dollar Amount
Owner Participant Owner Participant's Percentage
General Electric Capital 100% $__________
Corporation
CERTAIN TERMS
Defined Term Definition
Commitment Termination Date __________, 200_
Lessee's Advisor(s) Capstar Partners, LLC
Lessor's Cost $_______________
OP Jurisdiction New York
Owner Participant's Special Counsel Dewey Ballantine LLP
Trust Company Jurisdiction Utah
LEASE AGREEMENT N___AT
dated as of __________, 200_
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
NOT IN ITS INDIVIDUAL CAPACITY, EXCEPT AS EXPRESSLY
PROVIDED HEREIN, BUT SOLELY AS OWNER TRUSTEE,
Lessor
and
AMERICAN TRANS AIR, INC.,
Lessee
--------------------------------------------------------
One Boeing model 737-800 aircraft bearing United States registration no.
N___AT and manufacturer's serial no. _____, including two CFM International
model CFM56-7 engines bearing manufacturer's serial nos. _____ and _____
- -------------------------------------------------------------
CERTAIN OF LESSOR'S RIGHTS UNDER THIS LEASE AND IN THE AIRCRAFT COVERED HEREBY
HAVE BEEN ASSIGNED TO, AND ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF,
WILMINGTON TRUST COMPANY, AS MORTGAGEE UNDER TRUST INDENTURE AND MORTGAGE
N___AT, DATED AS OF THE DATE OF THIS LEASE. THIS LEASE HAS BEEN EXECUTED IN
COUNTERPARTS; SEE SS. 18.5 FOR INFORMATION CONCERNING THE RIGHTS OF HOLDERS OF
THE VARIOUS COUNTERPARTS.
CONTENTS
1. DEFINITIONS AND CONSTRUCTION................................................1
2. DELIVERY AND ACCEPTANCE.....................................................1
2.1 Delivery and Lease of Aircraft...........................................1
2.2 Acceptance by Lessee.....................................................1
3. TERM AND RENT...............................................................1
3.1 Term 1
3.2 Rent 1
3.3 Payments.................................................................4
4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION 1110 MATTERS..............5
4.1 Disclaimer of Warranties.................................................5
4.2 Certain Agreements of Lessor.............................................6
4.3 Quiet Enjoyment..........................................................6
4.4 Investment of Funds Held as Security.....................................6
4.5 Title Transfers by Lessor................................................7
4.6 Lessor's Interest in Certain Engines.....................................8
4.7 Lease For U.S. Federal Income Tax Law Purposes; Section 1110
of Bankruptcy Code.......................................................8
5. RETURN OF AIRCRAFT..........................................................8
5.1 Compliance with Annex B..................................................8
5.2 Parking and Related Matters..............................................9
5.3 Return of Other Engines..................................................9
5.4 Fuel 9
6. LIENS 10
7. REGISTRATION; OPERATION; POSSESSION AND SUBLEASING.........................10
7.1 Registration and Operation..............................................10
7.2 Possession..............................................................12
7.3 Certain Limitations on Subleasing or Other Relinquishment of Possession.17
8. MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
MODIFICATIONS, AND ADDITIONS; OTHER LESSEE COVENANTS.............18
8.1 Maintenance; Replacement and Pooling of Parts; Alterations,
Modifications, and Additions............................................18
8.2 Information, Certificates, Notices, and Reports.........................18
9. VOLUNTARY TERMINATION UPON OBSOLESCENCE....................................20
9.1 Right of Termination....................................................20
9.2 Election by Lessor to Sell..............................................20
9.3 Retention of Aircraft by Lessor.........................................23
10. LOSS, DESTRUCTION, REQUISITION, ETC.......................................24
10.1 Event of Loss to the Aircraft..........................................24
10.2 Event of Loss to an Engine; Engine Exchanges...........................27
10.3 Conditions to any Replacement..........................................28
10.4 Conveyance to Lessee...................................................30
10.5 Application of Payments................................................30
10.6 Requisition of Aircraft for Use........................................31
10.7 Requisition of an Engine for Use.......................................32
10.8 Application of Payments................................................32
10.9 Application of Payments During Default.................................32
11. INSURANCE.................................................................32
11.1 Lessee's Obligation to Insure..........................................33
11.2 Insurance for Own Account..............................................33
11.3 Indemnification by Government in Lieu of Insurance.....................33
11.4 Application of Insurance Proceeds......................................33
11.5 Application of Payments During Default.................................34
12. INSPECTION................................................................34
13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE...............................35
13.1 In General.............................................................35
13.2 Merger of Lessee.......................................................35
13.3 Assignment as Security for Lessor's Obligations........................36
13.4 Successor Owner Trustee................................................37
14. LEASE EVENTS OF DEFAULT...................................................37
14.1 Payments...............................................................37
14.2 Insurance..............................................................38
14.3 Other Covenants........................................................38
14.4 Representations and Warranties.........................................38
14.5 Bankruptcy and Insolvency..............................................38
14.6 Repudiation or Invalidity of Guarantee.................................39
15. REMEDIES AND WAIVERS......................................................39
15.1 Remedies...............................................................39
15.2 Limitations Under CRAF.................................................43
15.3 Right to Perform for Lessee............................................43
15.4 Determination of Fair Market Rental Value and Fair Market Sales Value..44
15.5 Remedies Cumulative....................................................44
16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC........................44
17. RENEWAL AND PURCHASE OPTIONS..............................................45
17.1 Notices Generally......................................................45
17.2 Renewal Options........................................................45
17.3 Purchase Option........................................................47
17.4 Appraisals.............................................................50
18. MISCELLANEOUS.............................................................51
18.1 Amendments.............................................................51
18.2 Severability...........................................................51
18.3 Third-Party Beneficiary................................................51
18.4 Reproduction of Documents..............................................51
18.5 Counterparts...........................................................52
18.6 Notices................................................................52
18.7 Governing Law..........................................................52
18.8 No Waiver..............................................................52
18.9 Entire Agreement.......................................................53
ANNEXES, EXHIBITS, AND SCHEDULES
ANNEX A Definitions
ANNEX B Return Conditions
ANNEX C Maintenance
ANNEX D Insurance
EXHIBIT A Aircraft Description
EXHIBIT B Form of Return Acceptance Supplement
SCHEDULE 1 Certain Terms
SCHEDULE 2 Basic Rent Payments
SCHEDULE 2A Basic Rent Allocations
SCHEDULE 3 Stipulated Loss Value Schedule
SCHEDULE 4 Termination Value Schedule
SCHEDULE 5 EBO Price Schedule
SCHEDULE 6 Permitted Countries
SCHEDULE 7 Placards
LEASE AGREEMENT N___AT
This Lease Agreement N___AT (this "LEASE") dated as of __________,
200_, between (1) First Security Bank, National Association, a national banking
association, not in its individual capacity (except as expressly provided
herein) but solely as Owner Trustee ("LESSOR"), and (2) American Trans Air, Inc.
("LESSEE"), an Indiana corporation.
Lessor and Lessee agree as follows:
1. DEFINITIONS AND CONSTRUCTION
The terms defined in Annex A, when capitalized as in Annex A, have the
same meanings when used in this Lease. Annex A also contains rules of usage that
control construction in this Lease.
2. DELIVERY AND ACCEPTANCE
2.1 DELIVERY AND LEASE OF AIRCRAFT
Lessor hereby leases the Aircraft to Lessee for the Term, and Lessee
hereby leases the Aircraft from Lessor for the Term.
2.2 ACCEPTANCE BY LESSEE
Lessee hereby confirms to Lessor that Lessee has duly and irrevocably
accepted delivery of the Aircraft for all purposes of this Lease.
3. TERM AND RENT
3.1 TERM
The Aircraft shall be leased hereunder for the Term, unless this Lease
or the leasing of the Aircraft is earlier terminated in accordance with any
provision of this Lease.
3.2 RENT
3.2.1 BASIC RENT; ADJUSTMENTS TO BASIC RENT AND CERTAIN OTHER AMOUNTS
(a)......During the Base Term, Lessee shall pay to Lessor, on each
Payment Date, Basic Rent in the amount equal to the percentage of Lessor's Cost
specified in Schedule 2 for such Payment Date. The amounts and periods of
Lessee's liability for Basic Rent shall be as allocated in accordance with
Schedule 2A. Such Basic Rent payments and such allocations shall be (i) adjusted
pursuant to ss. 3.2.1(b), or (ii) increased in an amounT equal to any increase
in the amount of interest due on the Equipment Notes on the relevant Payment
Date pursuant to ss. 2(e) of the Registration Rights Agreement (or, subsequent
to any such increase, decreased by the amount oF such increase pursuant to ss.
2(e) of the Registration Rights Agreement). During any Renewal Term, Lessee
shall paY to Lessor, on each Payment Date, Basic Rent equal to the Renewal Rent
for that Renewal Term, determined pursuant to ss. 17.2.2.
(b)......Basic Rent, Basic Rent allocations, Stipulated Loss Values,
Termination Values, and EBO Price shall be subject to adjustment as follows:
(1) If Transaction Expenses paid by Lessor pursuant to ss. 9.2
of the ParticipatioN Agreement are determined to be other than 2.0% of
Lessor's Cost, then the Basic Rent percentages in Schedule 2, the Basic
Rent allocations in Schedule 2A, the Stipulated Loss Value percentages
in Schedule 3, the Termination Value percentages in Schedule 4, and the
EBO Price shall be recalculated (upwards or downwards) by Owner
Participant, on or before the 120th day after the Delivery Date using
the same methods and assumptions used to calculate original Basic Rent,
EBO Price, Stipulated Loss Value, and Termination Value percentages, in
order (aa) to maintain Owner Participant's Net Economic Return, and
(bb) to the extent possible consistent with clause (aa) of this ss.
3.2.1(b)(1), to minimizE the Net Present Value of Rents to Lessee.
(2) In the event of a refinancing as contemplated by ss. 11 of
the ParticipatioN Agreement, then the Basic Rent percentages in
Schedule 2, the Basic Rent allocations in Schedule 2A, the Stipulated
Loss Value percentages in Schedule 3, the Termination Value percentages
in Schedule 4, and the EBO Price shall be adjusted (upwards or
downwards) by Owner Participant as contemplated by such ss. 11 to
reflect the change, if any, in interest rate resulting from such
refinancing, in order (aa) to maintain Owner Participant's Net Economic
Return, and (bb) to the extent possible consistent with clause (aa) of
this ss. 3.2.1(b)(2), to minimize the Net Present Value of Rents to
Lessee.
(3) Notwithstanding the foregoing, in no event shall any
adjustment to the EBO Price be made such that the EBO Price is less
than the greatest of (aa) the adjusted Stipulated Loss Value as of the
EBO Date, (bb) the estimated fair market value of the Aircraft on the
EBO Date as set forth in the Appraisal referred to in ss. 5.1.2(m) of
the Participation Agreement, and (cc) the sum of the presenT values of
(i) Basic Rent payable, as adjusted, during the Base Term after the EBO
Date, and (ii) the appraised fair market value of the Aircraft at the
end of the Base Term as estimated in the Appraisal referred to in ss.
5.1.2(m) of the Participation Agreement, each discounted back to the
EBO Date (using A discount rate of 16.5%).
(c) All adjustments pursuant to ss. 3.2.1(b) shall be made as promptly
as practicable after eitheR Owner Participant or Lessee gives notice to the
other that an event has occurred that requires an adjustment. Owner Participant
and Lessee shall give prompt notice to the other of any event requiring an
adjustment. Any recalculation of the percentages of Basic Rent payments, Basic
Rent allocations, Stipulated Loss Value, Termination Value, and EBO Price shall
be prepared by Owner Participant, subject to verification at the request of
Lessee in accordance with this ss. 3.2.1(c), on the basis of the same
methodology and assumptions used by OwneR Participant in determining the
percentages of Basic Rent, Stipulated Loss Value, Termination Value, and EBO
Price as of the Delivery Date, except as such assumptions have been modified to
reflect the events giving rise to adjustments hereunder and taking into account
the law applicable at the time of such adjustment. Promptly after an adjustment
is made hereunder, Owner Participant shall deliver to Lessee a description of
such adjustment, setting forth in reasonable detail the calculation thereof. All
adjustments (1) shall be made so as to avoid characterization of the Lease as a
"disqualified leaseback or long-term agreement" within the meaning of Code ss.
467 and Treasury Regulations thereunder, and (2) shall be in compliance with the
requirements of ss. 4(1) And ss. 4(6) of Revenue Procedure 75-21 and ss.ss.
4.02(5), 4.07(l), and 4.07(2) of Revenue Procedure 75-28, except tO the extent
that on the Delivery Date the Lease constituted a "disqualified leaseback or
long-term agreement" or was not in compliance with the Revenue Procedure
sections referred to in clause (2). In connection with any such adjustments to
payments and allocations of Basic Rent, appropriate corresponding adjustments
shall be made to the percentages set forth on Schedules 3 and 4 in the columns
headed "Deferred Basic Rent Amount" and "Prepaid Basic Rent Amount". All of the
foregoing adjustments shall be set forth in an amendment to this Lease, and
promptly after execution thereof by Lessor and Lessee, Lessee shall give a copy
thereof to Mortgagee.
(d) If Lessee believes that any calculations by Owner Participant
pursuant to ss. 3.2.1(c) are iN error, and if, after consultation, Lessee and
Owner Participant do not agree on an adjustment, then a nationally-recognized
firm of accountants selected by Lessee and reasonably satisfactory to Owner
Participant shall verify such calculations. Owner Participant will make
available to such firm (but not to Lessee or any representative of Lessee) the
methodology and assumptions referred to in ss. 3.2.1(c) and any modifications
theretO made to reflect the events giving rise to adjustments hereunder (subject
to the execution by such firm of a confidentiality agreement, reasonably
acceptable to Owner Participant, prohibiting disclosure of such methodology and
assumptions to any third party). The determination by such firm of accountants
shall be final. Lessee will pay the reasonable costs and expenses of such
verification by such accountants, except that if it results in (1) a decrease in
Basic Rent which decreases the remaining Net Present Value of Rents by ten or
more basis points from the remaining Net Present Value of Rents as recalculated
by Owner Participant, or (2) a material reduction in Stipulated Loss Values,
Termination Values, or the EBO Price, then Owner Participant will pay such costs
and expenses.
(e) Notwithstanding anything to the contrary in any Operative
Agreement, the amount of the payment of Basic Rent due and payable on each
Payment Date shall be at least sufficient to pay in full, as of such Payment
Date (assuming timely payment of the Equipment Notes before such Date), the
aggregate principal amount of scheduled installments due on the Equipment Notes
outstanding on such Payment Date, together with the accrued and unpaid interest
thereon, due on such Payment Date in respect of the Equipment Notes; PROVIDED,
that no installment of Basic Rent shall be increased to the extent such increase
would be based upon (1) any attachment or diversion of Basic Rent on account of
Lessor Liens, (2) any modification of the payment terms of the Equipment Notes,
other than as required or permitted by any Operative Agreement (including as
permitted upon the occurrence of a Lease Event of Default), or (3) the
acceleration of any Equipment Note(s) due solely to the existence of a Mortgage
Event of Default that does not constitute a Lease Event of Default.
3.2.2 SUPPLEMENTAL RENT
Lessee shall pay to Lessor, or to whomever is entitled to it, any and
all Supplemental Rent when and as it becomes due and owing. Lessee will also pay
to Lessor, or to whomever is entitled to it, as Supplemental Rent, to the extent
permitted by applicable Law, interest at the Past-Due Rate on any part of any
amount of Rent (including Supplemental Rent) not paid by 11:00 a.m., New York
time, on the date when due (so long as, in the case of any Person not a party to
the Participation Agreement, Lessee had received timely notice of the account to
which such payment was required to be made), for the period from and including
the date on which the same was due to (but excluding) the date of payment in
full.
3.3 PAYMENTS
(a) Payments of Rent by Lessee shall be paid by wire transfer of
immediately available Dollars, not later than 11:00 a.m., New York City time, on
the date when due, to the account of Lessor specified in Schedule 1 to the
Participation Agreement (or to such other account in the United States as Lessor
specifies to Lessee in writing at least 10 Business Days before such payment of
Rent is due), or, in the case of any payment of Supplemental Rent expressly
payable to a Person other than Lessor, to the Person that shall be entitled
thereto, to such account in the United States as such Person specifies from time
to time to Lessee at least 10 Business Days before such payment of Rent is due.
(b) Except as otherwise expressly provided herein, whenever any payment
of Rent shall be due on a day that is not a Business Day, such payment shall be
made on the next day that is a Business Day, and, if such payment is made on
such next Business Day, no interest shall accrue on the amount of such payment
during such extension.
(c) So long as Lessee has not received written notice from the
Mortgagee that the Lien of the Mortgage has been discharged, and notwithstanding
ss. 3.3(a), Lessor hereby directs, and Lessee agrees, that alL payments of Rent
payable by Lessee, other than Excluded Payments, shall be paid directly to
Mortgagee on behalf of Lessor by wire transfer of immediately available Dollars
to the account of Mortgagee specified in Schedule 1 to the Participation
Agreement (or to such other account in the United States as Mortgagee specifies
by written notice to Lessor and Lessee at least 10 Business Days before such
payment of Rent is due).
(d) Excluded Payments payable to any Person shall be paid by wire
transfer of immediately available Dollars to the account of such Person
specified in the Participation Agreement or, if not so specified, to such
account in the United States such Person specifies by written notice to Lessor
and Lessee from time to time at least 10 Business Days before such payment is
required to be made.
(e) All computations of interest under this Lease shall be made on the
basis of a year of 360 days composed of twelve 30-day months.
4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION 1110 MATTERS
4.1 DISCLAIMER OF WARRANTIES
LESSOR LEASES AND LESSEE TAKES THE AIRCRAFT "AS-IS, WHERE-IS." LESSEE
ACKNOWLEDGES AND AGREES THAT, AS BETWEEN LESSEE AND EACH OF LESSOR, MORTGAGEE,
AND ANY PARTICIPANT, (A) LESSEE HAS SELECTED THE AIRCRAFT AND MANUFACTURER
THEREOF, AND (B) NEITHER LESSOR NOR MORTGAGEE NOR ANY PARTICIPANT MAKES, HAS
MADE, OR SHALL BE DEEMED TO HAVE MADE, AND EACH WILL BE DEEMED TO HAVE EXPRESSLY
DISCLAIMED, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO:
(1) THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY, OR FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF THE
AIRFRAME, ANY ENGINE, OR ANY PART THEREOF;
(2) THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH RESPECT TO THE
AIRFRAME, ANY ENGINE, OR ANY PART THEREOF;
(3) THE ABSENCE OF LATENT OR ANY OTHER DEFECT IN THE AIRFRAME, ANY ENGINE,
OR ANY PART THEREOF, WHETHER OR NOT DISCOVERABLE;
(4) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, OR COPYRIGHT,
OR THE LIKE; OR
(5) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY
OTHER IMPLIED REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT TO THE
AIRFRAME, ANY ENGINE, OR ANY PART THEREOF.
4.2 CERTAIN AGREEMENTS OF LESSOR
Unless a Lease Event of Default exists, Lessor agrees to make available
to Lessee such rights as Lessor may have under any warranty with respect to the
Aircraft made, or made available, by Airframe Manufacturer or Engine
Manufacturer, or any of their subcontractors or suppliers, pursuant to and in
accordance with the terms of the Purchase Agreement Assignment.
4.3 QUIET ENJOYMENT
So long as no Lease Event of Default exists, Lessor shall not interfere
with Lessee's rights hereunder to continued possession, use, and operation of,
and quiet enjoyment of, the Aircraft during the Term.
4.4 INVESTMENT OF FUNDS HELD AS SECURITY
4.4.1 INVESTMENT
Any money required to be paid to or retained by Lessor that is required
to be paid to Lessee or applied as provided herein shall, until paid to Lessee
as provided herein or applied as provided herein, be invested by Lessor from
time to time as directed in writing by Lessee (or, if Lessee does not so direct,
by or as directed by Lessor in its sole discretion) and at Lessee's risk and
expense in Cash Equivalents so long as such Cash Equivalents specified by Lessee
or Lessor (as applicable) can be acquired by Lessor using its reasonable best
efforts; PROVIDED, that so long as the Lien of the Mortgage has not been
discharged, such money shall be invested and held by Mortgagee, as assignee of
Lessor, in accordance with this Lease, and upon discharge of such Lien,
Mortgagee shall pay any such money held by it to Lessor to be held and invested
in accordance with this ss. 4.4.1.
4.4.2 PAYMENT OF GAIN OR LOSS
Any net gain (including interest received) realized as the result of
investments pursuant to ss. 4.4.1 (net of any fees, commissions, and other
reasonable expenses incurred in connection with such investment) shall be held
and applied in the same manner as the principal amount is to be held and applied
hereunder. Lessee will promptly pay to Lessor, on demand, the amount of any loss
realized as the result of any such investment (together with any fees,
commissions, and other reasonable expenses incurred in connection with such
investment), such amount so paid to be held and applied by Lessor as
contemplated in ss. 4.4.1.
4.4.3 LIMITATION OF LIABILITY
All investments under this ss. 4.4 shall be at Lessee's risk and
expense, and Lessor and Mortgagee shalL not be liable for any loss resulting
from any investment made under this ss. 4.4 other than by reason of itS willful
misconduct or gross negligence. Any such investment may be sold (without regard
to its maturity) by Lessor without instructions whenever such sale is necessary
to make a distribution required by this Lease.
4.5 TITLE TRANSFERS BY LESSOR
If Lessor shall be required to transfer title to the Aircraft, the
Airframe, or any Engine to Lessee or any other Person pursuant to this Lease,
then (a) Lessor shall (1) transfer to Lessee or such other Person (as
applicable) all of Lessor's right, title and interest in and to the Aircraft,
the Airframe, or such Engine (as applicable), free and clear of all Lessor Liens
attributable to Lessor, FSB, or Owner Participant, (2) so long as the Lien of
the Mortgage has not been discharged, comply with the Mortgage relating to the
release of the Aircraft, the Airframe, or such Engine, (3) assign to Lessee or
such other Person (as applicable), if and to the extent permitted under the
Purchase Agreement, all warranties of Airframe Manufacturer and Engine
Manufacturer with respect to the Aircraft, the Airframe, or such Engine, and (4)
assign to Lessee or such other Person (as applicable), if and to the extent
permitted, all claims, if any, for damage to the Aircraft, the Airframe, or such
Engine, in each case free of Lessor Liens attributable to Lessor, FSB, or Owner
Participant, and without recourse or warranty of any kind whatsoever (except as
to the transfer described in clause (1) above and as to the absence of such
Lessor Liens), and (b) Lessor shall promptly deliver to Lessee or such other
Person (as applicable), a bill of sale and agreements of assignment, evidencing
such transfer and assignment, and such other instruments of transfer, all in
form and substance reasonably satisfactory to Lessee (or such other Person, as
applicable), as Lessee (or such other Person, as applicable) may reasonably
request and furnish to Lessor.
4.6 LESSOR'S INTEREST IN CERTAIN ENGINES
Lessor hereby agrees for the benefit of each lessor, conditional
seller, or secured party of any engine (other than an Engine) leased, purchased,
or owned by Lessee or any Permitted Sublessee subject to a lease, conditional
sale, or other security agreement that Lessor will not acquire or claim, as
against such lessor, conditional seller, or secured party, any right, title, or
interest in such engine as the result of the installation of such engine on the
Airframe at any time while such engine is subject to such lease, conditional
sale, or other security agreement and owned by such lessor or conditional seller
or subject to a security interest in favor of such secured party.
4.7 LEASE FOR U.S. FEDERAL INCOME TAX LAW PURPOSES; SECTION 1110 OF
BANKRUPTCY CODE
(a) Lessee and Lessor agree that this Lease is, and shall be treated as, a
lease for U.S. federal income tax purposes of the Aircraft, Airframe, Engines,
and Parts.
(b) Lessee and Lessor intend that Lessor (and Mortgagee as assignee of
Lessor under the Mortgage) shall be entitled to the benefits of Section 1110
with respect to the right to take possession of the Aircraft, Airframe, Engines,
and Parts as provided in this Lease.
5. RETURN OF AIRCRAFT
5.1 COMPLIANCE WITH ANNEX B
Lessee shall comply with each of the provisions of Annex B, which
provisions are hereby incorporated by this reference as if set forth in full
herein.
5.2 PARKING AND RELATED MATTERS
If Lessor gives written notice to Lessee, not less than 10 days nor
more than 120 days before the end of the Term, requesting parking of the
Aircraft upon its return hereunder, Lessee will assist Lessor in procuring (or
cause Lessor to be provided with) outdoor parking facilities for the Aircraft
for a storage period up to 30 days, starting on the date of such return, and
upon Lessor's request to Lessee made at least 10 days before the end of such
initial 30-day period, for an additional 90-day period commencing upon
expiration of such initial period, at such storage facility in the 48 contiguous
states of the United States as Lessee selects. Such storage shall be at Lessor's
risk, and Lessor shall pay all applicable storage fees, except that Lessee shall
pay the parking fees for the initial 30-day storage period; PROVIDED FURTHER
that Lessee's obligation to provide parking shall be subject to Lessor's
entering into an agreement with the storage facility, before the storage period
begins, providing that Lessor shall bear all maintenance charges and other costs
incurred, and that Lessee's obligations hereunder will be solely for the payment
of parking fees for the initial 30-day period pursuant to the terms of this ss.
5.2. Unless Lessor and Lessee otherwise agree, the location of such parking wilL
also constitute the return location for the Aircraft.
5.3 RETURN OF OTHER ENGINES
If any Engine owned by Lessor is not installed on the Airframe at the
time of return hereunder, Lessee shall return the Airframe hereunder with a
Replacement Engine meeting the requirements of, and in accordance with, ss. 10
and Annex B. Thereupon, Lessor will transfer to Lessee the Engine constituting
part of such AircrafT but not installed on such Airframe at the time of the
return of the Airframe.
5.4 FUEL
Upon the return of the Airframe upon any termination of this Lease,
Lessor shall pay Lessee, as compensation for any fuel or oil contained in the
fuel or oil tanks of such Airframe, the value of such fuel or oil at the price
paid by Lessee for such fuel or oil. However, if the Aircraft is being returned
in connection with the exercise of remedies pursuant to ss. 15, Lessor shall
have no obligation to make such payment to LesseE until Lessor shall have been
paid all amounts due to it pursuant to ss. 15.
6. LIENS
Lessee shall not, directly or indirectly, create, incur, assume, or
suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any
Engine, or any Part, title to any of the foregoing, or any interest therein, or
Lessee's rights in and to this Lease or any Permitted Sublease, except (a) the
rights of Lessor, Mortgagee, the Participants, and Lessee under the Operative
Agreements, and of any Permitted Sublessee under any Permitted Sublease; (b)
Lessor Liens; (c) the rights of others under agreements or arrangements to the
extent permitted by ss. 7.2, ss. 7.3, or Annex C; (d) Liens for Taxes either not
yet due or being contested in good faith by appropriate proceedings if such
Liens and such proceedings do not involve more than a DE MINIMIS risk of the
sale, forfeiture, or loss of the Aircraft, the Airframe, any Engine, or the
interest of any Participant therein, or impair the Lien of the Mortgage; (e)
materialmen's, mechanics', workers', repairers', employees', or other like Liens
arising in the ordinary course of business for amounts the payment of which
either is not yet delinquent for more than 60 days or is being contested in good
faith by appropriate proceedings, if such Liens and such proceedings do not
involve any more than a DE MINIMIS risk of the sale, forfeiture, or loss of the
Aircraft, the Airframe, any Engine, or the interest of any Participant therein,
or impair the Lien of the Mortgage; (f) Liens arising out of any judgment or
award against Lessee, if, within 60 days after the entry thereof, that judgment
or award is discharged or vacated, or has its execution stayed pending appeal,
or is discharged, vacated, or reversed within 60 days after the expiration of
such stay, and if during any such 60-day period there is not, or any such
judgment or award does not involve, more than a DE MINIMIS risk of the sale,
forfeiture, or loss of the Aircraft, the Airframe, any Engine, or the interest
of any Participant therein, or impairment of the Lien of the Mortgage; and (g)
any other Lien with respect to which Lessee or any Permitted Sublessee provides
a bond, cash collateral, or other security adequate in the reasonable opinion of
Lessor. Lessee shall promptly take or cause to be taken such action as may be
necessary duly to discharge (by bonding or otherwise) any Lien not excepted
above that arises in respect of the Aircraft, the Airframe, any Engine, or any
Part during the Term.
7. REGISTRATION; OPERATION; POSSESSION AND SUBLEASING
7.1 REGISTRATION AND OPERATION
7.1.1 REGISTRATION AND RECORDATION
Subject to Lessor's and Owner Participant's compliance with their
obligations under ss. 13 of thE Participation Agreement, Lessee shall cause the
Aircraft to be, and at all times during the Term to remain, duly registered with
the FAA under the Transportation Code or with such other country of registry as
shall be permitted under ss. 7.1.2 hereof, in the name of Lessor as owner and
lessor (except to the extent that sucH registration under the Transportation
Code is prevented or lost because of Lessor's or Owner Participant's failure to
comply with the citizenship requirements for registration of the Aircraft under
the Transportation Code). Lessor shall execute and deliver all such documents as
Lessee or any Permitted Sublessee reasonably requests for the purpose of
effecting and continuing such registration. Unless Mortgagee has given Lessee
notice that the Mortgage has been discharged, Lessee shall also cause the
Mortgage to be duly recorded and at all times maintained of record as a
first-priority perfected mortgage (subject to Permitted Liens) on the Aircraft,
the Airframe, and each of the Engines (except to the extent such perfection or
priority cannot be maintained solely as a result of the failure by Lessor or
Mortgagee to execute and deliver any necessary documents). Each of the
registrations and recordations referenced in this ss. 7.1.1 will be at Lessee's
cost and expense, except aS otherwise provided in this Lease.
7.1.2 REREGISTRATION
After the Tax Attribute Period (or before such date, provided Lessee
pre-pays on a lump-sum basis any liability due under the Tax Indemnity Agreement
as a result of such registration on the assumption that such registration would
continue for the remainder of the term of the Permitted Sublease described in
ss. 7.6.11(a)(3) of the Participation Agreement, if no Special Default or Lease
Event of Default exists, Lessee may, by written notice to Lessor (with a copy of
such notice to Owner Participant), request to change the country of registration
of the Aircraft. Any such change in registration shall be effected only in
compliance with, and subject to all of the conditions set forth in, ss. 7.6.11
of the Participation Agreement.
7.1.3 MARKINGS
If permitted by applicable Law, on or reasonably promptly after the
Delivery Date, Lessee will cause to be affixed to, and maintained in, the
cockpit of the Airframe and on each Engine, in each case in a clearly visible
location, a placard of a reasonable size and shape bearing the legend set forth
in Schedule 6. Such placards may be removed temporarily, if necessary, in the
course of maintenance of the Airframe or Engines. If any such placard is damaged
or becomes illegible, Lessee shall promptly replace it with a placard complying
with the requirements of this ss. 7.1.3.
7.1.4 COMPLIANCE WITH LAWS
Lessee shall not, and shall not allow any other Person to, operate,
use, maintain, service, repair, overhaul, improve, or modify the Aircraft (a) in
violation of any Law binding on or applicable to the Aircraft, the Airframe, or
any Engine, or (b) in violation of any airworthiness certificate, license, or
registration of any Government Entity relating to the Aircraft, the Airframe, or
any Engine, except (1) immaterial or non-recurring violations with respect to
which corrective measures are taken promptly by Lessee or a Permitted Sublessee
(as applicable) upon discovery thereof, and (2) to the extent Lessee or any
Permitted Sublessee is contesting the validity or application of any such Law or
requirement relating to any such certificate, license, or registration in good
faith in any reasonable manner which does not involve more than a DE MINIMIS
risk of the sale, forfeiture, or loss of the Aircraft, the Airframe, any Engine
or the interest of any Participant therein, any risk of criminal liability or of
material civil penalty against Lessor, Mortgagee, or any Participant or impair
the lien of the Mortgage.
7.1.5 OPERATION
Lessee agrees not to operate, use, or locate the Aircraft, the
Airframe, or any Engine, or allow the Aircraft, the Airframe, or any Engine to
be operated, used, or located, (a) in any area excluded from coverage by any
insurance required by the terms of ss. 11, except in the case of a requisition
by the U.S. Government where thE U.S. Government provides an indemnity in lieu
of such insurance, or insurance from the U.S. Government, covering such area, in
accordance with ss. 11.3, or (b) in any recognized area of hostilities unless
fully covered iN accordance with Annex D by war-risk insurance as required by
the terms of ss. 11 (including ss. 11.3), unless in Any case referred to in this
ss. 7.1.5 the Aircraft is only temporarily operated, used, or located in such
area as A result of an emergency, equipment malfunction, navigational error,
hijacking, weather condition, or other similar unforeseen circumstances, so long
as Lessee diligently and in good faith proceeds to remove the Aircraft from such
area.
7.2 POSSESSION
Lessee will not, without the prior written consent of Lessor and Owner
Participant, sublease or otherwise in any manner deliver, transfer, or
relinquish possession of the Aircraft, the Airframe, or any Engine, or install
any Engine, or permit any Engine to be installed, on any airframe other than the
Airframe; PROVIDED, that, subject to the provisions of ss. 7.3, Lessee may,
without such prior written consent:
7.2.1 INTERCHANGE AND POOLING
Subject or permit any Permitted Sublessee to subject (a) the Airframe
to normal interchange agreements (provided that (1) any such
interchange agreement does not contemplate that Lessee (or a Permitted
Sublessee) will be out of possession of the Airframe for more than five
consecutive days at a time (absent weather, maintenance, or other
exigencies), and (2) the party to such interchange agreement is a
Permitted Air Carrier, not in bankruptcy, organized and having its
principal place of business in a country with which the United States
then maintains normal diplomatic relations and which recognizes and
gives effect to the rights, title, and interests of Lessor in the
Airframe), or (b) any Engine (but only if such Engine is then installed
upon an aircraft) to normal interchange agreements or pooling
agreements or arrangements, in each case customary in the commercial
airline industry and entered into by Lessee or such Permitted Sublessee
in the ordinary course of business; PROVIDED, that (1) no such
agreement or arrangement shall require any transfer of Lessor's title
to the Airframe or such Engine, and (2) if Lessor's title to any such
Engine is nevertheless divested under any such agreement or
arrangement, then such Engine shall be deemed to have suffered an Event
of Loss as of the date of such divestiture, and Lessee shall be
required to replace such Engine with a Replacement Engine meeting the
requirements of, and in accordance with, ss. 10.
7.2.2 TESTING AND SERVICE
Deliver or permit any Permitted Sublessee to deliver possession of the
Aircraft, the Airframe, any Engine, or any Part (a) to the manufacturer
thereof or to any third-party maintenance provider, for testing,
service, repair, maintenance, or overhaul work on the Aircraft,
Airframe, any Engine, or any Part, or, to the extent required or
permitted by the terms of Annex C, for alterations or modifications in
or additions to the Aircraft, the Airframe, or any Engine, or (b) to
any Person for the purpose of transport to a Person referred to in the
preceding clause (a).
7.2.3 TRANSFER TO U.S. GOVERNMENT
Transfer or permit any Permitted Sublessee to transfer possession of
the Aircraft, the Airframe, or any Engine to the U.S. Government
pursuant to CRAF or otherwise, in which event Lessee shall promptly
notify Lessor and Mortgagee in writing of any such transfer of
possession (and, in the case of any transfer pursuant to CRAF, in such
notification shall identify by name, address, and telephone numbers the
Contracting Office Representative(s) for the Military Airlift Command
of the United States Air Force to whom notices must be given and to
whom requests or claims must be made to the extent applicable under
CRAF).
7.2.4 INSTALLATION OF ENGINES ON OWNED AIRCRAFT
Install or permit any Permitted Sublessee to install an Engine on an
airframe owned by Lessee or such Permitted Sublessee free and clear of
all Liens except (a) Permitted Liens, (b) Liens that do not apply to
the Engines, and (c) the rights of third parties under normal
interchange or pooling agreements and arrangements of the type
permitted under ss. 7.2.1.
7.2.5 INSTALLATION OF ENGINES ON OTHER AIRFRAMES
Install or permit any Permitted Sublessee to install an Engine on an
airframe leased to Lessee or such Permitted Sublessee, or purchased or
owned by Lessee or such Permitted Sublessee subject to a security
agreement, conditional sale, or other secured financing arrangement,
but only if (a) such airframe is free and clear of all Liens except (1)
the rights of the parties to such lease or secured financing
arrangement, covering such airframe, and (2) Liens of the type
permitted by clauses (a) and (b) of ss. 7.2.4, and (b) Lessee or such
Permitted Sublessee has received from the lessor, secured party, oR
conditional seller, in respect of such airframe, a written agreement
(which may be a copy of the lease, security agreement, conditional sale
agreement, or other agreement covering such airframe), whereby such
Person agrees that it will not acquire or claim any right, title, or
interest in, or Lien on, such Engine by reason of the installation of
such Engine on such airframe at any time while such Engine is subject
to this Lease or is owned by Lessor.
7.2.6 INSTALLATIONS OF ENGINES ON FINANCED AIRCRAFT
Install or permit any Permitted Sublessee to install an Engine on an
airframe owned by Lessee or such Permitted Sublessee, leased to Lessee
or such Permitted Sublessee, or purchased or owned by Lessee or such
Permitted Sublessee subject to a conditional sale or other security
agreement under circumstances where neither ss. 7.2.4 nor ss. 7.2.5
applies; PROVIDED, that any such installation shall be deemed an EvEnt
of Loss with respect to such Engine, and Lessee shall comply with ss.
10.2 in respect thereof. UntiL ss. 10.2 has been fully complied with,
Lessor's interest in such Engine shall continue in full force anD
effect.
7.2.7 SUBLEASING
With respect to the Aircraft, the Airframe, or any Engine, if no Special
Default or Lease Event of Default exists, enter into a sublease with any
Permitted Air Carrier, but only if:
(a) Lessee provides written notice to Lessor (with a copy to Owner
Participant) and Mortgagee (such notice in the event of a sublease to a U.S. Air
Carrier to be given promptly after entering into any such sublease, and, in the
case of a sublease to any other Permitted Air Carrier, 10 Business Days in
advance of entering into such sublease);
(b) at the time that Lessee enters into such sublease, such Permitted Air
Carrier shall not be subject to any bankruptcy, insolvency, liquidation,
reorganization, dissolution, or similar proceeding, and shall not have
substantially all of its property in the possession of any liquidator, trustee,
receiver, or similar Person;
(c) any such sublease (1) shall not extend beyond the expiration of the
Base Term or any Renewal Term then in effect or irrevocably committed to by
Lessee, or contain a purchase option, unless expressly subject to Lessee's
exercise of its renewal or purchase options in accordance with the terms of ss.
17, and in any event subject to the requirements of clause (4) of this ss.
7.2.7(c), (2) shall Not contain any purchase option exercisable at a date
earlier than such date permitted under ss. 17.3, (3) shall explicitly require
that sublessee or sublessor (or both with specified allocations) will fully
comply with the Lease's maintenance, operation, possession, inspection, and
insurance requirements, and (4) shall be expressly subject and subordinate to
all the terms of this Lease and to Lessor's rights, powers, and remedies
hereunder, including Lessor's rights under ss. 15 to repossess the Aircraft and
tO terminate such sublease if a Lease Event of Default exists;
(d) in connection with a sublease to a Permitted Foreign Air Carrier, (1)
the United States maintains diplomatic relations with the country of domicile of
such Permitted Foreign Air Carrier, and (2) Lessee furnishes to Lessor, Owner
Participant and Mortgagee a favorable opinion of counsel, reasonably
satisfactory to Lessor and Owner Participant (and, so long as the Policy is in
effect, to Mortgagee), located in the country of domicile of such Permitted
Foreign Air Carrier, that (aa) the terms of such sublease are legal, valid, and
binding obligations of the parties thereto, enforceable under the laws of such
jurisdiction, (bb) it is not necessary for Owner Participant, Lessor, or
Mortgagee to register or qualify to do business in such jurisdiction, if not
already so registered or qualified, as a result of the proposed sublease, (cc)
Lessor's title to, and Mortgagee's first-priority Lien in respect of, the
Aircraft, Airframe, and Engines will be recognized in such jurisdiction, (dd)
the Laws of such jurisdiction of domicile require fair compensation by the
government of such jurisdiction, payable in a currency freely convertible into
Dollars, for the loss of title to the Aircraft, Airframe, or Engines in the
event of the requisition by such government of such title (unless Lessee
provides insurance in the amounts required with respect to hull insurance under
ss. 11 covering thE requisition of title to the Aircraft, Airframe, or Engines
by the government of such jurisdiction so long as the Aircraft, Airframe, or
Engines are subject to such sublease), (ee) such Permitted Air Carrier's
agreement that its rights under the sublease are subject and subordinate to all
the terms of this Lease is enforceable against such Permitted Air Carrier under
applicable Law, and (ff) such sublease will subject Lessor, Mortgagee, and Owner
Participant to no greater tort liability than in the United States of America,
OR, if such sublease will subject Lessor, Mortgagee, or Owner Participant to
greater tort liability than in the United States of America, Lessee (or
Permitted Sublessee) has provided insurance to insure against such additional
liability;
(e) Lessee furnishes to Lessor, Mortgagee, and Owner Participant evidence
reasonably satisfactory to Lessor that the insurance required byss. 11 remains
in effect;
(f) all necessary documents are duly filed, registered, or recorded in such
public offices as are required fully to preserve the title of Lessor, and the
first-priority security interest (subject to Permitted Liens) of Mortgagee, in
the Aircraft, Airframe, and Engines;
(g) Lessee shall reimburse Lessor, Mortgagee, and Owner Participant for all
of their reasonable out-of-pocket fees and expenses (including reasonable fees
and disbursements of counsel) incurred in connection with any such sublease;
(h) no such sublease shall be made to a "tax exempt entity" as defined in
ss. 168(h)(2) oF the Code, including a Permitted Foreign Air Carrier, before the
end of the Tax Attribute Period unless Lessee prepays on a lump-sum basis any
liability due under the Tax Indemnity Agreement as a result of such sublease
based upon the assumption that such sublease were to continue for the remainder
of the term of such sublease;
(i) no such sublease will adversely affect Lessor's or Mortgagee's
protection under Section 1110;
(j) no such sublease shall permit the Permitted Sublessee thereunder to
sub-sublease or transfer the Airframe or any Engine, except for transfers by a
Permitted sublessee permitted by the foregoing provisions of this ss. 7.2, and
except that a Permitted Sublessee who is a manufacturer maY sub-sublease to any
Person to whom a sublease would be permitted under this ss. 7.2.7; PROVIDED,
that (1) such sub-sublease shall not permit any sub-sub-subleasing of the
Aircraft, the Airframe, or any Engine, and (2) such sub-sublease must meet the
requirement of a Permitted Sublease;
(k) if the term of such Sublease is greater than one year,
Lessee will assign such Sublease to Lessor as security for Lessee's
obligations hereunder.
7.3 CERTAIN LIMITATIONS ON SUBLEASING OR OTHER RELINQUISHMENT OF POSSESSION
Notwithstanding anything to the contrary in ss. 7.2:
(a) The rights of any Person who receives possession of the Aircraft in
accordance with ss. 7.2 shalL be subject and subordinate to all the terms of
this Lease, and to Lessor's rights, powers, and remedies hereunder, including
(1) Lessor's right to repossess the Aircraft pursuant to ss. 15, (2) Lessor's
right tO terminate and avoid such sublease, delivery, transfer, or
relinquishment of possession if a Lease Event of Default exists, and (3) the
right to require such Person to deliver the Aircraft, Airframe, and Engines
forthwith if a Lease Event of Default exists.
(b) Lessee shall remain primarily liable hereunder for the performance
of all the terms of this Lease to the same extent as if such transfer had not
occurred, and no transfer of possession of the Aircraft, the Airframe, any
Engine, or any Part shall in any way discharge or diminish any of Lessee's
obligations to Lessor hereunder or under any other Operative Agreement.
(c) Lessee shall ensure that no sublease, delivery, transfer, or
relinquishment permitted under ss. 7.2 shall affect the United States
registration of the Aircraft, unless also made in accordance with thE provisions
of ss. 7.1.2.
(d) Any event that constitutes or would, with the passage of time,
constitute an Event of Loss under clause (3), (4), or (5) of the definition of
such term (as set forth in Annex A) shall not be deemed to violate the
provisions of ss. 7.2.
(e) No Wet Lease shall constitute a delivery, transfer, or
relinquishment of possession for purposes of ss. 7.2, nor shall it be prohibited
by the terms hereof.
8. MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
MODIFICATIONS, AND ADDITIONS; OTHER LESSEE COVENANTS
8.1 MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
MODIFICATIONS, AND ADDITIONS
At all times during the Term, Lessee shall comply with (or cause to be
complied with) each of the provisions of Annex C, which provisions are hereby
incorporated by this reference as if set forth in full herein.
8.2 INFORMATION, CERTIFICATES, NOTICES, AND REPORTS
8.2.1 FINANCIAL INFORMATION
Lessee will furnish to Lessor and Owner Participant:
(a) within 90 days after the end of each of the first three
fiscal quarters in each fiscal year of Lessee, a consolidated balance
sheet of Lessee and Guarantor as of the end of such quarter, and
related statements of income and cash flows for the period commencing
at the end of the previous fiscal year and ending with the end of such
quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding period in the preceding
fiscal year, prepared in accordance with GAAP; PROVIDED, that while
Lessee or Guarantor is subject to the reporting requirements of the
Securities Exchange Act of 1934, a copy of Lessee's or Guarantor's
report on Form 10-Q for such fiscal quarter (excluding exhibits) will
satisfy this clause (a).
(b) within 120 days after the end of each fiscal year of
Lessee, a consolidated balance sheet of Lessee and Guarantor as of the
end of such fiscal year and related statements of income and cash flows
of Lessee and Guarantor for such fiscal year, in comparative form with
the preceding fiscal year, prepared in accordance with GAAP, together
with a report of Lessee's and Guarantor's independent certified public
accountants with respect to their audit of such financial statements;
PROVIDED, that while Lessee or Guarantor is subject to the reporting
requirements of the Securities Exchange Act of 1934, a copy of Lessee's
or Guarantor's report on Form 10-K for such fiscal year (excluding
exhibits) will satisfy this clause (b).
8.2.2 ANNUAL CERTIFICATE
Within 120 days after the close of each fiscal year of Lessee, Lessee
shall deliver to Lessor, Owner Participant, and Mortgagee an Officer's
Certificate of Lessee to the effect that such officer is familiar with or has
reviewed or caused to be reviewed the relevant terms of this Lease and the other
Lessee Operative Agreements, and that such officer does not have knowledge of
the existence as at the date of such certificate of any Lease Event of Default
(or, if any Lease Event of Default exists, specifying the nature and period of
existence thereof and the action Lessee has taken or is taking or proposes to
take with respect thereto).
8.2.3 INFORMATION FOR FILINGS
Lessee shall promptly furnish to Owner Participant or Lessor such
information (other than with respect to the citizenship of Owner Participant and
Lessor) within Lessee's or any Permitted Sublessee's possession, or reasonably
available to or obtainable by Lessee or such Permitted Sublessee, as may be
required to enable Lessor to file in a timely manner any reports required to be
filed by it as lessor under the Lease or to enable Owner Participant to file in
a timely manner any reports required to be filed by it as the beneficiary of the
Trust Estate, in either case, with any Government Entity because of, or in
connection with, the interest of Owner Participant or Lessor in the Aircraft,
this Lease, or any other part of the Trust Estate; PROVIDED, that, with respect
to any such information which Lessee reasonably deems commercially sensitive or
confidential, Owner Participant or Lessor (as applicable) shall afford Lessee a
reasonable opportunity (to the extent reasonably obtainable) to seek from any
such Government Entity a waiver of the obligation of Owner Participant or Lessor
to file any such information, or shall consent to the filing of such information
directly by Lessee in lieu of filing by Owner Participant or Lessor, and if any
such waiver or consent is evidenced to the reasonable satisfaction of Owner
Participant or Lessor (as applicable), then Lessee shall not be required to
furnish such information to Owner Participant or Lessor.
8.2.4 OTHER INFORMATION
Lessee shall provide to Owner Participant from time to time such other
information or data as Owner Participant reasonably requests concerning the
Aircraft, Lessee's financial condition, or otherwise relating to the
transactions or matters contemplated in the Operative Agreements, in each case
to the extent within Lessee's or any Permitted Sublessee's possession, or
reasonably available to or obtainable by Lessee or such Permitted Sublessee.
9. VOLUNTARY TERMINATION UPON OBSOLESCENCE
9.1 RIGHT OF TERMINATION
(a) Provided there is then no Special Default or Lease Event of
Default, Lessee shall have the right at its option to terminate this Lease
during the Base Term, effective only on a Termination Date occurring on or after
the seventh anniversary of the Delivery Date, if:
(1) Lessee makes a good faith determination that the Aircraft
either has become economically obsolete or is surplus to Lessee's
requirements, and Lessee's Chief Financial Officer or Treasurer so
certifies in writing to Lessor; and
(2) Lessee provides Lessor (with a copy to Owner Participant)
with written notice of Lessee's exercise of such termination option not
less than 180 days and not more than 360 days before the Termination
Date specified in such notice.
(b) Lessor shall notify Lessee and Mortgagee of Lessor's intention to
sell or retain the Aircraft, as provided in this ss. 9, not less than 120 days
before the Termination Date specified in the written noticE pursuant to ss.
9.1(a)(2). Any failure by Lessor to give such notice of its election shall be
deemed to be aN election to sell the Aircraft, as provided in this ss. 9.
(c) In the event of any termination pursuant to this ss. 9, Lessee
shall not acquire additionaL 737-800 aircraft during the 24 months following
such termination, except to replace any lost or damaged aircraft or under
short-term operating leases, and Lessee shall notify Lessor in the event Lessee
plans to enter into such an operating lease to discuss the possible re-lease of
the Aircraft from Lessor to Lessee under such short-term operating lease.
9.2 ELECTION BY LESSOR TO SELL
9.2.1 BIDS; CLOSING OF SALE
Unless Lessor has notified Lessee of Lessor's election to retain the
Aircraft, Lessee, as agent for Lessor, shall, until the date ten Business Days
before the Termination Date, use commercially reasonable efforts to obtain bids
for a cash purchase of the Aircraft, and Lessor may, if it desires to do so,
also seek to obtain such bids. If Lessee receives any bid, Lessee shall
promptly, and in any event at least ten Business Days before the Termination
Date, certify to Lessor in writing the amount and terms of such bid, and the
name and address of the Person (who shall not be Lessee or any Affiliate of
Lessee or any Person with whom Lessee or any such Affiliate has an arrangement
for the future use of the Aircraft by Lessee or any such Affiliate) submitting
such bid. If Lessor receives any bid on or before the date ten Business Days
before the Termination Date, Lessor shall, at least ten Business Days before the
Termination Date, certify to Lessee in writing the amount and terms of such bid,
and the name and address of the Person submitting such bid.
9.2.2 CLOSING OF SALE
(a) On the Termination Date (1) Lessee shall deliver the Airframe and
Engines or engines constituting part of the Aircraft to the bidder (if any) who
shall have submitted the highest cash bid on or before the date ten Business
Days before such Termination Date, in the same manner as if delivery were made
to Lessor pursuant to ss. 5 and Annex B and in full compliance with the terms
thereof, and shall duly transfer tO Lessor title to any such engines not owned
by Lessor, all in accordance with the terms of ss. 5 and Annex B, anD (2) Lessor
shall simultaneously therewith transfer the Airframe and Engines or engines to
such bidder, in the manner described in ss. 4.5, against cash paid to Lessor in
the amount of such highest bid and in the manner and iN funds of the type
specified in ss. 3.3.
(b) All proceeds of any sale described in ss. 9.2.2(a) shall be paid to
and retained by Lessor and, on such Termination Date, and as a condition
precedent to such sale and the delivery of the Aircraft and Engines or engines
to such bidder, Lessee shall pay to Lessor, in the manner and in funds of the
type specified in ss. 3.3:
(1) all unpaid Basic Rent due at any time before such Termination Date;
plus
(2) the excess (if any) of the Termination Value for the Aircraft, computed
as of such Termination Date, over the proceeds of such sale; plus
(3) as provided in ss. 3.2.2, interest on the amounts specified in the
foregoing clausE (1) at the Past-Due Rate from and including the date on which
any such amount was due to the date of payment of such amount in full.
As a further condition precedent to such sale and delivery, Lessee
shall pay all Supplemental Rent due by Lessee to Lessor, Mortgagee, or the
Participants under this Lease (including (aa) Supplemental Rent in respect of
Make-Whole Amount (if any) payable pursuant to ss. 2.11(b) of the Mortgage in
connection with a prepayment oF the Equipment Notes upon such sale, (bb) all
interest charges provided for hereunder or under any other Lessee Operative
Agreement with respect to the late payment of any amounts so payable, (cc) all
reasonable and previously-invoiced out-of-pocket fees and expenses (including
reasonable fees and expenses of counsel, but excluding brokerage commissions
payable to any Person not retained by Lessee) incurred by Lessor, Mortgagee, and
Owner Participant in connection with such sale and the related termination of
this Lease), (dd) all previously-invoiced commissions payable to any Person
retained by Lessee in connection with such sale, and (ee) all sales, transfer,
or similar Taxes then due with respect to such sale). To the extent not invoiced
or due on the Termination Date, Lessee shall pay in due course the obligations
described in the foregoing clauses (cc), (dd), and (ee).
(c) Upon and subject to any such sale and receipt of proceeds by
Lessor, and full and final payment of all amounts described in ss. 9.2.2(b), and
compliance by Lessee with all the other provisions of this ss. 9.2,
(1) Lessor will transfer to Lessee, in accordance with ss.
4.5, any Engines constitutinG part of the Aircraft but which were not
then installed on the Airframe and sold therewith; and
(2) the obligation of Lessee to pay Basic Rent, on or after
the Payment Date with reference to which Termination Value is computed,
shall cease, and the Term shall end effective as of the date of such
sale.
(d) A sale of the Aircraft pursuant to this ss. 9.2.2 shall take place
only on a Termination Date. Subject to ss. 9.3, if no sale shall have occurred
on or as of the proposed Termination Date, this Lease shalL continue in full
force and effect, and all of Lessee's obligations shall continue, including its
obligation to pay Rent, in each case, as if the notice under ss. 9.1 shall not
have been given and, subject to ss. 9.2.3(a), LesSee may give another notice
pursuant to ss. 9.1.
(e) Lessor shall be under no duty to solicit bids, to inquire into the
efforts of Lessee to obtain bids, or otherwise to take any action in connection
with any such sale other than to transfer to the purchaser named in the highest
bid referred to above (or to such purchaser and, in the case of Engines
described in ss. 9.2.2(c), to Lessee) the Airframe and Engines or engines
against receipt of the payments described in ss. 9.2.2(B)
9.2.3 WITHDRAWAL OF NOTICE OF TERMINATION
(a) So long as Lessor has not elected to retain the Aircraft pursuant
to ss. 9.1, Lessee may withdraW any notice given pursuant to ss. 9.1 at any time
on or before the date five Business Days before the proposeD Termination Date,
whereupon this Lease shall continue in full force and effect and all of Lessee's
obligations shall continue, including its obligation to pay Rent, in each case
as if the notice under ss. 9.1 were not given, and Lessee may give another
notice pursuant to ss. 9.1; PROVIDED, that Lessee shall not be entitled to give
morE than three termination notices pursuant to ss. 9.1 during the Term.
(b) Lessee shall pay, on an after-tax basis, all reasonable
out-of-pocket fees and expenses of Lessor (including reasonable fees and
expenses of counsel), Mortgagee, and Owner Participant in connection with any
notice of termination withdrawn by Lessee or in connection with any notice of
termination pursuant to which a sale of the Aircraft fails to occur.
9.3 RETENTION OF AIRCRAFT BY LESSOR
(a) If Lessor elects to retain the Aircraft in accordance withss. 9.1, on
the Termination Date:
(1) (aa) Lessor shall pay or cause to be paid, in the manner
and in funds of the type specified in ss. 3.3, to the Mortgagee, an
amount sufficient to prepay all outstanding Equipment NoteS pursuant to
ss. 2.11(b) of the Mortgage, and (bb) Lessee shall pay any Make-Whole
Amount then due;
(2) subject to Mortgagee's receipt of the funds described in
clause (1)(aa) of this ss. 9.3(a), Lessee shall deliver the Airframe
and Engines or engines constituting part of the Aircraft tO Lessor
pursuant to ss. 5 and Annex B and in full compliance with the terms
thereof, and shall dulY transfer to Lessor title to any such engines
not owned by Lessor, all in accordance with the terms of ss. 5 and
Annex B;
(3) Lessee shall pay to Lessor, in the manner and in funds of the type
specified inss. 3.3:
(aa) all unpaid Basic Rent due at any time before such Termination Date;
plus
(bb) any Make-Whole Amount due as a result of the prepayment of all
outstanding Equipment Notes pursuant toss. 2.11(b) of the Mortgage; plus
(cc) as provided in ss. 3.2.2, interest on the amounts specified in the
foregoinG clauses (aa) and (bb) at the Past-Due Rate from and including the date
on which any such amount was due to the date of payment of such amount in full;
and
(4) Lessee shall also pay all Supplemental Rent due and
payable by Lessee to Lessor, Mortgagee, or any Participant under this
Lease, including all interest charges provided for hereunder or under
any other Lessee Operative Agreement with respect to the late payment
of any amounts so payable, and the reasonable out-of-pocket fees and
expenses incurred by Lessor, Mortgagee, and Owner Participant in
connection with such termination and delivery of the Airframe and
Engine or engines (excluding brokerage commissions and similar expenses
payable to any Person(s) not retained by Lessee).
(b) Upon full and final payment to Lessor, Mortgagee, and the
Participants of the amounts described in ss. 9.3(a)(1), and (3) and (4), and
compliance by Lessee with all the applicable provisions of ss. 9.3(a)(2),
(1) Lessor will transfer to Lessee, in accordance with ss.
4.5, any Engines constitutinG part of the Aircraft but which were not
then installed on the Airframe and sold therewith; and
(2) Lessee's obligation to pay Basic Rent otherwise due on or
after the Termination Date shall cease, and the Term for the Aircraft
shall end effective as of such Termination Date.
10. LOSS, DESTRUCTION, REQUISITION, ETC.
10.1 EVENT OF LOSS TO THE AIRCRAFT
10.1.1 NOTICE AND ELECTION
(a) If an Event of Loss to the Airframe (and any Engine(s) installed
thereon) occurs, Lessee shall promptly (and in any event within 15 days after
such occurrence) notify Lessor, Owner Participant and Mortgagee of such Event of
Loss. Within 60 days after such occurrence, Lessee shall give to Lessor (with a
copy to Owner Participant) and Mortgagee written notice of Lessee's election to
make payment in respect of such Event of Loss, as provided in ss. 10.1.2, or to
replace the Airframe and any such Engine(s) as provided in ss. 10.1.3.
(b) Lessee's failure to give the notice of election described in ss.
10.1.1(a) shall be deemed to bE an election of the option set forth in ss.
10.1.2. In addition, Lessee shall not be entitled to elect the optioN set forth
in ss. 10.1.3 if, at the time Lessor receives such notice from Lessee or on the
replacement date, A Special Default or a Lease Event of Default exists.
(c) For purposes of ss. 10.1.2, an Event of Loss to the Airframe shall
be deemed to constitute aN Event of Loss to the Aircraft. For purposes of ss.
10.1.3, any Engine not actually suffering an Event of LosS shall not be required
to be replaced.
10.1.2 PAYMENT OF LOSS AND TERMINATION OF LEASE
(a) If Lessee elects, in accordance with ss. 10.1.1, to make payment in
respect of any such Event oF Loss, then Lessee shall pay, in the manner and in
funds of the type specified in ss. 3.3, the following amounts:
(1) on the date (the "LOSS PAYMENT DATE") that is the earlier
of (x) the Stipulated Loss Value Date first following the 75th day
following the date of the occurrence of such Event of Loss, and (y) the
Stipulated Loss Value Date first following the fourth Business Day
following the receipt of the insurance proceeds with respect to such
occurrence (but in any event not earlier than the date of Lessee's
election under ss. 10.1.1 to make payment under this ss. 10.1.2),
Lessee shall pay to Lessor:
(aa) all unpaid Basic Rent due at any time before the Loss Payment Date;
plus
[(bb) all Basic Rent due on the Loss Payment Date; plus]
(cc) the Stipulated Loss Value computed as of the Stipulated Loss Value
Date immediately preceding the Loss Payment Date (or, if the Loss Payment Date
is a Stipulated Loss Value Date, the Loss Payment Date), plus
(dd) if the Loss Payment Date is not a Stipulated Loss Value Date, an
additional amount equal to interest, at the rate per annum equal to the SLV
Rate, on the amount of the excess referred to in clause (cc) above for each day
from and including the Stipulated Loss Value Date referred to in clause [(cc)]
to but excluding the Loss Payment Date; plus
(ee) as provided in ss. 3.2.2, interest on the amount specified in the
foregoing clause (aa) at the Past-Due Rate from and including the date on which
any such amount was due to the date of payment of such amount in full; and
(2) on or before the date required for payment of the amounts
specified in clause 10.1.2(a)(1), Lessee shall also pay to Lessor,
Mortgagee, and the Participants all other amounts due and payable by
Lessee to Lessor, Mortgagee, and the Participants under this Lease, the
Participation Agreement, or any other Lessee Operative Agreement and,
on an after-tax basis, all out-of-pocket fees and expenses (including
reasonable fees and expenses of counsel) incurred by Lessor, each
Participant, and Mortgagee in connection with such Event of Loss.
(b) Upon payment in full of all amounts described in the foregoing ss.
10.1.2(a)(1), (1) Lessee'S liability for use of the Aircraft and obligation to
pay Basic Rent hereunder with respect to the Aircraft shall terminate, (2) the
Term for the Aircraft shall end, and (3) Lessor will transfer the Aircraft to
Lessee, as-is and where-is, and subject to any insurer's salvage rights, but
otherwise in the manner described in ss. 4.5.
10.1.3 REPLACEMENT OF AIRFRAME AND ENGINES
(a) If Lessee elects, in accordance with ss. 10.1.1, to replace the
Airframe and any Engine(s) suffering the Event of Loss, then Lessee shall, as
promptly as possible and in any event within 120 days after the occurrence of
such Event of Loss, convey or cause to be conveyed to Lessor, in compliance with
ss. 10.3 and aS replacement for the Airframe and any such Engine(s), title to a
Replacement Airframe (which shall comply with ss. 10.1.3(b)), and for each such
Engine a Replacement Engine, in each case free and clear of all Liens other thaN
Permitted Liens (PROVIDED, that if such conveyance occurs after the end of the
Term, Lessee shall pay rent for the Aircraft from the end of the Term until
return thereof pursuant to ss. 5 at a daily rate equal to the averagE daily
Basic Rent or Renewal Rent, as applicable, over the Base Term or then-expiring
Renewal Term, as applicable). If Lessee makes such election, but for any reason
does not effect such replacement within such time period and in compliance with
the requirements set forth in ss. 10.3, then Lessee shall be deemed to have
initiallY made the election set forth in ss. 10.1.2 with the effect that Lessee
shall pay, in the manner and in funds of thE type specified in ss. 3.3, the
amounts required under, and in accordance with, ss. 10.1.2 (except that the tIme
period for payment referenced in ss. 10.1.2(a)(1) shall, for the purposes of
this ss. 10.1.3(a), in all cases be on the Stipulated Loss Value Date first
following the 120th day following the date of the occurrence of such Event of
Loss).
(b) Any such Replacement Airframe shall be an airframe manufactured by
the Airframe Manufacturer that is the same model as the Airframe to be replaced
thereby, or an improved model, and that has a current value, estimated residual
value, utility, and remaining economic useful life (without regard to hours or
cycles remaining until the next regular maintenance check, provided no Special
Default or Lease Event of Default then exists) at least equal to the Airframe to
be replaced thereby (assuming that such Airframe had been maintained in
accordance with this Lease), immediately prior to such Event of Loss and that
has a year of manufacture no earlier than that of the Airframe to be replaced.
Any such Replacement Engine shall meet the requirements of, and be conveyed by
Lessee to Lessor in accordance with, ss. 10.2 (other than the notice requirement
set forth iN ss. 10.2.1).
10.2 EVENT OF LOSS TO AN ENGINE; ENGINE EXCHANGES
10.2.1 NOTICE
If an Event of Loss to an Engine occurs under circumstances in which no
Event of Loss to the Airframe occurs, Lessee shall promptly (and in any event
within 15 days after such occurrence) notify Lessor of such Event of Loss.
10.2.2 REPLACEMENT OF ENGINE
Lessee shall, promptly and in any event within 60 days after the
occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in
compliance with ss. 10.3 and as replacement for the Engine witH respect to which
any Event of Loss occurred, title to a Replacement Engine, free and clear of all
Liens other than Permitted Liens. Such Replacement Engine shall be an engine
manufactured by Engine Manufacturer that is the same model as the Engine to be
replaced thereby, or an improved model, and that is suitable for installation
and use on the Airframe, and that has a current value, estimated residual value,
utility, and remaining economic useful life (without regard to hours and cycles
remaining until overhaul, provided no Special Default or Lease Event of Default
then exists) at least equal to the Engine to be replaced thereby (assuming that
such Engine had been maintained in accordance with the Lease) immediately prior
to such Event of Loss.
10.2.3 ENGINE EXCHANGE
Upon not less than five Business Days' prior written notice to Lessor
(with a copy to Owner Participant), Lessee may replace any Engine leased
hereunder with another engine (the "EXCHANGED ENGINE") meeting the requirements
of ss. 10.2.2. Such Exchanged Engine shall be deemed to be a "Replacement
Engine", and Lessor anD Lessee shall comply with the provisions of ss. 10.3 with
regard to the Exchanged Engine and the Engine so replaced.
10.3 CONDITIONS TO ANY REPLACEMENT
10.3.1 DOCUMENTS
Before or at the time of conveyance of title to any Replacement
Airframe or Replacement Engine to Lessor, Lessee shall take each of the
following actions:
(a) furnish Lessor with a full warranty (as to title) bill of sale duly
conveying to Lessor such Replacement Airframe or Replacement Engine, in form and
substance reasonably satisfactory to Lessor and Owner Participant, and cause
such Replacement Airframe to be duly registered in the name of Lessor pursuant
to the Transportation Code (or such other applicable Law of a jurisdiction other
than the United States where the Aircraft is registered in accordance with ss.
7.1.2);
(b) cause (1) a supplement to this Lease, subjecting such Replacement
Airframe or Replacement Engine to this Lease, duly executed by Lessee, to be
delivered to Lessor for execution, and, upon such execution, to be filed for
recordation with the FAA pursuant to the Transportation Code (or such other
applicable Law of a jurisdiction other than the United States where the Aircraft
is registered in accordance with ss. 7.1.2), (2) A supplement to the Mortgage,
subjecting such Replacement Airframe or Replacement Engine to the Mortgage, to
be delivered to Lessor for execution, and, upon execution, to be filed for
recordation with the FAA pursuant to the Transportation Code (or such other
applicable Law of a jurisdiction other than the United States where the Aircraft
is registered in accordance with ss. 7.1.2), and (3) such Financing Statements
and other filings, as OwneR Participant or Mortgagee reasonably request, duly
executed by Lessee and (to the extent applicable) Lessor and Mortgagee (and
Lessor and Mortgagee shall execute and deliver the same), to be filed in such
locations as any such party reasonably requests;
(c) furnish such evidence of compliance with the insurance provisions
of ss. 11 with respect to sucH Replacement Airframe or Replacement Engine as
Owner Participant reasonably requests;
(d) furnish an opinion or opinions of Lessee's counsel (which may be
Lessee's legal department) reasonably satisfactory to Owner Participant and
addressed to Lessor, Owner Participant, and Mortgagee to the effect that (1)
such full warranty bill of sale referred to in ss. 10.3.1(a) constitutes an
effective instrumenT for the conveyance of title to the Replacement Airframe or
Replacement Engine, and (2) in the case of a Replacement Airframe or of a
Replacement Engine substituted under ss. 10.2.3 in the absence of an Event of
Loss, (aa) Lessor and Mortgagee, as assignee of Lessor, will be entitled to the
benefits of Section 1110 with respect to the Replacement Airframe, and (bb) as
to the U.S. federal income tax consequences to Owner Participant of the
replacement;
(e) furnish an opinion of Lessee's aviation law counsel reasonably
satisfactory to Owner Participant and addressed to Lessor, Owner Participant,
and Mortgagee as to the due registration of any such Replacement Airframe and
the due filing for recordation of each supplement to this Lease and each
supplement to the Mortgage with respect to such Replacement Airframe or
Replacement Engine under the Transportation Code (or such other applicable Law
of a jurisdiction other than the United States where the Aircraft is registered
in accordance with ss. 7.1.2);
(f) with respect to the replacement of the Airframe and any Engine(s)
installed thereon at the time of the Event of Loss, if requested by Owner
Participant and at Lessee's expense, furnish a certified report of a qualified
independent aircraft appraiser, such report and such appraiser to be reasonably
satisfactory to Owner Participant, certifying that such Replacement Airframe and
any such Replacement Engine complies with the current value, estimated residual
value, utility, and remaining economic useful life requirements set forth in ss.
10.1.3(b); and
(g) take such other actions and furnish such other certificates and
documents as Lessor or Owner Participant may reasonably request in order that
such Replacement Airframe or Replacement Engine be duly and properly titled in
Lessor, leased hereunder and subjected to the Lien of the Trust Indenture to the
same extent as initially required under the Operative Agreements with respect to
the Airframe or Engine so replaced.
Lessor and Lessee understand and agree that if, at the time of any
replacement of the Airframe or any Engine(s) as contemplated in this ss. 10, the
Airframe was registered in a jurisdiction other than the UniteD States, then the
requirements set forth above in this ss. 10.3.1 relating to compliance with the
requirements oF the Transportation Code or the FAA shall be deemed to refer to
the comparable applicable Law of, and the Aviation Authority of, such other
jurisdiction.
10.3.2 OTHER OBLIGATIONS
(a) Lessor and Lessee agree that, when and after any Replacement
Airframe becomes the Airframe hereunder, and when and after any Replacement
Engine becomes an Engine hereunder, this Lease shall continue to be, and shall
be treated as, a lease for U.S. federal income tax purposes of such Replacement
Airframe and such Replacement Engine. Without limiting the foregoing, Lessee and
Lessor intend that Lessor shall, in all events, be entitled to the benefits of
Section 1110 with respect to any Replacement Airframe or Replacement Engine, and
Lessee and Lessor shall cooperate and take such action as the other may
reasonably request so as to ensure that Lessor shall be entitled to such
benefits.
(b) No Event of Loss to an Engine, or to an Airframe, shall result in,
or otherwise allow or permit (other than as provided in ss. 10.1.2(b)), any
reduction, deferral, discharge, or other change in the timing oR amount of any
Rent payable by Lessee hereunder, and (subject to such ss. 10.1.2(b)) Lessee
shall pay all such RenT and other amounts as though such Event of Loss had not
occurred.
10.4 CONVEYANCE TO LESSEE
Upon compliance by Lessee with the applicable terms of ss.ss. 10.1.3,
10.2, and 10.3.1, Lessor will transFer to Lessee the Airframe or Engine(s), as
applicable, with respect to which such Event of Loss occurred, in accordance
with ss. 4.5.
10.5 APPLICATION OF PAYMENTS
Any amounts, other than insurance proceeds in respect of damage or loss
not constituting an Event of Loss (the application of which is provided for in
ss. 11), received at any time by Lessor, Lessee, or any PermitteD Sublessee from
any Government Entity or any other Person in respect of any Event of Loss will
be paid over to Lessor (or to Mortgagee if Mortgagee has not notified Lessee
that the Lien of the Mortgage has been duly discharged, except with respect to
Excluded Payments) to be held in accordance with ss. 4.5 and applied as follows:
10.5.1 REPLACEMENT OF AIRFRAME AND ENGINES
If such amounts are received with respect to the Airframe or any
Engine(s) installed thereon at the time of such Event of Loss, upon Lessee's
compliance with the applicable terms of ss. 10.1.3 with respect to the EvenT of
Loss for which such amounts are received, such amounts shall (subject to ss.
10.9) be paid over to, or retaineD by, Lessee.
10.5.2 LOSS OF ENGINE
If such amounts are received with respect to an Engine (other than an
Engine installed on the Airframe when the Airframe suffers an Event of Loss),
upon Lessee's compliance with the applicable terms of ss. 10.2.2 witH respect to
the Event of Loss for which such amounts are received, such amounts shall
(subject to ss. 10.9) be paiD over to, or retained by, Lessee.
10.5.3 PAYMENT OF LOSS
If such amounts are received, in whole or in part, with respect to the
Airframe, and Lessee makes, has made or is deemed to have made the election set
forth in ss. 10.1.2, such amounts shall be applied as follows:
(a) FIRST, if the sum described in ss. 10.1.2 has not then been paid in
full by Lessee, such amountS shall be paid to Lessor (or to Mortgagee if
Mortgagee has not notified Lessee that the Lien of the Mortgage has been duly
discharged, except with respect to Excluded Payments) to the extent necessary to
pay in full such sum; and
(b) SECOND, the remainder, if any, shall (subject toss. 10.9) be paid to
Lessee.
10.6 REQUISITION OF AIRCRAFT FOR USE
If any Government Entity requisitions the use of the Airframe and the
Engines or engines installed thereon, and if the requisition does not constitute
an Event of Loss, Lessee shall promptly notify Lessor and Mortgagee of such
requisition, and all of Lessee's obligations under this Lease shall continue to
the same extent as if such requisition had not occurred; PROVIDED, that, if the
Airframe and Engines or engines installed thereon are not returned to Lessor by
Lessee at the end of the Term or within 30 days thereafter, then Lessee shall be
deemed to have made the election set forth in ss. 10.1.2 with the effect that
Lessee shall be obligated to pay thE Stipulated Loss Value and all other amounts
payable pursuant to ss. 10.1.2 with respect to the Aircraft as if aN Event of
Loss had occurred as of the end of the Term. If such requisition does not
constitute an Event of Loss, Lessee shall be obligated to return the Airframe
and Engine(s) or engine(s) to Lessor pursuant to, and in all other respects to
comply with the provisions of, ss. 5 promptly upon their return by such
Government Entity, anD Lessee shall pay (or cause to be paid) to Lessor upon
such return an amount equal to the average daily Basic Rent payable by Lessee
during the Term for each day after the end of the Term to but excluding the day
of such return, up to a maximum of 30 days, which payment may be made from any
payments received by Lessor or Lessee from any Government Entity for the use of
the Aircraft (notwithstanding any language to the contrary contained in ss.
10.8).
10.7 REQUISITION OF AN ENGINE FOR USE
If any Government Entity requisitions for use any Engine but not the
Airframe, Lessee will replace such Engine by complying with ss. 10.2 and ss.
10.3 to the same extent as if an Event of Loss with respect to that EngIne had
occurred, and any payments received by Lessor or Lessee from such Government
Entity with respect to such requisition shall be paid or retained in accordance
with ss. 10.5.2.
10.8 APPLICATION OF PAYMENTS
All payments received by Lessor or Lessee, or any Permitted Sublessee,
from any Government Entity for the use of the Airframe and Engine(s) or
engine(s) installed thereon during the Term shall be paid over to, or retained
by, Lessee, and all payments received by Lessor or Lessee from any Government
Entity for the use of the Airframe and Engine(s) or engine(s) installed thereon
after the Term shall be paid over to, or retained by, Lessor; PROVIDED, that, if
such requisition constitutes an Event of Loss, then all such payments shall be
paid over to Lessor (or to Mortgagee if Mortgagee has not notified Lessee that
the Lien of the Mortgage has been discharged), and held as provided in ss. 10.5.
10.9 APPLICATION OF PAYMENTS DURING DEFAULT
Any amount described in this ss. 10 that is payable or creditable to,
or retainable by, Lessee shall noT be paid or credited to, or retained by,
Lessee if a Special Default or Lease Event of Default exists when such payment,
credit, or retention would otherwise occur, but shall instead be held by or paid
over to Lessor (or to Mortgagee if Mortgagee has not notified Lessee that the
Mortgage has been discharged) as security for Lessee's obligations under this
Lease and the other Lessee Operative Agreements, and shall be invested pursuant
to ss. 4.4 hereof, unless and until such amount is applied, at the option of
Lessor, or upon Lessee's written request to Lessor, from time to time during the
existence of a Lease Event of Default, to Lessee's obligations under this Lease
as and when due (any such application shall be made to such Lessee obligations
as Lessor determines in its sole discretion). If and when no Special Default and
no Lease Event of Default exists, such amount shall be paid to Lessee to the
extent not previously applied in accordance with this ss. 10.9.
11. INSURANCE
11.1 LESSEE'S OBLIGATION TO INSURE
Lessee shall comply with, or cause to be complied with, each of the
provisions of Annex D, which provisions are hereby incorporated by this
reference as if set forth in full herein.
11.2 INSURANCE FOR OWN ACCOUNT
Nothing in ss. 11 shall limit or prohibit (a) Lessee from maintaining
the policies of insurance requireD under Annex D with higher limits than those
specified in Annex D, or (b) Lessor, Mortgagee, or Owner Participant from
obtaining insurance for its own account (and any proceeds payable under such
separate insurance shall be payable as provided in the policy relating thereto);
PROVIDED, that no insurance may be obtained or maintained that would limit or
otherwise adversely affect the coverage of or increase the cost of any insurance
required to be obtained or maintained by Lessee pursuant to this ss. 11 and
Annex D.
11.3 INDEMNIFICATION BY GOVERNMENT IN LIEU OF INSURANCE
During the period of any Government Entity's requisition for use of the
Aircraft or any Engine, Lessor, Mortgagee, and each Participant shall accept, in
lieu of insurance against any risk with respect to the Aircraft described in
Annex D, indemnification from, or insurance provided by, the U.S. Government, or
upon Owner Participant's written consent, other Government Entity, against such
risk in an amount that, when added to the amount of insurance (including
permitted self-insurance), if any, against such risk that Lessee (or any
Permitted Sublessee) may continue to maintain, in accordance with this ss. 11,
during the period of such requisition, shalL be at least equal to the amount of
insurance against such risk otherwise required by this ss. 11.
11.4 APPLICATION OF INSURANCE PROCEEDS
As between Lessor and Lessee, all insurance proceeds received as a
result of the occurrence of an Event of Loss to the Aircraft or any Engine under
policies required to be maintained by Lessee pursuant to this ss. 11 will be
applied in accordance with ss. 10.5. All proceeds of insurance required to be
maintained by Lessee, iN accordance with ss. 11 and ss. B of Annex D, in respect
of any property damage or loss not constituting an Event of Loss to the
Aircraft, the Airframe, or any Engine will be applied to pay (or to reimburse
Lessee) for repairs or for replacement property incorporated in accordance with
ss. 8.1, and any balance remaining after such repairs oR replacement with
respect to such damage or loss shall be paid over to, or retained by, Lessee.
11.5 APPLICATION OF PAYMENTS DURING DEFAULT
Any amount described in this ss. 11 that is payable or creditable to,
or retainable by, Lessee shall noT be paid or credited to, or retained by,
Lessee if a Special Default or Lease Event of Default exists when such payment,
credit, or retention would otherwise occur, but shall instead be held by or paid
over to Lessor (or to if Mortgagee has not notified Lessee that the Lien of the
Mortgage has been discharged) as security for Lessee's obligations under this
Lease, and shall be invested pursuant to ss. 4.4 unless and until such amount is
applied, aT Lessor's option, or upon Lessee's written request to Lessor, from
time to time during the existence of a Lease Event of Default, to Lessee's
obligations under this Lease and the other Lessee Operative Agreements as and
when due (any such application to be made to such obligations of Lessee as
Lessor determines in its sole discretion). If and when no Special Default and
Lease Event of Default exists, such amount shall be paid to Lessee to the extent
not previously applied in accordance with this ss. 11.5.
12. INSPECTION
(a) At all reasonable times Lessor, Mortgagee, Owner Participant, or
their authorized representatives (the "INSPECTING PARTIES") may (not more than
once every 12 months by each such Person, unless a Lease Event of Default exists
or during the last 12 months of the Base Term and any Renewal Term, then such
inspection right shall not be so limited) inspect the Aircraft and the Aircraft
Documents, and any such Inspecting Party may make copies of the Aircraft
Documents not reasonably deemed confidential by Lessee or a Permitted Sublessee.
(b) Any inspection of the Aircraft hereunder shall be limited to a
visual, walk-around inspection that may include going on board the Aircraft and
visually examining the contents of any open panels, bays, or other components of
the Airframe or Engines, but shall not include the opening of any unopened
panels, bays, or other components of the Aircraft, and no such inspection shall
interfere with Lessee's or any Permitted Sublessee's maintenance or operation of
the Aircraft, the Airframe, or any Engine.
(c) Lessor, Owner Participant and Mortgagee shall not have any duty or
liability to make, or any duty or liability by reason of not making, any such
visit, inspection or survey.
(d) Each Inspecting Party shall bear its own expenses in connection
with any such inspection (including the cost of any copies made in accordance
with ss. 12(a)), except following a Lease Event of Default, iN which case Lessee
will bear the costs of inspection and pay the same on demand.
(e) Upon Lessor's request, during the last 12 months of the Base Term
and any Renewal Term, Lessee will give 10 Business Days' prior written notice to
Lessor and Owner Participant of any scheduled maintenance checks, inspections,
surveys, or repair visits. During such period, Owner Participant or its
representative may attend any and all such maintenance checks, inspections,
surveys, or repair visits.
13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE
13.1 IN GENERAL
This Lease and the other Lessee Operative Agreements shall bind and
benefit Lessor and Lessee and their successors and permitted assigns. Except as
otherwise expressly permitted by the terms of the Lease or any other Lessee
Operative Agreement, Lessee will not, without the prior written consent of Owner
Participant and Mortgagee, assign any of its rights under this Lease.
13.2 MERGER OF LESSEE
13.2.1 IN GENERAL
Lessee shall not consolidate with or merge into any other Person under
circumstances in which Lessee is not the surviving corporation, or convey,
transfer, or lease in one or more transactions all or substantially all of its
assets to any other Person, unless:
(a) such Person is organized, existing, and in good standing under the Laws
of the United States, any state of the United States, or the District Columbia,
and, upon consummation of such transaction, such Person will be a U.S. Air
Carrier;
(b) such Person executes and delivers to Lessor, Owner Participant and
Mortgagee a duly authorized, legal, valid, binding, and enforceable agreement,
reasonably satisfactory in form and substance to Owner Participant, containing
an effective assumption by such Person of the due and punctual performance and
observance of each covenant, agreement, and condition in the Lessee Operative
Agreements to be performed or observed by Lessee;
(c) such Person makes such filings and recordings with the FAA pursuant to
the Transportation Code as shall be necessary to evidence such consolidation or
merger;
(d) Lessee furnishes Lessor and Owner Participant an opinion of counsel
reasonably satisfactory to Owner Participant (and, while the Policy is in
effect, reasonably satisfactory to Policy Provider) to the effect that such
consolidation or merger has satisfied at the closing of such consolidation or
merger items (a), (b) and (c) above;
(e) immediately after giving effect to such consolidation or merger, no
Special Default or Lease Event of Default exists;
(f) unless Owner Participant otherwise consents, immediately after giving
effect to such consolidation or merger, such Person will have a tangible net
worth of at least the lesser of (i) 100% of Lessee's tangible net worth
immediately prior to such consolidation or merger, and (ii) the greater of (aa)
the tangible net worth of Lessee as of March 31, 2000, and (bb) 65% of Lessee's
tangible net worth immediately prior to such consolidation or merger; and
(g) upon such consolidation or merger becoming effective, Lessor will enjoy
the same degree of protection under Section 1110 with respect to the Aircraft as
Lessor enjoyed prior to such merger.
13.2.2 EFFECT OF MERGER
Upon any such consolidation or merger of Lessee with or into, or the
conveyance, transfer, or lease by Lessee of all or substantially all of its
assets to, any Person in accordance with this ss. 13.2, such Person wilL succeed
to, and be substituted for, and may exercise every right and power of, Lessee
under the Lessee Operative Agreements with the same effect as if such Person had
been named as "Lessee" therein. No such consolidation, merger, conveyance,
transfer, or lease shall have the effect of releasing Lessee or such Person from
any of Lessee's obligations, liabilities, covenants, or undertakings under the
Lessee Operative Agreements.
13.3 ASSIGNMENT AS SECURITY FOR LESSOR'S OBLIGATIONS
In order to secure the indebtedness evidenced by the Equipment Notes,
Lessor agrees in the Mortgage to assign this Lease to Mortgagee and to mortgage
the Aircraft to Mortgagee, subject to the reservations and conditions therein
set forth. Lessee hereby accepts and consents to the assignment of Lessor's
right, title, and interest in and to this Lease pursuant to the terms of the
Mortgage. In accordance with ss. 3.3(c), Lessee agreeS to pay directly to
Mortgagee (or, after receipt by Lessee of notice from Mortgagee of the discharge
of the Lien of the Mortgage, to Lessor), all amounts of Rent (other than
Excluded Payments) due or to become due hereunder and assigned to Mortgagee, and
Lessee agrees that Mortgagee's right to such payments hereunder shall be
absolute and unconditional and shall not be affected by any circumstance,
including the circumstances set forth in ss. 16 hereof. Notwithstanding the
foregoing assignment of this Lease, Lessee's obligations to Lessor to perform
the terms and conditions of this Lease shall remain in full force and effect.
13.4 SUCCESSOR OWNER TRUSTEE
If any successor is appointed to serve as Owner Trustee pursuant to the
terms of the Participation Agreement and the Trust Agreement, such successor
shall, upon written notice by such successor to Lessee, succeed to all the
rights, powers, and title of Lessor hereunder, and shall be deemed to be
"Lessor" and the owner of the Aircraft and the other assets of the Trust Estate
for all purposes hereof, without the need for any consent or approval by Lessee
and without in any way altering the terms of this Lease or Lessee's obligations
hereunder. An appointment and designation of a successor as Owner Trustee shall
not exhaust the right to appoint and designate further successors or additional
trustees as Owner Trustees pursuant to the Participation Agreement and the Trust
Agreement, and such right may be exercised repeatedly as long as this Lease
shall be in effect.
14. LEASE EVENTS OF DEFAULT
The existence of any one or more of the following circumstances,
conditions, acts, or events, for any reason whatsoever and whether any such
circumstance, condition, act, or event is voluntary or involuntary or comes
about or is effected by operation of Law or pursuant to or in compliance with
any judgment, decree, order, rule, or regulation of any Government Entity, shall
constitute a Lease Event of Default so long as it shall not have been remedied:
14.1 PAYMENTS
Lessee fails to pay any amount of Basic Rent, Stipulated Loss Value, or
Termination Value within five Business Days after it becomes due; or Lessee
fails to pay any Supplemental Rent (other than Stipulated Loss Value or
Termination Value) when due and such failure continues for a period in excess of
ten Business Days from and after the date of any written notice to Lessee from
Lessor of the failure to make such payment when due; PROVIDED, that any such
failure to pay any Excluded Payment shall not constitute a Lease Event of
Default until Owner Participant gives written notice to Lessee and Mortgagee
that such failure constitutes a Lease Event of Default and such failure has
continued for a period in excess of ten Business Days after such notice.
14.2 INSURANCE
Lessee fails to carry and maintain, or cause to be carried and
maintained, insurance on and in respect of the Aircraft in accordance with the
provisions of ss. 11.
14.3 OTHER COVENANTS
Lessee fails to observe or perform (or cause to be observed and
performed) in any material respect any other covenant, agreement, or obligation
of Lessee in any Lessee Operative Agreement (other than those contained in the
Tax Indemnity Agreement), and such failure continues unremedied for a period of
30 days from and after the date of written notice thereof to Lessee (or the
Guarantor, as the case may be) from Lessor, Owner Participant, or Mortgagee,
unless such failure is capable of being corrected and Lessee is diligently
proceeding to correct such failure, and such failure poses no imminent and
material risk of Lessor, Owner Participant, or Mortgagee losing their respective
interests in the Aircraft, in which case there shall be no Lease Event of
Default unless and until such failure continues unremedied for a period of 270
days after receipt of such notice; PROVIDED, that in all events Lessee must
remedy such failures within 90 days of Lessee's obtaining access to the
Aircraft.
14.4 REPRESENTATIONS AND WARRANTIES
Any representation or warranty made by Lessee in any Lessee Operative
Agreement (other than Lessee's representations and warranties in the Tax
Indemnity Agreement) (a) proves to have been untrue or inaccurate in any
material respect as of the date made, (b) is material at the time in question,
and (c) remains uncured (to the extent of the adverse impact of such
incorrectness on the interest of the Participants or Lessor) for a period in
excess of 30 days from and after the date of written notice thereof from Lessor,
Owner Participant, or Mortgagee to Lessee (or Guarantor, as the case may be);
provided that clause (c) above will not apply to Lessee's representations as to
the financial condition of Lessee.
14.5 BANKRUPTCY AND INSOLVENCY
(a) Lessee or Guarantor consents to the appointment of or the taking of
possession by a receiver, trustee, or liquidator of itself or of substantially
all of its property, or Lessee or Guarantor admits in writing its inability to
pay its debts generally as they come due, or does not pay its debts generally as
they become due or makes a general assignment for the benefit of creditors, or
Lessee or Guarantor files a voluntary petition in bankruptcy or a voluntary
petition or an answer seeking reorganization, liquidation or other relief in a
case under any bankruptcy Laws or other insolvency Laws (as in effect at such
time), or Lessee or Guarantor seeks relief by voluntary petition, answer, or
consent under the provisions of any other bankruptcy or other similar Law
providing for the reorganization or winding-up of corporations (as in effect at
such time); or
(b) an order, judgment, or decree is entered by any court of competent
jurisdiction appointing, without Lessee's or Guarantor's consent, a receiver,
trustee, or liquidator of Lessee or Guarantor or of substantially all of the
property of Lessee or Guarantor, or substantially all of Lessee's or Guarantor's
property is sequestered, and any such order, judgment, or decree of appointment
or sequestration remains in force undismissed, unstayed, and unvacated for a
period of 90 days after the date of entry thereof; or
(c) a petition against Lessee or Guarantor in a case under any
bankruptcy Laws or other insolvency Laws (as in effect at such time) is filed
and not withdrawn or dismissed within 90 days thereafter, or if, under the
provisions of any Law providing for reorganization or winding-up of corporations
that applies to Lessee or Guarantor, any court of competent jurisdiction assumes
jurisdiction, custody, or control of Lessee or Guarantor or of substantially all
of its property, and such jurisdiction, custody or control remains in force
unrelinquished, unstayed, and unterminated for a period of 90 days.
14.6 REPUDIATION OR INVALIDITY OF GUARANTEE
Either (a) Guarantor repudiates its obligations, in whole or in part,
under the Guarantee; or (b) the Guarantee ceases to be in full effect, is
determined to be invalid, or becomes unenforceable for any reason.
15. REMEDIES AND WAIVERS
15.1 REMEDIES
If any Lease Event of Default exists, Lessor may, at its option and at
any time and from time to time, exercise any one or more of the following
remedies as Lessor in its sole discretion shall elect:
15.1.1 RETURN AND REPOSSESSION
Lessor may cause Lessee, upon giving written notice to Lessee, to
return promptly, and Lessee shall return promptly, the Airframe and Engines as
Lessor shall so demand, to Lessor or its order in the manner and condition
required by, and otherwise in accordance with, all the provisions of ss. 5, as
if the Airframe or EnginE were being returned at the end of the Term or Lessor,
at its option, may enter upon the premises where the Airframe or any Engine, or
any Part thereof, is located and take immediate possession of and remove the
same by summary proceedings or otherwise, all without liability accruing to
Lessor for or by reason of such entry or taking of possession, whether for the
restoration of damage to property caused by such taking or otherwise.
15.1.2 SALE AND USE
Lessor may sell the Airframe or any Engine at public or private sale,
at such time(s) and place(s), and to such Person(s) (including Mortgagee or any
Participant), as Lessor determines; or Lessor may otherwise dispose of, hold,
use, operate, lease to others, or keep idle the Airframe or any Engine, as
Lessor, in its sole discretion, shall determine, all free and clear of any
rights of Lessee and without any duty to account to Lessee with respect to such
action or inaction or for any proceeds with respect thereto, except as
hereinafter set forth in this ss. 15, and except to the extent that such
proceeds would constitute, under applicable Law, a mitigation oF Lessor's
damages suffered or incurred as a result of the subject Lease Event of Default.
Lessor shall give to Lessee at least 15 days' prior written notice of the date
fixed for any public sale of the Airframe or any Engine or of the date on or
after which will occur the execution of any contract providing for any private
sale.
15.1.3 CERTAIN LIQUIDATED DAMAGES
Whether or not Lessor shall have exercised, or shall thereafter at any
time exercise, any of its rights under ss. 15.1.1 or ss. 15.1.2 with respect to
the Airframe or any Engine, or any Part thereof, Lessor, by writTen notice to
Lessee specifying a payment date (which shall be the first Stipulated Loss Value
Date occurring not less than 10 days after the date of such notice), may demand
that Lessee to pay to Lessor, and Lessee shall pay to Lessor, on the payment
date so specified and in the manner and in funds of the type specified in ss.
3.3, aS liquidated damages for loss of a bargain and not as a penalty (in lieu
of the Basic Rent (as applicable) for the Aircraft in respect of all periods
commencing on or after the date specified for payment in such notice), the
following amounts:
(a) all unpaid Basic Rent due at any time before the Stipulated Loss Value
Date specified in such notice; plus
(b) whichever of the following amounts Lessor, in its sole discretion
specifies in such notice:
(1) an amount equal to the excess (if any) of the present
value, computed as of the Stipulated Loss Value Date specified in such
notice, discounted to such date at a rate equal to the Debt Rate,
compounded quarterly, of all unpaid Basic Rent during the
then-remaining portion of the Base Term (or, if a Renewal Term has
commenced, of all unpaid Basic Rent during the remaining portion of
such Renewal Term) over the Fair Market Rental Value of the Aircraft
for the remainder of the Term, after discounting such Fair Market
Rental Value to present value (at a rate per annum equal to the Debt
Rate, compounded quarterly) as of the Stipulated Loss Value Date
specified in such notice, or
(2) an amount equal to the excess (if any) of the Stipulated
Loss Value for the Aircraft, computed as of the Stipulated Loss Value
Date specified in such notice, over the Fair Market Sales Value of the
Aircraft, as of the Stipulated Loss Value Date specified in such
notice; plus
(c) interest on the amounts specified in the foregoing clause (a) at
the Past-Due Rate from and including the date on which any such amount was due
to the date of payment of such amount; plus
(d) interest on the amount specified in the foregoing clause (b)(1) or
(b)(2), according to Lessor's election, at the Past-Due Rate from and including
the Stipulated Loss Value Date specified in such notice to the date of payment
of such amount.
15.1.4 LIQUIDATED DAMAGES UPON SALE
If, pursuant to ss. 15.1.2 or applicable Law, Lessor has sold the
Airframe or any Engine, then, in lieu oF exercising its rights under ss. 15.1.3
with respect to the Aircraft, the Airframe, or any Engine (as applicable),
Lessor may, if Lessor so elects, upon giving written notice to Lessee, demand
that Lessee to pay to Lessor, and Lessee shall pay to Lessor, on the date of
such sale and in the manner and in funds of the type specified in ss. 3.3, as
liquidated damages for loss of a bargain and not as a penalty (in lieu of the
Basic Rent for thE Aircraft in respect of all periods commencing on or after the
date of such sale), the following amounts:
(a) all unpaid Basic Rent due at any time before the Stipulated Loss Value
Date on or immediately preceding the date of such sale; plus
(b) an amount equal to the excess, if any, of (1) the Stipulated Loss Value
of the Aircraft, computed as of the Stipulated Loss Value Date referred to in
the foregoing clause (a), over (2) the proceeds of such sale; plus
(c) if the date of such sale is not a Stipulated Loss Value Date, an amount
equal to interest, at the rate per annum equal to the SLV Rate, on the amount of
Stipulated Loss Value referred to in clause (b)(1) above, from and including the
Stipulated Loss Value Date referred to in the foregoing clause (a) to the date
of such sale; plus
(d) all brokerage and other out-of-pocket fees and expenses incurred by
Lessor, Mortgagee, and any Participant in connection with such sale; plus
(e) interest on the amounts specified in the foregoing clause (a) at the
Past-Due Rate from and including the date on which any such amount was due to
the date of payment of such amount; plus
(f) interest on the sum of the amounts specified in the foregoing clauses
(b), (d) and (e) at the Past-Due Rate from and including the date of such sale
to the date of payment of such amounts.
15.1.5 RESCISSION
Lessor may (a) at its option, rescind or terminate this Lease as to the
Aircraft, the Airframe, or any Engine, or any Part thereof, or (b) exercise any
other right or remedy that may be available to it under applicable Law or
proceed by appropriate court action to enforce the terms hereof or to recover
damages for the breach hereof.
15.1.6 OTHER REMEDIES
In addition to the foregoing remedies (but without duplication of
amounts otherwise paid under this ss. 15), Lessee shall be liable for any and
all unpaid Rent due hereunder before, during, or after (except aS otherwise
provided herein) the exercise of any of the foregoing remedies and for all
reasonable attorneys' fees and other costs and expenses of Lessor, Mortgagee,
Owner Participant, and the Note Holders, including interest on overdue Rent at
the rate as herein provided, incurred by reason of the existence of any Lease
Event of Default or the exercise of Lessor's remedies with respect thereto,
including all reasonable costs and expenses incurred in connection with the
return of the Airframe or any Engine in accordance with the terms of ss. 5, or
in placing thE Airframe or any Engine in the condition and airworthiness
required by ss. 5.
15.2 LIMITATIONS UNDER CRAF
Notwithstanding the provisions of ss. 15.1, during any period that the
Aircraft, the Airframe, or anY Engine is subject to CRAF in accordance with the
provisions of ss. 7.2.3 and in the possession of the U.S. Government, Lessor
shall not, as a result of any Lease Event of Default, exercise its remedies
hereunder in such manner as to limit Lessee's control under this Lease (or any
Permitted Sublessee's control under any Permitted Sublease) of the Aircraft, the
Airframe, or such Engine, unless Lessor or Mortgagee gives at least 30 days' (or
such other period as may then apply under CRAF) written notice of default
hereunder by registered or certified mail to Lessee (and any Permitted
Sublessee) with a copy to the Contracting Officer Representative or
Representatives for the Military Airlift Command of the United States Air Force
to whom notices must be given under the contract governing Lessee's (or any
Permitted Sublessee's) participation in CRAF with respect to the Aircraft, the
Airframe, or any Engine.
15.3 RIGHT TO PERFORM FOR LESSEE
If Lessee (a) fails to make any payment of Rent required to be made by
it hereunder or (b) fails to perform or comply with any of its agreements
contained herein and such failure under this clause (b) continues for a period
of 30 days after the earlier of Lessor, Owner Participant, or Mortgagee giving
written notice thereof to Lessee, or (c) fails to maintain the insurance
required hereunder and such failure under this clause (c) continues for 10 days
after such notice, then Lessor, Owner Participant, or Mortgagee may (but shall
not be obligated to) make such payment or perform or comply with such agreement,
and the amount of such payment and the amount of the expenses of Lessor, Owner
Participant, or Mortgagee incurred in connection with such payment or the
performance of or compliance with such agreement (as applicable), together with
interest thereon at the Past-Due Rate, shall be deemed Supplemental Rent,
payable by Lessee upon demand by Lessor, Owner Participant, or Mortgagee,
whichever is entitled thereto. No such payment, performance, or compliance shall
be deemed to waive any Lease Default or otherwise relieve Lessee of its
obligations with respect thereto.
15.4 DETERMINATION OF FAIR MARKET RENTAL VALUE AND FAIR MARKET SALES VALUE
For the purpose of this ss. 15, the Fair Market Rental Value or the
Fair Market Sales Value of thE Aircraft, the Airframe, or any Engine shall be
determined on an "as is, where is" basis and shall take into account customary
brokerage and other out-of-pocket fees and expenses which typically would be
incurred in connection with a re-lease or sale of such an aircraft, airframe, or
engine. Any such determination shall be made by an Appraiser selected by Lessor,
and the costs and expenses associated therewith shall be borne by Lessee;
PROVIDED, that, if Lessor does not obtain possession of the Aircraft pursuant to
this ss. 15, an AppraiseR shall not be appointed, and Fair Market Rental Value
and Fair Market Sales Value for purposes of this ss. 15 shalL be zero.
15.5 REMEDIES CUMULATIVE
Nothing contained in this Lease shall be construed to limit in any way
any right, power, remedy, or privilege of Lessor hereunder or under any other
Operative Agreement or now or hereafter existing at law or in equity. Each and
every right, power, remedy, and privilege hereby given to, or retained by,
Lessor in this Lease shall be in addition to and not in limitation of every
other right, power, remedy, and privilege given under the Operative Agreements
or now or hereafter existing at law or in equity. Each and every right, power,
remedy, and privilege of Lessor under this Lease and any other Operative
Agreement may be exercised from time to time or simultaneously and as often and
in such order as may be deemed expedient by Lessor. All such rights, powers,
remedies, and privileges shall be cumulative and not mutually exclusive, and the
exercise of one shall not be deemed a waiver of the right to exercise any other.
Lessee hereby waives to the extent permitted by applicable Law any right which
it may have to require Lessor to choose or elect remedies.
16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC.
(a) Lessee's obligation to pay all Rent payable hereunder shall be
absolute and unconditional, and shall not be affected by any event or
circumstance, including: (1) any setoff, counterclaim, recoupment, defense, or
other right that Lessee may have against Lessor, Mortgagee, any Participant, any
Note Holder, or any other Person for any reason whatsoever; (2) any defect in
the title, airworthiness, condition, design, operation, or fitness for use of,
or any damage to or loss or destruction of, the Aircraft, the Airframe, or any
Engine, or any interruption or cessation in the use or possession thereof by
Lessee for any reason whatsoever; (3) any insolvency, bankruptcy,
reorganization, or similar proceedings by or against Lessee or any other Person;
or (4) any other circumstance, happening, or event whatsoever, whether or not
similar to any of the foregoing.
(b) If for any reason whatsoever this Lease shall be terminated in
whole or in part by operation of law or otherwise except as specifically
provided herein, Lessee nonetheless agrees to pay an amount equal to each Rent
payment at the time such payment would have become due and payable in accordance
with the terms hereof had this Lease not been terminated in whole or in part.
Lessee hereby waives, to the extent permitted by applicable Law, any and all
rights that it may now have or that at any time hereafter may be conferred upon
it, by statute or otherwise, to terminate, cancel, quit, or surrender this
Lease, except in accordance with the express terms hereof.
(c) Nothing set forth in this ss. 16 shall be construed to prohibit
Lessee from separately pursuinG any claim that it may have from time to time
against Lessor or any other Person with respect to any matter (other than the
absolute and unconditional nature of Lessee's obligations hereunder to pay Rent,
and other than the matters specified in paragraphs (a) and (b) above).
17. RENEWAL AND PURCHASE OPTIONS
17.1 NOTICES GENERALLY
(a) Unless otherwise provided by this ss. 17, at least 270 days and no
more than 365 days before thE Scheduled Expiration Date for the Base Term or
then-current Renewal Term, Lessee may provide irrevocable written notice to
Lessor (a "PRELIMINARY NOTICE"), with a copy of such notice to Owner
Participant, that Lessee intends to exercise the option either to extend the
leasing of the Aircraft for a Renewal Term pursuant to ss. 17.2 or tO purchase
the Aircraft on the Scheduled Expiration Date pursuant to ss. 17.3.
(b) If Lessee gives a Preliminary Notice, then Lessee shall provide a
further notice, at least 30 days before the following Scheduled Expiration Date,
specifying which option it intends to elect, pursuant to ss. 17.2.1 or ss.
17.3.1 (as applicable). If Lessee fails to give such further notice at least 30
days before sUch Scheduled Expiration Date, Lessee shall be deemed to have
elected its option to purchase the Aircraft pursuant to ss. 17.3.1.
17.2 RENEWAL OPTIONS
17.2.1 RENEWAL NOTICE
(a) If Lessee has given a Preliminary Notice, as specified in ss. 17.1, and
subject to the terms anD conditions of this ss. 17.2, Lessee may exercise its
option to extend the leasing of the Aircraft hereunder untiL the following
Scheduled Expiration Date, on the same terms (except as contemplated by this ss.
17) as in the LesseE Operative Agreements with respect to the Base Term, by
delivering a notice (a "RENEWAL NOTICE") to Lessor not less than 30 days before
the Scheduled Expiration Date.
(b) Notwithstanding anything to the contrary in any Operative Agreement:
(1) No Preliminary Notice or Renewal Notice shall be binding
on Lessor or oblige Lessor to extend the leasing of the Aircraft
hereunder for a Renewal Term if any Special Default or Lease Event of
Default exists on and as of the date that such Renewal Term would
otherwise commence.
(2) A Renewal Notice shall be revocable by Lessee until 10
Business Days after the Renewal Rent is determined in accordance with
ss. 17.2.2, and unless revoked by written notice by Lessee to LessoR
shall thereafter become irrevocable and shall constitute an
unconditional obligation of Lessee to extend the leasing of the
Aircraft hereunder for the Renewal Term to which such Renewal Notice
relates. If Lessee revokes a Renewal Notice as indicated above, Lessee
will be deemed to have irrevocably elected its option to purchase the
Aircraft pursuant to ss. 17.3.1.
(3) Lessee shall not be entitled to give any Renewal Notice if
it (aa) has not delivered a Preliminary Notice to Lessor, (bb) has
delivered a Purchase Notice to Lessor, or (cc) has previously delivered
four Renewal Notices to Lessor.
17.2.2 RENEWAL RENT
(a) During each Renewal Term, Lessee shall pay to Lessor on each
Payment Date, in the manner and in the funds of the type specified in ss. 3.3,
Renewal Rent in arrears.
(b) The Renewal Rent payable by Lessee on each Payment Date during each
Renewal Term shall be the Fixed Rate (or, if less, the Applicable Percentage of
the Fair Market Rental Value). Any such Fair Market Rental Value shall be
determined not more than 120 days and not less than 100 days before the first
day of such Renewal Term by mutual agreement of Lessor and Lessee or, if they do
not agree, by an appraisal in accordance with ss. 17.4.
17.2.3 STIPULATED LOSS AND TERMINATION VALUES
(a) For any Renewal Term, Stipulated Loss Value Dates and Termination
Value Dates shall be extended throughout such Renewal Term on the same days and
for the same months as during the Base Term.
(b) Stipulated Loss Value and Termination Value amounts that are
payable during any such Renewal Term shall be determined at the same time that
the Renewal Rent for such Renewal Term is determined under ss. 17.2.2.
Stipulated Loss Values and Termination Values for any such Renewal Term shall,
commencing on the firsT day of such Renewal Term, be equal to the Fair Market
Sales Value of the Aircraft on such day, and shall decline ratably on a monthly
basis to the salvage value of the Aircraft as of the last day of its remaining
useful life.
(c) For purposes of calculating Stipulated Loss Value and Termination
Value amounts applicable during any Renewal Term, the "salvage value" and
"useful life" shall be determined by mutual agreement of Lessor and Lessee, or,
if they do not agree, by an appraisal in accordance with ss. 17.4.
17.3 PURCHASE OPTIONS
17.3.1 PURCHASE NOTICE
(a) Provided that at the time of such election no Special Default or
Lease Event of Default exists, Lessee may, subject to ss. 17.1 and this ss.
17.3, elect to purchase the Aircraft: (1) on the EBO Date as shown on Schedule 5
at the price indicated thereon; (2) on any Purchase Date, at a purchase price
equal to the Fair Market Sales Value of the Aircraft computed as of the Purchase
Date; or (3) (aa) on any Payment Date occurring after the Tax Attribute Period,
if a Burdensome Indemnity Payment not waived by Owner Participant shall become
due and owing, if Lessee did not cause such indemnity with the intent of
permitting such purchase and if such purchase would eliminate such indemnity on
a future basis, or (bb) on any Payment Date after the EBO Date, if Lessee has
committed to (but not commenced) a Significant Expenditure, then (whether as to
clause (aa) or (bb)) at a purchase price equal to the greater of (x) the Fair
Market Sales Value of the Aircraft computed as of such Payment Date (not
including any portion of the Fair Market Sales Value of the Aircraft
attributable to any Significant Expenditure) and (y) the Termination Value for
the Aircraft computed as of such Payment Date.
(b) Lessee may exercise such option to purchase the Aircraft, by
delivery of a written notice (a "PURCHASE NOTICE") to Lessor (with a copy of
such Purchase Notice to Owner Participant) not less than 60 days and no more
than 365 days before the EBO Date (for a purchase under ss. 17.3.1(a)(1)), not
less than 30 days and nO more than 365 days before the Purchase Date (for a
purchase under ss. 17.3.1(a)(2)), and not less than 120 days anD no more than
365 days before the Payment Date specified in such Purchase Notice (for a
voluntary termination purchase under ss. 17.3.1(a)(3)).
(c) Notwithstanding anything to the contrary in any Operative Agreement:
(1) Any Purchase Notice delivered or deemed to have been
delivered pursuant to ss. 17.3.1(a)(1) or (2) shall be irrevocable and
shall constitute an unconditional obligation of Lessee tO purchase the
Aircraft under this ss. 17.3; and any Purchase Notice delivered
pursuant to ss. 17.3.1(a)(3), shall be revocable until 10 Business Days
after the determination of the Fair Market Sales Value in accordance
with ss. 17.3.2, and unless so revoked by written notice by Lessee to
Lessor (with a copy tO Owner Participant) shall thereafter become
irrevocable and shall constitute an unconditional obligation of Lessee
to purchase the Aircraft under this ss. 17.3.
(2) Lessee shall not be entitled to give any Purchase Notice pursuant toss.
17.3.1(a)(2) if it has not delivered a Preliminary Notice.
17.3.2 DETERMINATION OF FAIR MARKET SALES VALUE
The Fair Market Sales Value of the Aircraft shall be determined not
more than 120 days and not less than 100 days before the applicable Purchase
Date or Payment Date by mutual agreement of Lessor and Lessee, or, if they shall
be unable to agree, by an appraisal in accordance with ss. 17.4.
17.3.3 PAYMENTS BY LESSEE
(a) If Lessee elects to purchase the Aircraft pursuant to clause (1) of
ss. 17.3.1(a), then on thE EBO Date Lessee shall pay to Lessor in immediately
available funds:
(1) all unpaid Basic Rent due before the EBO Date; plus
(2) the EBO Price; plus
(3) all Supplemental Rent then due (including any Make-Whole
Amount then due), and any sales or transfer tax then due in
connection with such purchase.
(b) If Lessee elects to purchase the Aircraft pursuant to clause (2) of
ss. 17.3.1(a), then on thE applicable Purchase Date Lessee shall pay to Lessor
in immediately available funds:
(1) all unpaid Basic Rent due on or before such Purchase Date; plus
(2) the applicable purchase price for the Aircraft; plus
(3) all Supplemental Rent then due, and any sales or transfer tax then due
in connection with such purchase.
(c) If Lessee elects to purchase the Aircraft pursuant to clause (3) of ss.
17.3.1(a), then on thE Payment Date on which Lessee elects to purchase the
Aircraft, Lessee shall pay to Lessor in immediately available funds:
(1) all unpaid Basic Rent due on or before such Payment Date; plus
(2) the purchase price of the Aircraft pursuant to such clause (3); plus
(3) all Supplemental Rent then due (including any Make-Whole Amount then
due), and any sales or transfer tax then due in connection with such purchase.
17.3.4 TITLE
Upon full and final payment by Lessee of (a) the applicable amount
payable under ss. 17.3.3, (b) on aN after-tax basis, all out-of-pocket fees and
expenses (including reasonable fees and expenses of counsel) incurred by Lessor,
each Participant, and Mortgagee in connection with such purchase and invoiced to
Lessee prior thereto, and (c) all other amounts then due and payable by Lessee
under the Operative Agreements, Lessor will transfer to Lessee title to the
Aircraft in accordance with ss. 4.5.
17.3.5 INSTALLMENT EBO PURCHASE
Lessee and Lessor acknowledge that at Lessee's election the EBO Price
may be payable in installments as provided in Schedule 5. Lessor and Lessee
agree that if Lessee elects to purchase the Aircraft pursuant to ss.
17.3.1(a)(1) and elects to pay the EBO Price in installments, Lessee agrees to
provide security to Lessor tO secure the unpaid balance of the EBO Price, which
security shall be required to be in an amount and otherwise in form and
substance reasonably satisfactory to Lessor and Owner Participant. Subject to
the foregoing, upon payment of the initial installment of the EBO Price as set
forth in Schedule 5 [with such payment being sufficient to pay all amounts
referenced in ss. 2.10(b) of the Mortgage] together with all amounts otherwisE
payable pursuant to ss. 17.3.3(a) and ss. 17.3.4, Lessor will transfer title to
the Aircraft in accordance with ss. 4.5.
17.3.6 ASSUMPTION OF EQUIPMENT NOTES
Lessor and Lessee agree that, if Lessee elects to purchase the Aircraft
pursuant to ss. 17.3.1(a)(3) oF this Lease, Lessee may elect to assume the
Equipment Notes pursuant to ss. 2.14 of the Mortgage and ss. 11.6 of The
Participation Agreement.
17.4 APPRAISALS
Whenever Fair Market Rental Value or Fair Market Sales Value of the
Aircraft is required to be determined by an appraisal under this ss. 17, Lessee
and Lessor shall appoint a mutually-satisfactory Appraiser tO conduct such
appraisal. If Lessee and Lessor fail to agree upon a satisfactory Appraiser,
then each shall promptly appoint a separate Appraiser, and such Appraisers shall
jointly determine such amount. If either Lessee or Lessor does not so appoint an
Appraiser, the determination of the single Appraiser appointed shall be final.
If two Appraisers are appointed and within seven days after the appointment of
the latter of such two Appraisers, they do not agree upon such amount, such two
Appraisers shall, within eight days after such latter appointment, appoint a
third Appraiser, and such amount shall be determined by such three Appraisers,
who shall make their separate appraisals within seven days following the
appointment of the third Appraiser, and any determination so made shall be
conclusive and binding upon Lessor and Lessee. If no such third Appraiser is
appointed within such eight-day period, either Lessor or Lessee may apply to the
American Arbitration Association to make such appointment, and both parties
shall be bound by such appointment. The foregoing appraisal procedure shall in
any event be completed no less than 125 days before the end of the Base Term or
any Renewal Term (unless such procedure is undertaken in connection with ss. 15
or ss. 17.3.1(a), in which case it shall be completed promptlY). If three
Appraisers are appointed and the difference between the determination which is
further from the middle determination and the middle determination is more than
125% of the difference between the middle determination and the third
determination, then such further determination shall be excluded, the remaining
two determinations shall be averaged, and such average shall be final and
binding upon Lessor and Lessee. Otherwise, the average of all three
determinations shall be final and binding upon Lessor and Lessee. The fees and
expenses of all such Appraisers and such appraisal procedure shall be borne
equally by Lessee and Lessor.
18. MISCELLANEOUS
18.1 AMENDMENTS
No provision of this Lease may be amended, supplemented, waived,
modified, discharged, terminated, or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this Lease
that it purports to amend, supplement, waive, modify, discharge, terminate, or
otherwise vary and is signed by Lessor and Lessee. Each such amendment,
supplement, waiver, modification, discharge, termination, or variance shall be
effective only in the specific instance and for the specific purpose for which
it is given. No provision of this Lease shall be varied or contradicted by oral
communication, course of dealing or performance, or other manner not set forth
in an agreement, document, or instrument in writing and signed by Lessor and
Lessee.
18.2 SEVERABILITY
If any provision hereof shall be held invalid, illegal, or
unenforceable in any respect in any jurisdiction, then, to the extent permitted
by Law, (a) all other provisions hereof shall remain in full force and effect in
such jurisdiction, and (b) such invalidity, illegality, or unenforceability
shall not affect the validity, legality, or enforceability of such provision in
any other jurisdiction. If, however, any Law pursuant to which such provisions
are held invalid, illegal, or unenforceable may be waived, Lessor and Lessee
hereby waive such Law to the full extent permitted, to the end that this Lease
shall be deemed to be a valid and binding agreement in all respects, enforceable
in accordance with its terms.
18.3 THIRD-PARTY BENEFICIARY
This Lease is not intended to provide, and shall not provide, any
Person not a party hereto (other than Mortgagee, the Participants, the Mortgage
Indemnitees, and the Persons referred to in ss. 4.6) with any rights oF any
nature whatsoever against either of the parties hereto, and no Person not a
party hereto (other than Mortgagee, the Participants, the Mortgage Indemnitees,
and the Persons referred to in ss. 4.6) shall have anY right, power, or
privilege in respect of this Lease, or have any benefit or interest arising out
of this Lease.
18.4 REPRODUCTION OF DOCUMENTS
This Lease (including all annexes, schedules, and exhibits hereto) and
all agreements, instruments, and documents relating hereto, including (a)
consents, waivers, and modifications that may hereafter be executed, and (b)
financial statements, certificates, and other information previously or
hereafter furnished to any party hereto, may be reproduced by such party by any
photographic, photostatic, microfilm, micro-card, miniature photographic, or
other similar process, and such party may destroy any original documents so
reproduced. Any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by such
party in the regular course of business), and any enlargement, facsimile, or
further reproduction of such reproduction likewise is admissible in evidence.
18.5 COUNTERPARTS
This Lease and any amendments, waivers, consents, or supplements hereto
may be executed in any number of counterparts (or upon separate signature pages
bound together into one or more counterparts), each fully-executed set of which
when so executed shall be deemed to be an original, and all of which
counterparts, taken together, shall constitute one and the same instrument. The
single fully-executed original of this Lease marked "Original" on the signature
page hereof is the original for chattel paper purposes, and all other
counterparts are duplicates for chattel paper purposes and are marked
"duplicate" on the signature page hereof. No security interest in this Lease may
be perfected by the possession of any counterpart other than the "Original".
18.6 NOTICES
Unless otherwise expressly permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers, and other
communications required or permitted to be made, given, furnished, or filed
hereunder shall be made, given, furnished, or filed, and shall become effective,
in the manner prescribed in ss. 15.7 of the Participation Agreement.
18.7 GOVERNING LAW
THIS LEASE 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 LEASE IS BEING DELIVERED IN THE
STATE OF NEW YORK.
18.8 NO WAIVER
No failure on the part of Lessor to exercise, and no delay by Lessor in
exercising, any of its rights, powers, remedies, or privileges under this Lease
or provided at Law, in equity or otherwise shall impair, prejudice, or
constitute a waiver of any such right, power, remedy, or privilege or be
construed as a waiver of any breach hereof or default hereunder or as an
acquiescence therein, nor shall any single or partial exercise of any such
right, power, remedy, or privilege preclude any other or further exercise
thereof by Lessor or the exercise of any other right, power, remedy, or
privilege by Lessor. No notice to or demand on Lessee in any case shall, unless
otherwise required under this Lease, entitle Lessee to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of Lessor to any other or further action in any circumstances without
notice or demand.
18.9 ENTIRE AGREEMENT
This Lease, together with the other Operative Agreements, on and as of
the date hereof constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and thereof, and all prior understandings
or agreements, whether written or oral, between the parties hereto with respect
to such subject matter are hereby superseded in their entirety.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease
Agreement N___AT.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY, EXCEPT AS EXPRESSLY PROVIDED HEREIN, BUT SOLELY AS TRUSTEE
UNDER THE TRUST AGREEMENT, as Lessor
By:
----------------------------------------------------------
Name:
Title:
AMERICAN TRANS AIR, INC., as Lessee
By:
----------------------------------------------------------
Name:
Title:
[This is the ORIGINAL counterpart of the Lease for chattel paper purposes,
and the receipt hereof is acknowledged by X , -- [print], [title],
WILMINGTON TRUST COMPANY.
[or]
[This is a DUPLICATE executed counterpart, and
is NOT the original counterpart, of the
Lease, for chattel paper purposes.]
AIRCRAFT DESCRIPTION
The Aircraft is a Boeing model 737-800 aircraft, consisting of (1) an airframe
bearing FAA registration no. N___AT and manufacturer's serial no. __________,
(2) two CFM International model CFM56-7 engines (each of which has 750 or more
rated takeoff horsepower or its equivalent), bearing manufacturer's serial nos.
__________ and __________, and (3) all appliances, parts, instruments,
appurtenances, accessories, furnishings, and other equipment or property
incorporated in such airframe and engines.
RETURN ACCEPTANCE SUPPLEMENT N___AT
This Supplement, dated __________, ____, is entered into between First
Security Bank, National Association, a national banking association, not in its
individual capacity but solely as Owner Trustee under Trust Agreement N___AT,
dated as of __________________, ____, with the Owner Participant named therein
(such Owner Trustee, in its capacity as trustee, being referred to as "LESSOR"),
and American Trans Air, Inc. ("Lessee"), an Indiana corporation.
Lessor and Lessee have entered into Lease Agreement N___AT (the
"LEASE"), dated as of [_____________, ____], relating to the Boeing model
737-800 aircraft described below. Terms defined in the Lease have the same
meanings when used in this Supplement.
Lessor and Lessee hereby agree as follows:
1. Lessor and Lessee are executing this Return Acceptance Supplement to
confirm that, on the date hereof, Lessee returned the following Airframe and
Engines to Lessor:
Airframe: U.S. registration no. N___AT; manufacturer's serial no.
__________; and
Engines: two CFM International engines, bearing manufacturer's serial nos.
__________ and ----------. 2. This Return Acceptance Supplement is being
delivered in _____________________.
3. Lessor and Lessee agree that the Lease is terminated, except for the
provisions thereof that expressly survive termination.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Return
Acceptance Supplement N___AT.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY, EXCEPT AS EXPRESSLY PROVIDED HEREIN, BUT SOLELY AS TRUSTEE
UNDER THE TRUST AGREEMENT, as Lessor
By:
----------------------------------------------------------
Name:
Title:
AMERICAN TRANS AIR, INC., as Lessee
By:
----------------------------------------------------------
Name:
Title:
CERTAIN TERMS
DEFINED TERM DEFINITION
Commencement Date __________, 200_
Fixed Rate $__________ per quarterly Payment Date
[60% OF AVERAGE BASIC RENT DURING THE
BASE TERM]
Minimum Liability Insurance Amount (CONFIDENTIAL MATERIAL OMITTED)
Past-Due Rate (CONFIDENTIAL MATERIAL OMITTED)
Scheduled Expiration Date
(a) for the
Base Term, the
20th
anniversary of
the Delivery
Date, and (b)
for a Renewal
Term, the day
before the
first
anniversary of
the first day
of that Renewal
Term
Similar Aircraft Boeing model 737-800 aircraft (other than
the Aircraft)
SLV Rate (CONFIDENTIAL MATERIAL OMITTED)
Threshold Amount (CONFIDENTIAL MATERIAL OMITTED)
BASIC RENT PAYMENTS
PERCENTAGE OF
PAYMENT DATE LESSOR'S COST
BASIC RENT ALLOCATIONS
FROM (BUT ALLOCATION OF
NOT INCLUDING) THROUGH BASIC RENT
- --------------------------------------------------------------------------------
STIPULATED LOSS VALUE
STIPULATED STIPULATED PREPAID BASIC DEFERRED BASIC
LOSS VALUE DATE LOSS VALUE RENT AMOUNT RENT AMOUNT
- --------------------------------------------------------------------------------
TERMINATION VALUE
TERMINATION TERMINATION VALUE PREPAID BASIC DEFERRED BASIC
VALUE DATE RENT AMOUNT RENT AMOUNT
- --------------------------------------------------------------------------------
EBO PRICE SCHEDULE
Unadjusted Adjusted EBO
EBO Price Rent Adjustment Amount
(Percentage of (Percentage of (Percentage of
EBO Date Lessor's Cost) Lessor's Cost) Lessor's Cost)
PERMITTED COUNTRIES
Argentina*
Australia
Austria
Bahamas
Belgium
Bermuda
Brazil*
Canada
Chile*
Denmark
Ecuador*
Egypt*
Finland
France
Germany
Greece*
Hungary*
Iceland
India*
Indonesia*
Ireland
Italy**
Jamaica*
Japan
Liechtenstein*
Luxembourg
Malaysia*
Malta*
Mexico**
Monaco
Morocco*
Netherlands
New Zealand
Norway
Paraguay*
Peoples Republic of China*
Philippines*
Portugal
Republic of China (Taiwan)*
Singapore*
South Africa*
South Korea*
Spain
Sweden
Switzerland
Thailand*
United Kingdom
Uruguay*
Venezuela*
United States of America
*SUBLEASING AND RE-REGISTRATION PERMITTED ONLY WITH OWNER PARTICIPANT'S PRIOR
WRITTEN CONSENT, WHICH CONSENT OWNER PARTICIPANT MAY WITHHOLD IN ITS SOLE AND
ABSOLUTE DISCRETION.
**APPROVED FOR SUBLEASING BUT LESSEE MAY NOT RE-REGISTER IN SUCH COUNTRY
WITHOUT OWNER PARTICIPANT'S PRIOR WRITTEN CONSENT, WHICH CONSENT OWNER
PARTICIPANT MAY WITHHOLD IN ITS SOLE AND ABSOLUTE DISCRETION..
PLACARDS
Leased from
First Security Bank, National Association,
as owner trustee
and mortgaged to
Wilmington Trust Company,
as trustee
ANNEX B
RETURN CONDITIONS
This Annex B shall apply to the return of the Aircraft by or on behalf
of Lessee under the Lease, whether at a Scheduled Expiration Date, upon the
exercise of Lessee's rights under ss. 9 of the Lease, upon thE exercise of
Lessor's remedies following the occurrence of a Lease Event of Default, or
otherwise. However, this Annex B shall not apply (1) if an Event of Loss to the
Aircraft occurs (unless the Aircraft is replaced under ss. 10.1.3 of the Lease),
or (2) if Lessee buys the Aircraft in accordance with ss. 17 of the Lease.
The terms defined in Annex A to Lease Agreement N___AT, when
capitalized as in Annex A, have the same meanings when used in this "Return
Conditions" Annex. Annex A also contains rules of usage that control
construction in this "Return Conditions" Annex.
(CONFIDENTIAL MATERIAL OMITTED)
ANNEX C
MAINTENANCE
The terms defined in Annex A to Lease Agreement N___AT, when
capitalized as in Annex A, have the same meanings when used in this
"Maintenance" Annex. Annex A also contains rules of usage that control
construction in this "Maintenance" Annex.
A. MAINTENANCE.
-----------
Lessee shall maintain, service, repair, and overhaul the Aircraft (or
cause the Aircraft to be maintained, serviced, repaired, and overhauled) in
accordance with (1) maintenance standards required by, or substantially
equivalent to those required by, the FAA or the central civil aviation authority
of Canada, Japan, and the JAA for the Aircraft (the "MAINTENANCE PROGRAM"), so
as (aa) to keep the Aircraft in as good operating condition as originally
delivered hereunder, ordinary wear and tear excepted, and (bb) to keep the
Aircraft in such operating condition as may be necessary to enable the
applicable airworthiness certificate for the Aircraft to be maintained under the
regulations of the FAA or other Aviation Authority then having jurisdiction over
the operation of the Aircraft, other than during (x) temporary periods of
storage in accordance with applicable regulations, (y) maintenance and
modification permitted hereunder, and (z) periods when the FAA or such other
Aviation Authority has revoked or suspended the airworthiness certificates for
Similar Aircraft; and (2) except during periods when a Permitted Sublease is in
effect, the same standards as Lessee uses with respect to similar aircraft of
similar size in its fleet operated by Lessee in similar circumstances and,
during any period in which a Permitted Sublease is in effect, the same standards
used by the Permitted Sublessee with respect to similar aircraft of similar size
in its fleet and operated by the Permitted Sublessee in similar circumstances.
Lessee further agrees that the Aircraft will be maintained, used, serviced,
repaired, overhauled, or inspected in compliance with applicable Laws with
respect to the maintenance of the Aircraft and in compliance with each
applicable airworthiness certificate, license, and registration relating to the
Aircraft issued by the Aviation Authority, other than minor or nonrecurring
violations with respect to which corrective measures are taken upon discovery
thereof and except to the extent Lessee or Permitted Sublessee is contesting in
good faith the validity or application of any such Law or requirement relating
to any such certificate, license, or registration in any reasonable manner which
does not create a material risk of sale, loss, or forfeiture of the Aircraft,
the Airframe, or any Engine or the interest of any Participant therein or a
material risk of criminal liability or material civil penalty against Lessor,
Owner Participant, or Mortgagee. Lessee shall cause the Aircraft Documents to be
maintained in English and promptly furnish Lessor and Owner Participant with
information necessary for filing with applicable governmental aviation
authorities.
B. REPLACEMENT OF PARTS.
--------------------
Except as otherwise provided herein, Lessee will promptly replace (or
cause to be replaced) all Parts that are from time to time incorporated or
installed in or attached to the Aircraft, and that become worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair, or permanently
rendered unfit for use for any reason whatsoever. In addition, Lessee may remove
(or permit to be removed) any Parts in the ordinary course of maintenance,
service, repair, overhaul, or testing, whether or not such Parts are worn out,
lost, stolen, destroyed, seized, confiscated, damaged beyond repair, or
permanently rendered unfit for use; PROVIDED, that, except as otherwise provided
herein, Lessee will replace or cause the replacement of such Parts as promptly
as practicable. All replacement Parts shall be free and clear of all Liens,
except for Permitted Liens and pooling arrangements to the extent permitted by
ss. C below and shall be in good operating condition and (except in thE case of
replacement property installed on the basis of operational exigencies) have a
value and utility not less than the value and utility of the Parts replaced
(assuming such replaced Parts were in the condition required under this Lease).
Except as otherwise provided herein, all Parts at any time removed from the
Aircraft shall remain the property of Lessor, no matter where located, until
they are replaced by Parts that have been incorporated or installed in or
attached to the Aircraft and that meet the requirements for replacement Parts
specified above. As soon as a replacement Part is incorporated or installed in
or attached to the Aircraft as above provided, without further act, (1) title to
the replaced Part shall vest in Lessee (or if a Permitted Sublease is then in
effect, in the Permitted Sublessee) free and clear of all Lessor Liens and all
rights of Lessor, and the replaced Part shall no longer be deemed a Part
hereunder, (2) title to such replacement Part shall vest in Lessor, subject only
to Permitted Liens and pooling arrangements to the extent permitted by ss. C
below and except in the case of replacement property temporarily installed on an
emergency basis, and (3) such replacement Part shall become subject to this
Lease and the Mortgage and be deemed part of the Aircraft for all purposes
hereof and thereof to the same extent as the Parts originally incorporated or
installed in or attached to such Aircraft.
C. POOLING OF PARTS.
----------------
Any Part removed from the Aircraft may be subjected by Lessee or a
Permitted Sublessee to a normal pooling arrangement customary in the airline
industry and entered into in the ordinary course of business of Lessee or such
Permitted Sublessee, so long as a Part replacing such removed Part shall be
incorporated or installed in or attached to the Aircraft in accordance with ss.
B of this Annex C as promptly as practicable afteR the removal of such removed
Part. In addition, any replacement Part when incorporated or installed in or
attached to the Aircraft may be owned by any third party subject to such a
normal pooling arrangement, so long as Lessee or Permitted Sublessee, as
promptly thereafter as reasonably possible, either (1) causes title to such
replacement Part to vest in Lessor in accordance with ss. B of this Annex C,
free and clear of all Liens (excepT Permitted Liens), or (2) replaces (or causes
to be replaced) such replacement Part by incorporating or installing in or
attaching to the Aircraft a further replacement Part owned by Lessee or a
Permitted Sublessee free and clear of all Liens (except Permitted Liens) and by
causing title to such further replacement Part to vest in Lessor in accordance
with ss. B of this Annex C.
D. ALTERATIONS, MODIFICATIONS, AND ADDITIONS.
-----------------------------------------
Lessee shall make (or cause to be made) such alterations and
modifications in and additions to the Aircraft as may be required from time to
time to meet the applicable standards of the FAA or other Aviation Authority
having jurisdiction over the operation of the Aircraft, to the extent made
mandatory in respect of the Aircraft (a "MANDATORY MODIFICATION"); PROVIDED,
that Lessee or any Permitted Sublessee may, in good faith and by appropriate
procedure, contest the validity or application of any law, rule, regulation, or
order in any reasonable manner which does not have more than a DE MINIMIS risk
of adversely affecting Lessor's interest in the Aircraft (and, so long as any
Equipment Notes are outstanding, the Mortgagee) and does not involve more than a
DE MINIMIS risk of sale, forfeiture, or loss of the Aircraft or the interest of
any Participant therein, more than a DE MINIMIS risk of material civil penalty,
or any risk of criminal liability being imposed on Lessor, Owner Participant,
Mortgagee, or the holder of any Equipment Note. In addition, Lessee may make or
permit to be made such alterations and modifications in and additions to the
Aircraft (each an "OPTIONAL MODIFICATION") as Lessee or any Permitted Sublessee
deems desirable in the proper conduct of its business, including removal of
Parts which Lessee deems are obsolete or no longer suitable or appropriate for
use in the Aircraft (PROVIDED, that Lessee's right to remove obsolete Parts will
be limited to Parts having an aggregate original cost not exceeding 1% of
Lessor's Cost of the Aircraft with Lessor having the right to request such parts
be shipped to Owner Participant upon removal at Lessee's expense; PROVIDED, that
no such Optional Modification shall (1) diminish the fair market value,
estimated residual value, utility, or economic useful life of the Aircraft or
any Engine below its fair market value, estimated residual value, utility, or
economic useful life immediately before such Optional Modification (assuming the
Aircraft or such Engine was in the condition required by the Lease immediately
before such Optional Modification), (2) cause the Aircraft to cease to have the
applicable standard airworthiness certificate, or (3) cause the Aircraft to
become "limited use property" within the meaning of Rev. Proc. 79-48. Except as
otherwise provided herein, title to all Parts (other than Removable Parts (as
defined below)) incorporated or installed in or attached to the Aircraft as the
result of such Optional Modification shall, without further act, vest in Lessor
and become subject to this Lease and the Mortgage. Notwithstanding anything to
the contrary in this ss. D, Lessee or a Permitted Sublessee may, at any time
during the Term, removE any Part (such Part being referred to herein as a
"REMOVABLE PART") if (aa) such Part is in addition to, and not in replacement of
or substitution for, any Part originally incorporated or installed in or
attached to the Aircraft at the time of delivery thereof to Lessee or any Part
in replacement of, or substitution for, any such Part, (bb) such Part is not
required to be incorporated or installed in or attached to the Aircraft pursuant
to the terms of ss. A of this Annex C or the first sentence of this ss. D or
pursuant to the terms of any insuraNCE policies required to be carried hereunder
or any applicable law, and (cc) such Part can be removed from the Airframe or
Engine without in any material respect diminishing the fair market value,
estimated residual value, utility, or remaining economic useful life that the
Airframe or Engine would have had at the time of removal had such removal not
occurred, assuming that such Airframe or Engine was in the condition and repair
required to be maintained by the terms hereof and such Removable Part had not
been incorporated or installed in or attached to the Aircraft. Removable Parts
may be leased from or financed by third parties other than Lessor. Title to any
Removable Part shall not vest in Lessor or be subject to the Lien of the
Mortgage; except that any Part not removed before the return to Lessor hereunder
of the Airframe or Engine on which it is incorporated, installed, or attached
shall become the property of Lessor.
E. RECORDS.
-------
Lessee shall maintain (or cause to be maintained) all Aircraft
Documents. All Aircraft Documents that are specific to the Aircraft shall be the
property of Lessor, but shall become the property of Lessee upon Lessee's
purchase of the Aircraft pursuant to the terms of this Lease or upon the
occurrence of an Event of Loss and Lessee's compliance with ss. 10.
ANNEX D
INSURANCE
The terms defined in Annex A to Lease Agreement N___AT, when
capitalized as in Annex A, have the same meanings when used in this "Insurance"
Annex. Annex A also contains rules of usage that control construction in this
"Insurance" Annex.
A. LIABILITY INSURANCE
1. Except as provided in ss. A2 below, Lessee will carry or cause to be
carried at all times, at nO expense to Lessor, Owner Participant, or Mortgagee,
comprehensive airline legal liability (including passenger liability, property
damage, and contractual liability insurance) with respect to the Aircraft which
is (a) in an amount not less than the greater of (x) the amount of comprehensive
airline legal liability insurance from time to time applicable to aircraft owned
or leased and operated by Lessee of the same type and operating on similar
routes as the Aircraft, and (y) the Minimum Liability Insurance Amount per
occurrence; (b) of the type and covering the same risks as from time to time
applicable to aircraft, operated by Lessee and similarly-situated carriers, of
the same type as the Aircraft; and (c) maintained in effect with insurers of
internationally recognized responsibility in the international aviation industry
(such insurers being referred to herein as "APPROVED INSURERS").
2. During any period that the Aircraft is on the ground and not in
operation, Lessee may carry or cause to be carried, in lieu of the insurance
required by ss. A1 above, insurance otherwise conforming with thE provisions of
ss. A1 except that (a) the amounts of coverage shall not be required to exceed
the amounts of publiC liability and property damage insurance from time to time
applicable to aircraft owned or operated by Lessee of the same type as the
Aircraft which are on the ground and not in operation, and (b) the scope of the
risks covered and the type of insurance shall be the same as from time to time
shall be applicable to aircraft owned or operated by Lessee of the same type
which are on the ground and not in operation.
B. HULL INSURANCE
1. Except as provided in ss. B2 below, Lessee will carry or cause to be
carried at all times, at nO expense to Lessor, Owner Participant, or Mortgagee,
with Approved Insurers "all-risk" ground and flight aircraft hull insurance
covering the Aircraft (including the Engines when they are installed on the
Airframe or any other airframe) which is of the type as from time to time
applicable to aircraft operated by Lessee of the same type as the Aircraft for
an amount denominated in United States Dollars not less than the Stipulated Loss
Value of the Aircraft
Any policies of insurance carried in accordance with this ss. B1
covering the Aircraft and any policieS taken out in substitution or replacement
for any such policies (a) shall name Mortgagee (or, if the Lien of the Mortgage
has been discharged, Lessor) as exclusive loss payee for any proceeds to be paid
under such policies up to an amount equal to the Stipulated Loss Value, and (b)
shall provide that (aa) in the event of a loss involving proceeds in excess of
the Threshold Amount, the proceeds in respect of such loss up to an amount equal
to the Stipulated Loss Value for the Aircraft shall be payable to Mortgagee (or,
if the Lien of the Mortgage has been discharged, to Lessor), except in the case
of a loss with respect to an Engine installed on an airframe other than the
Airframe, in which case Lessee (or any Permitted Sublessee) shall endeavor to
arrange for any payment of insurance proceeds in respect of such loss to be held
for the account of Mortgagee (or, if the Lien of the Mortgage has been
discharged, Lessor), whether such payment is made to Lessee (or any Permitted
Sublessee) or any third party [and, if Mortgagee (or Lessor) receives such a
payment otherwise than in respect of an Event of Loss, then, upon receipt of
evidence reasonably satisfactory to Mortgagee (or Lessor) that the damage giving
rise to such payment has been repaired or that such payment is then required to
pay for repairs then being made, Mortgagee (or Lessor) shall pay the amount of
such payment to Lessee or its order], and (bb) the entire amount of any loss
involving proceeds of the Threshold Amount or less or the amount of any proceeds
of any loss in excess of the Stipulated Loss Value for the Aircraft shall be
paid to Lessee or its order unless a Lease Event of Default exists and the
insurers have been notified thereof by Lessor or the Mortgagee. In the case of a
loss with respect to an engine (other than an Engine) installed on the Airframe,
Lessor shall hold any payment to it of any insurance proceeds for that loss for
the account of Lessee or any other third party who is entitled to receive such
proceeds.
2. During any period that the Aircraft is on the ground and not in
operation, Lessee may carry or cause to be carried, in lieu of the insurance
required by ss. B1 above, insurance otherwise conforming with thE provisions of
ss. B1, except that the scope of the risks and the type of insurance shall be
the same as from timE to time applicable to aircraft owned by Lessee of the same
type similarly on the ground and not in operation, PROVIDED, that Lessee shall
maintain insurance against risk of loss or damage to the Aircraft in an amount
equal to the Stipulated Loss Value of the Aircraft during such period that the
Aircraft is on the ground and not in operation.
C. WAR-RISK, HIJACKING, AND ALLIED PERILS INSURANCE
If Lessee (or any Permitted Sublessee) operates or proposes to operate
the Aircraft, the Airframe, or any Engine (1) in any area of recognized
hostilities, or (2) on international routes and Lessee (or such Permitted
Sublessee) maintains war-risk, hijacking, or allied perils insurance for other
aircraft that it operates on such routes or in such areas, Lessee shall maintain
or cause to be maintained war-risk, hijacking, and allied perils insurance of
substantially the same type carried by similar United States commercial air
carriers operating the same or comparable models of aircraft on similar routes
or in such areas, and in no event in an amount less than the Stipulated Loss
Value.
D. GENERAL PROVISIONS
Any policies of insurance carried in accordance with ss.ss. A, B, and
C, including any policies taken out IN substitution or replacement for such
policies:
(1) shall name Lessor, each Participant, the Liquidity Provider (if any),
and Mortgagee (and in respect of liability insurances, to the extent they are
available without unreimbursed additional cost to Lessee, each of their
respective successors, assigns, directors, agents, officers, and employees) as
additional insureds (the "ADDITIONAL INSUREDS"), as their interests may appear;
(2) shall apply worldwide and have no territorial restrictions or
limitations (except only in the case of war, hijacking, and allied perils
insurance required under ss. C, which shall apply to thE fullest extent
available in the international insurance market);
(3) shall provide that, in respect of the interests of the Additional
Insureds in such policies, the insurance shall not be invalidated or impaired by
any act or omission (including misrepresentation and nondisclosure) by Lessee
(or any Permitted Sublessee) or any other Person (including use for illegal
purposes of the Aircraft or any Engine), and shall insure the Additional
Insureds regardless of any breach or violation of any representation, warranty,
declaration, term, or condition contained in such policies by Lessee (or any
Permitted Sublessee);
(4) shall provide that, if the insurers cancel such insurance for any
reason whatsoever, or if it is allowed to lapse for nonpayment of premium, or if
any material change is made in the insurance which adversely affects the
interest of any of the Additional Insureds, such cancellation, lapse, or change
shall not be effective as to the Additional Insureds for 30 days (seven days in
the case of war risk, hijacking, and allied perils insurance) after receipt by
the Additional Insureds of written notice by such insurers of such cancellation,
lapse or change, PROVIDED, that if any notice period specified above is not
reasonably obtainable, such policies shall provide for as long a period of prior
notice as shall then be reasonably obtainable;
(5) shall waive any rights of recourse, subrogation, setoff (including for
unpaid premiums), recoupment, counterclaim, or other deduction, whether by
attachment or otherwise, against each Additional Insured;
(6) shall be primary without right of contribution from any other insurance
that may be available to any Additional Insured;
(7) shall provide that all of the liability insurance provisions thereof,
except the limits of liability, shall operate in all respects as if a separate
policy had been issued covering each party insured thereunder;
(8) shall provide that none of the Additional Insureds shall be liable for
any insurance premium; and
(9) shall contain a 50/50 Clause per Lloyd's Aviation Underwriters'
Association Standard Policy Form AVS 103;
PROVIDED, that any such endorsements may be subject to any limitations on
endorsements generally prevailing in the airline insurance marketplace at the
time (E.G., AVN67B).
E. REPORTS AND CERTIFICATES; OTHER INFORMATION
On or before the Delivery Date and on or before each renewal date of
the insurance policies required hereunder (and no less often than on an annual
basis), Lessee will furnish or cause to be furnished to Lessor, Owner
Participant, and Mortgagee insurance certificates describing in reasonable
detail the insurance maintained hereunder and a report, signed by Lessee's or a
Permitted Sublessee's regular independent insurance broker (the "INSURANCE
BROKER"), stating the opinion of such Insurance Broker that (1) all premiums for
the insurance then due have been paid, and (2) such insurance complies with the
terms of this Annex D. To the extent that such agreement is reasonably
obtainable, Lessee will also cause the Insurance Broker to agree to notify
Lessor, Owner Participant, and Mortgagee in writing of any default in the
payment of any premium and of any other act or omission on the part of Lessee of
which the Insurance Broker has knowledge and which might invalidate or render
unenforceable, in whole or in part, any insurance on the Aircraft or Engines or
cause the cancellation or termination of such insurance, and to notify Lessor,
Owner Participant, and Mortgagee in writing at least 30 days (seven days for
war-risk and allied perils coverage, or such shorter period therefor as may be
available in the international insurance market, as applicable) before the
cancellation, lapse, or materially adverse change of any insurance maintained
pursuant to this Annex D.
F. RIGHT TO PAY PREMIUMS
Each Additional Insured shall have the rights but not the obligations
of an additional named insured. No Additional Insured shall have any obligation
to pay any premium, commission, assessment, or call due on any such insurance
(including reinsurance). Notwithstanding the foregoing, in the event of
cancellation of any required insurance due to the nonpayment of premium, each of
Lessor, Owner Participant, and Mortgagee shall have the option, in its sole
discretion, to pay any such premium and to maintain such coverage, as Lessor,
Owner Participant, or Mortgagee may require, until the scheduled expiry date of
such insurance and, in such event, Lessee shall, upon demand, reimburse Lessor,
Owner Participant, and Mortgagee for amounts that they so pay.
G. DEDUCTIBLES; SELF-INSURANCE
Lessee may self-insure by way of deductible, premium adjustment,
franchise provisions, or otherwise (including, with respect to insurance
maintained pursuant to ss. B, insuring for a maximum amount which is lesS than
the Stipulated Loss Value of the Aircraft) the insurance covering the risks
required to be insured against pursuant to ss. 11 and this Annex D under a
program applicable to all aircraft in Lessee's fleet, but in no casE shall the
aggregate amount of self-insurance (including any applicable deductible) in
regard to ss. 11 and thiS Annex D during any policy year, with respect to the
Aircraft, exceed (CONFIDENTIAL MATERIAL OMITTED). In addition, Lessee (and any
Permitted Sublessee) may self-insure to the extent that any applicable
deductible per aircraft that does not exceed industry standards for major U.S.
airlines.
LEASE AGREEMENT N___AT
dated as of __________, 200_
between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
NOT IN ITS INDIVIDUAL CAPACITY, EXCEPT AS EXPRESSLY
PROVIDED HEREIN, BUT SOLELY AS OWNER TRUSTEE,
Lessor
and
AMERICAN TRANS AIR, INC.,
Lessee
One Boeing model 737-800 aircraft bearing United States registration no.
N___AT and manufacturer's serial no. _____, including two CFM International
model CFM56-7 engines bearing manufacturer's serial nos. _____ and _____
- -------------------------------------------------------------
THIS LEASE HAS BEEN EXECUTED IN COUNTERPARTS; SEE SS. 18.5 FOR INFORMATION
CONCERNING THE RIGHTS OF HOLDERS OF THE VARIOUS COUNTERPARTS.
CONTENTS
1. DEFINITIONS AND CONSTRUCTION................................................1
2. DELIVERY AND ACCEPTANCE.....................................................1
2.1 Delivery and Lease of Aircraft...........................................1
2.2 Acceptance by Lessee.....................................................1
3. TERM AND RENT...............................................................1
3.1 Term 1
3.2 Rent 1
3.3 Payments.................................................................4
4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION 1110 MATTERS..............4
4.1 Disclaimer of Warranties.................................................4
4.2 Certain Agreements of Lessor.............................................5
4.3 Quiet Enjoyment..........................................................5
4.4 Investment of Funds Held as Security.....................................5
4.5 Title Transfers by Lessor................................................6
4.6 Lessor's Interest in Certain Engines.....................................7
4.7 Lease For U.S. Federal Income Tax Law Purposes; Section 1110
of Bankruptcy Code...........................................................7
5. RETURN OF AIRCRAFT..........................................................7
5.1 Compliance with Annex B..................................................7
5.2 Parking and Related Matters..............................................7
5.3 Return of Other Engines..................................................8
5.4 Fuel 8
6. LIENS 8
7. REGISTRATION; OPERATION; POSSESSION AND SUBLEASING..........................9
7.1 Registration and Operation...............................................9
7.2 Possession..............................................................11
7.3 Certain Limitations on Subleasing or Other Relinquishment of Possession.15
8. MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
MODIFICATIONS, AND ADDITIONS; OTHER LESSEE COVENANTS.................. ....16
8.1 Maintenance; Replacement and Pooling of Parts; Alterations,
Modifications, and Additions................................................16
8.2 Information, Certificates, Notices, and Reports.........................16
9. VOLUNTARY TERMINATION UPON OBSOLESCENCE....................................18
9.1 Right of Termination....................................................18
9.2 Election by Lessor to Sell..............................................19
9.3 Retention of Aircraft by Lessor.........................................21
10. LOSS, DESTRUCTION, REQUISITION, ETC.......................................22
10.1 Event of Loss to the Aircraft..........................................22
10.2 Event of Loss to an Engine; Engine Exchanges...........................25
10.3 Conditions to any Replacement..........................................26
10.4 Conveyance to Lessee...................................................28
10.5 Application of Payments................................................28
10.6 Requisition of Aircraft for Use........................................29
10.7 Requisition of an Engine for Use.......................................29
10.8 Application of Payments................................................30
10.9 Application of Payments During Default.................................30
11. INSURANCE.................................................................30
11.1 Lessee's Obligation to Insure..........................................30
11.2 Insurance for Own Account..............................................30
11.3 Indemnification by Government in Lieu of Insurance.....................31
11.4 Application of Insurance Proceeds......................................31
11.5 Application of Payments During Default.................................31
12. INSPECTION................................................................32
13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE...............................33
13.1 In General.............................................................33
13.2 Merger of Lessee.......................................................33
13.3 Assignment as Security for Lessor's Obligations........................34
13.4 Successor Owner Trustee................................................34
14. LEASE EVENTS OF DEFAULT...................................................34
14.1 Payments...............................................................35
14.2 Insurance..............................................................35
14.3 Other Covenants........................................................35
14.4 Representations and Warranties.........................................35
14.5 Bankruptcy and Insolvency..............................................36
14.6 Repudiation or Invalidity of Guarantee.................................36
15. REMEDIES AND WAIVERS......................................................37
15.1 Remedies...............................................................37
15.2 Limitations Under CRAF.................................................40
15.3 Right to Perform for Lessee............................................40
15.4 Determination of Fair Market Rental Value and Fair Market Sales Value..41
15.5 Remedies Cumulative....................................................41
16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC........................41
17. RENEWAL AND PURCHASE OPTIONS..............................................42
17.1 Notices Generally......................................................42
17.2 Renewal Options........................................................42
17.3 Purchase Options.......................................................44
17.4 Appraisals.............................................................46
18. MISCELLANEOUS.............................................................47
18.1 Amendments.............................................................47
18.2 Severability...........................................................48
18.3 Third-Party Beneficiary................................................48
18.4 Reproduction of Documents..............................................48
18.5 Counterparts...........................................................48
18.6 Notices................................................................49
18.7 Governing Law..........................................................49
18.8 No Waiver..............................................................49
18.9 Entire Agreement.......................................................49
ANNEXES, EXHIBITS, AND SCHEDULES
ANNEX A Definitions
ANNEX B Return Conditions
ANNEX C Maintenance
ANNEX D Insurance
EXHIBIT A Aircraft Description
EXHIBIT B Form of Return Acceptance Supplement
SCHEDULE 1 Certain Terms
SCHEDULE 2 Basic Rent Payments
SCHEDULE 2A Basic Rent Allocations
SCHEDULE 3 Stipulated Loss Value Schedule
SCHEDULE 4 Termination Value Schedule
SCHEDULE 5 EBO Price Schedule
SCHEDULE 6 Permitted Countries
SCHEDULE 7 Placards
LEASE AGREEMENT N___AT
This Lease Agreement N___AT (this "LEASE") dated as of __________,
200_, between (1) First Security Bank, National Association, a national banking
association, not in its individual capacity (except as expressly provided
herein) but solely as Owner Trustee ("LESSOR"), and (2) American Trans Air, Inc.
("LESSEE"), an Indiana corporation.
Lessor and Lessee agree as follows:
1. DEFINITIONS AND CONSTRUCTION
The terms defined in Annex A, when capitalized as in Annex A, have the
same meanings when used in this Lease. Annex A also contains rules of usage that
control construction in this Lease.
2. DELIVERY AND ACCEPTANCE
2.1 DELIVERY AND LEASE OF AIRCRAFT
Lessor hereby leases the Aircraft to Lessee for the Term, and Lessee
hereby leases the Aircraft from Lessor for the Term.
2.2 ACCEPTANCE BY LESSEE
Lessee hereby confirms to Lessor that Lessee has duly and irrevocably
accepted delivery of the Aircraft for all purposes of this Lease.
3. TERM AND RENT
3.1 TERM
The Aircraft shall be leased hereunder for the Term, unless this Lease
or the leasing of the Aircraft is earlier terminated in accordance with any
provision of this Lease.
3.2 RENT
3.2.1 BASIC RENT; ADJUSTMENTS TO BASIC RENT AND CERTAIN OTHER AMOUNTS
(a)......During the Base Term, Lessee shall pay to Lessor, on each
Payment Date, Basic Rent in the amount equal to the percentage of Lessor's Cost
specified in Schedule 2 for such Payment Date. The amounts and periods of
Lessee's liability for Basic Rent shall be as allocated in accordance with
Schedule 2A. Such Basic Rent payments and such allocations shall be adjusted
pursuant to ss. 3.2.1(b). During any Renewal Term, Lessee shall pay to Lessor,
on each Payment Date, Basic Rent equal to the Renewal Rent for that Renewal
Term, determined pursuant to ss. 17.2.2.
(b)......Basic Rent, Basic Rent allocations, Stipulated Loss Values,
Termination Values, and EBO Price shall be subject to adjustment as follows:
(1) If Transaction Expenses paid by Lessor pursuant to ss. 9.2
of the Participation Agreement are determined to be other than 2.0% of
Lessor's Cost, then the Basic Rent percentages in Schedule 2, the Basic
Rent allocations in Schedule 2A, the Stipulated Loss Value percentages
in Schedule 3, the Termination Value percentages in Schedule 4, and the
EBO Price shall be recalculated (upwards or downwards) by Owner
Participant, on or before the 120th day after the Delivery Date using
the same methods and assumptions used to calculate original Basic Rent,
EBO Price, Stipulated Loss Value, and Termination Value percentages, in
order (aa) to maintain Owner Participant's Net Economic Return, and
(bb) to the extent possible consistent with clause (aa) of this ss.
3.2.1(b)(1), to minimize the Net Present Value of Rents to Lessee.
(2) Notwithstanding the foregoing, in no event shall any
adjustment to the EBO Price be made such that the EBO Price is less
than the greatest of (aa) the adjusted Stipulated Loss Value as of the
EBO Date, (bb) the estimated fair market value of the Aircraft on the
EBO Date as set forth in the Appraisal referred to in ss. 5.1.2(m) of
the Participation Agreement, and (cc) the sum of the present values of
(i) Basic Rent payable, as adjusted, during the Base Term after the EBO
Date, and (ii) the appraised fair market value of the Aircraft at the
end of the Base Term as estimated in the Appraisal referred to in ss.
5.1.2(m) of the Participation Agreement, each discounted back to the
EBO Date (using a discount rate of 16.5 %).
(c) All adjustments pursuant to ss. 3.2.1(b) shall be made as promptly
as practicable after either Owner Participant or Lessee gives notice to the
other that an event has occurred that requires an adjustment. Owner Participant
and Lessee shall give prompt notice to the other of any event requiring an
adjustment. Any recalculation of the percentages of Basic Rent payments, Basic
Rent allocations, Stipulated Loss Value, Termination Value, and EBO Price shall
be prepared by Owner Participant, subject to verification at the request of
Lessee in accordance with this ss. 3.2.1(c), on the basis of the same
methodology and assumptions used by Owner Participant in determining the
percentages of Basic Rent, Stipulated Loss Value, Termination Value, and EBO
Price as of the Delivery Date, except as such assumptions have been modified to
reflect the events giving rise to adjustments hereunder and taking into account
the law applicable at the time of such adjustment. Promptly after an adjustment
is made hereunder, Owner Participant shall deliver to Lessee a description of
such adjustment, setting forth in reasonable detail the calculation thereof. All
adjustments (1) shall be made so as to avoid characterization of the Lease as a
"disqualified leaseback or long-term agreement" within the meaning of Code ss.
467 and Treasury Regulations thereunder, and (2) shall be in compliance with the
requirements of ss. 4(1) and ss. 4(6) of Revenue Procedure 75-21 and ss.ss.
4.02(5), 4.07(l), and 4.07(2) of Revenue Procedure 75-28, except to the extent
that on the Delivery Date the Lease constituted a "disqualified leaseback or
long-term agreement" or was not in compliance with the Revenue Procedure
sections referred to in clause (2). In connection with any such adjustments to
payments and allocations of Basic Rent, appropriate corresponding adjustments
shall be made to the percentages set forth on Schedules 3 and 4 in the columns
headed "Deferred Basic Rent Amount" and "Prepaid Basic Rent Amount". All of the
foregoing adjustments shall be set forth in an amendment to this Lease.
(d) If Lessee believes that any calculations by Owner Participant
pursuant to ss. 3.2.1(c) are in error, and if, after consultation, Lessee and
Owner Participant do not agree on an adjustment, then a nationally-recognized
firm of accountants selected by Lessee and reasonably satisfactory to Owner
Participant shall verify such calculations. Owner Participant will make
available to such firm (but not to Lessee or any representative of Lessee) the
methodology and assumptions referred to in ss. 3.2.1(c) and any modifications
thereto made to reflect the events giving rise to adjustments hereunder (subject
to the execution by such firm of a confidentiality agreement, reasonably
acceptable to Owner Participant, prohibiting disclosure of such methodology and
assumptions to any third party). The determination by such firm of accountants
shall be final. Lessee will pay the reasonable costs and expenses of such
verification by such accountants, except that if it results in (1) a decrease in
Basic Rent which decreases the remaining Net Present Value of Rents by ten or
more basis points from the remaining Net Present Value of Rents as recalculated
by Owner Participant, or (2) a material reduction in Stipulated Loss Values,
Termination Values, or the EBO Price, then Owner Participant will pay such costs
and expenses.
3.2.2 SUPPLEMENTAL RENT
Lessee shall pay to Lessor, or to whomever is entitled to it, any and
all Supplemental Rent when and as it becomes due and owing. Lessee will also pay
to Lessor, or to whomever is entitled to it, as Supplemental Rent, to the extent
permitted by applicable Law, interest at the Past-Due Rate on any part of any
amount of Rent (including Supplemental Rent) not paid by 11:00 a.m., New York
time, on the date when due (so long as, in the case of any Person not a party to
the Participation Agreement, Lessee had received timely notice of the account to
which such payment was required to be made), for the period from and including
the date on which the same was due to (but excluding) the date of payment in
full.
3.3 PAYMENTS
(a) Payments of Rent by Lessee shall be paid by wire transfer of
immediately available Dollars, not later than 11:00 a.m., New York City time, on
the date when due, to the account of Lessor specified in Schedule 1 to the
Participation Agreement (or to such other account in the United States as Lessor
specifies to Lessee in writing at least 10 Business Days before such payment of
Rent is due), or, in the case of any payment of Supplemental Rent expressly
payable to a Person other than Lessor, to the Person that shall be entitled
thereto, to such account in the United States as such Person specifies from time
to time to Lessee at least 10 Business Days before such payment of Rent is due.
(b) Except as otherwise expressly provided herein, whenever any payment
of Rent shall be due on a day that is not a Business Day, such payment shall be
made on the next day that is a Business Day, and, if such payment is made on
such next Business Day, no interest shall accrue on the amount of such payment
during such extension.
(c) All computations of interest under this Lease shall be made on the
basis of a year of 360 days composed of twelve 30-day months.
4. DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION 1110 MATTERS
4.1 DISCLAIMER OF WARRANTIES
LESSOR LEASES AND LESSEE TAKES THE AIRCRAFT "AS-IS, WHERE-IS." LESSEE
ACKNOWLEDGES AND AGREES THAT, AS BETWEEN LESSEE AND LESSOR AND OWNER
PARTICIPANT, (A) LESSEE HAS SELECTED THE AIRCRAFT AND MANUFACTURER THEREOF, AND
(B) NEITHER LESSOR NOR OWNER PARTICIPANT MAKES, HAS MADE, OR SHALL BE DEEMED TO
HAVE MADE, AND EACH WILL BE DEEMED TO HAVE EXPRESSLY DISCLAIMED, ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO:
(1) THE AIRWORTHINESS, VALUE, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY, OR FITNESS FOR USE OR FOR ANY PARTICULAR PURPOSE OF THE
AIRFRAME, ANY ENGINE, OR ANY PART THEREOF;
(2) THE QUALITY OF THE MATERIAL OR WORKMANSHIP WITH RESPECT TO THE
AIRFRAME, ANY ENGINE, OR ANY PART THEREOF;
(3) THE ABSENCE OF LATENT OR ANY OTHER DEFECT IN THE AIRFRAME, ANY ENGINE,
OR ANY PART THEREOF, WHETHER OR NOT DISCOVERABLE;
(4) THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK, OR COPYRIGHT,
OR THE LIKE; OR
(5) THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT, OR ANY
OTHER IMPLIED REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT TO THE
AIRFRAME, ANY ENGINE, OR ANY PART THEREOF.
4.2 CERTAIN AGREEMENTS OF LESSOR
Unless an Event of Default exists, Lessor agrees to make available to
Lessee such rights as Lessor may have under any warranty with respect to the
Aircraft made, or made available, by Airframe Manufacturer or Engine
Manufacturer, or any of their subcontractors or suppliers, pursuant to and in
accordance with the terms of the Purchase Agreement Assignment.
4.3 QUIET ENJOYMENT
So long as no Event of Default exists, Lessor shall not interfere with
Lessee's rights hereunder to continued possession, use, and operation of, and
quiet enjoyment of, the Aircraft during the Term.
4.4 INVESTMENT OF FUNDS HELD AS SECURITY
4.4.1 INVESTMENT
Any money required to be paid to or retained by Lessor that is required
to be paid to Lessee or applied as provided herein shall, until paid to Lessee
as provided herein or applied as provided herein, be invested by Lessor from
time to time as directed in writing by Lessee (or, if Lessee does not so direct,
by or as directed by Lessor in its sole discretion) and at Lessee's risk and
expense in Cash Equivalents so long as such Cash Equivalents specified by Lessee
or Lessor (as applicable) can be acquired by Lessor using its reasonable best
efforts.
4.4.2 PAYMENT OF GAIN OR LOSS
Any net gain (including interest received) realized as the result of
investments pursuant to ss. 4.4.1 (net of any fees, commissions, and other
reasonable expenses incurred in connection with such investment) shall be held
and applied in the same manner as the principal amount is to be held and applied
hereunder. Lessee will promptly pay to Lessor, on demand, the amount of any loss
realized as the result of any such investment (together with any fees,
commissions, and other reasonable expenses incurred in connection with such
investment), such amount so paid to be held and applied by Lessor as
contemplated in ss. 4.4.1.
4.4.3 LIMITATION OF LIABILITY
All investments under this ss. 4.4 shall be at Lessee's risk and
expense, and Lessor shall not be liable for any loss resulting from any
investment made under this ss. 4.4 other than by reason of its willful
misconduct or gross negligence. Any such investment may be sold (without regard
to its maturity) by Lessor without instructions whenever such sale is necessary
to make a distribution required by this Lease.
4.5 TITLE TRANSFERS BY LESSOR
If Lessor shall be required to transfer title to the Aircraft, the
Airframe, or any Engine to Lessee or any other Person pursuant to this Lease,
then (a) Lessor shall (1) transfer to Lessee or such other Person (as
applicable) all of Lessor's right, title and interest in and to the Aircraft,
the Airframe, or such Engine (as applicable), free and clear of all Lessor Liens
attributable to Lessor, FSB, or Owner Participant, (2) assign to Lessee or such
other Person (as applicable), if and to the extent permitted under the Purchase
Agreement, all warranties of Airframe Manufacturer and Engine Manufacturer with
respect to the Aircraft, the Airframe, or such Engine, and (3) assign to Lessee
or such other Person (as applicable), if and to the extent permitted, all
claims, if any, for damage to the Aircraft, the Airframe, or such Engine, in
each case free of Lessor Liens attributable to Lessor, FSB, or Owner
Participant, and without recourse or warranty of any kind whatsoever (except as
to the transfer described in clause (1) above and as to the absence of such
Lessor Liens), and (b) Lessor shall promptly deliver to Lessee or such other
Person (as applicable), a bill of sale and agreements of assignment, evidencing
such transfer and assignment, and such other instruments of transfer, all in
form and substance reasonably satisfactory to Lessee (or such other Person, as
applicable), as Lessee (or such other Person, as applicable) may reasonably
request and furnish to Lessor.
4.6 LESSOR'S INTEREST IN CERTAIN ENGINES
Lessor hereby agrees for the benefit of each lessor, conditional
seller, or secured party of any engine (other than an Engine) leased, purchased,
or owned by Lessee or any Permitted Sublessee subject to a lease, conditional
sale, or other security agreement that Lessor will not acquire or claim, as
against such lessor, conditional seller, or secured party, any right, title, or
interest in such engine as the result of the installation of such engine on the
Airframe at any time while such engine is subject to such lease, conditional
sale, or other security agreement and owned by such lessor or conditional seller
or subject to a security interest in favor of such secured party.
4.7 LEASE FOR U.S. FEDERAL INCOME TAX LAW PURPOSES; SECTION 1110 OF
BANKRUPTCY CODE
(a) Lessee and Lessor agree that this Lease is, and shall be treated as, a
lease for U.S. federal income tax purposes of the Aircraft, Airframe, Engines,
and Parts.
(b) Lessee and Lessor intend that Lessor shall be entitled to the benefits
of Section 1110 with respect to the right to take possession of the Aircraft,
Airframe, Engines, and Parts as provided in this Lease.
5. RETURN OF AIRCRAFT
5.1 COMPLIANCE WITH ANNEX B
Lessee shall comply with each of the provisions of Annex B, which
provisions are hereby incorporated by this reference as if set forth in full
herein.
5.2 PARKING AND RELATED MATTERS
If Lessor gives written notice to Lessee, not less than 10 days nor
more than 120 days before the end of the Term, requesting parking of the
Aircraft upon its return hereunder, Lessee will assist Lessor in procuring (or
cause Lessor to be provided with) outdoor parking facilities for the Aircraft
for a storage period up to 30 days, starting on the date of such return, and
upon Lessor's request to Lessee made at least 10 days before the end of such
initial 30-day period, for an additional 90-day period commencing upon
expiration of such initial period, at such storage facility in the 48 contiguous
states of the United States as Lessee selects. Such storage shall be at Lessor's
risk, and Lessor shall pay all applicable storage fees, except that Lessee shall
pay the parking fees for the initial 30-day storage period; PROVIDED FURTHER
that Lessee's obligation to provide parking shall be subject to Lessor's
entering into an agreement with the storage facility, before the storage period
begins, providing that Lessor shall bear all maintenance charges and other costs
incurred, and that Lessee's obligations hereunder will be solely for the payment
of parking fees for the initial 30-day period pursuant to the terms of this ss.
5.2. Unless Lessor and Lessee otherwise agree, the location of such parking will
also constitute the return location for the Aircraft.
5.3 RETURN OF OTHER ENGINES
If any Engine owned by Lessor is not installed on the Airframe at the
time of return hereunder, Lessee shall return the Airframe hereunder with a
Replacement Engine meeting the requirements of, and in accordance with, ss. 10
and Annex B. Thereupon, Lessor will transfer to Lessee the Engine constituting
part of such Aircraft but not installed on such Airframe at the time of the
return of the Airframe.
5.4 FUEL
Upon the return of the Airframe upon any termination of this Lease,
Lessor shall pay Lessee, as compensation for any fuel or oil contained in the
fuel or oil tanks of such Airframe, the value of such fuel or oil at the price
paid by Lessee for such fuel or oil. However, if the Aircraft is being returned
in connection with the exercise of remedies pursuant to ss. 15, Lessor shall
have no obligation to make such payment to Lessee until Lessor shall have been
paid all amounts due to it pursuant to ss. 15.
6. LIENS
Lessee shall not, directly or indirectly, create, incur, assume, or
suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any
Engine, or any Part, title to any of the foregoing, or any interest therein, or
Lessee's rights in and to this Lease or any Permitted Sublease, except (a) the
rights of Lessor, Owner Participant, and Lessee under the Operative Agreements,
and of any Permitted Sublessee under any Permitted Sublease; (b) Lessor Liens;
(c) the rights of others under agreements or arrangements to the extent
permitted by ss. 7.2, ss. 7.3, or Annex C; (d) Liens for Taxes either not yet
due or being contested in good faith by appropriate proceedings if such Liens
and such proceedings do not involve more than a DE MINIMIS risk of the sale,
forfeiture, or loss of the Aircraft, the Airframe, any Engine, or the interest
of Owner Participant therein; (e) materialmen's, mechanics', workers',
repairers', employees', or other like Liens arising in the ordinary course of
business for amounts the payment of which either is not yet delinquent for more
than 60 days or is being contested in good faith by appropriate proceedings, if
such Liens and such proceedings do not involve any more than a DE MINIMIS risk
of the sale, forfeiture, or loss of the Aircraft, the Airframe, any Engine, or
the interest of Owner Participant therein; (f) Liens arising out of any judgment
or award against Lessee, if, within 60 days after the entry thereof, that
judgment or award is discharged or vacated, or has its execution stayed pending
appeal, or is discharged, vacated, or reversed within 60 days after the
expiration of such stay, and if during any such 60-day period there is not, or
any such judgment or award does not involve, more than a DE MINIMIS risk of the
sale, forfeiture, or loss of the Aircraft, the Airframe, any Engine, or the
interest of Owner Participant therein; and (g) any other Lien with respect to
which Lessee or any Permitted Sublessee provides a bond, cash collateral, or
other security adequate in the reasonable opinion of Lessor. Lessee shall
promptly take or cause to be taken such action as may be necessary duly to
discharge (by bonding or otherwise) any Lien not excepted above that arises in
respect of the Aircraft, the Airframe, any Engine, or any Part during the Term.
7. REGISTRATION; OPERATION; POSSESSION AND SUBLEASING
7.1 REGISTRATION AND OPERATION
7.1.1 REGISTRATION AND RECORDATION
Subject to Lessor's and Owner Participant's compliance with their
obligations under ss. 13 of the Participation Agreement, Lessee shall cause the
Aircraft to be, and at all times during the Term to remain, duly registered with
the FAA under the Transportation Code or with such other country of registry as
shall be permitted under ss. 7.1.2 hereof, in the name of Lessor as owner and
lessor (except to the extent that such registration under the Transportation
Code is prevented or lost because of Lessor's or Owner Participant's failure to
comply with the citizenship requirements for registration of the Aircraft under
the Transportation Code). Lessor shall execute and deliver all such documents as
Lessee or any Permitted Sublessee reasonably requests for the purpose of
effecting and continuing such registration. Each of the registrations and
recordations referenced in this ss. 7.1.1 will be at Lessee's cost and expense,
except as otherwise provided in this Lease.
7.1.2 REREGISTRATION
After the Tax Attribute Period (or before such date, provided Lessee
pre-pays on a lump-sum basis any liability due under the Tax Indemnity Agreement
as a result of such registration on the assumption that such registration would
continue for the remainder of the term of the Permitted Sublease described in
ss. 7.6.11(a)(3) of the Participation Agreement, if no Special Default or Event
of Default exists, Lessee may, by written notice to Lessor (with a copy of such
notice to Owner Participant), request to change the country of registration of
the Aircraft. Any such change in registration shall be effected only in
compliance with, and subject to all of the conditions set forth in, ss. 7.6.11
of the Participation Agreement.
7.1.3 MARKINGS
If permitted by applicable Law, on or reasonably promptly after the
Delivery Date, Lessee will cause to be affixed to, and maintained in, the
cockpit of the Airframe and on each Engine, in each case in a clearly visible
location, a placard of a reasonable size and shape bearing the legend set forth
in Schedule 6. Such placards may be removed temporarily, if necessary, in the
course of maintenance of the Airframe or Engines. If any such placard is damaged
or becomes illegible, Lessee shall promptly replace it with a placard complying
with the requirements of this ss. 7.1.3.
7.1.4 COMPLIANCE WITH LAWS
Lessee shall not, and shall not allow any other Person to, operate,
use, maintain, service, repair, overhaul, improve, or modify the Aircraft (a) in
violation of any Law binding on or applicable to the Aircraft, the Airframe, or
any Engine, or (b) in violation of any airworthiness certificate, license, or
registration of any Government Entity relating to the Aircraft, the Airframe, or
any Engine, except (1) immaterial or non-recurring violations with respect to
which corrective measures are taken promptly by Lessee or a Permitted Sublessee
(as applicable) upon discovery thereof, and (2) to the extent Lessee or any
Permitted Sublessee is contesting the validity or application of any such Law or
requirement relating to any such certificate, license, or registration in good
faith in any reasonable manner which does not involve more than a DE MINIMIS
risk of the sale, forfeiture, or loss of the Aircraft, the Airframe, any Engine
or the interest of Owner Participant therein, any risk of criminal liability or
of material civil penalty against Lessor or Owner Participant.
7.1.5 OPERATION
Lessee agrees not to operate, use, or locate the Aircraft, the
Airframe, or any Engine, or allow the Aircraft, the Airframe, or any Engine to
be operated, used, or located, (a) in any area excluded from coverage by any
insurance required by the terms of ss. 11, except in the case of a requisition
by the U.S. Government where the U.S. Government provides an indemnity in lieu
of such insurance, or insurance from the U.S. Government, covering such area, in
accordance with ss. 11.3, or (b) in any recognized area of hostilities unless
fully covered in accordance with Annex D by war-risk insurance as required by
the terms of ss. 11 (including ss. 11.3), unless in any case referred to in this
ss. 7.1.5 the Aircraft is only temporarily operated, used, or located in such
area as a result of an emergency, equipment malfunction, navigational error,
hijacking, weather condition, or other similar unforeseen circumstances, so long
as Lessee diligently and in good faith proceeds to remove the Aircraft from such
area.
7.2 POSSESSION
Lessee will not, without the prior written consent of Lessor and Owner
Participant, sublease or otherwise in any manner deliver, transfer, or
relinquish possession of the Aircraft, the Airframe, or any Engine, or install
any Engine, or permit any Engine to be installed, on any airframe other than the
Airframe; PROVIDED, that, subject to the provisions of ss. 7.3, Lessee may,
without such prior written consent:
7.2.1 INTERCHANGE AND POOLING
Subject or permit any Permitted Sublessee to subject (a) the Airframe
to normal interchange agreements (provided that (1) any such
interchange agreement does not contemplate that Lessee (or a Permitted
Sublessee) will be out of possession of the Airframe for more than five
consecutive days at a time (absent weather, maintenance, or other
exigencies), and (2) the party to such interchange agreement is a
Permitted Air Carrier, not in bankruptcy, organized and having its
principal place of business in a country with which the United States
then maintains normal diplomatic relations and which recognizes and
gives effect to the rights, title, and interests of Lessor in the
Airframe), or (b) any Engine (but only if such Engine is then installed
upon an aircraft) to normal interchange agreements or pooling
agreements or arrangements, in each case customary in the commercial
airline industry and entered into by Lessee or such Permitted Sublessee
in the ordinary course of business; PROVIDED, that (1) no such
agreement or arrangement shall require any transfer of Lessor's title
to the Airframe or such Engine, and (2) if Lessor's title to any such
Engine is nevertheless divested under any such agreement or
arrangement, then such Engine shall be deemed to have suffered an Event
of Loss as of the date of such divestiture, and Lessee shall be
required to replace such Engine with a Replacement Engine meeting the
requirements of, and in accordance with, ss. 10.
7.2.2 TESTING AND SERVICE
Deliver or permit any Permitted Sublessee to deliver possession of the
Aircraft, the Airframe, any Engine, or any Part (a) to the manufacturer
thereof or to any third-party maintenance provider, for testing,
service, repair, maintenance, or overhaul work on the Aircraft,
Airframe, any Engine, or any Part, or, to the extent required or
permitted by the terms of Annex C, for alterations or modifications in
or additions to the Aircraft, the Airframe, or any Engine, or (b) to
any Person for the purpose of transport to a Person referred to in the
preceding clause (a).
7.2.3 TRANSFER TO U.S. GOVERNMENT
Transfer or permit any Permitted Sublessee to transfer possession of
the Aircraft, the Airframe, or any Engine to the U.S. Government
pursuant to CRAF or otherwise, in which event Lessee shall promptly
notify Lessor in writing of any such transfer of possession (and, in
the case of any transfer pursuant to CRAF, in such notification shall
identify by name, address, and telephone numbers the Contracting Office
Representative(s) for the Military Airlift Command of the United States
Air Force to whom notices must be given and to whom requests or claims
must be made to the extent applicable under CRAF).
7.2.4 INSTALLATION OF ENGINES ON OWNED AIRCRAFT
Install or permit any Permitted Sublessee to install an Engine on an
airframe owned by Lessee or such Permitted Sublessee free and clear of
all Liens except (a) Permitted Liens, (b) Liens that do not apply to
the Engines, and (c) the rights of third parties under normal
interchange or pooling agreements and arrangements of the type
permitted under ss. 7.2.1.
7.2.5 INSTALLATION OF ENGINES ON OTHER AIRFRAMES
Install or permit any Permitted Sublessee to install an Engine on an
airframe leased to Lessee or such Permitted Sublessee, or purchased or
owned by Lessee or such Permitted Sublessee subject to a security
agreement, conditional sale, or other secured financing arrangement,
but only if (a) such airframe is free and clear of all Liens except (1)
the rights of the parties to such lease or secured financing
arrangement, covering such airframe, and (2) Liens of the type
permitted by clauses (a) and (b) of ss. 7.2.4, and (b) Lessee or such
Permitted Sublessee has received from the lessor, secured party, or
conditional seller, in respect of such airframe, a written agreement
(which may be a copy of the lease, security agreement, conditional sale
agreement, or other agreement covering such airframe), whereby such
Person agrees that it will not acquire or claim any right, title, or
interest in, or Lien on, such Engine by reason of the installation of
such Engine on such airframe at any time while such Engine is subject
to this Lease or is owned by Lessor.
7.2.6 INSTALLATIONS OF ENGINES ON FINANCED AIRCRAFT
Install or permit any Permitted Sublessee to install an Engine on an
airframe owned by Lessee or such Permitted Sublessee, leased to Lessee
or such Permitted Sublessee, or purchased or owned by Lessee or such
Permitted Sublessee subject to a conditional sale or other security
agreement under circumstances where neither ss. 7.2.4 nor ss. 7.2.5
applies; PROVIDED, that any such installation shall be deemed an Event
of Loss with respect to such Engine, and Lessee shall comply with ss.
10.2 in respect thereof. Until ss. 10.2 has been fully complied with,
Lessor's interest in such Engine shall continue in full force and
effect.
7.2.7 SUBLEASING
With respect to the Aircraft, the Airframe, or any Engine, if no Special
Default or Event of Default exists, enter into a sublease with any Permitted Air
Carrier, but only if:
(a) Lessee provides written notice to Lessor (with a copy to Owner
Participant) (such notice in the event of a sublease to a U.S. Air Carrier to be
given promptly after entering into any such sublease, and, in the case of a
sublease to any other Permitted Air Carrier, 10 Business Days in advance of
entering into such sublease);
(b) at the time that Lessee enters into such sublease, such Permitted Air
Carrier shall not be subject to any bankruptcy, insolvency, liquidation,
reorganization, dissolution, or similar proceeding, and shall not have
substantially all of its property in the possession of any liquidator, trustee,
receiver, or similar Person;
(c) any such sublease (1) shall not extend beyond the expiration of the
Base Term or any Renewal Term then in effect or irrevocably committed to by
Lessee, or contain a purchase option, unless expressly subject to Lessee's
exercise of its renewal or purchase options in accordance with the terms of ss.
17, and in any event subject to the requirements of clause (4) of this ss.
7.2.7(c), (2) shall not contain any purchase option exercisable at a date
earlier than such date permitted under ss. 17.3, (3) shall explicitly require
that sublessee or sublessor (or both with specified allocations) will fully
comply with the Lease's maintenance, operation, possession, inspection, and
insurance requirements, and (4) shall be expressly subject and subordinate to
all the terms of this Lease and to Lessor's rights, powers, and remedies
hereunder, including Lessor's rights under ss. 15 to repossess the Aircraft and
to terminate such sublease if an Event of Default exists;
(d) in connection with a sublease to a Permitted Foreign Air Carrier, (1)
the United States maintains diplomatic relations with the country of domicile of
such Permitted Foreign Air Carrier, and (2) Lessee furnishes to Lessor and Owner
Participant a favorable opinion of counsel, reasonably satisfactory to Lessor
and Owner Participant, located in the country of domicile of such Permitted
Foreign Air Carrier, that (aa) the terms of such sublease are legal, valid, and
binding obligations of the parties thereto, enforceable under the laws of such
jurisdiction, (bb) it is not necessary for Owner Participant or Lessor to
register or qualify to do business in such jurisdiction, if not already so
registered or qualified, as a result of the proposed sublease, (cc) Lessor's
title to, the Aircraft, Airframe, and Engines will be recognized in such
jurisdiction, (dd) the Laws of such jurisdiction of domicile require fair
compensation by the government of such jurisdiction, payable in a currency
freely convertible into Dollars, for the loss of title to the Aircraft,
Airframe, or Engines in the event of the requisition by such government of such
title (unless Lessee provides insurance in the amounts required with respect to
hull insurance under ss. 11 covering the requisition of title to the Aircraft,
Airframe, or Engines by the government of such jurisdiction so long as the
Aircraft, Airframe, or Engines are subject to such sublease), (ee) such
Permitted Air Carrier's agreement that its rights under the sublease are subject
and subordinate to all the terms of this Lease is enforceable against such
Permitted Air Carrier under applicable Law, and (ff) such sublease will subject
Lessor and Owner Participant to no greater tort liability than in the United
States of America, OR, if such sublease will subject Lessor or Owner Participant
to greater tort liability than in the United States of America, Lessee (or
Permitted Sublessee) has provided insurance to insure against such additional
liability;
(e) Lessee furnishes to Lessor and Owner Participant evidence reasonably
satisfactory to Lessor that the insurance required byss. 11 remains in effect;
(f) all necessary documents are duly filed, registered, or recorded in such
public offices as are required fully to preserve the title of Lessor, in the
Aircraft, Airframe, and Engines;
(g) Lessee shall reimburse Lessor and Owner Participant for all of their
reasonable out-of-pocket fees and expenses (including reasonable fees and
disbursements of counsel) incurred in connection with any such sublease;
(h) no such sublease shall be made to a "tax exempt entity" as defined in
ss. 168(h)(2) of the Code, including a Permitted Foreign Air Carrier, before the
end of the Tax Attribute Period unless Lessee prepays on a lump-sum basis any
liability due under the Tax Indemnity Agreement as a result of such sublease
based upon the assumption that such sublease were to continue for the remainder
of the term of such sublease;
(i) no such sublease will adversely affect Lessor's protection under
Section 1110;
(j) no such sublease shall permit the Permitted Sublessee thereunder to
sub-sublease or transfer the Airframe or any Engine, except for transfers by a
Permitted sublessee permitted by the foregoing provisions of this ss. 7.2, and
except that a Permitted Sublessee who is a manufacturer may sub-sublease to any
Person to whom a sublease would be permitted under this ss. 7.2.7; PROVIDED,
that (1) such sub-sublease shall not permit any sub-sub-subleasing of the
Aircraft, the Airframe, or any Engine, and (2) such sub-sublease must meet the
requirement of a Permitted Sublease;
(k) if the term of such Sublease is greater than one year, Lessee will
assign such Sublease to Lessor as security for Lessee's obligations hereunder.
7.3 CERTAIN LIMITATIONS ON SUBLEASING OR OTHER RELINQUISHMENT OF POSSESSION
Notwithstanding anything to the contrary in ss. 7.2:
(a) The rights of any Person who receives possession of the Aircraft in
accordance with ss. 7.2 shall be subject and subordinate to all the terms of
this Lease, and to Lessor's rights, powers, and remedies hereunder, including
(1) Lessor's right to repossess the Aircraft pursuant to ss. 15, (2) Lessor's
right to terminate and avoid such sublease, delivery, transfer, or
relinquishment of possession if an Event of Default exists, and (3) the right to
require such Person to deliver the Aircraft, Airframe, and Engines forthwith if
an Event of Default exists.
(b) Lessee shall remain primarily liable hereunder for the performance
of all the terms of this Lease to the same extent as if such transfer had not
occurred, and no transfer of possession of the Aircraft, the Airframe, any
Engine, or any Part shall in any way discharge or diminish any of Lessee's
obligations to Lessor hereunder or under any other Operative Agreement.
(c) Lessee shall ensure that no sublease, delivery, transfer, or
relinquishment permitted under ss. 7.2 shall affect the United States
registration of the Aircraft, unless also made in accordance with the provisions
of ss. 7.1.2.
(d) Any event that constitutes or would, with the passage of time,
constitute an Event of Loss under clause (3), (4), or (5) of the definition of
such term (as set forth in Annex A) shall not be deemed to violate the
provisions of ss. 7.2.
(e) No Wet Lease shall constitute a delivery, transfer, or
relinquishment of possession for purposes of ss. 7.2, nor shall it be prohibited
by the terms hereof.
8. MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
MODIFICATIONS, AND ADDITIONS; OTHER LESSEE COVENANTS
8.1 MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS,
MODIFICATIONS, AND ADDITIONS
At all times during the Term, Lessee shall comply with (or cause to be
complied with) each of the provisions of Annex C, which provisions are hereby
incorporated by this reference as if set forth in full herein.
8.2 INFORMATION, CERTIFICATES, NOTICES, AND REPORTS
8.2.1 FINANCIAL INFORMATION
Lessee will furnish to Lessor and Owner Participant:
(a) within 90 days after the end of each of the first three
fiscal quarters in each fiscal year of Lessee, a consolidated balance
sheet of Lessee and Guarantor as of the end of such quarter, and
related statements of income and cash flows for the period commencing
at the end of the previous fiscal year and ending with the end of such
quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding period in the preceding
fiscal year, prepared in accordance with GAAP; PROVIDED, that while
Lessee or Guarantor is subject to the reporting requirements of the
Securities Exchange Act of 1934, a copy of Lessee's or Guarantor's
report on Form 10-Q for such fiscal quarter (excluding exhibits) will
satisfy this clause (a).
(b) within 120 days after the end of each fiscal year of
Lessee, a consolidated balance sheet of Lessee and Guarantor as of the
end of such fiscal year and related statements of income and cash flows
of Lessee and Guarantor for such fiscal year, in comparative form with
the preceding fiscal year, prepared in accordance with GAAP, together
with a report of Lessee's and Guarantor's independent certified public
accountants with respect to their audit of such financial statements;
PROVIDED, that while Lessee or Guarantor is subject to the reporting
requirements of the Securities Exchange Act of 1934, a copy of Lessee's
or Guarantor's report on Form 10-K for such fiscal year (excluding
exhibits) will satisfy this clause (b).
8.2.2 ANNUAL CERTIFICATE
Within 120 days after the close of each fiscal year of Lessee, Lessee
shall deliver to Lessor and Owner Participant an Officer's Certificate of Lessee
to the effect that such officer is familiar with or has reviewed or caused to be
reviewed the relevant terms of this Lease and the other Lessee Operative
Agreements, and that such officer does not have knowledge of the existence as at
the date of such certificate of any Event of Default (or, if any Event of
Default exists, specifying the nature and period of existence thereof and the
action Lessee has taken or is taking or proposes to take with respect thereto).
8.2.3 INFORMATION FOR FILINGS
Lessee shall promptly furnish to Owner Participant or Lessor such
information (other than with respect to the citizenship of Owner Participant and
Lessor) within Lessee's or any Permitted Sublessee's possession, or reasonably
available to or obtainable by Lessee or such Permitted Sublessee, as may be
required to enable Lessor to file in a timely manner any reports required to be
filed by it as lessor under the Lease or to enable Owner Participant to file in
a timely manner any reports required to be filed by it as the beneficiary of the
Trust Estate, in either case, with any Government Entity because of, or in
connection with, the interest of Owner Participant or Lessor in the Aircraft,
this Lease, or any other part of the Trust Estate; PROVIDED, that, with respect
to any such information which Lessee reasonably deems commercially sensitive or
confidential, Owner Participant or Lessor (as applicable) shall afford Lessee a
reasonable opportunity (to the extent reasonably obtainable) to seek from any
such Government Entity a waiver of the obligation of Owner Participant or Lessor
to file any such information, or shall consent to the filing of such information
directly by Lessee in lieu of filing by Owner Participant or Lessor, and if any
such waiver or consent is evidenced to the reasonable satisfaction of Owner
Participant or Lessor (as applicable), then Lessee shall not be required to
furnish such information to Owner Participant or Lessor.
8.2.4 OTHER INFORMATION
Lessee shall provide to Owner Participant from time to time such other
information or data as Owner Participant reasonably requests concerning the
Aircraft, Lessee's financial condition, or otherwise relating to the
transactions or matters contemplated in the Operative Agreements, in each case
to the extent within Lessee's or any Permitted Sublessee's possession, or
reasonably available to or obtainable by Lessee or such Permitted Sublessee.
9. VOLUNTARY TERMINATION UPON OBSOLESCENCE
9.1 RIGHT OF TERMINATION
(a) Provided there is then no Special Default or Event of Default,
Lessee shall have the right at its option to terminate this Lease during the
Base Term, effective only on a Termination Date occurring on or after the
seventh anniversary of the Delivery Date, if:
(1) Lessee makes a good faith determination that the Aircraft
either has become economically obsolete or is surplus to Lessee's
requirements, and Lessee's Chief Financial Officer or Treasurer so
certifies in writing to Lessor; and
(2) Lessee provides Lessor (with a copy to Owner Participant)
with written notice of Lessee's exercise of such termination option not
less than 180 days and not more than 360 days before the Termination
Date specified in such notice.
(b) Lessor shall notify Lessee of Lessor's intention to sell or retain
the Aircraft, as provided in this ss. 9, not less than 120 days before the
Termination Date specified in the written notice pursuant to ss. 9.1(a)(2). Any
failure by Lessor to give such notice of its election shall be deemed to be an
election to sell the Aircraft, as provided in this ss. 9.
(c) In the event of any termination pursuant to this ss. 9, Lessee
shall not acquire additional 737-800 aircraft during the 24 months following
such termination, except to replace any lost or damaged aircraft or under
short-term operating leases, and Lessee shall notify Lessor in the event Lessee
plans to enter into such an operating lease to discuss the possible re-lease of
the Aircraft from Lessor to Lessee under such short-term operating lease.
9.2 ELECTION BY LESSOR TO SELL
9.2.1 BIDS; CLOSING OF SALE
Unless Lessor has notified Lessee of Lessor's election to retain the
Aircraft, Lessee, as agent for Lessor, shall, until the date ten Business Days
before the Termination Date, use commercially reasonable efforts to obtain bids
for a cash purchase of the Aircraft, and Lessor may, if it desires to do so,
also seek to obtain such bids. If Lessee receives any bid, Lessee shall
promptly, and in any event at least ten Business Days before the Termination
Date, certify to Lessor in writing the amount and terms of such bid, and the
name and address of the Person (who shall not be Lessee or any Affiliate of
Lessee or any Person with whom Lessee or any such Affiliate has an arrangement
for the future use of the Aircraft by Lessee or any such Affiliate) submitting
such bid. If Lessor receives any bid on or before the date ten Business Days
before the Termination Date, Lessor shall, at least ten Business Days before the
Termination Date, certify to Lessee in writing the amount and terms of such bid,
and the name and address of the Person submitting such bid.
9.2.2 CLOSING OF SALE
(a) On the Termination Date (1) Lessee shall deliver the Airframe and
Engines or engines constituting part of the Aircraft to the bidder (if any) who
shall have submitted the highest cash bid on or before the date ten Business
Days before such Termination Date, in the same manner as if delivery were made
to Lessor pursuant to ss. 5 and Annex B and in full compliance with the terms
thereof, and shall duly transfer to Lessor title to any such engines not owned
by Lessor, all in accordance with the terms of ss. 5 and Annex B, and (2) Lessor
shall simultaneously therewith transfer the Airframe and Engines or engines to
such bidder, in the manner described in ss. 4.5, against cash paid to Lessor in
the amount of such highest bid and in the manner and in funds of the type
specified in ss. 3.3.
(b) All proceeds of any sale described in ss. 9.2.2(a) shall be paid to
and retained by Lessor and, on such Termination Date, and as a condition
precedent to such sale and the delivery of the Aircraft and Engines or engines
to such bidder, Lessee shall pay to Lessor, in the manner and in funds of the
type specified in ss. 3.3:
(1) all unpaid Basic Rent due at any time before such Termination Date;
plus
(2) the excess (if any) of the Termination Value for the Aircraft, computed
as of such Termination Date, over the proceeds of such sale; plus
(3) as provided in ss. 3.2.2, interest on the amounts specified in the
foregoing clause (1) at the Past-Due Rate from and including the date on which
any such amount was due to the date of payment of such amount in full.
As a further condition precedent to such sale and delivery, Lessee
shall pay all Supplemental Rent due by Lessee to Lessor, or Owner Participant
under this Lease (including (aa) all interest charges provided for hereunder or
under any other Lessee Operative Agreement with respect to the late payment of
any amounts so payable, (bb) all reasonable and previously-invoiced
out-of-pocket fees and expenses (including reasonable fees and expenses of
counsel, but excluding brokerage commissions payable to any Person not retained
by Lessee) incurred by Lessor and Owner Participant in connection with such sale
and the related termination of this Lease), (cc) all previously-invoiced
commissions payable to any Person retained by Lessee in connection with such
sale, and (dd) all sales, transfer, or similar Taxes then due with respect to
such sale). To the extent not invoiced or due on the Termination Date, Lessee
shall pay in due course the obligations described in the foregoing clauses (cc),
(dd), and (ee).
(c) Upon and subject to any such sale and receipt of proceeds by
Lessor, and full and final payment of all amounts described in ss. 9.2.2(b), and
compliance by Lessee with all the other provisions of this ss. 9.2,
(1) Lessor will transfer to Lessee, in accordance with ss.
4.5, any Engines constituting part of the Aircraft but which were not
then installed on the Airframe and sold therewith; and
(2) the obligation of Lessee to pay Basic Rent, on or after
the Payment Date with reference to which Termination Value is computed,
shall cease, and the Term shall end effective as of the date of such
sale.
(d) A sale of the Aircraft pursuant to this ss. 9.2.2 shall take place
only on a Termination Date. Subject to ss. 9.3, if no sale shall have occurred
on or as of the proposed Termination Date, this Lease shall continue in full
force and effect, and all of Lessee's obligations shall continue, including its
obligation to pay Rent, in each case, as if the notice under ss. 9.1 shall not
have been given and, subject to ss. 9.2.3(a), Lessee may give another notice
pursuant to ss. 9.1.
(e) Lessor shall be under no duty to solicit bids, to inquire into the
efforts of Lessee to obtain bids, or otherwise to take any action in connection
with any such sale other than to transfer to the purchaser named in the highest
bid referred to above (or to such purchaser and, in the case of Engines
described in ss. 9.2.2(c), to Lessee) the Airframe and Engines or engines
against receipt of the payments described in ss. 9.2.2(b)
9.2.3 WITHDRAWAL OF NOTICE OF TERMINATION
(a) So long as Lessor has not elected to retain the Aircraft pursuant
to ss. 9.1, Lessee may withdraw any notice given pursuant to ss. 9.1 at any time
on or before the date five Business Days before the proposed Termination Date,
whereupon this Lease shall continue in full force and effect and all of Lessee's
obligations shall continue, including its obligation to pay Rent, in each case
as if the notice under ss. 9.1 were not given, and Lessee may give another
notice pursuant to ss. 9.1; PROVIDED, that Lessee shall not be entitled to give
more than three termination notices pursuant to ss. 9.1 during the Term.
(b) Lessee shall pay, on an after-tax basis, all reasonable
out-of-pocket fees and expenses of Lessor (including reasonable fees and
expenses of counsel) and Owner Participant in connection with any notice of
termination withdrawn by Lessee or in connection with any notice of termination
pursuant to which a sale of the Aircraft fails to occur.
9.3 RETENTION OF AIRCRAFT BY LESSOR
(a) If Lessor elects to retain the Aircraft in accordance withss. 9.1, on
the Termination Date:
(1) Lessee shall deliver the Airframe and Engines or engines constituting
part of the Aircraft to Lessor pursuant to ss. 5 and Annex B and in full
compliance with the terms thereof, and shall duly transfer to Lessor title to
any such engines not owned by Lessor, all in accordance with the terms of ss. 5
and Annex B;
(2) Lessee shall pay to Lessor, in the manner and in funds of the type
specified inss. 3.3:
(aa) all unpaid Basic Rent due at any time before such Termination Date;
plus
(bb) as provided in ss. 3.2.2, interest on the amounts specified in the
foregoing clause (aa) at the Past-Due Rate from and including the date on which
any such amount was due to the date of payment of such amount in full; and
(4) Lessee shall also pay all Supplemental Rent due and
payable by Lessee to Lessor or Owner Participant under this Lease,
including all interest charges provided for hereunder or under any
other Lessee Operative Agreement with respect to the late payment of
any amounts so payable, and the reasonable out-of-pocket fees and
expenses incurred by Lessor and Owner Participant in connection with
such termination and delivery of the Airframe and Engine or engines
(excluding brokerage commissions and similar expenses payable to any
Person(s) not retained by Lessee).
(b) Upon full and final payment to Lessor and Owner Participant of the
amounts described in ss. 9.3(a)(1), and (3) and (4), and compliance by Lessee
with all the applicable provisions of ss. 9.3(a)(2),
(1) Lessor will transfer to Lessee, in accordance with ss.
4.5, any Engines constituting part of the Aircraft but which were not
then installed on the Airframe and sold therewith; and
(2) Lessee's obligation to pay Basic Rent otherwise due on or
after the Termination Date shall cease, and the Term for the Aircraft
shall end effective as of such Termination Date.
10. LOSS, DESTRUCTION, REQUISITION, ETC.
10.1 EVENT OF LOSS TO THE AIRCRAFT
10.1.1 NOTICE AND ELECTION
(a) If an Event of Loss to the Airframe (and any Engine(s) installed
thereon) occurs, Lessee shall promptly (and in any event within 15 days after
such occurrence) notify Lessor and Owner Participant of such Event of Loss.
Within 60 days after such occurrence, Lessee shall give to Lessor (with a copy
to Owner Participant) written notice of Lessee's election to make payment in
respect of such Event of Loss, as provided in ss. 10.1.2, or to replace the
Airframe and any such Engine(s) as provided in ss. 10.1.3.
(b) Lessee's failure to give the notice of election described in ss.
10.1.1(a) shall be deemed to be an election of the option set forth in ss.
10.1.2. In addition, Lessee shall not be entitled to elect the option set forth
in ss. 10.1.3 if, at the time Lessor receives such notice from Lessee or on the
replacement date, a Special Default or an Event of Default exists.
(c) For purposes of ss. 10.1.2, an Event of Loss to the Airframe shall
be deemed to constitute an Event of Loss to the Aircraft. For purposes of ss.
10.1.3, any Engine not actually suffering an Event of Loss shall not be required
to be replaced.
10.1.2 PAYMENT OF LOSS AND TERMINATION OF LEASE
(a) If Lessee elects, in accordance with ss. 10.1.1, to make payment in
respect of any such Event of Loss, then Lessee shall pay, in the manner and in
funds of the type specified in ss. 3.3, the following amounts:
(1) on the date (the "LOSS PAYMENT DATE") that is the earlier
of (x) the Stipulated Loss Value Date first following the 75th day
following the date of the occurrence of such Event of Loss, and (y) the
Stipulated Loss Value Date first following the fourth Business Day
following the receipt of the insurance proceeds with respect to such
occurrence (but in any event not earlier than the date of Lessee's
election under ss. 10.1.1 to make payment under this ss. 10.1.2),
Lessee shall pay to Lessor:
(aa) all unpaid Basic Rent due at any time before the Loss Payment Date;
plus
[(bb) all Basic Rent due on the Loss Payment Date; plus]
(cc) the Stipulated Loss Value computed as of the Stipulated Loss Value
Date immediately preceding the Loss Payment Date (or, if the Loss Payment Date
is a Stipulated Loss Value Date, the Loss Payment Date), plus
(dd) if the Loss Payment Date is not a Stipulated Loss Value Date, an
additional amount equal to interest, at the rate per annum equal to the SLV
Rate, on the amount of the excess referred to in clause (cc) above for each day
from and including the Stipulated Loss Value Date referred to in clause [(cc)]
to but excluding the Loss Payment Date; plus
(ee) as provided in ss. 3.2.2, interest on the amount specified in the
foregoing clause (aa) at the Past-Due Rate from and including the date on which
any such amount was due to the date of payment of such amount in full; and
(2) on or before the date required for payment of the amounts
specified in clause 10.1.2(a)(1), Lessee shall also pay to Lessor and
Owner Participant all other amounts due and payable by Lessee to Lessor
and Owner Participant under this Lease, the Participation Agreement, or
any other Lessee Operative Agreement and, on an after-tax basis, all
out-of-pocket fees and expenses (including reasonable fees and expenses
of counsel) incurred by Lessor and each Owner Participant in connection
with such Event of Loss.
(b) Upon payment in full of all amounts described in the foregoing ss.
10.1.2(a)(1), (1) Lessee's liability for use of the Aircraft and obligation to
pay Basic Rent hereunder with respect to the Aircraft shall terminate, (2) the
Term for the Aircraft shall end, and (3) Lessor will transfer the Aircraft to
Lessee, as-is and where-is, and subject to any insurer's salvage rights, but
otherwise in the manner described in ss. 4.5.
10.1.3 REPLACEMENT OF AIRFRAME AND ENGINES
(a) If Lessee elects, in accordance with ss. 10.1.1, to replace the
Airframe and any Engine(s) suffering the Event of Loss, then Lessee shall, as
promptly as possible and in any event within 120 days after the occurrence of
such Event of Loss, convey or cause to be conveyed to Lessor, in compliance with
ss. 10.3 and as replacement for the Airframe and any such Engine(s), title to a
Replacement Airframe (which shall comply with ss. 10.1.3(b)), and for each such
Engine a Replacement Engine, in each case free and clear of all Liens other than
Permitted Liens (PROVIDED, that if such conveyance occurs after the end of the
Term, Lessee shall pay rent for the Aircraft from the end of the Term until
return thereof pursuant to ss. 5 at a daily rate equal to the average daily
Basic Rent or Renewal Rent, as applicable, over the Base Term or then-expiring
Renewal Term, as applicable). If Lessee makes such election, but for any reason
does not effect such replacement within such time period and in compliance with
the requirements set forth in ss. 10.3, then Lessee shall be deemed to have
initially made the election set forth in ss. 10.1.2 with the effect that Lessee
shall pay, in the manner and in funds of the type specified in ss. 3.3, the
amounts required under, and in accordance with, ss. 10.1.2 (except that the time
period for payment referenced in ss. 10.1.2(a)(1) shall, for the purposes of
this ss. 10.1.3(a), in all cases be on the Stipulated Loss Value Date first
following the 120th day following the date of the occurrence of such Event of
Loss).
(b) Any such Replacement Airframe shall be an airframe manufactured by
the Airframe Manufacturer that is the same model as the Airframe to be replaced
thereby, or an improved model, and that has a current value, estimated residual
value, utility, and remaining economic useful life (without regard to hours or
cycles remaining until the next regular maintenance check, provided no Special
Default or Event of Default then exists) at least equal to the Airframe to be
replaced thereby (assuming that such Airframe had been maintained in accordance
with this Lease), immediately prior to such Event of Loss and that has a year of
manufacture no earlier than that of the Airframe to be replaced. Any such
Replacement Engine shall meet the requirements of, and be conveyed by Lessee to
Lessor in accordance with, ss. 10.2 (other than the notice requirement set forth
in ss. 10.2.1).
10.2 EVENT OF LOSS TO AN ENGINE; ENGINE EXCHANGES
10.2.1 NOTICE
If an Event of Loss to an Engine occurs under circumstances in which no
Event of Loss to the Airframe occurs, Lessee shall promptly (and in any event
within 15 days after such occurrence) notify Lessor of such Event of Loss.
10.2.2 REPLACEMENT OF ENGINE
Lessee shall, promptly and in any event within 60 days after the
occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in
compliance with ss. 10.3 and as replacement for the Engine with respect to which
any Event of Loss occurred, title to a Replacement Engine, free and clear of all
Liens other than Permitted Liens. Such Replacement Engine shall be an engine
manufactured by Engine Manufacturer that is the same model as the Engine to be
replaced thereby, or an improved model, and that is suitable for installation
and use on the Airframe, and that has a current value, estimated residual value,
utility, and remaining economic useful life (without regard to hours and cycles
remaining until overhaul, provided no Special Default or Event of Default then
exists) at least equal to the Engine to be replaced thereby (assuming that such
Engine had been maintained in accordance with the Lease) immediately prior to
such Event of Loss.
10.2.3 ENGINE EXCHANGE
Upon not less than five Business Days' prior written notice to Lessor
(with a copy to Owner Participant), Lessee may replace any Engine leased
hereunder with another engine (the "EXCHANGED Engine") meeting the requirements
of ss. 10.2.2. Such Exchanged Engine shall be deemed to be a "Replacement
Engine", and Lessor and Lessee shall comply with the provisions of ss. 10.3 with
regard to the Exchanged Engine and the Engine so replaced.
10.3 CONDITIONS TO ANY REPLACEMENT
10.3.1 DOCUMENTS
Before or at the time of conveyance of title to any Replacement
Airframe or Replacement Engine to Lessor, Lessee shall take each of the
following actions:
(a) furnish Lessor with a full warranty (as to title) bill of sale duly
conveying to Lessor such Replacement Airframe or Replacement Engine, in form and
substance reasonably satisfactory to Lessor and Owner Participant, and cause
such Replacement Airframe to be duly registered in the name of Lessor pursuant
to the Transportation Code (or such other applicable Law of a jurisdiction other
than the United States where the Aircraft is registered in accordance with ss.
7.1.2);
(b) cause (1) a supplement to this Lease, subjecting such Replacement
Airframe or Replacement Engine to this Lease, duly executed by Lessee, to be
delivered to Lessor for execution, and, upon such execution, to be filed for
recordation with the FAA pursuant to the Transportation Code (or such other
applicable Law of a jurisdiction other than the United States where the Aircraft
is registered in accordance with ss. 7.1.2), and (2) such Financing Statements
and other filings, as Owner Participant reasonably request, duly executed by
Lessee and (to the extent applicable) Lessor (and Lessor shall execute and
deliver the same), to be filed in such locations as any such party reasonably
requests;
(c) furnish such evidence of compliance with the insurance provisions
of ss. 11 with respect to such Replacement Airframe or Replacement Engine as
Owner Participant reasonably requests;
(d) furnish an opinion or opinions of Lessee's counsel (which may be
Lessee's legal department) reasonably satisfactory to Owner Participant and
addressed to Lessor and Owner Participant to the effect that (1) such full
warranty bill of sale referred to in ss. 10.3.1(a) constitutes an effective
instrument for the conveyance of title to the Replacement Airframe or
Replacement Engine, and (2) in the case of a Replacement Airframe or of a
Replacement Engine substituted under ss. 10.2.3 in the absence of an Event of
Loss, (aa) Lessor will be entitled to the benefits of Section 1110 with respect
to the Replacement Airframe, and (bb) as to the U.S. federal income tax
consequences to Owner Participant of the replacement;
(e) furnish an opinion of Lessee's aviation law counsel reasonably
satisfactory to Owner Participant and addressed to Lessor and Owner Participant
as to the due registration of any such Replacement Airframe and the due filing
for recordation of each supplement to this Lease with respect to such
Replacement Airframe or Replacement Engine under the Transportation Code (or
such other applicable Law of a jurisdiction other than the United States where
the Aircraft is registered in accordance with ss. 7.1.2);
(f) with respect to the replacement of the Airframe and any Engine(s)
installed thereon at the time of the Event of Loss, if requested by Owner
Participant and at Lessee's expense, furnish a certified report of a qualified
independent aircraft appraiser, such report and such appraiser to be reasonably
satisfactory to Owner Participant, certifying that such Replacement Airframe and
any such Replacement Engine complies with the current value, estimated residual
value, utility, and remaining economic useful life requirements set forth in ss.
10.1.3(b); and
(g) take such other actions and furnish such other certificates and
documents as Lessor or Owner Participant may reasonably request in order that
such Replacement Airframe or Replacement Engine be duly and properly titled in
Lessor, leased hereunder and subjected to the Lien of the Trust Indenture to the
same extent as initially required under the Operative Agreements with respect to
the Airframe or Engine so replaced.
Lessor and Lessee understand and agree that if, at the time of any
replacement of the Airframe or any Engine(s) as contemplated in this ss. 10, the
Airframe was registered in a jurisdiction other than the United States, then the
requirements set forth above in this ss. 10.3.1 relating to compliance with the
requirements of the Transportation Code or the FAA shall be deemed to refer to
the comparable applicable Law of, and the Aviation Authority of, such other
jurisdiction.
10.3.2 OTHER OBLIGATIONS
(a) Lessor and Lessee agree that, when and after any Replacement
Airframe becomes the Airframe hereunder, and when and after any Replacement
Engine becomes an Engine hereunder, this Lease shall continue to be, and shall
be treated as, a lease for U.S. federal income tax purposes of such Replacement
Airframe and such Replacement Engine. Without limiting the foregoing, Lessee and
Lessor intend that Lessor shall, in all events, be entitled to the benefits of
Section 1110 with respect to any Replacement Airframe or Replacement Engine, and
Lessee and Lessor shall cooperate and take such action as the other may
reasonably request so as to ensure that Lessor shall be entitled to such
benefits.
(b) No Event of Loss to an Engine, or to an Airframe, shall result in,
or otherwise allow or permit (other than as provided in ss. 10.1.2(b)), any
reduction, deferral, discharge, or other change in the timing or amount of any
Rent payable by Lessee hereunder, and (subject to such ss. 10.1.2(b)) Lessee
shall pay all such Rent and other amounts as though such Event of Loss had not
occurred.
10.4 CONVEYANCE TO LESSEE
Upon compliance by Lessee with the applicable terms of ss.ss. 10.1.3,
10.2, and 10.3.1, Lessor will transfer to Lessee the Airframe or Engine(s), as
applicable, with respect to which such Event of Loss occurred, in accordance
with ss. 4.5.
10.5 APPLICATION OF PAYMENTS
Any amounts, other than insurance proceeds in respect of damage or loss
not constituting an Event of Loss (the application of which is provided for in
ss. 11), received at any time by Lessor, Lessee, or any Permitted Sublessee from
any Government Entity or any other Person in respect of any Event of Loss will
be paid over to Lessor to be held in accordance with ss. 4.5 and applied as
follows:
10.5.1 REPLACEMENT OF AIRFRAME AND ENGINES
If such amounts are received with respect to the Airframe or any
Engine(s) installed thereon at the time of such Event of Loss, upon Lessee's
compliance with the applicable terms of ss. 10.1.3 with respect to the Event of
Loss for which such amounts are received, such amounts shall (subject to ss.
10.9) be paid over to, or retained by, Lessee.
10.5.2 LOSS OF ENGINE
If such amounts are received with respect to an Engine (other than an
Engine installed on the Airframe when the Airframe suffers an Event of Loss),
upon Lessee's compliance with the applicable terms of ss. 10.2.2 with respect to
the Event of Loss for which such amounts are received, such amounts shall
(subject to ss. 10.9) be paid over to, or retained by, Lessee.
10.5.3 PAYMENT OF LOSS
If such amounts are received, in whole or in part, with respect to the
Airframe, and Lessee makes, has made or is deemed to have made the election set
forth in ss. 10.1.2, such amounts shall be applied as follows:
(a) FIRST, if the sum described in ss. 10.1.2 has not then been paid in
full by Lessee, such amounts shall be paid to Lessor to the extent necessary to
pay in full such sum; and
(b) SECOND, the remainder, if any, shall (subject toss. 10.9) be paid to
Lessee.
10.6 REQUISITION OF AIRCRAFT FOR USE
If any Government Entity requisitions the use of the Airframe and the
Engines or engines installed thereon, and if the requisition does not constitute
an Event of Loss, Lessee shall promptly notify Lessor of such requisition, and
all of Lessee's obligations under this Lease shall continue to the same extent
as if such requisition had not occurred; PROVIDED, that, if the Airframe and
Engines or engines installed thereon are not returned to Lessor by Lessee at the
end of the Term or within 30 days thereafter, then Lessee shall be deemed to
have made the election set forth in ss. 10.1.2 with the effect that Lessee shall
be obligated to pay the Stipulated Loss Value and all other amounts payable
pursuant to ss. 10.1.2 with respect to the Aircraft as if an Event of Loss had
occurred as of the end of the Term. If such requisition does not constitute an
Event of Loss, Lessee shall be obligated to return the Airframe and Engine(s) or
engine(s) to Lessor pursuant to, and in all other respects to comply with the
provisions of, ss. 5 promptly upon their return by such Government Entity, and
Lessee shall pay (or cause to be paid) to Lessor upon such return an amount
equal to the average daily Basic Rent payable by Lessee during the Term for each
day after the end of the Term to but excluding the day of such return, up to a
maximum of 30 days, which payment may be made from any payments received by
Lessor or Lessee from any Government Entity for the use of the Aircraft
(notwithstanding any language to the contrary contained in ss. 10.8).
10.7 REQUISITION OF AN ENGINE FOR USE
If any Government Entity requisitions for use any Engine but not the
Airframe, Lessee will replace such Engine by complying with ss. 10.2 and ss.
10.3 to the same extent as if an Event of Loss with respect to that Engine had
occurred, and any payments received by Lessor or Lessee from such Government
Entity with respect to such requisition shall be paid or retained in accordance
with ss. 10.5.2.
10.8 APPLICATION OF PAYMENTS
All payments received by Lessor or Lessee, or any Permitted Sublessee,
from any Government Entity for the use of the Airframe and Engine(s) or
engine(s) installed thereon during the Term shall be paid over to, or retained
by, Lessee, and all payments received by Lessor or Lessee from any Government
Entity for the use of the Airframe and Engine(s) or engine(s) installed thereon
after the Term shall be paid over to, or retained by, Lessor; PROVIDED, that, if
such requisition constitutes an Event of Loss, then all such payments shall be
paid over to Lessor and held as provided in ss. 10.5.
10.9 APPLICATION OF PAYMENTS DURING DEFAULT
Any amount described in this ss. 10 that is payable or creditable to,
or retainable by, Lessee shall not be paid or credited to, or retained by,
Lessee if a Special Default or Event of Default exists when such payment,
credit, or retention would otherwise occur, but shall instead be held by or paid
over to Lessor as security for Lessee's obligations under this Lease and the
other Lessee Operative Agreements, and shall be invested pursuant to ss. 4.4
hereof, unless and until such amount is applied, at the option of Lessor, or
upon Lessee's written request to Lessor, from time to time during the existence
of an Event of Default, to Lessee's obligations under this Lease as and when due
(any such application shall be made to such Lessee obligations as Lessor
determines in its sole discretion). If and when no Special Default and no Event
of Default exists, such amount shall be paid to Lessee to the extent not
previously applied in accordance with this ss. 10.9.
11. INSURANCE
11.1 LESSEE'S OBLIGATION TO INSURE
Lessee shall comply with, or cause to be complied with, each of the
provisions of Annex D, which provisions are hereby incorporated by this
reference as if set forth in full herein.
11.2 INSURANCE FOR OWN ACCOUNT
Nothing in ss. 11 shall limit or prohibit (a) Lessee from maintaining
the policies of insurance required under Annex D with higher limits than those
specified in Annex D, or (b) Lessor or Owner Participant from obtaining
insurance for its own account (and any proceeds payable under such separate
insurance shall be payable as provided in the policy relating thereto);
PROVIDED, that no insurance may be obtained or maintained that would limit or
otherwise adversely affect the coverage of or increase the cost of any insurance
required to be obtained or maintained by Lessee pursuant to this ss. 11 and
Annex D.
11.3 INDEMNIFICATION BY GOVERNMENT IN LIEU OF INSURANCE
During the period of any Government Entity's requisition for use of the
Aircraft or any Engine, Lessor, and Owner Participant shall accept, in lieu of
insurance against any risk with respect to the Aircraft described in Annex D,
indemnification from, or insurance provided by, the U.S. Government, or upon
Owner Participant's written consent, other Government Entity, against such risk
in an amount that, when added to the amount of insurance (including permitted
self-insurance), if any, against such risk that Lessee (or any Permitted
Sublessee) may continue to maintain, in accordance with this ss. 11, during the
period of such requisition, shall be at least equal to the amount of insurance
against such risk otherwise required by this ss. 11.
11.4 APPLICATION OF INSURANCE PROCEEDS
As between Lessor and Lessee, all insurance proceeds received as a
result of the occurrence of an Event of Loss to the Aircraft or any Engine under
policies required to be maintained by Lessee pursuant to this ss. 11 will be
applied in accordance with ss. 10.5. All proceeds of insurance required to be
maintained by Lessee, in accordance with ss. 11 and ss. B of Annex D, in respect
of any property damage or loss not constituting an Event of Loss to the
Aircraft, the Airframe, or any Engine will be applied to pay (or to reimburse
Lessee) for repairs or for replacement property incorporated in accordance with
ss. 8.1, and any balance remaining after such repairs or replacement with
respect to such damage or loss shall be paid over to, or retained by, Lessee.
11.5 APPLICATION OF PAYMENTS DURING DEFAULT
Any amount described in this ss. 11 that is payable or creditable to,
or retainable by, Lessee shall not be paid or credited to, or retained by,
Lessee if a Special Default or Event of Default exists when such payment,
credit, or retention would otherwise occur, but shall instead be held by or paid
over to Lessor as security for Lessee's obligations under this Lease, and shall
be invested pursuant to ss. 4.4 unless and until such amount is applied, at
Lessor's option, or upon Lessee's written request to Lessor, from time to time
during the existence of an Event of Default, to Lessee's obligations under this
Lease and the other Lessee Operative Agreements as and when due (any such
application to be made to such obligations of Lessee as Lessor determines in its
sole discretion). If and when no Special Default and Event of Default exists,
such amount shall be paid to Lessee to the extent not previously applied in
accordance with this ss. 11.5.
12. INSPECTION
(a) At all reasonable times Lessor, Owner Participant, or their
authorized representatives (the "INSPECTING PARTIES") may (not more than once
every 12 months by each such Person, unless an Event of Default exists or during
the last 12 months of the Base Term and any Renewal Term, then such inspection
right shall not be so limited) inspect the Aircraft and the Aircraft Documents,
and any such Inspecting Party may make copies of the Aircraft Documents not
reasonably deemed confidential by Lessee or a Permitted Sublessee.
(b) Any inspection of the Aircraft hereunder shall be limited to a
visual, walk-around inspection that may include going on board the Aircraft and
visually examining the contents of any open panels, bays, or other components of
the Airframe or Engines, but shall not include the opening of any unopened
panels, bays, or other components of the Aircraft, and no such inspection shall
interfere with Lessee's or any Permitted Sublessee's maintenance or operation of
the Aircraft, the Airframe, or any Engine.
(c) Lessor and Owner Participant shall not have any duty or liability
to make, or any duty or liability by reason of not making, any such visit,
inspection or survey.
(d) Each Inspecting Party shall bear its own expenses in connection
with any such inspection (including the cost of any copies made in accordance
with ss. 12(a)), except following an Event of Default, in which case Lessee will
bear the costs of inspection and pay the same on demand.
(e) Upon Lessor's request, during the last 12 months of the Base Term
and any Renewal Term, Lessee will give 10 Business Days' prior written notice to
Lessor and Owner Participant of any scheduled maintenance checks, inspections,
surveys, or repair visits. During such period, Owner Participant or its
representative may attend any and all such maintenance checks, inspections,
surveys, or repair visits.
13. ASSIGNMENT; MERGER; SUCCESSOR OWNER TRUSTEE
13.1 IN GENERAL
This Lease and the other Lessee Operative Agreements shall bind and
benefit Lessor and Lessee and their successors and permitted assigns. Except as
otherwise expressly permitted by the terms of the Lease or any other Lessee
Operative Agreement, Lessee will not, without the prior written consent of Owner
Participant, assign any of its rights under this Lease.
13.2 MERGER OF LESSEE
13.2.1 IN GENERAL
Lessee shall not consolidate with or merge into any other Person under
circumstances in which Lessee is not the surviving corporation, or convey,
transfer, or lease in one or more transactions all or substantially all of its
assets to any other Person, unless:
(a) such Person is organized, existing, and in good standing under the Laws
of the United States, any state of the United States, or the District Columbia,
and, upon consummation of such transaction, such Person will be a U.S. Air
Carrier;
(b) such Person executes and delivers to Lessor and Owner Participant a
duly authorized, legal, valid, binding, and enforceable agreement, reasonably
satisfactory in form and substance to Owner Participant, containing an effective
assumption by such Person of the due and punctual performance and observance of
each covenant, agreement, and condition in the Lessee Operative Agreements to be
performed or observed by Lessee;
(c) such Person makes such filings and recordings with the FAA pursuant to
the Transportation Code as shall be necessary to evidence such consolidation or
merger;
(d) Lessee furnishes Lessor and Owner Participant an opinion of counsel
reasonably satisfactory to Owner Participant to the effect that such
consolidation or merger has satisfied at the closing of such consolidation or
merger items (a), (b) and (c) above;
(e) immediately after giving effect to such consolidation or merger, no
Special Default or Event of Default exists;
(f) unless Owner Participant otherwise consents, immediately after
giving effect to such consolidation or merger, such Person will have a tangible
net worth of at least the lesser of (i) 100% of Lessee's tangible net worth
immediately prior to such consolidation or merger, and (ii) the greater of (aa)
the tangible net worth of Lessee as of March 31, 2000, and (bb) 65% of Lessee's
tangible net worth immediately prior to such consolidation or merger; and
(g) upon such consolidation or merger becoming effective, Lessor will
enjoy the same degree of protection under Section 1110 with respect to the
Aircraft as Lessor enjoyed prior to such merger.
13.2.2 EFFECT OF MERGER
Upon any such consolidation or merger of Lessee with or into, or the
conveyance, transfer, or lease by Lessee of all or substantially all of its
assets to, any Person in accordance with this ss. 13.2, such Person will succeed
to, and be substituted for, and may exercise every right and power of, Lessee
under the Lessee Operative Agreements with the same effect as if such Person had
been named as "Lessee" therein. No such consolidation, merger, conveyance,
transfer, or lease shall have the effect of releasing Lessee or such Person from
any of Lessee's obligations, liabilities, covenants, or undertakings under the
Lessee Operative Agreements.
13.3 SUCCESSOR OWNER TRUSTEE
If any successor is appointed to serve as Owner Trustee pursuant to the
terms of the Participation Agreement and the Trust Agreement, such successor
shall, upon written notice by such successor to Lessee, succeed to all the
rights, powers, and title of Lessor hereunder, and shall be deemed to be
"Lessor" and the owner of the Aircraft and the other assets of the Trust Estate
for all purposes hereof, without the need for any consent or approval by Lessee
and without in any way altering the terms of this Lease or Lessee's obligations
hereunder. An appointment and designation of a successor as Owner Trustee shall
not exhaust the right to appoint and designate further successors or additional
trustees as Owner Trustees pursuant to the Participation Agreement and the Trust
Agreement, and such right may be exercised repeatedly as long as this Lease
shall be in effect.
14. EVENTS OF DEFAULT
The existence of any one or more of the following circumstances,
conditions, acts, or events, for any reason whatsoever and whether any such
circumstance, condition, act, or event is voluntary or involuntary or comes
about or is effected by operation of Law or pursuant to or in compliance with
any judgment, decree, order, rule, or regulation of any Government Entity, shall
constitute an Event of Default so long as it shall not have been remedied:
14.1 PAYMENTS
Lessee fails to pay any amount of Basic Rent, Stipulated Loss Value, or
Termination Value within five Business Days after it becomes due; or Lessee
fails to pay any Supplemental Rent (other than Stipulated Loss Value or
Termination Value) when due and such failure continues for a period in excess of
ten Business Days from and after the date of any written notice to Lessee from
Lessor of the failure to make such payment when due.
14.2 INSURANCE
Lessee fails to carry and maintain, or cause to be carried and
maintained, insurance on and in respect of the Aircraft in accordance with the
provisions of ss. 11.
14.3 OTHER COVENANTS
Lessee fails to observe or perform (or cause to be observed and
performed) in any material respect any other covenant, agreement, or obligation
of Lessee in any Lessee Operative Agreement, and such failure continues
unremedied for a period of 30 days from and after the date of written notice
thereof to Lessee (or the Guarantor, as the case may be) from Lessor or Owner
Participant, unless such failure is capable of being corrected and Lessee is
diligently proceeding to correct such failure, and such failure poses no
imminent and material risk of Lessor or Owner Participant losing their
respective interests in the Aircraft, in which case there shall be no Event of
Default unless and until such failure continues unremedied for a period of 270
days after receipt of such notice; PROVIDED, that in all events Lessee must
remedy such failures within 90 days of Lessee's obtaining access to the
Aircraft.
14.4 REPRESENTATIONS AND WARRANTIES
Any representation or warranty made by Lessee in any Lessee Operative
Agreement (other than Lessee's representations and warranties in the Tax
Indemnity Agreement) (a) proves to have been untrue or inaccurate in any
material respect as of the date made, (b) is material at the time in question,
and (c) remains uncured (to the extent of the adverse impact of such
incorrectness on the interest of Owner Participant or Lessor) for a period in
excess of 30 days from and after the date of written notice thereof from Lessor
or Owner Participant to Lessee (or Guarantor, as the case may be); provided that
clause (c) above will not apply to Lessee's representations as to the financial
condition of Lessee.
14.5 BANKRUPTCY AND INSOLVENCY
(a) Lessee or Guarantor consents to the appointment of or the taking of
possession by a receiver, trustee, or liquidator of itself or of substantially
all of its property, or Lessee or Guarantor admits in writing its inability to
pay its debts generally as they come due, or does not pay its debts generally as
they become due or makes a general assignment for the benefit of creditors, or
Lessee or Guarantor files a voluntary petition in bankruptcy or a voluntary
petition or an answer seeking reorganization, liquidation or other relief in a
case under any bankruptcy Laws or other insolvency Laws (as in effect at such
time), or Lessee or Guarantor seeks relief by voluntary petition, answer, or
consent under the provisions of any other bankruptcy or other similar Law
providing for the reorganization or winding-up of corporations (as in effect at
such time); or
(b) an order, judgment, or decree is entered by any court of competent
jurisdiction appointing, without Lessee's or Guarantor's consent, a receiver,
trustee, or liquidator of Lessee or Guarantor or of substantially all of the
property of Lessee or Guarantor, or substantially all of Lessee's or Guarantor's
property is sequestered, and any such order, judgment, or decree of appointment
or sequestration remains in force undismissed, unstayed, and unvacated for a
period of 90 days after the date of entry thereof; or
(c) a petition against Lessee or Guarantor in a case under any
bankruptcy Laws or other insolvency Laws (as in effect at such time) is filed
and not withdrawn or dismissed within 90 days thereafter, or if, under the
provisions of any Law providing for reorganization or winding-up of corporations
that applies to Lessee or Guarantor, any court of competent jurisdiction assumes
jurisdiction, custody, or control of Lessee or Guarantor or of substantially all
of its property, and such jurisdiction, custody or control remains in force
unrelinquished, unstayed, and unterminated for a period of 90 days.
14.6 REPUDIATION OR INVALIDITY OF GUARANTEE
Either (a) Guarantor repudiates its obligations, in whole or in part,
under the Guarantee; or (b) the Guarantee ceases to be in full effect, is
determined to be invalid, or becomes unenforceable for any reason.
15. REMEDIES AND WAIVERS
15.1 REMEDIES
If any Event of Default exists, Lessor may, at its option and at any
time and from time to time, exercise any one or more of the following remedies
as Lessor in its sole discretion shall elect:
15.1.1 RETURN AND REPOSSESSION
Lessor may cause Lessee, upon giving written notice to Lessee, to
return promptly, and Lessee shall return promptly, the Airframe and Engines as
Lessor shall so demand, to Lessor or its order in the manner and condition
required by, and otherwise in accordance with, all the provisions of ss. 5, as
if the Airframe or Engine were being returned at the end of the Term or Lessor,
at its option, may enter upon the premises where the Airframe or any Engine, or
any Part thereof, is located and take immediate possession of and remove the
same by summary proceedings or otherwise, all without liability accruing to
Lessor for or by reason of such entry or taking of possession, whether for the
restoration of damage to property caused by such taking or otherwise.
15.1.2 SALE AND USE
Lessor may sell the Airframe or any Engine at public or private sale,
at such time(s) and place(s), and to such Person(s) (including Owner
Participant), as Lessor determines; or Lessor may otherwise dispose of, hold,
use, operate, lease to others, or keep idle the Airframe or any Engine, as
Lessor, in its sole discretion, shall determine, all free and clear of any
rights of Lessee and without any duty to account to Lessee with respect to such
action or inaction or for any proceeds with respect thereto, except as
hereinafter set forth in this ss. 15, and except to the extent that such
proceeds would constitute, under applicable Law, a mitigation of Lessor's
damages suffered or incurred as a result of the subject Event of Default. Lessor
shall give to Lessee at least 15 days' prior written notice of the date fixed
for any public sale of the Airframe or any Engine or of the date on or after
which will occur the execution of any contract providing for any private sale.
15.1.3 CERTAIN LIQUIDATED DAMAGES
Whether or not Lessor shall have exercised, or shall thereafter at any
time exercise, any of its rights under ss. 15.1.1 or ss. 15.1.2 with respect to
the Airframe or any Engine, or any Part thereof, Lessor, by written notice to
Lessee specifying a payment date (which shall be the first Stipulated Loss Value
Date occurring not less than 10 days after the date of such notice), may demand
that Lessee to pay to Lessor, and Lessee shall pay to Lessor, on the payment
date so specified and in the manner and in funds of the type specified in ss.
3.3, as liquidated damages for loss of a bargain and not as a penalty (in lieu
of the Basic Rent (as applicable) for the Aircraft in respect of all periods
commencing on or after the date specified for payment in such notice), the
following amounts:
(a) all unpaid Basic Rent due at any time before the Stipulated Loss Value
Date specified in such notice; plus
(b) whichever of the following amounts Lessor, in its sole discretion
specifies in such notice:
(1) an amount equal to the excess (if any) of the present
value, computed as of the Stipulated Loss Value Date specified in such
notice, discounted to such date at a rate equal to the SLV Rate
compounded quarterly, of all unpaid Basic Rent during the
then-remaining portion of the Base Term (or, if a Renewal Term has
commenced, of all unpaid Basic Rent during the remaining portion of
such Renewal Term) over the Fair Market Rental Value of the Aircraft
for the remainder of the Term, after discounting such Fair Market
Rental Value to present value (at a rate per annum equal to the SLV
Rate, compounded quarterly) as of the Stipulated Loss Value Date
specified in such notice, or
(2) an amount equal to the excess (if any) of the Stipulated
Loss Value for the Aircraft, computed as of the Stipulated Loss Value
Date specified in such notice, over the Fair Market Sales Value of the
Aircraft, as of the Stipulated Loss Value Date specified in such
notice; plus
(c) interest on the amounts specified in the foregoing clause (a) at
the Past-Due Rate from and including the date on which any such amount was due
to the date of payment of such amount; plus
(d) interest on the amount specified in the foregoing clause (b)(1) or
(b)(2), according to Lessor's election, at the Past-Due Rate from and including
the Stipulated Loss Value Date specified in such notice to the date of payment
of such amount.
15.1.4 LIQUIDATED DAMAGES UPON SALE
If, pursuant to ss. 15.1.2 or applicable Law, Lessor has sold the
Airframe or any Engine, then, in lieu of exercising its rights under ss. 15.1.3
with respect to the Aircraft, the Airframe, or any Engine (as applicable),
Lessor may, if Lessor so elects, upon giving written notice to Lessee, demand
that Lessee to pay to Lessor, and Lessee shall pay to Lessor, on the date of
such sale and in the manner and in funds of the type specified in ss. 3.3, as
liquidated damages for loss of a bargain and not as a penalty (in lieu of the
Basic Rent for the Aircraft in respect of all periods commencing on or after the
date of such sale), the following amounts:
(a) all unpaid Basic Rent due at any time before the Stipulated Loss Value
Date on or immediately preceding the date of such sale; plus
(b) an amount equal to the excess, if any, of (1) the Stipulated Loss Value
of the Aircraft, computed as of the Stipulated Loss Value Date referred to in
the foregoing clause (a), over (2) the proceeds of such sale; plus
(c) if the date of such sale is not a Stipulated Loss Value Date, an amount
equal to interest, at the rate per annum equal to the SLV Rate, on the amount of
Stipulated Loss Value referred to in clause (b)(1) above, from and including the
Stipulated Loss Value Date referred to in the foregoing clause (a) to the date
of such sale; plus
(d) all brokerage and other out-of-pocket fees and expenses incurred by
Lessor and Owner Participant in connection with such sale; plus
(e) interest on the amounts specified in the foregoing clause (a) at the
Past-Due Rate from and including the date on which any such amount was due to
the date of payment of such amount; plus
(f) interest on the sum of the amounts specified in the foregoing clauses
(b), (d) and (e) at the Past-Due Rate from and including the date of such sale
to the date of payment of such amounts.
15.1.5 RESCISSION
Lessor may (a) at its option, rescind or terminate this Lease as to the
Aircraft, the Airframe, or any Engine, or any Part thereof, or (b) exercise any
other right or remedy that may be available to it under applicable Law or
proceed by appropriate court action to enforce the terms hereof or to recover
damages for the breach hereof.
15.1.6 OTHER REMEDIES
In addition to the foregoing remedies (but without duplication of
amounts otherwise paid under this ss. 15), Lessee shall be liable for any and
all unpaid Rent due hereunder before, during, or after (except as otherwise
provided herein) the exercise of any of the foregoing remedies and for all
reasonable attorneys' fees and other costs and expenses of Lessor and Owner
Participant, including interest on overdue Rent at the rate as herein provided,
incurred by reason of the existence of any Event of Default or the exercise of
Lessor's remedies with respect thereto, including all reasonable costs and
expenses incurred in connection with the return of the Airframe or any Engine in
accordance with the terms of ss. 5, or in placing the Airframe or any Engine in
the condition and airworthiness required by ss. 5.
15.2 LIMITATIONS UNDER CRAF
Notwithstanding the provisions of ss. 15.1, during any period that the
Aircraft, the Airframe, or any Engine is subject to CRAF in accordance with the
provisions of ss. 7.2.3 and in the possession of the U.S. Government, Lessor
shall not, as a result of any Event of Default, exercise its remedies hereunder
in such manner as to limit Lessee's control under this Lease (or any Permitted
Sublessee's control under any Permitted Sublease) of the Aircraft, the Airframe,
or such Engine, unless Lessor gives at least 30 days' (or such other period as
may then apply under CRAF) written notice of default hereunder by registered or
certified mail to Lessee (and any Permitted Sublessee) with a copy to the
Contracting Officer Representative or Representatives for the Military Airlift
Command of the United States Air Force to whom notices must be given under the
contract governing Lessee's (or any Permitted Sublessee's) participation in CRAF
with respect to the Aircraft, the Airframe, or any Engine.
15.3 RIGHT TO PERFORM FOR LESSEE
If Lessee (a) fails to make any payment of Rent required to be made by
it hereunder or (b) fails to perform or comply with any of its agreements
contained herein and such failure under this clause (b) continues for a period
of 30 days after the earlier of Lessor or Owner Participant, giving written
notice thereof to Lessee, or (c) fails to maintain the insurance required
hereunder and such failure under this clause (c) continues for 10 days after
such notice, then Lessor or Owner Participant may (but shall not be obligated
to) make such payment or perform or comply with such agreement, and the amount
of such payment and the amount of the expenses of Lessor or Owner Participant
incurred in connection with such payment or the performance of or compliance
with such agreement (as applicable), together with interest thereon at the
Past-Due Rate, shall be deemed Supplemental Rent, payable by Lessee upon demand
by Lessor or Owner Participant, whichever is entitled thereto. No such payment,
performance, or compliance shall be deemed to waive any Default or otherwise
relieve Lessee of its obligations with respect thereto.
15.4 DETERMINATION OF FAIR MARKET RENTAL VALUE AND FAIR MARKET SALES VALUE
For the purpose of this ss. 15, the Fair Market Rental Value or the
Fair Market Sales Value of the Aircraft, the Airframe, or any Engine shall be
determined on an "as is, where is" basis and shall take into account customary
brokerage and other out-of-pocket fees and expenses which typically would be
incurred in connection with a re-lease or sale of such an aircraft, airframe, or
engine. Any such determination shall be made by an Appraiser selected by Lessor,
and the costs and expenses associated therewith shall be borne by Lessee;
PROVIDED, that, if Lessor does not obtain possession of the Aircraft pursuant to
this ss. 15, an Appraiser shall not be appointed, and Fair Market Rental Value
and Fair Market Sales Value for purposes of this ss. 15 shall be zero.
15.5 REMEDIES CUMULATIVE
Nothing contained in this Lease shall be construed to limit in any way
any right, power, remedy, or privilege of Lessor hereunder or under any other
Operative Agreement or now or hereafter existing at law or in equity. Each and
every right, power, remedy, and privilege hereby given to, or retained by,
Lessor in this Lease shall be in addition to and not in limitation of every
other right, power, remedy, and privilege given under the Operative Agreements
or now or hereafter existing at law or in equity. Each and every right, power,
remedy, and privilege of Lessor under this Lease and any other Operative
Agreement may be exercised from time to time or simultaneously and as often and
in such order as may be deemed expedient by Lessor. All such rights, powers,
remedies, and privileges shall be cumulative and not mutually exclusive, and the
exercise of one shall not be deemed a waiver of the right to exercise any other.
Lessee hereby waives to the extent permitted by applicable Law any right which
it may have to require Lessor to choose or elect remedies.
16. LESSEE'S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC.
(a) Lessee's obligation to pay all Rent payable hereunder shall be
absolute and unconditional, and shall not be affected by any event or
circumstance, including: (1) any setoff, counterclaim, recoupment, defense, or
other right that Lessee may have against Lessor, Owner Participant, or any other
Person for any reason whatsoever; (2) any defect in the title, airworthiness,
condition, design, operation, or fitness for use of, or any damage to or loss or
destruction of, the Aircraft, the Airframe, or any Engine, or any interruption
or cessation in the use or possession thereof by Lessee for any reason
whatsoever; (3) any insolvency, bankruptcy, reorganization, or similar
proceedings by or against Lessee or any other Person; or (4) any other
circumstance, happening, or event whatsoever, whether or not similar to any of
the foregoing.
(b) If for any reason whatsoever this Lease shall be terminated in
whole or in part by operation of law or otherwise except as specifically
provided herein, Lessee nonetheless agrees to pay an amount equal to each Rent
payment at the time such payment would have become due and payable in accordance
with the terms hereof had this Lease not been terminated in whole or in part.
Lessee hereby waives, to the extent permitted by applicable Law, any and all
rights that it may now have or that at any time hereafter may be conferred upon
it, by statute or otherwise, to terminate, cancel, quit, or surrender this
Lease, except in accordance with the express terms hereof.
(c) Nothing set forth in this ss. 16 shall be construed to prohibit
Lessee from separately pursuing any claim that it may have from time to time
against Lessor or any other Person with respect to any matter (other than the
absolute and unconditional nature of Lessee's obligations hereunder to pay Rent,
and other than the matters specified in paragraphs (a) and (b) above).
17. RENEWAL AND PURCHASE OPTIONS
17.1 NOTICES GENERALLY
(a) Unless otherwise provided by this ss. 17, at least 270 days and no
more than 365 days before the Scheduled Expiration Date for the Base Term or
then-current Renewal Term, Lessee may provide irrevocable written notice to
Lessor (a "PRELIMINARY NOTICE"), with a copy of such notice to Owner
Participant, that Lessee intends to exercise the option either to extend the
leasing of the Aircraft for a Renewal Term pursuant to ss. 17.2 or to purchase
the Aircraft on the Scheduled Expiration Date pursuant to ss. 17.3.
(b) If Lessee gives a Preliminary Notice, then Lessee shall provide a
further notice, at least 30 days before the following Scheduled Expiration Date,
specifying which option it intends to elect, pursuant to ss. 17.2.1 or ss.
17.3.1 (as applicable). If Lessee fails to give such further notice at least 30
days before such Scheduled Expiration Date, Lessee shall be deemed to have
elected its option to purchase the Aircraft pursuant to ss. 17.3.1.
17.2 RENEWAL OPTIONS
17.2.1 RENEWAL NOTICE
(a) If Lessee has given a Preliminary Notice, as specified in ss. 17.1,
and subject to the terms and conditions of this ss. 17.2, Lessee may exercise
its option to extend the leasing of the Aircraft hereunder until the following
Scheduled Expiration Date, on the same terms (except as contemplated by this ss.
17) as in the Lessee Operative Agreements with respect to the Base Term, by
delivering a notice (a "RENEWAL NOTICE") to Lessor not less than 30 days before
the Scheduled Expiration Date.
(b) Notwithstanding anything to the contrary in any Operative Agreement:
(1) No Preliminary Notice or Renewal Notice shall be binding
on Lessor or oblige Lessor to extend the leasing of the Aircraft
hereunder for a Renewal Term if any Special Default or Event of Default
exists on and as of the date that such Renewal Term would otherwise
commence.
(2) A Renewal Notice shall be revocable by Lessee until 10
Business Days after the Renewal Rent is determined in accordance with
ss. 17.2.2, and unless revoked by written notice by Lessee to Lessor
shall thereafter become irrevocable and shall constitute an
unconditional obligation of Lessee to extend the leasing of the
Aircraft hereunder for the Renewal Term to which such Renewal Notice
relates. If Lessee revokes a Renewal Notice as indicated above, Lessee
will be deemed to have irrevocably elected its option to purchase the
Aircraft pursuant to ss. 17.3.1.
(3) Lessee shall not be entitled to give any Renewal Notice if
it (aa) has not delivered a Preliminary Notice to Lessor, (bb) has
delivered a Purchase Notice to Lessor, or (cc) has previously delivered
four Renewal Notices to Lessor.
17.2.2 RENEWAL RENT
(a) During each Renewal Term, Lessee shall pay to Lessor on each
Payment Date, in the manner and in the funds of the type specified in ss. 3.3,
Renewal Rent in arrears.
(b) The Renewal Rent payable by Lessee on each Payment Date during each
Renewal Term shall be the Fixed Rate (or, if less, the Applicable Percentage of
the Fair Market Rental Value). Any such Fair Market Rental Value shall be
determined not more than 120 days and not less than 100 days before the first
day of such Renewal Term by mutual agreement of Lessor and Lessee or, if they do
not agree, by an appraisal in accordance with ss. 17.4.
17.2.3 STIPULATED LOSS AND TERMINATION VALUES
(a) For any Renewal Term, Stipulated Loss Value Dates and Termination
Value Dates shall be extended throughout such Renewal Term on the same days and
for the same months as during the Base Term.
(b) Stipulated Loss Value and Termination Value amounts that are
payable during any such Renewal Term shall be determined at the same time that
the Renewal Rent for such Renewal Term is determined under ss. 17.2.2.
Stipulated Loss Values and Termination Values for any such Renewal Term shall,
commencing on the first day of such Renewal Term, be equal to the Fair Market
Sales Value of the Aircraft on such day, and shall decline ratably on a monthly
basis to the salvage value of the Aircraft as of the last day of its remaining
useful life.
(c) For purposes of calculating Stipulated Loss Value and Termination
Value amounts applicable during any Renewal Term, the "salvage value" and
"useful life" shall be determined by mutual agreement of Lessor and Lessee, or,
if they do not agree, by an appraisal in accordance with ss. 17.4.
17.3 PURCHASE OPTIONS
17.3.1 PURCHASE NOTICE
(a) Provided that at the time of such election no Special Default or Event
of Default exists, Lessee may, subject to ss. 17.1 and this ss. 17.3, elect to
purchase the Aircraft: (1) on the EBO Date as shown on Schedule 5 at the price
indicated thereon; (2) on any Purchase Date, at a purchase price equal to the
Fair Market Sales Value of the Aircraft computed as of the Purchase Date; or (3)
(aa) on any Payment Date occurring after the Tax Attribute Period, if a
Burdensome Indemnity Payment not waived by Owner Participant shall become due
and owing, if Lessee did not cause such indemnity with the intent of permitting
such purchase and if such purchase would eliminate such indemnity on a future
basis, or (bb) on any Payment Date after the EBO Date, if Lessee has committed
to (but not commenced) a Significant Expenditure, then (whether as to clause
(aa) or (bb)) at a purchase price equal to the greater of (x) the Fair Market
Sales Value of the Aircraft computed as of such Payment Date (not including any
portion of the Fair Market Sales Value of the Aircraft attributable to any
Significant Expenditure) and (y) the Termination Value for the Aircraft computed
as of such Payment Date.
(b) Lessee may exercise such option to purchase the Aircraft, by delivery
of a written notice (a "PURCHASE NOTICE") to Lessor (with a copy of such
Purchase Notice to Owner Participant) not less than 60 days and no more than 365
days before the EBO Date (for a purchase under ss. 17.3.1(a)(1)), not less than
30 days and no more than 365 days before the Purchase Date (for a purchase under
ss. 17.3.1(a)(2)), and not less than 120 days and no more than 365 days before
the Payment Date specified in such Purchase Notice (for a voluntary termination
purchase under ss. 17.3.1(a)(3)).
(c) Notwithstanding anything to the contrary in any Operative Agreement:
(1) Any Purchase Notice delivered or deemed to have been
delivered pursuant to ss. 17.3.1(a)(1) or (2) shall be irrevocable and
shall constitute an unconditional obligation of Lessee to purchase the
Aircraft under this ss. 17.3; and any Purchase Notice delivered
pursuant to ss. 17.3.1(a)(3), shall be revocable until 10 Business Days
after the determination of the Fair Market Sales Value in accordance
with ss. 17.3.2, and unless so revoked by written notice by Lessee to
Lessor (with a copy to Owner Participant) shall thereafter become
irrevocable and shall constitute an unconditional obligation of Lessee
to purchase the Aircraft under this ss. 17.3.
(2) Lessee shall not be entitled to give any Purchase Notice pursuant to
ss. 17.3.1(a)(2) if it has not delivered a Preliminary Notice.
17.3.2 DETERMINATION OF FAIR MARKET SALES VALUE
The Fair Market Sales Value of the Aircraft shall be determined not
more than 120 days and not less than 100 days before the applicable Purchase
Date or Payment Date by mutual agreement of Lessor and Lessee, or, if they shall
be unable to agree, by an appraisal in accordance with ss. 17.4.
17.3.3 PAYMENTS BY LESSEE
(a) If Lessee elects to purchase the Aircraft pursuant to clause (1) of ss.
17.3.1(a), then on the EBO Date Lessee shall pay to Lessor in immediately
available funds:
(1) all unpaid Basic Rent due before the EBO Date; plus
(2) the EBO Price; plus
(3) all Supplemental Rent then due, and any sales or transfer tax then due
in connection with such purchase.
(b) If Lessee elects to purchase the Aircraft pursuant to clause (2) of ss.
17.3.1(a), then on the applicable Purchase Date Lessee shall pay to Lessor in
immediately available funds:
(1) all unpaid Basic Rent due on or before such Purchase Date; plus
(2) the applicable purchase price for the Aircraft; plus
(3) all Supplemental Rent then due, and any sales or transfer tax then due
in connection with such purchase.
(c) If Lessee elects to purchase the Aircraft pursuant to clause (3) of ss.
17.3.1(a), then on the Payment Date on which Lessee elects to purchase the
Aircraft, Lessee shall pay to Lessor in immediately available funds:
(1) all unpaid Basic Rent due on or before such Payment Date; plus
(2) the purchase price of the Aircraft pursuant to such clause (3); plus
(3) all Supplemental Rent then due, and any sales or transfer tax then due
in connection with such purchase.
17.3.4 TITLE
Upon full and final payment by Lessee of (a) the applicable amount
payable under ss. 17.3.3, (b) on an after-tax basis, all out-of-pocket fees and
expenses (including reasonable fees and expenses of counsel) incurred by Lessor
and Owner Participant in connection with such purchase and invoiced to Lessee
prior thereto, and (c) all other amounts then due and payable by Lessee under
the Operative Agreements, Lessor will transfer to Lessee title to the Aircraft
in accordance with ss. 4.5.
17.3.5 INSTALLMENT EBO PURCHASE
Lessee and Lessor acknowledge that at Lessee's election the EBO Price
may be payable in installments as provided in Schedule 5. Lessor and Lessee
agree that if Lessee elects to purchase the Aircraft pursuant to ss.
17.3.1(a)(1) and elects to pay the EBO Price in installments, Lessee agrees to
provide security to Lessor to secure the unpaid balance of the EBO Price, which
security shall be required to be in an amount and otherwise in form and
substance reasonably satisfactory to Lessor and Owner Participant. Subject to
the foregoing, upon payment of the initial installment of the EBO Price as set
forth in Schedule 5 together with all amounts otherwise payable pursuant to ss.
17.3.3(a) and ss. 17.3.4, Lessor will transfer title to the Aircraft in
accordance with ss. 4.5.
17.4 APPRAISALS
Whenever Fair Market Rental Value or Fair Market Sales Value of the
Aircraft is required to be determined by an appraisal under this ss. 17, Lessee
and Lessor shall appoint a mutually-satisfactory Appraiser to conduct such
appraisal. If Lessee and Lessor fail to agree upon a satisfactory Appraiser,
then each shall promptly appoint a separate Appraiser, and such Appraisers shall
jointly determine such amount. If either Lessee or Lessor does not so appoint an
Appraiser, the determination of the single Appraiser appointed shall be final.
If two Appraisers are appointed and within seven days after the appointment of
the latter of such two Appraisers, they do not agree upon such amount, such two
Appraisers shall, within eight days after such latter appointment, appoint a
third Appraiser, and such amount shall be determined by such three Appraisers,
who shall make their separate appraisals within seven days following the
appointment of the third Appraiser, and any determination so made shall be
conclusive and binding upon Lessor and Lessee. If no such third Appraiser is
appointed within such eight-day period, either Lessor or Lessee may apply to the
American Arbitration Association to make such appointment, and both parties
shall be bound by such appointment. The foregoing appraisal procedure shall in
any event be completed no less than 125 days before the end of the Base Term or
any Renewal Term (unless such procedure is undertaken in connection with ss. 15
or ss. 17.3.1(a), in which case it shall be completed promptly). If three
Appraisers are appointed and the difference between the determination which is
further from the middle determination and the middle determination is more than
125% of the difference between the middle determination and the third
determination, then such further determination shall be excluded, the remaining
two determinations shall be averaged, and such average shall be final and
binding upon Lessor and Lessee. Otherwise, the average of all three
determinations shall be final and binding upon Lessor and Lessee. The fees and
expenses of all such Appraisers and such appraisal procedure shall be borne
equally by Lessee and Lessor.
18. MISCELLANEOUS
18.1 AMENDMENTS
No provision of this Lease may be amended, supplemented, waived,
modified, discharged, terminated, or otherwise varied orally, but only by an
instrument in writing that specifically identifies the provision of this Lease
that it purports to amend, supplement, waive, modify, discharge, terminate, or
otherwise vary and is signed by Lessor and Lessee. Each such amendment,
supplement, waiver, modification, discharge, termination, or variance shall be
effective only in the specific instance and for the specific purpose for which
it is given. No provision of this Lease shall be varied or contradicted by oral
communication, course of dealing or performance, or other manner not set forth
in an agreement, document, or instrument in writing and signed by Lessor and
Lessee.
18.2 SEVERABILITY
If any provision hereof shall be held invalid, illegal, or
unenforceable in any respect in any jurisdiction, then, to the extent permitted
by Law, (a) all other provisions hereof shall remain in full force and effect in
such jurisdiction, and (b) such invalidity, illegality, or unenforceability
shall not affect the validity, legality, or enforceability of such provision in
any other jurisdiction. If, however, any Law pursuant to which such provisions
are held invalid, illegal, or unenforceable may be waived, Lessor and Lessee
hereby waive such Law to the full extent permitted, to the end that this Lease
shall be deemed to be a valid and binding agreement in all respects, enforceable
in accordance with its terms.
18.3 THIRD-PARTY BENEFICIARY
This Lease is not intended to provide, and shall not provide, any
Person not a party hereto (other than Owner Participant and the Persons referred
to in ss. 4.6) with any rights of any nature whatsoever against either of the
parties hereto, and no Person not a party hereto (other than Owner Participant
and the Persons referred to in ss. 4.6) shall have any right, power, or
privilege in respect of this Lease, or have any benefit or interest arising out
of this Lease.
18.4 REPRODUCTION OF DOCUMENTS
This Lease (including all annexes, schedules, and exhibits hereto) and
all agreements, instruments, and documents relating hereto, including (a)
consents, waivers, and modifications that may hereafter be executed, and (b)
financial statements, certificates, and other information previously or
hereafter furnished to any party hereto, may be reproduced by such party by any
photographic, photostatic, microfilm, micro-card, miniature photographic, or
other similar process, and such party may destroy any original documents so
reproduced. Any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by such
party in the regular course of business), and any enlargement, facsimile, or
further reproduction of such reproduction likewise is admissible in evidence.
18.5 COUNTERPARTS
This Lease and any amendments, waivers, consents, or supplements hereto
may be executed in any number of counterparts (or upon separate signature pages
bound together into one or more counterparts), each fully-executed set of which
when so executed shall be deemed to be an original, and all of which
counterparts, taken together, shall constitute one and the same instrument. The
single fully-executed original of this Lease marked "Original" on the signature
page hereof is the original for chattel paper purposes, and all other
counterparts are duplicates for chattel paper purposes and are marked
"duplicate" on the signature page hereof. No security interest in this Lease may
be perfected by the possession of any counterpart other than the "Original".
18.6 NOTICES
Unless otherwise expressly permitted by the terms hereof, all notices,
requests, demands, authorizations, directions, consents, waivers, and other
communications required or permitted to be made, given, furnished, or filed
hereunder shall be made, given, furnished, or filed, and shall become effective,
in the manner prescribed in ss. 15.7 of the Participation Agreement.
18.7 GOVERNING LAW
THIS LEASE 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 LEASE IS BEING DELIVERED IN THE
STATE OF NEW YORK.
18.8 NO WAIVER
No failure on the part of Lessor to exercise, and no delay by Lessor in
exercising, any of its rights, powers, remedies, or privileges under this Lease
or provided at Law, in equity or otherwise shall impair, prejudice, or
constitute a waiver of any such right, power, remedy, or privilege or be
construed as a waiver of any breach hereof or default hereunder or as an
acquiescence therein, nor shall any single or partial exercise of any such
right, power, remedy, or privilege preclude any other or further exercise
thereof by Lessor or the exercise of any other right, power, remedy, or
privilege by Lessor. No notice to or demand on Lessee in any case shall, unless
otherwise required under this Lease, entitle Lessee to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of Lessor to any other or further action in any circumstances without
notice or demand.
18.9 ENTIRE AGREEMENT
This Lease, together with the other Operative Agreements, on and as of
the date hereof constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and thereof, and all prior understandings
or agreements, whether written or oral, between the parties hereto with respect
to such subject matter are hereby superseded in their entirety.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease
Agreement N___AT.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY, EXCEPT
AS EXPRESSLY PROVIDED
HEREIN, BUT SOLELY AS
TRUSTEE UNDER THE TRUST
AGREEMENT, as Lessor
By:
----------------------------------------
Name:
Title:
AMERICAN TRANS AIR, INC., as Lessee
By:
Name:
Title:
[This is the ORIGINAL counterpart of the Lease for chattel paper purposes]
[or]
[This is a DUPLICATE executed counterpart, and is NOT
the original counterpart, of the Lease, for
chattel paper purposes.]
AIRCRAFT DESCRIPTION
The Aircraft is a Boeing model 737-800 aircraft, consisting of (1) an airframe
bearing FAA registration no. N___AT and manufacturer's serial no. __________,
(2) two CFM International model CFM56-7 engines (each of which has 750 or more
rated takeoff horsepower or its equivalent), bearing manufacturer's serial nos.
__________ and __________, and (3) all appliances, parts, instruments,
appurtenances, accessories, furnishings, and other equipment or property
incorporated in such airframe and engines.
RETURN ACCEPTANCE SUPPLEMENT N___AT
This Supplement, dated __________, ____, is entered into between First
Security Bank, National Association, a national banking association, not in its
individual capacity but solely as Owner Trustee under Trust Agreement N___AT,
dated as of __________________, ____, with the Owner Participant named therein
(such Owner Trustee, in its capacity as trustee, being referred to as "LESSOR"),
and American Trans Air, Inc. ("LESSEE"), an Indiana corporation.
Lessor and Lessee have entered into Lease Agreement N___AT (the
"LEASE"), dated as of [_____________, ____], relating to the Boeing model
737-800 aircraft described below. Terms defined in the Lease have the same
meanings when used in this Supplement.
Lessor and Lessee hereby agree as follows:
1. Lessor and Lessee are executing this Return Acceptance Supplement to
confirm that, on the date hereof, Lessee returned the following Airframe and
Engines to Lessor:
Airframe: U.S. registration no. N___AT; manufacturer's serial no.
__________; and
Engines: two CFM International engines, bearing manufacturer's serial nos.
__________ and __________. 2. This Return Acceptance Supplement is being
delivered in _____________________.
3. Lessor and Lessee agree that the Lease is terminated, except for the
provisions thereof that expressly survive termination.
IN WITNESS WHEREOF, Lessor and Lessee have executed this Return
Acceptance Supplement N___AT.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, NOT IN ITS
INDIVIDUAL CAPACITY, EXCEPT
AS EXPRESSLY PROVIDED
HEREIN, BUT SOLELY AS
TRUSTEE UNDER THE TRUST
AGREEMENT, as Lessor
By:
--------------------------------------------------------
Name:
Title:
AMERICAN TRANS AIR, INC., as Lessee
By:
--------------------------------------------------------
Name:
Title:
CERTAIN TERMS
DEFINED TERM DEFINITION
Commencement Date __________, 200_
Fixed Rate $__________ per quarterly Payment Date
[60% OF AVERAGE BASIC RENT DURING THE
BASE TERM]
Minimum Liability Insurance Amount (CONFIDENTIAL MATERIAL OMITTED)
Past-Due Rate (CONFIDENTIAL MATERIAL OMITTED)
Scheduled Expiration Date
(a) for the
Base Term, the
20th
anniversary of
the Delivery
Date, and (b)
for a Renewal
Term, the day
before the
first
anniversary of
the first day
of that Renewal
Term
Similar Aircraft Boeing model 737-800 aircraft
(other than the Aircraft)
SLV Rate ___________% per annum
Threshold Amount (CONFIDENTIAL MATERIAL OMITTED)
BASIC RENT PAYMENTS
PERCENTAGE OF
PAYMENT DATE LESSOR'S COST
BASIC RENT ALLOCATIONS
FROM (BUT ALLOCATION OF
NOT INCLUDING) THROUGH BASIC RENT
- -----------------------------------------------------------------------
STIPULATED LOSS VALUE
STIPULATED STIPULATED PREPAID BASIC DEFERRED BASIC
LOSS VALUE DATE LOSS VALUE RENT AMOUNT RENT AMOUNT
TERMINATION VALUE
TERMINATION TERMINATION VALUE PREPAID BASIC DEFERRED BASIC
VALUE DATE RENT AMOUNT RENT AMOUNT
- ------------------------------------------------------------------------------
EBO PRICE SCHEDULE
Unadjusted Adjusted EBO
EBO Price Rent Adjustment Amount
(Percentage of (Percentage of (Percentage of
EBO Date Lessor's Cost) Lessor's Cost) Lessor's Cost)
PERMITTED COUNTRIES
Argentina*
Australia
Austria
Bahamas
Belgium
Bermuda
Brazil*
Canada
Chile*
Denmark
Ecuador*
Egypt*
Finland
France
Germany
Greece*
Hungary*
Iceland
India*
Indonesia*
Ireland
Italy**
Jamaica*
Japan
Liechtenstein*
Luxembourg
Malaysia*
Malta*
Mexico**
Monaco
Morocco*
Netherlands
New Zealand
Norway
Paraguay*
Peoples Republic of China*
Philippines*
Portugal
Republic of China (Taiwan)*
Singapore*
South Africa*
South Korea*
Spain
Sweden
Switzerland
Thailand*
United Kingdom
Uruguay*
Venezuela*
United States of America
*SUBLEASING AND RE-REGISTRATION PERMITTED ONLY WITH OWNER PARTICIPANT'S PRIOR
WRITTEN CONSENT, WHICH CONSENT OWNER PARTICIPANT MAY WITHHOLD IN ITS SOLE AND
ABSOLUTE DISCRETION.
**APPROVED FOR SUBLEASING BUT LESSEE MAY NOT RE-REGISTER IN SUCH COUNTRY WITHOUT
OWNER PARTICIPANT'S PRIOR WRITTEN CONSENT, WHICH CONSENT OWNER PARTICIPANT MAY
WITHHOLD IN ITS SOLE AND ABSOLUTE DISCRETION..
PLACARDS
Leased from
First Security Bank, National Association,
as owner trustee
ANNEX B
RETURN CONDITIONS
This Annex B shall apply to the return of the Aircraft by or on behalf
of Lessee under the Lease, whether at a Scheduled Expiration Date, upon the
exercise of Lessee's rights under ss. 9 of the Lease, upon the exercise of
Lessor's remedies following the occurrence of an Event of Default, or otherwise.
However, this Annex B shall not apply (1) if an Event of Loss to the Aircraft
occurs (unless the Aircraft is replaced under ss. 10.1.3 of the Lease), or (2)
if Lessee buys the Aircraft in accordance with ss. 17 of the Lease.
The terms defined in Annex A to Lease Agreement N___AT, when
capitalized as in Annex A, have the same meanings when used in this "Return
Conditions" Annex. Annex A also contains rules of usage that control
construction in this "Return Conditions" Annex.
(CONFIDENTIAL MATERIAL OMITTED)
ANNEX C
MAINTENANCE
The terms defined in Annex A to Lease Agreement N___AT, when
capitalized as in Annex A, have the same meanings when used in this
"Maintenance" Annex. Annex A also contains rules of usage that control
construction in this "Maintenance" Annex.
A. MAINTENANCE.
-----------
Lessee shall maintain, service, repair, and overhaul the Aircraft (or
cause the Aircraft to be maintained, serviced, repaired, and overhauled) in
accordance with (1) maintenance standards required by, or substantially
equivalent to those required by, the FAA or the central civil aviation authority
of Canada, Japan, and the JAA for the Aircraft (the "MAINTENANCE PROGRAM"), so
as (aa) to keep the Aircraft in as good operating condition as originally
delivered hereunder, ordinary wear and tear excepted, and (bb) to keep the
Aircraft in such operating condition as may be necessary to enable the
applicable airworthiness certificate for the Aircraft to be maintained under the
regulations of the FAA or other Aviation Authority then having jurisdiction over
the operation of the Aircraft, other than during (x) temporary periods of
storage in accordance with applicable regulations, (y) maintenance and
modification permitted hereunder, and (z) periods when the FAA or such other
Aviation Authority has revoked or suspended the airworthiness certificates for
Similar Aircraft; and (2) except during periods when a Permitted Sublease is in
effect, the same standards as Lessee uses with respect to similar aircraft of
similar size in its fleet operated by Lessee in similar circumstances and,
during any period in which a Permitted Sublease is in effect, the same standards
used by the Permitted Sublessee with respect to similar aircraft of similar size
in its fleet and operated by the Permitted Sublessee in similar circumstances.
Lessee further agrees that the Aircraft will be maintained, used, serviced,
repaired, overhauled, or inspected in compliance with applicable Laws with
respect to the maintenance of the Aircraft and in compliance with each
applicable airworthiness certificate, license, and registration relating to the
Aircraft issued by the Aviation Authority, other than minor or nonrecurring
violations with respect to which corrective measures are taken upon discovery
thereof and except to the extent Lessee or Permitted Sublessee is contesting in
good faith the validity or application of any such Law or requirement relating
to any such certificate, license, or registration in any reasonable manner which
does not create a material risk of sale, loss, or forfeiture of the Aircraft,
the Airframe, or any Engine or the interest of Owner Participant therein or a
material risk of criminal liability or material civil penalty against Lessor or
Owner Participant. Lessee shall cause the Aircraft Documents to be maintained in
English and promptly furnish Lessor and Owner Participant with information
necessary for filing with applicable governmental aviation authorities.
B. REPLACEMENT OF PARTS.
--------------------
Except as otherwise provided herein, Lessee will promptly replace (or
cause to be replaced) all Parts that are from time to time incorporated or
installed in or attached to the Aircraft, and that become worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair, or permanently
rendered unfit for use for any reason whatsoever. In addition, Lessee may remove
(or permit to be removed) any Parts in the ordinary course of maintenance,
service, repair, overhaul, or testing, whether or not such Parts are worn out,
lost, stolen, destroyed, seized, confiscated, damaged beyond repair, or
permanently rendered unfit for use; PROVIDED, that, except as otherwise provided
herein, Lessee will replace or cause the replacement of such Parts as promptly
as practicable. All replacement Parts shall be free and clear of all Liens,
except for Permitted Liens and pooling arrangements to the extent permitted by
ss. C below and shall be in good operating condition and (except in the case of
replacement property installed on the basis of operational exigencies) have a
value and utility not less than the value and utility of the Parts replaced
(assuming such replaced Parts were in the condition required under this Lease).
Except as otherwise provided herein, all Parts at any time removed from the
Aircraft shall remain the property of Lessor, no matter where located, until
they are replaced by Parts that have been incorporated or installed in or
attached to the Aircraft and that meet the requirements for replacement Parts
specified above. As soon as a replacement Part is incorporated or installed in
or attached to the Aircraft as above provided, without further act, (1) title to
the replaced Part shall vest in Lessee (or if a Permitted Sublease is then in
effect, in the Permitted Sublessee) free and clear of all Lessor Liens and all
rights of Lessor, and the replaced Part shall no longer be deemed a Part
hereunder, (2) title to such replacement Part shall vest in Lessor, subject only
to Permitted Liens and pooling arrangements to the extent permitted by ss. C
below and except in the case of replacement property temporarily installed on an
emergency basis, and (3) such replacement Part shall become subject to this
Lease and be deemed part of the Aircraft for all purposes hereof and thereof to
the same extent as the Parts originally incorporated or installed in or attached
to such Aircraft.
C. POOLING OF PARTS.
----------------
Any Part removed from the Aircraft may be subjected by Lessee or a
Permitted Sublessee to a normal pooling arrangement customary in the airline
industry and entered into in the ordinary course of business of Lessee or such
Permitted Sublessee, so long as a Part replacing such removed Part shall be
incorporated or installed in or attached to the Aircraft in accordance with ss.
B of this Annex C as promptly as practicable after the removal of such removed
Part. In addition, any replacement Part when incorporated or installed in or
attached to the Aircraft may be owned by any third party subject to such a
normal pooling arrangement, so long as Lessee or Permitted Sublessee, as
promptly thereafter as reasonably possible, either (1) causes title to such
replacement Part to vest in Lessor in accordance with ss. B of this Annex C,
free and clear of all Liens (except Permitted Liens), or (2) replaces (or causes
to be replaced) such replacement Part by incorporating or installing in or
attaching to the Aircraft a further replacement Part owned by Lessee or a
Permitted Sublessee free and clear of all Liens (except Permitted Liens) and by
causing title to such further replacement Part to vest in Lessor in accordance
with ss. B of this Annex C.
D. ALTERATIONS, MODIFICATIONS, AND ADDITIONS.
-----------------------------------------
Lessee shall make (or cause to be made) such alterations and
modifications in and additions to the Aircraft as may be required from time to
time to meet the applicable standards of the FAA or other Aviation Authority
having jurisdiction over the operation of the Aircraft, to the extent made
mandatory in respect of the Aircraft (a "MANDATORY MODIFICATION"); PROVIDED,
that Lessee or any Permitted Sublessee may, in good faith and by appropriate
procedure, contest the validity or application of any law, rule, regulation, or
order in any reasonable manner which does not have more than a DE MINIMIS risk
of adversely affecting Lessor's interest in the Aircraft and does not involve
more than a DE MINIMIS risk of sale, forfeiture, or loss of the Aircraft or the
interest of Owner Participant therein, more than a DE MINIMIS risk of material
civil penalty, or any risk of criminal liability being imposed on Lessor or
Owner Participant. In addition, Lessee may make or permit to be made such
alterations and modifications in and additions to the Aircraft (each an
"OPTIONAL MODIFICATION") as Lessee or any Permitted Sublessee deems desirable in
the proper conduct of its business, including removal of Parts which Lessee
deems are obsolete or no longer suitable or appropriate for use in the Aircraft
(PROVIDED, that Lessee's right to remove obsolete Parts will be limited to Parts
having an aggregate original cost not exceeding 1% of Lessor's Cost of the
Aircraft with Lessor having the right to request such parts be shipped to Owner
Participant upon removal at Lessee's expense; PROVIDED, that no such Optional
Modification shall (1) diminish the fair market value, estimated residual value,
utility, or economic useful life of the Aircraft or any Engine below its fair
market value, estimated residual value, utility, or economic useful life
immediately before such Optional Modification (assuming the Aircraft or such
Engine was in the condition required by the Lease immediately before such
Optional Modification), (2) cause the Aircraft to cease to have the applicable
standard airworthiness certificate, or (3) cause the Aircraft to become "limited
use property" within the meaning of Rev. Proc. 79-48. Except as otherwise
provided herein, title to all Parts (other than Removable Parts (as defined
below)) incorporated or installed in or attached to the Aircraft as the result
of such Optional Modification shall, without further act, vest in Lessor and
become subject to this Lease. Notwithstanding anything to the contrary in this
ss. D, Lessee or a Permitted Sublessee may, at any time during the Term, remove
any Part (such Part being referred to herein as a "REMOVABLE PART") if (aa) such
Part is in addition to, and not in replacement of or substitution for, any Part
originally incorporated or installed in or attached to the Aircraft at the time
of delivery thereof to Lessee or any Part in replacement of, or substitution
for, any such Part, (bb) such Part is not required to be incorporated or
installed in or attached to the Aircraft pursuant to the terms of ss. A of this
Annex C or the first sentence of this ss. D or pursuant to the terms of any
insurance policies required to be carried hereunder or any applicable law, and
(cc) such Part can be removed from the Airframe or Engine without in any
material respect diminishing the fair market value, estimated residual value,
utility, or remaining economic useful life that the Airframe or Engine would
have had at the time of removal had such removal not occurred, assuming that
such Airframe or Engine was in the condition and repair required to be
maintained by the terms hereof and such Removable Part had not been incorporated
or installed in or attached to the Aircraft. Removable Parts may be leased from
or financed by third parties other than Lessor. Title to any Removable Part
shall not vest in Lessor; except that any Part not removed before the return to
Lessor hereunder of the Airframe or Engine on which it is incorporated,
installed, or attached shall become the property of Lessor.
E. RECORDS.
-------
Lessee shall maintain (or cause to be maintained) all Aircraft
Documents. All Aircraft Documents that are specific to the Aircraft shall be the
property of Lessor, but shall become the property of Lessee upon Lessee's
purchase of the Aircraft pursuant to the terms of this Lease or upon the
occurrence of an Event of Loss and Lessee's compliance with ss. 10.
ANNEX D
INSURANCE
The terms defined in Annex A to Lease Agreement N___AT, when
capitalized as in Annex A, have the same meanings when used in this "Insurance"
Annex. Annex A also contains rules of usage that control construction in this
"Insurance" Annex.
A. LIABILITY INSURANCE
1. Except as provided in ss. A2 below, Lessee will carry or cause to be
carried at all times, at no expense to Lessor or Owner Participant,
comprehensive airline legal liability (including passenger liability, property
damage, and contractual liability insurance) with respect to the Aircraft which
is (a) in an amount not less than the greater of (x) the amount of comprehensive
airline legal liability insurance from time to time applicable to aircraft owned
or leased and operated by Lessee of the same type and operating on similar
routes as the Aircraft, and (y) the Minimum Liability Insurance Amount per
occurrence; (b) of the type and covering the same risks as from time to time
applicable to aircraft, operated by Lessee and similarly-situated carriers, of
the same type as the Aircraft; and (c) maintained in effect with insurers of
internationally recognized responsibility in the international aviation industry
(such insurers being referred to herein as "APPROVED INSURERS").
2. During any period that the Aircraft is on the ground and not in
operation, Lessee may carry or cause to be carried, in lieu of the insurance
required by ss. A1 above, insurance otherwise conforming with the provisions of
ss. A1 except that (a) the amounts of coverage shall not be required to exceed
the amounts of public liability and property damage insurance from time to time
applicable to aircraft owned or operated by Lessee of the same type as the
Aircraft which are on the ground and not in operation, and (b) the scope of the
risks covered and the type of insurance shall be the same as from time to time
shall be applicable to aircraft owned or operated by Lessee of the same type
which are on the ground and not in operation.
B. HULL INSURANCE
1. Except as provided in ss. B2 below, Lessee will carry or cause to be
carried at all times, at no expense to Lessor or Owner Participant, with
Approved Insurers "all-risk" ground and flight aircraft hull insurance covering
the Aircraft (including the Engines when they are installed on the Airframe or
any other airframe) which is of the type as from time to time applicable to
aircraft operated by Lessee of the same type as the Aircraft for an amount
denominated in United States Dollars not less than the Stipulated Loss Value of
the Aircraft
Any policies of insurance carried in accordance with this ss. B1
covering the Aircraft and any policies taken out in substitution or replacement
for any such policies shall provide that (a) in the event of a loss involving
proceeds in excess of the Threshold Amount, the proceeds in respect of such loss
up to an amount equal to the Stipulated Loss Value for the Aircraft shall be
payable to Lessor, except in the case of a loss with respect to an Engine
installed on an airframe other than the Airframe, in which case Lessee (or any
Permitted Sublessee) shall endeavor to arrange for any payment of insurance
proceeds in respect of such loss to be held for the account of Lessor, whether
such payment is made to Lessee (or any Permitted Sublessee) or any third party
[and, if or Lessor receives such a payment otherwise than in respect of an Event
of Loss, then, upon receipt of evidence reasonably satisfactory to Lessor that
the damage giving rise to such payment has been repaired or that such payment is
then required to pay for repairs then being made, Lessor shall pay the amount of
such payment to Lessee or its order], and (b) the entire amount of any loss
involving proceeds of the Threshold Amount or less or the amount of any proceeds
of any loss in excess of the Stipulated Loss Value for the Aircraft shall be
paid to Lessee or its order unless an Event of Default exists and the insurers
have been notified thereof by Lessor. In the case of a loss with respect to an
engine (other than an Engine) installed on the Airframe, Lessor shall hold any
payment to it of any insurance proceeds for that loss for the account of Lessee
or any other third party who is entitled to receive such proceeds.
2. During any period that the Aircraft is on the ground and not in
operation, Lessee may carry or cause to be carried, in lieu of the insurance
required by ss. B1 above, insurance otherwise conforming with the provisions of
ss. B1, except that the scope of the risks and the type of insurance shall be
the same as from time to time applicable to aircraft owned by Lessee of the same
type similarly on the ground and not in operation, PROVIDED, that Lessee shall
maintain insurance against risk of loss or damage to the Aircraft in an amount
equal to the Stipulated Loss Value of the Aircraft during such period that the
Aircraft is on the ground and not in operation.
C. WAR-RISK, HIJACKING, AND ALLIED PERILS INSURANCE
If Lessee (or any Permitted Sublessee) operates or proposes to operate
the Aircraft, the Airframe, or any Engine (1) in any area of recognized
hostilities, or (2) on international routes and Lessee (or such Permitted
Sublessee) maintains war-risk, hijacking, or allied perils insurance for other
aircraft that it operates on such routes or in such areas, Lessee shall maintain
or cause to be maintained war-risk, hijacking, and allied perils insurance of
substantially the same type carried by similar United States commercial air
carriers operating the same or comparable models of aircraft on similar routes
or in such areas, and in no event in an amount less than the Stipulated Loss
Value.
D. GENERAL PROVISIONS
Any policies of insurance carried in accordance with ss.ss. A, B, and
C, including any policies taken out in substitution or replacement for such
policies:
(1) shall name Lessor and Owner Participant (and in respect of liability
insurances, to the extent they are available without unreimbursed additional
cost to Lessee, each of their respective successors, assigns, directors, agents,
officers, and employees) as additional insureds (the "ADDITIONAL INSUREDS"), as
their interests may appear;
(2) shall apply worldwide and have no territorial restrictions or
limitations (except only in the case of war, hijacking, and allied perils
insurance required under ss. C, which shall apply to the fullest extent
available in the international insurance market);
(3) shall provide that, in respect of the interests of the Additional
Insureds in such policies, the insurance shall not be invalidated or impaired by
any act or omission (including misrepresentation and nondisclosure) by Lessee
(or any Permitted Sublessee) or any other Person (including use for illegal
purposes of the Aircraft or any Engine), and shall insure the Additional
Insureds regardless of any breach or violation of any representation, warranty,
declaration, term, or condition contained in such policies by Lessee (or any
Permitted Sublessee);
(4) shall provide that, if the insurers cancel such insurance for any
reason whatsoever, or if it is allowed to lapse for nonpayment of premium, or if
any material change is made in the insurance which adversely affects the
interest of any of the Additional Insureds, such cancellation, lapse, or change
shall not be effective as to the Additional Insureds for 30 days (seven days in
the case of war risk, hijacking, and allied perils insurance) after receipt by
the Additional Insureds of written notice by such insurers of such cancellation,
lapse or change, PROVIDED, that if any notice period specified above is not
reasonably obtainable, such policies shall provide for as long a period of prior
notice as shall then be reasonably obtainable;
(5) shall waive any rights of recourse, subrogation, setoff (including for
unpaid premiums), recoupment, counterclaim, or other deduction, whether by
attachment or otherwise, against each Additional Insured;
(6) shall be primary without right of contribution from any other insurance
that may be available to any Additional Insured;
(7) shall provide that all of the liability insurance provisions thereof,
except the limits of liability, shall operate in all respects as if a separate
policy had been issued covering each party insured thereunder;
(8) shall provide that none of the Additional Insureds shall be liable for
any insurance premium; and
(9) shall contain a 50/50 Clause per Lloyd's Aviation Underwriters'
Association Standard Policy Form AVS 103;
PROVIDED, that any such endorsements may be subject to any limitations on
endorsements generally prevailing in the airline insurance marketplace at the
time (E.G., AVN67B).
E. REPORTS AND CERTIFICATES; OTHER INFORMATION
On or before the Delivery Date and on or before each renewal date of
the insurance policies required hereunder (and no less often than on an annual
basis), Lessee will furnish or cause to be furnished to Lessor and Owner
Participant insurance certificates describing in reasonable detail the insurance
maintained hereunder and a report, signed by Lessee's or a Permitted Sublessee's
regular independent insurance broker (the "INSURANCE BROKER"), stating the
opinion of such Insurance Broker that (1) all premiums for the insurance then
due have been paid, and (2) such insurance complies with the terms of this Annex
D. To the extent that such agreement is reasonably obtainable, Lessee will also
cause the Insurance Broker to agree to notify Lessor and Owner Participant in
writing of any default in the payment of any premium and of any other act or
omission on the part of Lessee of which the Insurance Broker has knowledge and
which might invalidate or render unenforceable, in whole or in part, any
insurance on the Aircraft or Engines or cause the cancellation or termination of
such insurance, and to notify Lessor and Owner Participant in writing at least
30 days (seven days for war-risk and allied perils coverage, or such shorter
period therefor as may be available in the international insurance market, as
applicable) before the cancellation, lapse, or materially adverse change of any
insurance maintained pursuant to this Annex D.
F. RIGHT TO PAY PREMIUMS
Each Additional Insured shall have the rights but not the obligations
of an additional named insured. No Additional Insured shall have any obligation
to pay any premium, commission, assessment, or call due on any such insurance
(including reinsurance). Notwithstanding the foregoing, in the event of
cancellation of any required insurance due to the nonpayment of premium, each of
Lessor and Owner Participant shall have the option, in its sole discretion, to
pay any such premium and to maintain such coverage, as Lessor or Owner
Participant may require, until the scheduled expiry date of such insurance and,
in such event, Lessee shall, upon demand, reimburse Lessor or Owner Participant
for amounts that they so pay.
G. DEDUCTIBLES; SELF-INSURANCE
Lessee may self-insure by way of deductible, premium adjustment,
franchise provisions, or otherwise (including, with respect to insurance
maintained pursuant to ss. B, insuring for a maximum amount which is less than
the Stipulated Loss Value of the Aircraft) the insurance covering the risks
required to be insured against pursuant to ss. 11 and this Annex D under a
program applicable to all aircraft in Lessee's fleet, but in no case shall the
aggregate amount of self-insurance (including any applicable deductible) in
regard to ss. 11 and this Annex D during any policy year, with respect to the
Aircraft, exceed (CONFIDENTIAL MATERIAL OMITTED). In addition, Lessee (and any
Permitted Sublessee) may self-insure to the extent that any applicable
deductible per aircraft that does not exceed industry standards for major U.S.
airlines.
ANNEX A
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Agreement, unless otherwise expressly provided, a
reference to:
(1) each of "Lessee", "Lessor", "Loan Participant", "Owner Trustee", "Owner
Participant", "Mortgagee", "Note Holder", and any other Person includes any
successor in interest to it and any permitted transferee, permitted purchaser,
or permitted assignee of it;
(2) any agreement or other document (including any annex, schedule, or
exhibit thereto, or any other part thereof) includes that agreement or other
document as amended, supplemented, or otherwise modified and any agreement or
other document entered into in substitution or replacement therefor from time to
time, and in each case in accordance with its terms and in accordance with the
Operative Agreements;
(3) any provision of any Law includes any such provision as amended,
modified, supplemented, substituted, reissued, or reenacted before the Delivery
Date, and thereafter from time to time;
(4) "Agreement", "this Agreement", "hereby", "herein", "hereto", "hereof",
"hereunder", and words of similar import, when used in any Operative Agreement,
refer to such Operative Agreement as a whole and not to any particular provision
of such Operative Agreement;
(5) "including", "include", and terms or phrases of similar import means
"including [etc.], without limitation";
(6) "or" is conjunctive and not disjunctive; and
(7) a reference to a "section" or "ss.", an "Exhibit", an "Annex", or a
"Schedule" in any Operative Agreement, or in any annex thereto, is a reference
to a section of, or an exhibit, an annex, or a schedule to, such Operative
Agreement or such annex, respectively.
(b) Each exhibit, annex, and schedule to each Operative Agreement is
incorporated in, and is a part of, such Operative Agreement.
(c) Unless otherwise defined or specified in any Operative Agreement, all
accounting terms therein shall be construed and all accounting determinations
thereunder shall be made in accordance with GAAP.
(d) Headings used in any Operative Agreement are for convenience only, and
shall not in any way affect the construction of, or be taken into consideration
in interpreting, such Operative Agreement.
(e) For purposes of each Operative Agreement, the existence of a Lease
Event of Default, Lease Default, or Special Default referred to in ss. 14.5 of
the Lease shall not prohibit Lessee from taking any action or exercising any
right that is conditioned on the non-existence of any Lease Event of Default,
Lease Default, or Special Default if such Lease Event of Default, Lease Default,
or Special Default consists of the institution of reorganization proceedings
with respect to Lessee under Chapter 11 of the Bankruptcy Code, and the trustee
or debtor-in-possession in such proceedings (1) has agreed to perform its
obligations under the Lease with the approval of the applicable court and
thereafter continues to perform such obligations in accordance with Section
1110, or (2) has assumed the Lease with the approval of the relevant court and
thereafter continues to perform its obligations under the Lease.
DEFINED TERMS
ACTUAL KNOWLEDGE: (a) as it applies to Owner Trustee or Mortgagee,
actual knowledge of a responsible officer in the Corporate Trust Department or
the Corporate Trust Office, respectively, and (b) as it applies to Owner
Participant or Lessee, actual knowledge of a Vice President or more senior
officer of Owner Participant or Lessee (respectively), or any other officer of
Owner Participant or Lessee (respectively) having responsibility for the
Transactions; PROVIDED, that each of Lessee, Owner Participant, Owner Trustee,
and Mortgagee shall be deemed to have "Actual Knowledge" of any matter as to
which it has received notice from Lessee, Owner Participant, any Note Holder,
Owner Trustee, or Mortgagee, given pursuant to ss. 15.7 of the Participation
Agreement.
ADDITIONAL INSURED: defined inss. D of Annex D to the Lease.
AFFILIATE of any Person: any other Person directly or indirectly
controlling, controlled by, or under common control with such Person. For
purposes of this definition, "control" means the power, directly or indirectly,
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract, or otherwise,
and "controlling", "controlled by", and "under common control with" have
correlative meanings, PROVIDED, that neither Owner Participant nor the Mortgagee
will be deemed to be an "Affiliate" of Lessor or Owner Trustee (and vice versa),
and none of Owner Trustee or Owner Participant will be deemed to be an
"Affiliate" of the Mortgagee (and vice versa).
AIRCRAFT: the Airframe and Engines.
AIRCRAFT BILL OF SALE: a warranty bill of sale granting title to the
Aircraft, which bill of sale Seller is to deliver to Owner Trustee on the
Delivery Date.
AIRCRAFT DESCRIPTION EXHIBIT: Exhibit A to the Lease or Exhibit A to the
Mortgage.
AIRCRAFT DOCUMENTS: all technical data, manuals, and log books, and all
inspection, modification, and overhaul records and other service, repair,
maintenance, and technical records that the relevant Aviation Authority, the
Lease, or the Maintenance Program requires be maintained with respect to the
Aircraft, including all required additions, renewals, revisions, and
replacements of any such materials, in each case in whatever form and by
whatever means or medium (including microfiche, microfilm, paper, or computer
disk) such materials are maintained or retained by or on behalf of Lessee
(PROVIDED, that all such materials shall be maintained in the English language).
AIRFRAME: (1) the aircraft (excluding Engines or engines from time to time
installed thereon) manufactured by Airframe Manufacturer and identified by
Airframe Manufacturer's model number, United States registration number, and
Airframe Manufacturer's serial number set forth in the Aircraft Description
Exhibit, or (2) any Replacement Airframe, including in either case any and all
Parts incorporated or installed in or attached or appurtenant to such airframe,
and any and all Parts removed from such airframe, unless title to such Parts
does not vest in Lessor in accordance with ss. 8.1 and Annex C of the Lease.
Upon substitution of a Replacement Airframe under and in accordance with the
Lease, such Replacement Airframe shall become subject to the Lease and shall be
the "Airframe" for all purposes of the Operative Agreements, and the replaced
Airframe shall cease to be subject to the Lease and shall cease to be the
"Airframe".
AIRFRAME MANUFACTURER: The Boeing Company, a Delaware corporation.
ALLOCATED EETC EXPENSES means the Pro Rata Portion of the specified fees
and expenses of each of the following incurred in connection with the issuance
of the Pass-Through Certificates on the Issuance Date: (i) the placement fee and
reimbursed expenses of ____________________ and the other institutions, if any,
acting as initial purchasers of the Pass-Through Certificates, (ii) the upfront
fee and reimbursed expenses of Wilmington Trust Company, as the Subordination
Agent, the Pass-Through Trustees, and the Paying Agents, (iii) the upfront fee
and reimbursed expenses of First Security Bank, National Association, as Escrow
Agent, (iv) the upfront fee of ____________________, as the Depository, (v) the
upfront fee of ____________________, as the Liquidity Provider, (vi) the fees
and expenses of ____________________, special counsel to the initial purchasers
and the Liquidity Provider, (vii) the fees and expenses of Richards Layton
Finger, special counsel to the Pass-Through Trustees, Paying Agents, and
Subordination Agent, [and the fees and expenses of ____________________, special
counsel to Policy Provider,] (ix) the fees and expenses of Troutman Sanders LLP,
special counsel to Lessee, (x) the fees and expenses of Cravath, Swaine & Moore,
securities counsel to Lessee, (xi) the fees of the appraisers utilized for the
Offering Memorandum, (xiii) the fees of the appraisers utilized by Policy
Provider, (xiv) the fees and expenses of Moody's Investors Service, Inc. and
Standard & Poor's Rating Services, (xv) the fees and expenses of Ernst & Young
LLP, and (xvi) the initial quarterly premium due to Policy Provider under the
Policy Provider Agreement. As used in this definition, "Pro Rata Portion" means
one-[tenth].
AMORTIZATION AMOUNT for any Equipment Note, as of any Payment Date: the
amount determined by multiplying the percentage set forth opposite such Payment
Date on the Amortization Schedule by the Original Amount of such Equipment Note.
AMORTIZATION SCHEDULE for an Equipment Note: the amortization schedule for
that Equipment Note delivered pursuant toss. 2.02 of the Mortgage.
APPLICABLE PERCENTAGE: means (A) for the [first one-year Renewal
Term][first two one-year Renewal Terms], (1) 100% if, at the time that the first
Renewal Term begins, Lessee provides Owner Participant with an opinion of
counsel reasonably satisfactory to Owner Participant to the effect that, due to
a Change in Tax Law or clarification of law, if the Applicable Percentage had
been 100% on the Closing Date no Renewal Term would have been included in the
Lease Term under Code ss. 467 and the Treasury Regulations thereunder and (2)
otherwise, 105%; and (B) for any subsequent Renewal Term, 100%.
APPRAISER: a firm of internationally-recognized, independent aircraft
appraisers.
AVERAGE LIFE DATE for any Equipment Note: the date which follows the time
of determination by a period equal to the Remaining Weighted Average Life of
such Equipment Note. The "REMAINING WEIGHTED AVERAGE LIFE" (calculated in days)
for any Equipment Note on a given date is (1) the sum of (a) each then-remaining
scheduled payment of principal of such Equipment Note, TIMES (b) the number of
days from and including such determination date to but excluding the date on
which such payment of principal is scheduled to be made, DIVIDED BY (2) the
then-outstanding principal amount of such Equipment Note.
AVIATION AUTHORITY: the FAA or, if the Aircraft is registered with any
other Government Entity under and in accordance withss. 7.1.2 of the Lease, such
other Government Entity.
BANKRUPTCY CODE: the United States Bankruptcy Code, 11 U.S.C.ss. 101 ET
SEQ.
BASE TERM: the period beginning on and including the Commencement Date and
ending on the Scheduled Expiration Date therefor, or such earlier date on which
the Term terminates in accordance with the provisions of the Lease.
BASIC RENT: the rent (including, to the extent applicable, Renewal Rent)
payable or allocable, as applicable, for the Aircraft pursuant to ss. 3.2.1(a)
of the Lease.
BENEFICIAL OWNER of an Equipment Note: a Person who, by reason of direct
ownership, contract, share ownership, or otherwise, has the right to receive or
participate in receiving, directly or indirectly, payments of principal,
interest, or Make-Whole Amount for that Equipment Note; PROVIDED, that a Person
shall not be a Beneficial Owner of an Equipment Note solely because another
Person in whom such a Person owns common stock or other equity securities is a
registered holder or Beneficial Owner of such Equipment Note unless such Person
is an Affiliate of such other Person.
BILLS OF SALE: the FAA Bill of Sale and the Aircraft Bill of Sale.
BURDENSOME INDEMNITY PAYMENT: an indemnity payment pursuant to the Tax
Indemnity Agreement or ss. 9 of the Participation Agreement which would cause
the aggregate net present value of all losses paid or payable by Lessee as of
the determination date, discounted quarterly at the Debt Rate, to the
determination date, to exceed 2.5% of Lessor's Cost.
BUSINESS DAY: any day other than a Saturday, Sunday, or other day on which
commercial banks are authorized or required by law to close in New York, NY,
Indianapolis, IN, Wilmington, DE, or Salt Lake City, UT, or, so long as any
Equipment Note remains outstanding, the city and state in which the Mortgagee
maintains its Corporate Trust Office or receives and disburses funds.
CASH EQUIVALENTS: the following securities (which shall mature within 90
days of the date of purchase thereof): (1) direct obligations of the U.S.
Government; (2) obligations fully guaranteed by the U.S. Government; (3)
certificates of deposit issued by, or bankers' acceptances of, or time deposits
or a deposit account with, Owner Trustee, Mortgagee, or any bank, trust company,
or national banking association incorporated or doing business under the laws of
the United States or any state thereof having a combined capital and surplus and
retained earnings of at least $500,000,000 and having a rate of "C" or better
from the Thomson BankWatch Service; or (4) commercial paper of any issuer doing
business under the laws of the United States or one of the states thereof and in
each case having a rating assigned to such commercial paper by Standard & Poor's
or Moody's at least equal to A1 or P1, respectively.
CITIZEN OF THE UNITED STATES: defined inss. 40102(a)(15) of the
Transportation Code and in the FARs.
CLOSING: the closing of the transactions contemplated by the Participation
Agreement on the Delivery Date.
CODE: the Internal Revenue Code of 1986; PROVIDED, that when used in
relation to a Plan, "Code" shall be interpreted in accordance with the
regulations and rulings issued thereunder.
COLLATERAL: the property in which a security interest is created in favor
of the Loan Trustee under the "Granting Clause" of the Mortgage.
COMMENCEMENT DATE: defined in Schedule 1 to the Lease.
COMMITMENT for any Participant: that Participant's commitment to
participate in the payment of Lessor's Cost, as reflected in Schedule 2 of the
Participation Agreement.
COMMITMENT TERMINATION DATE: defined in Schedule 3 to the Participation
Agreement.
CONSENT AND AGREEMENT: Manufacturer Consent and Agreement N___AT, dated the
Delivery Date, of Airframe Manufacturer.
CONTINUOUS STAY PERIOD: defined inss. 4.04(a) of the Mortgage.
CORPORATE TRUST DEPARTMENT or TRUST OFFICE: Owner Trustee's principal
corporate trust office, located from time to time at Owner Trustee's address for
notices under the Participation Agreement, or such other office at which Owner
Trustee's corporate trust business shall be administered and which Owner Trustee
specifies by notice in writing to Lessee, Mortgagee, and each Note Holder.
CORPORATE TRUST OFFICE: Mortgagee's principal office, located at
Mortgagee's address for notices under the Participation Agreement, or such other
office at which Mortgagee's corporate trust business shall be administered and
which Mortgagee specifies by notice in writing to Lessee, Owner Trustee, and
each Note Holder.
CRAF: the Civil Reserve Air Fleet Program established pursuant to 10
U.S.C.ss. 9511 - 13, or any similar substitute program.
DEBT: any liability for borrowed money, or any liability for the payment of
money in connection with any letter of credit transaction, or any other
liabilities evidenced or to be evidenced by bonds, debentures, notes, or other
similar instruments.
DEBT RATE: (1) for any Series, the rate as defined in the Mortgage, and (2)
for any other purpose, with respect to any period, the weighted average interest
rate per annum during such period borne by the outstanding Equipment Notes,
excluding any interest payable at the Past-Due Rate (or, if no Equipment Notes
are outstanding, such weighted average interest rate on the Delivery Date).
DELAYED DELIVERY DATE: a delayed Delivery Date notified to each
Participant, Owner Trustee and Mortgagee by Lessee pursuant to ss. 4.3 of the
Participation Agreement, which delayed Delivery Date shall be a Business Day not
later than the Commitment Termination Date.
DELIVERY DATE: __________, 200_ (which is the date when the Aircraft is
delivered to and accepted by Lessee under the Lease and when the Closing
occurs).
DOLLARS, UNITED STATES DOLLARS, or $: the lawful currency of the United
States.
DOT: the Department of Transportation of the United States, or any
Government Entity succeeding to the functions of such Department of
Transportation.
EBO DATE: as specified in Schedule 5 to the Lease.
EBO PRICE: as specified in Schedule 5 to the Lease, as adjusted pursuant
toss. 3.2.1 of the Lease.
ELIGIBLE ACCOUNT: an account established by and with an Eligible
Institution at Mortgagee's request, which institution agrees, for all purposes
of the UCC (including UCC Article 8), that (1) such account shall be a
"securities account" (as defined in UCC ss. 8-501), (2) all property (other than
cash) credited to such account shall be treated as a "financial asset" (as
defined in UCC ss. 8-102(9)), (3) Mortgagee shall be the "entitlement holder"
(as defined in UCC ss. 8-102(7)) of such account, (4) it will comply with all
entitlement orders issued by Mortgagee to the exclusion of Lessee and Owner
Trustee, and (5) the "securities intermediary jurisdiction" (under UCC ss.
8-110(e)) shall be the state of New York.
ELIGIBLE INSTITUTION: the corporate trust department of (1) Wilmington
Trust Company, acting solely in its capacity as a "securities intermediary" (as
defined in UCC ss. 8-102(14)), or (2) a depository institution organized under
the laws of the United States of America or any one of the states thereof or the
District of Columbia (or any U.S. branch of a foreign bank), which has a
long-term unsecured debt rating from Moody's and Standard & Poor's of at least
A-3 or its equivalent.
ENFORCEMENT DATE: defined inss. 4.03 of the Mortgage.
ENGINE: (1) each of the engines manufactured by Engine Manufacturer and
identified by Engine Manufacturer's model number and Engine Manufacturer's
serial number in the Aircraft Description Exhibit and originally installed on
the Airframe on delivery thereof pursuant to the Lease, or (2) any Replacement
Engine, in any case whether or not from time to time installed on the Airframe
or installed on any other airframe or aircraft, including (for both clauses (1)
and (2)) any and all Parts incorporated or installed in or attached or
appurtenant to such engine, and any and all Parts removed from such engine,
unless title to such Parts does not vest in Lessor in accordance with ss. 8.1
and Annex C of the Lease. Upon substitution of a Replacement Engine under and in
accordance with the Lease, such Replacement Engine shall become subject to the
Lease and shall be an "Engine" for all purposes of the Operative Agreements, and
the replaced Engine shall cease to be subject to the Lease and shall cease to be
an "Engine".
ENGINE MANUFACTURER: CFM International.
[ENGINE MANUFACTURER WARRANTY AGREEMENT: Engine Manufacturer Warranty
Agreement N___AT, dated the Delivery Date, among Engine Manufacturer, Owner
Trustee and Lessee.]
EQUIPMENT NOTE: any equipment note issued under the Mortgage in the form
specified in ss. 2.01 and Exhibit B thereof (as such form may be varied pursuant
to the terms of the Mortgage), or any Equipment Note issued under the Mortgage
in exchange for or replacement of any Equipment Note.
EQUIPMENT NOTE REGISTER: defined inss. 2.08 of the Mortgage.
ERISA: the Employee Retirement Income Security Act of 1974.
ESCROW AGENT: ________________________________________.
ESCROW AGREEMENT: each of the two Escrow and Paying Agent Agreements, among
Escrow Agent, Paying Agent, certain initial purchasers of the Pass-Through
Certificates named therein, and one of the Pass-Through Trustees, dated as of
the Issuance Date, each of which relates to one of the Pass-Through Trusts,
PROVIDED, that, for purposes of any obligation of Lessee, no amendment,
modification, or supplement to, or substitution or replacement of, any such
Escrow Agreement shall be effective unless Lessee consents to it.
EVENT OF LOSS with respect to the Aircraft, the Airframe, or any Engine:
any of the following circumstances, conditions, or events with respect to such
property, which shall have occurred for any reason whatsoever:
(1) the destruction of such property, damage to such property beyond
economic repair, or rendition of such property permanently unfit for normal use
by Lessee;
(2) the actual or constructive total loss of such property, or any damage
to such property, or requisition of title or use of such property, which results
in an insurance settlement with respect to such property on the basis of a total
loss or constructive or compromised total loss;
(3) any theft, hijacking, or disappearance of such property for 90
consecutive days or more or, if earlier, the fifth day following the end of the
Term;
(4) any seizure, condemnation, confiscation, taking, or requisition
(including loss of title) of such property by any Government Entity or purported
Government Entity (other than a requisition of use by the U.S. Government) for
180 consecutive days or, if earlier, at the end of the Term;
(5) any seizure, condemnation, confiscation, taking, or requisition of use
of such property by the U.S. Government that continues until the 30th day after
the last day of the Term; and (6) as a result of any law, rule, regulation,
order, or other action by the Aviation Authority or by any Government Entity of
the government of registry of the Aircraft or by any Government Entity otherwise
having jurisdiction over the operation or use of the Aircraft, the use of the
Aircraft, the Airframe, or any Engine in the normal course of Lessee's business
of passenger air transportation is prohibited for 180 consecutive days, unless,
before the expiration of such 180-day period, Lessee undertakes and is
diligently carrying forward such steps as are necessary or desirable to permit
the normal use of such property by Lessee, but in any event if such use is
prohibited for a continuous period of 360 days, PROVIDED, that such prohibition
shall not create an Event of Loss if such prohibition applies to other B737-800
aircraft (or CFM 56-7 engines) in Lessee's fleet and also applies to Boeing
737-800 aircraft (or CFM 56-7 engines) not owned or operated by Lessee and,
before the expiration of such 360-day period, Lessee conforms at least one unit
of such property in its fleet to the requirements of any such law, rule,
regulation, order, or other action, begins regular commercial use of the same in
such jurisdiction, and is diligently carrying forward, in a manner which does
not discriminate against such property in so conforming such property, steps
which are necessary or desirable to permit the normal use of the Aircraft by
Lessee, but in any event if such use is prohibited for a continuous period of
540 days or such use is prohibited at the expiration of the Term.
EXCESS AMOUNT: defined inss. 2.03(b) of the Mortgage.
EXCLUDED PAYMENTS: (1) indemnity payments paid or payable by Lessee to or
in respect of Owner Participant or FSB, their Affiliates, successors, and
permitted assigns, and their directors, officers, employees, and agents pursuant
to ss. 9 of the Participation Agreement, or any corresponding payments payable
as Supplemental Rent under the Lease, (2) proceeds of public liability insurance
paid or payable as a result of insurance claims made, or losses suffered, by
Owner Participant or FSB (or the other Persons specified in clause (1)), that
are payable directly to Owner Participant or FSB (or any such other Person) for
its own account, (3) proceeds of insurance maintained with respect to the
Aircraft by Owner Participant or any Affiliate thereof for its own account or
benefit (whether directly or through Owner Trustee) and permitted under ss. 11.2
of the Lease, (4) all payments required to be made under the Tax Indemnity
Agreement by Lessee, (5) any Transaction Expenses paid or payable by Lessee to
Owner Trustee (to the extent for its sole benefit) or Owner Participant pursuant
to the Lease or the Participation Agreement, (6) any amount payable to Owner
Participant by any transferee as the purchase price of Owner Participant's
interest in the Trust Estate, (7) any interest that pursuant to the Operative
Agreements may from time to time accrue in respect of any of the amounts
described in clauses (1) through (6) above, (8) all payments made by Guarantor
in respect of any of the foregoing, (9) any right to enforce the payment of any
amount described in clauses (1) through (8) above (PROVIDED, that the rights
referred to in this clause (9) shall not include the exercise of any remedies
provided for in the Lease, other than the right to sue for specific performance
of any covenant to make such payment or to sue for damages for the breach of any
such covenant), and (10) any right to exercise any election or option or make
any decision or determination, or to give or receive any notice, consent,
waiver, or approval, or to take any other action in respect of, but in each case
only to the extent relating to, any Excluded Payments.
EXPENSES: any and all liabilities, obligations, losses, damages,
settlements, penalties, claims, actions, suits, costs, demands, judgments,
expenses, and disbursements (including reasonable fees, disbursements, and
reasonable out of pocket costs and expenses of legal counsel, accountants,
appraisers, inspectors, or other professionals, and costs of investigation).
FAA: the Federal Aviation Administration of the United States, or any
Government Entity succeeding to the functions of such Federal Aviation
Administration.
FAA BILL OF SALE: a bill of sale for the Aircraft on AC Form 8050-2 (or any
other FAA-approved form), delivered to Owner Trustee on the Delivery Date by
Seller.
FAA COUNSEL: Crowe & Dunlevy.
FAA-FILED DOCUMENTS: the Lease, the Mortgage, the Trust Agreement, the FAA
Bill of Sale, and an application for registration of the Aircraft with the FAA
in Owner Trustee's name.
FARS: the Federal Aviation Regulations issued or promulgated pursuant to
the Transportation Code from time to time.
FAIR MARKET RENTAL VALUE: the fair market rental value in Dollars for the
Aircraft that would apply in an arm's-length transaction between an informed and
willing lessee under no compulsion to lease, and an informed and willing lessor
under no compulsion to lease, for the applicable period, assuming that (1)
except as provided in ss. 15.4 of the Lease, the Aircraft has been maintained in
accordance with, and is in the condition required by, the Lease, (2) rent would
be paid quarterly, and (3) except as provided in ss. 15.4 of the Lease, the
Aircraft would be leased during any such period on the same terms and conditions
(except for Basic Rent amount) as during the Base Term.
FAIR MARKET SALES VALUE: the fair market sales value in Dollars for the
Aircraft that would apply in an arm's-length transaction between an informed and
willing buyer under no compulsion to buy, and an informed and willing seller
under no compulsion to sell, in a transaction that would close on or about the
relevant time of determination, assuming that (1) except as provided in ss. 15.4
of the Lease, the Aircraft has been maintained in accordance with the Lease, and
is in the condition required by the Lease, and (2) the Aircraft will be
delivered to such informed and willing buyer in the return condition required by
the Lease.
FINANCING STATEMENTS: UCC-1 (and, where appropriate, UCC-3) financing
statements (1) covering the Collateral, by Owner Trustee, as debtor, showing
Mortgagee as secured party, for filing in Utah and each other jurisdiction where
(in Mortgagee's opinion) filing is necessary to perfect its Lien on the
Collateral, and (2) covering the Aircraft, as a precautionary matter, by Lessee,
as lessee, showing Owner Trustee as lessor and Mortgagee as assignee of Owner
Trustee, for filing in Indiana and each other jurisdiction where (in Owner
Trustee's or Mortgagee's opinion) filing is reasonably desirable.
FIXED RATE: defined in Schedule 1 to the Lease.
FSB: First Security Bank, National Association, a national banking
association, not in its capacity as trustee under the Trust Agreement, but in
its individual capacity.
GAAP: generally accepted accounting principles as set forth in the
statements of financial accounting standards issued by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants, as
varied by any applicable financial accounting rules or regulations issued by the
SEC, and applied on a basis consistent with prior periods except as disclosed in
the pertinent Person's financial statements.
GOVERNMENT ENTITY: (1) any federal, state, provincial, or similar
government, and any body, board, department, commission, court, tribunal,
authority, agency, or other instrumentality of any such government or otherwise
exercising any executive, legislative, judicial, administrative, or regulatory
functions of such government, or (2) any other government entity having
jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
GTA: the General Terms Agreement, as defined in the Purchase Agreement
Assignment.
GUARANTEE: Guarantee N___AT, dated the Delivery Date, issued by Guarantor
in favor of Owner Trustee, FSB, Mortgagee, WTC, and each Participant.
GUARANTOR: AmTran, Inc., an Indiana corporation.
INDEMNITEE: (1) FSB and Owner Trustee, (2) WTC and Mortgagee, (3) each
separate or additional trustee appointed pursuant to the Trust Agreement or the
Mortgage, (4) each Participant, (5) the Trust Estate and the Collateral, (6)
each Affiliate of the Persons described in clauses (1) through (4), (7) the
directors, officers, employees, and agents of each of the Persons described in
clauses (1) through (4) and in clause (6), (8) the successors and permitted
assigns of the Persons described in clauses (1) through (4), and in clauses (6)
and (7), and (9) the Pass-Through Indemnitees; provided, that the Pass-Through
Indemnitees are Indemnitees only for purposes of ss. 9.1 of the Participation
Agreement. If any Indemnitee is Airframe Manufacturer or Engine Manufacturer or
any subcontractor or supplier of either thereof, such Person shall be an
Indemnitee only in its capacity as Owner Participant, Loan Participant, or Note
Holder.
INTERCREDITOR AGREEMENT: the Intercreditor Agreement among the Pass-Through
Trustees, each Liquidity Provider, Policy Provider, and Subordination Agent,
dated as of the Issuance Date, PROVIDED, that, for purposes of any obligation of
Lessee, no amendment, modification, or supplement to, or substitution or
replacement of, such Intercreditor Agreement shall be effective unless Lessee
consents to it.
IRS: the Internal Revenue Service of the United States, or any Government
Entity succeeding to the functions of such Internal Revenue Service.
ISSUANCE DATE: __________, 200_.
JAA: the Joint Aviation Authority of the European Union.
LAW: (1) any constitution, treaty, statute, law, decree, regulation, order,
rule, or directive of any Government Entity, and (2) any judicial or
administrative interpretation or application of, or decision under, any of the
foregoing.
LEASE or LEASE AGREEMENT: Lease Agreement N___AT, dated the Delivery Date,
between Owner Trustee and Lessee.
LEASE DEFAULT: (1) any condition, circumstance, act, or event that, with
the giving of notice or the lapse of time, would constitute a Lease Event of
Default, or (2) any Lease Event of Default.
LEASE EVENT OF DEFAULT: any one or more of the conditions, circumstances,
acts, or events set forth inss. 14 of the Lease.
LESSEE: American Trans Air, Inc., an Indiana corporation.
LESSEE ADVISOR: Capstar Partners, LLC, in its capacity as special advisor
to Lessee.
LESSEE OPERATIVE AGREEMENTS: the Participation Agreement, the Lease, the
Tax Indemnity Agreement, the Purchase Agreement Assignment [, the Engine
Manufacturer Warranty Agreement,] and each other agreement between Lessee and
any other party to the Participation Agreement, relating to the Transactions,
delivered on the Delivery Date.
LESSEE PERSON: Lessee, any sublessee, assignee, successor, or other user or
Person in possession of the Aircraft, the Airframe, or an Engine with or without
color of right, or any Affiliate of any of the foregoing (excluding any Tax
Indemnitee or any related Tax Indemnitee with respect thereto, or any Person
using or claiming any rights with respect to the Aircraft, the Airframe, or an
Engine directly by or through any of the Persons in this parenthetical phrase,
but not excluding any Person claiming directly or indirectly through or under
the Lease).
LESSEE'S ADVISOR(S): defined in Schedule 3 to the Participation Agreement.
LESSOR: Owner Trustee in its capacity as lessor under the Lease.
LESSOR LIEN, with respect to any Person, on any property (including the
Trust Estate, the Collateral, the Aircraft, Airframe, Engines, Parts, or
Aircraft Documents) or any payments: any Lien on such property or payments that
results from (1) claims against such Person (if such Person is a trustee,
whether in its individual capacity or in its capacity as a trustee) not related
to any of the Transactions, (2) acts or omissions of such Person (if such Person
is a trustee, whether in its individual capacity or in its capacity as a
trustee) in violation of its obligations under any of the terms of the Operative
Agreements, or not related to the Transactions, (3) Taxes against such Person
(if such Person is a trustee, whether in its individual capacity or in its
capacity as a trustee) or any of its Affiliates that Lessee is not required to
indemnify under the Participation Agreement, or (4) claims against such Person
arising out of its transfer of all or part of its interest in the Aircraft, the
Trust Estate, or the Operative Agreements, other than a Transfer required by the
terms of the Operative Agreements or attributable to the existence of a Lease
Event of Default.
LESSOR'S COST: the amount paid by Owner Trustee to Seller to purchase the
Aircraft pursuant to the Purchase Agreement Assignment and the Participation
Agreement, as designated by Dollar amount in Schedule 3 to the Participation
Agreement.
LIEN: any mortgage, pledge, lien, charge, claim, encumbrance, lease, or
security interest affecting the title to or any interest in property.
LIQUIDITY FACILITIES: the two Revolving Credit Agreements (consisting of a
separate Revolving Credit Agreement with Liquidity Provider with respect to each
Pass-Through Trust) between Subordination Agent, as borrower, and Liquidity
Provider, each dated as of the Issuance Date, PROVIDED, that, for purposes of
any obligation of Lessee, no amendment, modification, or supplement to, or
substitution or replacement of, any such Liquidity Facility shall be effective
unless Lessee consents to it.
LIQUIDITY PROVIDER: ______________, as "Class G Liquidity Provider" and
"Class C Liquidity Provider" (as such terms are defined in the Intercreditor
Agreement), or any Replacement Liquidity Provider.
LOAN TRUSTEE: Wilmington Trust Company, a Delaware banking corporation, not
in its individual capacity but solely as loan trustee under the Mortgage.
LOAN PARTICIPANT: a Note Holder.
LOSS PAYMENT DATE: defined inss. 10.1.2(a)(1) of the Lease.
MAINTENANCE PROGRAM: defined in Annex C to the Lease.
MAJORITY IN INTEREST OF NOTE HOLDERS as of a particular date of
determination: the holders of a majority in unpaid Original Amount of all
Equipment Notes outstanding as of such date (excluding any Equipment Notes held
by Owner Trustee, Lessee, or Owner Participant or any Affiliate of any such
party or any interests of Owner Trustee or Owner Participant therein by reason
of subrogation pursuant to ss. 4.03 of the Mortgage (unless all Equipment Notes
then outstanding are held by Owner Trustee, Lessee, Owner Participant, or any
Affiliate of any thereof)); PROVIDED, that for the purposes of directing any
action, casting any vote, or giving any consent, waiver, or instruction
hereunder, any Note Holder may (in its sole discretion) allocate any fractional
portion of the principal amount of its Equipment Note(s) in favor of or in
opposition to any such action, vote, consent, waiver, or instruction.
MAKE-WHOLE AMOUNT with respect to any Equipment Note: an amount (as
determined by an independent investment bank of national standing) equal to the
excess, if any, of (a) the present value of the remaining scheduled payments of
principal and interest to maturity of such Equipment Note, computed by
discounting such payments on a quarterly basis on each Payment Date (assuming a
360-day year of twelve 30-day months), using a discount rate equal to the
Treasury Yield, over (b) the outstanding principal amount of such Equipment Note
plus accrued interest to the determination date. For purposes of this
definition, "TREASURY YIELD" means, at the determination date for any Equipment
Note, the interest rate (expressed as a decimal and, in the case of United
States Treasury bills, converted to a bond equivalent yield) determined to be
the per annum rate equal to the quarterly yield to maturity for United States
Treasury securities maturing on the Average Life Date of such Equipment Note and
trading in the public securities markets either (1) as determined by
interpolation between the most-recent weekly average yield to maturity for two
series of United States Treasury securities, trading in the public securities
markets, (aa) one maturing as close as possible to, but earlier than, the
Average Life Date of such Equipment Note, and (bb) the other maturing as close
as possible to, but later than, the Average Life Date of such Equipment Note, in
each case as published in the most-recent H.15(519), or (2) if a weekly average
yield to maturity for United States Treasury securities maturing on the Average
Life Date of such Equipment Note is reported on the most-recent H.15(519), such
weekly average yield to maturity as published in such H.15(519) "H.15(519)"
means the weekly statistical release designated as such, or any successor
publication, published by the Board of Governors of the Federal Reserve System.
The determination date for a Make-Whole Amount shall be the third Business Day
before the applicable payment or redemption date, and the "MOST-RECENT
H.15(519)" means the H.15(519) published before the close of business on the
third Business Day before the applicable payment or redemption date.
MATERIALLY ADVERSE CHANGE with respect to any Person: any event, condition,
or circumstance that materially adversely affects such Person's business,
prospects, or consolidated financial condition, or its ability to observe or
perform its obligations, liabilities, and agreements under the Operative
Agreements.
MINIMUM LIABILITY INSURANCE AMOUNT: defined in Schedule 1 to the Lease.
MOODY'S: Moody's Investors Service, Inc.
MORTGAGE: Trust Indenture and Mortgage N___AT, dated the Delivery Date,
between Owner Trustee and Mortgagee.
MORTGAGE AGREEMENTS: the Participation Agreement, the Lease, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the
Engine Manufacturer Warranty Agreement, the Bills of Sale, and any other
contract, agreement, or instrument from time to time assigned or pledged under
the Mortgage.
MORTGAGE DEFAULT: (1) any condition, circumstance, act, or event that, with
the giving of notice or the lapse of time, would constitute a Mortgage Event of
Default, or (2) any Mortgage Event of Default.
MORTGAGE EVENT OF DEFAULT: any one or more of the conditions,
circumstances, acts, or events set forth inss. 4.02 of the Mortgage.
MORTGAGE INDEMNITEE: (1) WTC and Mortgagee, (2) each separate or additional
trustee appointed pursuant to the Mortgage, (3) Subordination Agent, (4) each
Liquidity Provider, (5) Policy Provider, (6) each Pass-Through Trustee, (7)
Paying Agent, (8) Escrow Agent, (9) each Loan Participant, (10) each of their
respective successors and assigns, and (11) each of the directors, officers,
employees, and agents of such Persons .
MORTGAGED PROPERTY: defined inss. 3.03 of the Mortgage.
MORTGAGEE: Wilmington Trust Company, a Delaware banking corporation, not in
its individual capacity but solely as loan trustee under the Mortgage.
MORTGAGEE AGREEMENTS: the Participation Agreement, the Mortgage, and each
other agreement between Mortgagee and any other party to the Participation
Agreement, relating to the Transactions, delivered on the Delivery Date.
MORTGAGEE EVENT: (1) in the event of a reorganization proceeding involving
Lessee under Chapter 11 of the Bankruptcy Code, (a) the trustee in such
proceeding or Lessee does not assume or agree to perform its obligations under
the Lease, as contemplated under Section 1110, during the 60-day period under
ss. 1110(a)(1)(A) of the Bankruptcy Code (or such longer period as may apply
under ss. 1110(b) of the Bankruptcy Code), or (b) at any time after agreeing to
perform or assuming such obligations, such trustee or Lessee ceases to perform
such obligations with the result that the Continuous Stay Period comes to an
end, or (2) either the Equipment Notes become due and payable pursuant to ss.
4.04(b) of the Mortgage, or Mortgagee takes action or notifies Owner Trustee
that it intends to take action to foreclose the Lien of the Mortgage or
otherwise commence the exercise of any significant remedy in accordance with ss.
4.04(a) of the Mortgage.
NET ECONOMIC RETURN: Owner Participant's net after-tax book yield, using
the "multiple investment sinking fund" method of analysis, and aggregate and
present value (discounted at 6% per annum) of the net after-tax cash flow,
computed both through the EBO Date (assuming Lessee's exercise of the early
buy-out option in ss. 17.3.1(a)(1) of the Lease) and through the end of the Base
Term, and computed on the basis of the same methodology and assumptions as the
initial Owner Participant used in determining Basic Rent payments and
allocations, Stipulated Loss Value percentages, and Termination Value
percentages, as of the Delivery Date, as such assumptions are adjusted for
events that have been the basis for adjustments to Basic Rent pursuant to ss.
3.2.1(b) of the Lease or events giving rise to indemnity payments pursuant to
ss. 5 of the Tax Indemnity Agreement; PROVIDED, that, even if the initial Owner
Participant transfers its interest, Net Economic Return shall be calculated as
if the initial Owner Participant had retained its interest; PROVIDED FURTHER,
that, notwithstanding the preceding proviso, solely for purposes of ss. 11 of
the Participation Agreement and calculating any adjustments to Basic Rent
payments and allocations, Stipulated Loss Values, EBO Price, and Termination
Values in connection with a refunding pursuant to such ss. 11 at a time when
Owner Participant is a transferee (other than an Affiliate of the initial Owner
Participant), the after-tax yield (but not the after-tax cash flow) component of
Net Economic Return shall be calculated on the basis of the methodology and
assumptions used by the transferee Owner Participant as of the date when it
acquires its interest.
NET PRESENT VALUE OF RENTS: the present value, as of the date of
determination, discounted at 10% per annum, compounded quarterly to the date of
determination, of all unpaid Basic Rent payments during the then-remaining
portion of the Base Term, expressed as a percentage of Lessor's Cost.
NET WORTH for any Person: the excess of its total assets over its total
liabilities.
NEW DEBT: debt securities in an aggregate principal amount specified in the
Re-Funding Information, with such principal amount not to exceed the
then-outstanding principal balance due under the then-existing Equipment Notes
being re-funded.
NON-U.S. PERSON: any Person, other than a United States person as defined
in Codess. 7701(a)(30).
NOTE HOLDER: a registered holder of one or more Equipment Notes.
NOTE PURCHASE AGREEMENT: the Note Purchase Agreement, dated as of the
Issuance Date, among American Trans Air, Inc., Subordination Agent, Escrow
Agent, Paying Agent, and Pass-Through Trustee under each Pass-Through Trust
Agreement, providing for the issuance and sale of Equipment Notes.
OFFICER'S CERTIFICATE of any party to the Participation Agreement: a
certificate signed by the Chairman, the President, any Vice President (including
those with varying ranks such as Executive, Senior, Assistant, or Staff Vice
President), the Treasurer, or the Secretary of such party.
OPERATIVE AGREEMENTS: the Participation Agreement, the Trust Agreement, the
Purchase Agreement Assignment, the Guarantee, the Consent and Agreement, the
Engine Manufacturer Warranty Agreement, the Lease, the Mortgage, the Bills of
Sale, the Tax Indemnity Agreement, and the Equipment Notes.
OPERATIVE INDENTURE: an indenture under which notes have been issued and
purchased by the Pass-Through Trustees pursuant to the Note Purchase Agreement.
OP JURISDICTION: defined in Schedule 3 to the Participation Agreement.
ORIGINAL AMOUNT of an Equipment Note: the stated original principal amount
of such Equipment Note and, with respect to all Equipment Notes, the aggregate
stated original principal amounts of all such equipment notes.
OWNER PARTICIPANT: the Person executing the Participation Agreement as
"Owner Participant"; except that, after an Owner Participant Transfers its
interest to a successor Owner Participant, such transferor shall not be an
"Owner Participant" (except as provided in ss. 10.2 of the Participation
Agreement) and the successor Owner Participant shall be the "Owner Participant".
OWNER PARTICIPANT AGREEMENTS: the Participation Agreement, the Tax
Indemnity Agreement, the Trust Agreement and each other agreement between Owner
Participant and any other party to the Participation Agreement relating to the
Transactions, delivered on the Delivery Date.
OWNER PARTICIPANT'S PERCENTAGE: the percentage of Lessor's Cost allocated
to Owner Participant in Schedule 2 to the Participation Agreement.
OWNER TRUSTEE: First Security Bank, National Association, a national
banking association, not in its individual capacity, except as expressly
provided in any Operative Agreement, but solely as Owner Trustee under the Trust
Agreement.
OWNER TRUSTEE AGREEMENTS: the Participation Agreement, the Lease, the Trust
Agreement, the Mortgage, the Equipment Notes, the Purchase Agreement Assignment,
[the Engine Manufacturer Warranty Agreement,] and each other agreement between
Owner Trustee and any other party to the Participation Agreement, relating to
the Transactions, delivered on the Delivery Date.
PARTICIPANT: Owner Participant or a Loan Participant.
PARTICIPATION AGREEMENT: Participation Agreement N___AT, dated the Delivery
Date, among Lessee, Owner Participant, Owner Trustee, Pass-Through Trustees,
Subordination Agent, and Mortgagee.
PARTS: all appliances, parts, components, instruments, appurtenances,
accessories, furnishings, seats, and other equipment of whatever nature (other
than (1) Engines or engines, and (2) any items leased by Lessee from a third
party other than Lessor) from time to time installed or incorporated in or
attached or appurtenant to the Airframe or any Engine.
PASS-THROUGH AGREEMENTS: the Pass-Through Trust Agreements, the Note
Purchase Agreement, the Deposit Agreements, the Escrow Agreements, the
Intercreditor Agreement, the Policy and the Policy Provider Agreements, the
Liquidity Facilities, and the Fee Letters referred to in ss. 2.3 of each of the
Liquidity Facilities, PROVIDED, that no amendment, modification, or supplement
to, or substitution or replacement of, any such Fee Letter shall be effective
for purposes of any obligation of Lessee, unless Lessee consents to it.
PASS-THROUGH CERTIFICATES: the pass-through certificates issued by the
Pass-Through Trusts (including any pass-through certificates for which such
pass-through certificates may be exchanged).
PASS-THROUGH INDEMNITEES: (1) Subordination Agent, Paying Agent, Escrow
Agent, Liquidity Provider, Policy Provider, and Pass-Through Trustees, (2) each
Affiliate of a Person described in the preceding clause (1), (3) the directors,
officers, employees, and agents of the Persons described in clauses (1) and (2),
and (4) the successors and permitted assigns of the Persons described in clauses
(1), (2), and (3).
PASS-THROUGH TRUST: each of the two separate pass-through trusts created
under the Pass-Through Trust Agreements.
PASS-THROUGH TRUST AGREEMENT: each of the two separate pass-through trust
agreements, dated as of the Issuance Date, by and between Lessee and a
Pass-Through Trustee.
PASS-THROUGH TRUSTEE: Wilmington Trust Company, a Delaware banking
corporation, not in its individual capacity but solely in its capacity as
trustee under each Pass-Through Trust Agreement.
PASS-THROUGH TRUSTEE AGREEMENTS: the Participation Agreement, the
Pass-Through Trust Agreements, the Note Purchase Agreement, the Deposit
Agreements, the Escrow Agreements, and the Intercreditor Agreement.
PAST-DUE RATE: defined in Schedule 1 to the Lease.
PAYING AGENT: Wilmington Trust Company, as Paying Agent under each of the
Escrow Agreements.
PAYMENT DATE: each __________, __________, __________, and __________
during the Term, commencing with the first such date to occur after the
Commencement Date.
PAYMENT PERIOD: each of the consecutive quarterly periods (or such
applicable shorter period beginning on the Delivery Date or the first day of a
Renewal Term) during the Term and ending on a Payment Date, the first such
period commencing on and including the Delivery Date.
PERMITTED AIR CARRIER: (1) any manufacturer of commercial airframes or
commercial aircraft engines, or any Affiliate thereof, (2) any Permitted Foreign
Air Carrier, (3) any Person approved in writing by Owner Participant, or (4) any
U.S. Air Carrier.
PERMITTED COUNTRY: any country listed on Schedule 5 to the Lease, subject
to the notes set forth on such Schedule.
PERMITTED FOREIGN AIR CARRIER: any air carrier that (1) has its principal
executive offices in a Permitted Country, and (2) is authorized to conduct
commercial airline operations and to operate jet aircraft similar to the
Aircraft under the applicable Laws of such Permitted Country.
PERMITTED INSTITUTION: any bank, trust company, insurance company,
financial institution, or corporation or limited liability company (other than,
without Lessee's consent, a commercial air carrier, a commercial aircraft
operator, a freight forwarder, an airframe manufacturer (other than Airframe
Manufacturer) or aircraft engine manufacturer (other than Engine Manufacturer),
or an Affiliate of any of the foregoing), in each case with a combined capital
and surplus or net worth of at least $50,000,000.
PERMITTED LIEN: any Lien described in clauses (a) through (g) ofss. 6 of
the Lease.
PERMITTED SUBLEASE: a sublease permitted underss. 7.2.7 of the Lease.
PERMITTED SUBLESSEE: the sublessee under a Permitted Sublease.
PERSON or PERSON: an individual, firm, business, partnership, joint
venture, trust, trustee, Government Entity, organization, association,
corporation, limited liability company, government agency, governmental
committee, governmental department, governmental authority, and other body or
organization, corporate or incorporate, whether having distinct legal status or
not, or any member of any of the same.
PLAN: any employee benefit plan within the meaning of ERISAss. 3(3), or any
plan within the meaning of Codess. 4975(e)(1).
POLICY: defined inss. 1.1 of the Intercreditor Agreement.
POLICY PROVIDER: [AIG].
POLICY PROVIDER AGREEMENT: defined inss. 1.1 of the Intercreditor
Agreement.
PRELIMINARY NOTICE: defined inss. 17.1 of the Lease.
PTT PERCENTAGE with respect to each Pass-Through Trustee: the percentage of
Lessor's Cost allocated to such Pass-Through Trustee in Schedule 2 to the
Participation Agreement.
PURCHASE AGREEMENT: shall mean Purchase Agreement No. _____ by and between
Lessee and the Airframe Manufacturer, dated as of __________, 2000, including
the exhibits and letter agreements appended thereto and incorporated therein
(except Letter Agreement Nos. __________, __________, and ----------).
PURCHASE AGREEMENT ASSIGNMENT: Purchase Agreement and Engine Warranties
Assignment N___AT, dated the Delivery Date, between Lessee and Owner Trustee.
PURCHASE DATE: the last Business Day of the Base Term or a Renewal Term, as
specified in any Purchase Notice.
PURCHASE NOTICE: defined inss. 17.3.1 of the Lease.
QIB: defined inss. 2.08 of the Mortgage.
RE-FUNDING CERTIFICATE: a certificate of an authorized representative of
Owner Participant delivered pursuant to ss. 11.1.1 of the Participation
Agreement, setting forth (1) the Re-Funding Date and (2) the following
information, subject to the limitations in ss. 11 of the Participation
Agreement: (a) the principal amount of debt to be issued by Owner Trustee on the
Re-Funding Date which amount cannot exceed the outstanding balance of the
existing Debt and (b) the proposed revised schedules of Basic Rent payments and
allocations, Stipulated Loss Value percentages, Termination Value percentages,
the EBO Price, and the proposed Amortization Schedules, calculated in accordance
with ss. 3.2.1 of the Lease.
RE-FUNDING DATE: the proposed date on which the outstanding Equipment Notes
will be redeemed and refinanced pursuant to ss. 11 of the Participation
Agreement.
RE-FUNDING INFORMATION: the information set forth in the Re-Funding
Certificate (other than the Re-Funding Date), as revised by any verification
procedures demanded by Lessee pursuant to ss. 3.2.1(d) of the Lease.
REGISTRATION RIGHTS AGREEMENT: the Exchange and Registration Rights
Agreement dated the Issuance Date by and among Guarantor, Lessee, and certain
initial purchasers of the Pass-Through Certificates named therein, providing
for, among other things, the exchange offer with respect to such Pass-Through
Certificates to be registered under the Securities Act or the shelf registration
of such Pass-Through Certificates for a period specified therein.
REMOVABLE PARTS: defined inss. D of Annex C to the Lease.
RENEWAL NOTICE: defined inss. 17.2.1 of the Lease.
RENEWAL RENT: the basic rent payable for a Renewal Term, determined
pursuant toss. 17.2.2 of the Lease.
RENEWAL TERM: a one-year term for which the Lease is extended by Lessee (if
applicable) pursuant toss. 17 of the Lease.
RENT: Basic Rent and Supplemental Rent.
REPLACEMENT AIRFRAME: an airframe substituted for the Airframe pursuant
toss. 10 of the Lease.
REPLACEMENT ENGINE: an engine substituted for an Engine pursuant to the
Lease.
REPLACEMENT LIQUIDITY PROVIDER: defined in the Intercreditor Agreement.
RETURN ACCEPTANCE SUPPLEMENT: a Return Acceptance Supplement, dated as of
the date the Aircraft is returned to Lessor pursuant toss. 5 of the Lease,
entered into by Lessor and Lessee, substantially in the form of Exhibit B to the
Lease.
SCHEDULED DELIVERY DATE: the expected Delivery Date that Lessee
notifies to each Participant, Owner Trustee, and Mortgagee pursuant to ss. 4.1
of the Participation Agreement, which must be a Business Day not later than the
Commitment Termination Date.
SCHEDULED EXPIRATION DATE: defined in Schedule 1 to the Lease.
SEC: the Securities and Exchange Commission of the United States, or any
Government Entity succeeding to the functions of the Securities and Exchange
Commission.
SECTION 1110: Bankruptcy Codess. 1110.
SECTION 1110 PERIOD: defined inss. 4.04(a) of the Mortgage.
SECURED OBLIGATIONS: defined inss. 2.06 of the Mortgage.
SECURITIES ACT: the Securities Act of 1933.
SECURITY: a "security" as defined inss. 2(1) of the Securities Act.
SELLER: _______________ [Lessee] [Airframe Manufacturer] [other].
SENIOR HOLDER: defined inss. 2.16(c) of the Mortgage.
SERIES: Series G or Series C.
SERIES C or SERIES C EQUIPMENT NOTES: Equipment Notes issued under the
Mortgage and designated as "Series C" thereunder, in the Original Amount and
maturities and bearing interest as specified in Schedule I to the Mortgage under
the heading "Series C".
SERIES G or SERIES G EQUIPMENT NOTES: Equipment Notes issued under the
Mortgage and designated as "Series G" thereunder, in the Original Amount and
maturities and bearing interest as specified in Schedule I to the Mortgage under
the heading "Series G".
SIGNIFICANT EXPENDITURE: expenditures in excess of $5,000,000 for
non-severable improvements to the Aircraft which constitute "Mandatory
Modifications" as defined inss. D of Annex C to the Lease.
SIMILAR AIRCRAFT: defined in Schedule 1 to the Lease.
SLV RATE: defined in Schedule 1 to the Lease.
SPECIAL DEFAULT: (1) Lessee's failure to pay any amount of Basic Rent,
Stipulated Loss Value, or Termination Value when due, or (2) any Lease Default
referred to inss. 14.5 of the Lease.
STANDARD & POOR'S: Standard & Poor's Ratings Services.
STIPULATED LOSS VALUE for the Aircraft: (1) during the Base Term, Lessor's
Cost multiplied by the percentage in Schedule 3 to the Lease (as adjusted from
time to time in accordance with ss. 3.2.1 of the Lease) for the pertinent
Stipulated Loss Value Date, and (2) during any Renewal Term, the amount
determined pursuant to ss. 17.2.3 of the Lease. Notwithstanding anything to the
contrary in any Operative Agreement, Stipulated Loss Value shall always be
sufficient to pay in full, as of the date of payment thereof (assuming timely
payment of the Equipment Notes before such date), the unpaid principal amount of
all Equipment Notes outstanding as of such date, together with accrued and
unpaid interest on all Equipment Notes as of such date (without regard to any
interest accrued on the Equipment Notes at a rate exceeding the Debt Rate). If
the event giving rise to an obligation to pay any Stipulated Loss Value occurs
and the actual date that the loss of tax benefits resulting from such event
shall be earlier or later than the date assumed in calculating the federal
income tax consequences reflected in the applicable Stipulated Loss Value, such
Stipulated Loss Value shall be appropriately adjusted upwards or downwards to
reflect the actual date of such loss.
STIPULATED LOSS VALUE DATE for any month: the day in that month specified
in Schedule 3 to the Lease or, if that day is not a Business Day, the following
Business Day.
SUBORDINATION AGENT: Wilmington Trust Company, as subordination agent under
the Intercreditor Agreement.
SUBORDINATION AGENT AGREEMENTS: the Participation Agreement, the Liquidity
Facilities, and the Intercreditor Agreement.
SUPPLEMENTAL RENT: without duplication, (1) all Expenses, Transaction
Expenses, and all other amounts, liabilities, indemnities, and obligations
(other than Basic Rent, but including any Make-Whole Amount) that Lessee assumes
or becomes obligated to pay or agrees to pay under any Lessee Operative
Agreement to or on behalf of Lessor or any other Person, including Stipulated
Loss Value, Termination Value, and indemnity payments under ss. 9 of the
Participation Agreement, but excluding any amount as to which Lessee is
obligated to pay a pro rata share pursuant to clause (5) of this definition, (2)
(a) to the extent not payable (whether or not in fact paid) under ss. 6(a) or
ss. 6(b), as applicable, of the Note Purchase Agreement (as originally in effect
or amended with Owner Participant's consent), the fees payable to (x) Liquidity
Provider under ss. 2.3 of each Liquidity Facility, multiplied by a fraction the
numerator of which is the then-outstanding aggregate principal amount of all the
series of Equipment Notes, and the denominator of which is the then-outstanding
aggregate principal amount of all "Series G Equipment Notes" and "Series C
Equipment Notes" (each as defined in the Note Purchase Agreement) and (y) Policy
Provider under ss. 3.02(d)(i) of the Policy Provider Agreement and the related
Policy Fee Letter (as defined in the Policy Provider Agreement) multiplied by a
fraction the numerator of which shall be the then-outstanding aggregate
principal amount of the Series G Equipment Notes and the denominator of which
shall be the then outstanding aggregate principal amount of all "Series G
Equipment Notes" (as defined in the Note Purchase Agreement); (b) (x) the amount
equal to interest on any Downgrade Advance (other than any Applied Downgrade
Advance) payable under ss. 3.7 of each Liquidity Facility minus Investment
Earnings from such Downgrade Advance, multiplied by (y) the fraction specified
in the foregoing clause (a)(x); (c) (x) the amount equal to interest on any
Non-Extension Advance (other than any Applied Non-Extension Advance) payable
under ss. 3.7 of each Liquidity Facility minus Investment Earnings on such
Non-Extension Advance multiplied by (y) the fraction specified in the forgoing
clause (a)(x); (d) if any payment default exists with respect to interest on any
series of Equipment Notes, (x) an amount equal to interest on any Unpaid
Advance, Applied Downgrade Advance, or Applied Non-Extension Advance payable
under ss. 3.7 of each Liquidity Facility (or if Policy Provider has made a
payment in respect of such Advance to the Liquidity Provider or, in the case of
the Series G Equipment Notes, if Policy Provider has made a payment equivalent
to such an Advance, as would have been payable under ss. 3.7 of the Liquidity
Facility in respect of the Class G Certificates had such Advance been made) plus
any interest at the Past-Due Rate actually payable (whether or not in fact paid)
in respect of the overdue scheduled interest on the Equipment Notes in respect
of which such Unpaid Advance, Applied Downgrade Advance, or Applied
Non-Extension Advance was made by the applicable Liquidity Provider (or, in the
case of the Series G Equipment Notes, an equivalent payment was made by Policy
Provider) multiplied by (y) a fraction the numerator of which is the sum of all
then-overdue interest on the Equipment Notes (other than interest becoming due
and payable solely as a result of acceleration of any Equipment Notes), and the
denominator of which shall be the sum of all then-overdue interest on all
"Series G Equipment Notes" and "Series C Equipment Notes" (each as defined in
the Note Purchase Agreement) (other than interest becoming due and payable
solely as a result of acceleration of any such "Equipment Notes"); and (e)
Lessor's pro rata share of any other amounts owed to Liquidity Provider by
Subordination Agent as borrower under each Liquidity Facility (other than
amounts due as repayment of advances thereunder or as interest on such
advances), except to the extent payable pursuant to clause (a), (b), (c), or (d)
above, (3) Lessor's pro rata share of all compensation and reimbursement of
expenses, disbursements, and advances payable under the Pass-Through Trust
Agreements, (4) Lessor's pro rata share of all compensation and reimbursement of
expenses and disbursements (including payments of indemnities) payable either
(a) to Subordination Agent under the Intercreditor Agreement, except with
respect to any income or franchise taxes incurred by Subordination Agent in
connection with the transactions contemplated by the Intercreditor Agreement, or
(b) by Lessee to Policy Provider under the Policy Provider Agreement, (5)
Lessor's pro rata share of any amount payable under ss. 9.1 (and, if
attributable thereto, ss. 9.5) of the Participation Agreement to any
Pass-Through Indemnitee to the extent such amount relates to, results from, or
arises out of or in connection with (a) the Pass-Through Agreements or the
enforcement of any of the terms of any of the Pass-Through Agreements, (b) the
offer, sale, or delivery of the Pass-Through Certificates or any interest
therein or represented thereby, or (c) any breach of or failure to perform or
observe, or any other noncompliance with, any covenant or agreement or other
obligation to be performed by Lessee under any Pass-Through Agreement, or the
falsity of any representation or warranty of Lessee in any Pass-Through
Agreement, and (6) if Lessee requests any amendment to any Operative Agreement
or Pass-Through Agreement, Lessor's pro rata share of all reasonable fees and
expenses (including fees and disbursements of counsel) of Escrow Agents and
Paying Agents in connection therewith payable by Pass-Through Trustees under the
Escrow Agreements. As used herein, (1) "LESSOR'S PRO RATA SHARE" means as of any
time a fraction, the numerator of which is the then-outstanding principal
balance of Equipment Notes, and the denominator of which is the aggregate
then-outstanding principal balance of all "Equipment Notes" (as each such term
is defined in each of the Operative Indentures), "(2) "Policy" means the
Certificate Guaranty Insurance Policy (including the endorsement attached
thereto and constituting a part thereof) issued by Policy Provider pursuant to
the Policy Provider Agreement, and (3) "Policy Provider Agreement" means the
Insurance and Indemnity Agreement dated as of the Policy issuance date among
Lessee, Subordination Agent, and Policy Provider. For purposes of this
definition, "Applied Downgrade Advance", "Applied Non-Extension Advance", "Cash
Collateral Account", "Downgrade Advance", "Final Advance", "Investment
Earnings", "Non-Extension Advance", and "Unpaid Advance" have the same meanings
as in each Liquidity Facility.
TAX ATTRIBUTE PERIOD: the period from the Delivery Date through December
31, 20__ [DELIVERY DATE YEAR PLUS SEVEN] or such longer period of depreciation
as may be allowable by reason of an indemnifiable event under the Tax Indemnity
Agreement;
TAX INDEMNITEE: (1) FSB and Owner Trustee, (2) WTC and Mortgagee, (3) each
separate or additional trustee appointed pursuant to the Trust Agreement or the
Mortgage, (4) each Participant, (5) the Trust Estate and the Collateral, (6)
Policy Provider, and (7) the successors, assigns, and agents of the foregoing.
For purposes of this definition, the term "Owner Participant" shall include any
member of an affiliated group (within the meaning of Code ss. 1504) of which
Owner Participant is a member at the pertinent time, if consolidated, joint, or
combined returns are filed for such affiliated group for federal, state, or
local income tax purposes.
TAX INDEMNITY AGREEMENT: Tax Indemnity Agreement N___AT, dated the Delivery
Date, between Lessee and Owner Participant.
TAXES: all fees (including license, recording, documentation, and
registration fees), taxes, including income, gross receipt franchise sales, use,
rental, turnover, business, occupational, excise, value-added, tangible and
intangible property and stamp taxes, levies, imposts, duties, charges,
assessments, or withholdings of any nature whatsoever imposed by any Taxing
Authority, and any penalties, additions to tax, fines, or interest thereon or
additions thereto.
TAXING AUTHORITY: any federal, state, or local government or other taxing
authority in the United States or its possessions, any foreign government or
political subdivision or taxing authority thereof, any international taxing
authority, or any territory or possession of the United States or taxing
authority thereof.
TERM: the term, commencing on the Delivery Date, for which the Aircraft is
leased pursuant to ss. 3 of the Lease, consisting of the Base Term and any
Renewal Term(s); PROVIDED, that, if at the scheduled end of the Term the
Aircraft or Airframe is being used, or was within the previous six months being
used, by the U.S. Government pursuant to CRAF, the Term shall be deemed extended
for the period necessary to accommodate usage of the Aircraft or Airframe
pursuant to CRAF plus six months thereafter, and Lessee shall be obligated to
pay Basic Rent for any such extension period at a quarterly rate equal to the
average of the Basic Rent paid during the Base Term or the applicable Renewal
Term (whichever ended immediately before such extension).
TERMINATION DATE: any Payment Date occurring after the seventh anniversary
of the Delivery Date on which the Lease terminates in accordance withss. 9 of
the Lease.
TERMINATION VALUE for the Aircraft: Lessor's Cost multiplied by the
percentage in Schedule 4 to the Lease (as adjusted from time to time in
accordance with ss. 3.2.1 of the Lease) for the pertinent Termination Value
Date. Notwithstanding anything to the contrary in any Operative Agreement,
Termination Value shall always be sufficient to pay in full, as of the date of
payment thereof (assuming timely payment of the Equipment Notes before such
date), the unpaid principal amount of all Equipment Notes outstanding as of such
date, together with accrued and unpaid interest on all such Equipment Notes as
of such date (without regard to any interest accrued on the Equipment Notes at a
rate exceeding the Debt Rate). If the event giving rise to an obligation to pay
any Termination Value occurs and the actual date that the loss of tax benefits
resulting from such event shall be earlier or later than the date assumed in
calculating the federal income tax consequences reflected in the applicable
Termination Value, such Termination Value shall be appropriately adjusted
upwards or downwards to reflect the actual date of such loss.
TERMINATION VALUE DATE for any month: the day in such month specified in
Schedule 4 to the Lease or, if such day is not a Business Day, the following
Business Day.
THRESHOLD AMOUNT: defined in Schedule 1 to the Lease.
TRANSACTION EXPENSES: (1) the reasonable and actual fees and disbursements
incurred in connection with the negotiation, execution, and delivery of the
Operative Agreements of (a) Richards, Layton & Finger, special counsel for
Mortgagee, such information to be furnished by Mortgagee, (b) Ray, Quinney &
Nebeker, special counsel for Owner Trustee under the Trust Agreement, such
information to be furnished by Owner Trustee, (c) FAA Counsel, such information
to be furnished by Lessee, (d) Dewey Ballantine LLP, special counsel to Owner
Participant (as defined in Schedule 3 to the Participation Agreement), such
information to be furnished by Owner Participant, (e) ____________________,
special counsel to the Loan Participants, such information to be furnished by
Lessee, (f) Troutman Sanders LLP, special counsel to Lessee, such information to
be furnished by Lessee, and (g) Lessee Advisor, such information to be furnished
by Lessee, (2) all fees, taxes, and other charges payable in connection with the
recording or filing of instruments and financing statements, such information to
be furnished by Lessee, (3) the initial fee and reasonable and actual
disbursements of Owner Trustee under the Trust Agreement, such information to be
furnished by Owner Trustee, (4) the initial fee and reasonable and actual
disbursements of Mortgagee under the Mortgage, such information to be furnished
by Mortgagee, (5) the fee of the Appraiser with respect to the appraisal of the
Aircraft referred to in ss. 5.1.2(l) of the Participation Agreement, such
information to be furnished by Owner Participant, and (6) the equity placement
fee and reasonable disbursements of Lessee's Advisor(s), such information to be
furnished by Lessee, and the Allocated EETC Expenses.
TRANSACTIONS: the transactions contemplated by the Operative Agreements.
TRANSFER: the transfer, sale, assignment, or other conveyance of all or any
interest in any property, right, or interest.
TRANSFEREE: a Person to whom Owner Participant, Owner Trustee, Loan
Participant, or Note Holder purports or intends to Transfer any or all of its
right, title, or interest in the Trust Estate or in its Equipment Note and the
Collateral, as described in ss. 10.1.1(a), ss. 10.1.2, or ss. 10.1.3 (but
excluding participants in any participation referred to in ss. 10.1.3) of the
Participation Agreement.
TRANSPORTATION CODE: subtitle VII of title 49, United States Code.
TRUST: the trust created by the Trust Agreement.
TRUST AGREEMENT: Trust Agreement N___AT, dated as of __________ 1, 200_,
between Owner Participant and FSB.
TRUST ESTATE: all Owner Trustee's estate, right, title, and interest in and
to the Aircraft, the Lease, the Purchase Agreement, [and the Engine Manufacturer
Warranty Agreement,] including all Basic Rent and Supplemental Rent (including
insurance proceeds and requisition, indemnity, or other payments of any kind for
of with respect to the Aircraft), but excluding any Excluded Payment.
UCC: the Uniform Commercial Code as in effect in any applicable
jurisdiction.
UNITED STATES or U.S.: the United States of America; PROVIDED, that for
geographic purposes, "United States" means the 50 states and the District of
Columbia of the United States of America.
U.S. AIR CARRIER: any United States air carrier who is a Citizen of the
United States holding an air carrier operating certificate issued by the
Secretary of Transportation pursuant to chapter 447 of the Transportation Code
for aircraft capable of carrying 10 or more individuals or 6000 pounds or more
of cargo, and as to whom there is in force an air carrier operating certificate
issued pursuant to FAR Part 121, or who may operate as an air carrier by
certification or otherwise under any successor or substitute provisions therefor
or in the absence thereof.
U.S. GOVERNMENT: the federal government of the United States, or any
instrumentality or agency thereof the obligations of which are guaranteed by the
full faith and credit of the federal government of the United States.
U.S. PERSON: any Person described in Codess. 7701(a)(30).
WEIGHTED AVERAGE LIFE TO MATURITY with respect to any specified Debt, at
the time of the determination thereof: the number of years obtained by dividing
the Remaining Dollar Years of such Debt by the then-outstanding principal amount
of such Debt. "REMAINING DOLLAR YEARS" means the amount obtained by (1)
multiplying the amount of each then-remaining principal payment on such Debt by
the number of years (calculated at the nearest one-twelfth) that will elapse
between the date of determination of the Weighted Average Life to Maturity of
such Debt and the date of that required payment, and (2) totaling the products
obtained in clause (1).
WET LEASE: any arrangement whereby Lessee or a Permitted Sublessee agrees
to furnish the Aircraft, the Airframe, or any Engine to a third party pursuant
to which the Aircraft, Airframe, or Engine is at all times in the operational
control of Lessee or a Permitted Sublessee, PROVIDED, that Lessee's obligations
under the Lease shall continue in full force and effect notwithstanding any such
arrangement.
WTC: Wilmington Trust Company, Delaware banking corporation, not in its
capacity as Mortgagee under the Mortgage, but in its individual capacity.
ANNEX A
DEFINITIONS
GENERAL PROVISIONS
(a) In each Operative Agreement, unless otherwise expressly provided, a
reference to:
(1) each of "Lessee", "Lessor", "Owner Trustee", "Owner Participant", and
any other Person includes any successor in interest to it and any permitted
transferee, permitted purchaser, or permitted assignee of it;
(2) any agreement or other document (including any annex, schedule, or
exhibit thereto, or any other part thereof) includes that agreement or other
document as amended, supplemented, or otherwise modified and any agreement or
other document entered into in substitution or replacement therefor from time to
time, and in each case in accordance with its terms and in accordance with the
Operative Agreements;
(3) any provision of any Law includes any such provision as amended,
modified, supplemented, substituted, reissued, or reenacted before the Delivery
Date, and thereafter from time to time;
(4) "Agreement", "this Agreement", "hereby", "herein", "hereto", "hereof",
"hereunder", and words of similar import, when used in any Operative Agreement,
refer to such Operative Agreement as a whole and not to any particular provision
of such Operative Agreement;
(5) "including", "include", and terms or phrases of similar import means
"including [etc.], without limitation";
(6) "or" is conjunctive and not disjunctive; and
(7) a reference to a "section" or "ss.", an "Exhibit", an "Annex", or a
"Schedule" in any Operative Agreement, or in any annex thereto, is a reference
to a section of, or an exhibit, an annex, or a schedule to, such Operative
Agreement or such annex, respectively.
(b) Each exhibit, annex, and schedule to each Operative Agreement is
incorporated in, and is a part of, such Operative Agreement.
(c) Unless otherwise defined or specified in any Operative Agreement, all
accounting terms therein shall be construed and all accounting determinations
thereunder shall be made in accordance with GAAP.
(d) Headings used in any Operative Agreement are for convenience only, and
shall not in any way affect the construction of, or be taken into consideration
in interpreting, such Operative Agreement.
(e) For purposes of each Operative Agreement, the existence of an Event of
Default, Default, or Special Default referred to in ss. 14.5 of the Lease shall
not prohibit Lessee from taking any action or exercising any right that is
conditioned on the non-existence of any Event of Default, Default, or Special
Default if such Event of Default, Default, or Special Default consists of the
institution of reorganization proceedings with respect to Lessee under Chapter
11 of the Bankruptcy Code, and the trustee or debtor-in-possession in such
proceedings (1) has agreed to perform its obligations under the Lease with the
approval of the applicable court and thereafter continues to perform such
obligations in accordance with Section 1110, or (2) has assumed the Lease with
the approval of the relevant court and thereafter continues to perform its
obligations under the Lease.
DEFINED TERMS
ACTUAL KNOWLEDGE: (a) as it applies to Owner Trustee, actual
knowledge of a responsible officer in the Corporate Trust Department,
respectively, and (b) as it applies to Owner Participant or Lessee, actual
knowledge of a Vice President or more senior officer of Owner Participant or
Lessee (respectively), or any other officer of Owner Participant or Lessee
(respectively) having responsibility for the Transactions; PROVIDED, that each
of Lessee, Owner Participant, and Owner Trustee, shall be deemed to have "Actual
Knowledge" of any matter as to which it has received notice from Lessee, Owner
Participant, or Owner Trustee, given pursuant to ss. 15.7 of the Participation
Agreement.
ADDITIONAL INSURED: defined inss. D of Annex D to the Lease.
AFFILIATE of any Person: any other Person directly or indirectly
controlling, controlled by, or under common control with such Person. For
purposes of this definition, "control" means the power, directly or indirectly,
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract, or otherwise,
and "controlling", "controlled by", and "under common control with" have
correlative meanings, PROVIDED, that Owner Participant will not be deemed to be
an "Affiliate" of Lessor or Owner Trustee (and vice versa).
AIRCRAFT: the Airframe and Engines.
AIRCRAFT BILL OF SALE: a warranty bill of sale granting title to the
Aircraft, which bill of sale Seller is to deliver to Owner Trustee on the
Delivery Date.
AIRCRAFT DESCRIPTION EXHIBIT: Exhibit A to the Lease.
AIRCRAFT DOCUMENTS: all technical data, manuals, and log books, and all
inspection, modification, and overhaul records and other service, repair,
maintenance, and technical records that the relevant Aviation Authority, the
Lease, or the Maintenance Program requires be maintained with respect to the
Aircraft, including all required additions, renewals, revisions, and
replacements of any such materials, in each case in whatever form and by
whatever means or medium (including microfiche, microfilm, paper, or computer
disk) such materials are maintained or retained by or on behalf of Lessee
(PROVIDED, that all such materials shall be maintained in the English language).
AIRFRAME: (1) the aircraft (excluding Engines or engines from time to time
installed thereon) manufactured by Airframe Manufacturer and identified by
Airframe Manufacturer's model number, United States registration number, and
Airframe Manufacturer's serial number set forth in the Aircraft Description
Exhibit, or (2) any Replacement Airframe, including in either case any and all
Parts incorporated or installed in or attached or appurtenant to such airframe,
and any and all Parts removed from such airframe, unless title to such Parts
does not vest in Lessor in accordance with ss. 8.1 and Annex C of the Lease.
Upon substitution of a Replacement Airframe under and in accordance with the
Lease, such Replacement Airframe shall become subject to the Lease and shall be
the "Airframe" for all purposes of the Operative Agreements, and the replaced
Airframe shall cease to be subject to the Lease and shall cease to be the
"Airframe".
AIRFRAME MANUFACTURER: The Boeing Company, a Delaware corporation.
APPLICABLE PERCENTAGE: means (A) for the [first one-year Renewal
Term][first two one-year Renewal Terms], (1) 100% if, at the time that the first
Renewal Term begins, Lessee provides Owner Participant with an opinion of
counsel reasonably satisfactory to Owner Participant to the effect that, due to
a Change in Tax Law or clarification of law, if the Applicable Percentage had
been 100% on the Closing Date no Renewal Term would have been included in the
Lease Term under Code ss. 467 and the Treasury Regulations thereunder and (2)
otherwise, 105%; and (B) for any subsequent Renewal Term, 100%.
APPRAISER: a firm of internationally-recognized, independent aircraft
appraisers.
AVIATION AUTHORITY: the FAA or, if the Aircraft is registered with any
other Government Entity under and in accordance withss. 7.1.2 of the Lease, such
other Government Entity.
BANKRUPTCY CODE: the United States Bankruptcy Code, 11 U.S.C.ss. 101 ET
SEQ.
BASE TERM: the period beginning on and including the Commencement Date and
ending on the Scheduled Expiration Date therefor, or such earlier date on which
the Term terminates in accordance with the provisions of the Lease.
BASIC RENT: the rent (including, to the extent applicable, Renewal Rent)
payable or allocable, as applicable, for the Aircraft pursuant to ss. 3.2.1(a)
of the Lease.
BILLS OF SALE: the FAA Bill of Sale and the Aircraft Bill of Sale.
BURDENSOME INDEMNITY PAYMENT: an indemnity payment pursuant to the Tax
Indemnity Agreement or ss. 9 of the Participation Agreement which would cause
the aggregate net present value of all losses paid or payable by Lessee as of
the determination date, discounted quarterly at the SLV Rate, to the
determination date, to exceed 2.5% of Lessor's Cost.
BUSINESS DAY: any day other than a Saturday, Sunday, or other day on which
commercial banks are authorized or required by law to close in New York, NY,
Indianapolis, IN, or Salt Lake City, UT.
CASH EQUIVALENTS: the following securities (which shall mature within 90
days of the date of purchase thereof): (1) direct obligations of the U.S.
Government; (2) obligations fully guaranteed by the U.S. Government; (3)
certificates of deposit issued by, or bankers' acceptances of, or time deposits
or a deposit account with, Owner Trustee, or any bank, trust company, or
national banking association incorporated or doing business under the laws of
the United States or any state thereof having a combined capital and surplus and
retained earnings of at least $500,000,000 and having a rate of "C" or better
from the Thomson BankWatch Service; or (4) commercial paper of any issuer doing
business under the laws of the United States or one of the states thereof and in
each case having a rating assigned to such commercial paper by Standard & Poor's
or Moody's at least equal to A1 or P1, respectively.
CITIZEN OF THE UNITED STATES: defined inss. 40102(a)(15) of the
Transportation Code and in the FARs.
CLOSING: the closing of the transactions contemplated by the Participation
Agreement on the Delivery Date.
CODE: the Internal Revenue Code of 1986; PROVIDED, that when used in
relation to a Plan, "Code" shall be interpreted in accordance with the
regulations and rulings issued thereunder.
COMMENCEMENT DATE: defined in Schedule 1 to the Lease.
COMMITMENT: Owner Participant's commitment to participate in the payment of
Lessor's Cost, as reflected in Schedule 2 of the Participation Agreement.
COMMITMENT TERMINATION DATE: defined in Schedule 3 to the Participation
Agreement.
CONSENT AND AGREEMENT: Manufacturer Consent and Agreement N___AT, dated the
Delivery Date, of Airframe Manufacturer.
CORPORATE TRUST DEPARTMENT or TRUST OFFICE: Owner Trustee's principal
corporate trust office, located from time to time at Owner Trustee's address for
notices under the Participation Agreement, or such other office at which Owner
Trustee's corporate trust business shall be administered and which Owner Trustee
specifies by notice in writing to Lessee.
CRAF: the Civil Reserve Air Fleet Program established pursuant to 10
U.S.C.ss. 9511 - 13, or any similar substitute program.
DEBT: any liability for borrowed money, or any liability for the payment of
money in connection with any letter of credit transaction, or any other
liabilities evidenced or to be evidenced by bonds, debentures, notes, or other
similar instruments.
DELAYED DELIVERY DATE: a delayed Delivery Date notified to each Participant
and Owner Trustee by Lessee pursuant to ss. 4.3 of the Participation Agreement,
which delayed Delivery Date shall be a Business Day not later than the
Commitment Termination Date.
DELIVERY DATE: __________, 200_ (which is the date when the Aircraft is
delivered to and accepted by Lessee under the Lease and when the Closing
occurs).
DOLLARS, UNITED STATES DOLLARS, or $: the lawful currency of the United
States.
DOT: the Department of Transportation of the United States, or any
Government Entity succeeding to the functions of such Department of
Transportation.
EBO DATE: as specified in Schedule 5 to the Lease.
EBO PRICE: as specified in Schedule 5 to the Lease, as adjusted pursuant
toss. 3.2.1 of the Lease.
ELIGIBLE INSTITUTION: the corporate trust department of (1) Wilmington
Trust Company, acting solely in its capacity as a "securities intermediary" (as
defined in UCC ss. 8-102(14)), or (2) a depository institution organized under
the laws of the United States of America or any one of the states thereof or the
District of Columbia (or any U.S. branch of a foreign bank), which has a
long-term unsecured debt rating from Moody's and Standard & Poor's of at least
A-3 or its equivalent.
ENGINE: (1) each of the engines manufactured by Engine Manufacturer and
identified by Engine Manufacturer's model number and Engine Manufacturer's
serial number in the Aircraft Description Exhibit and originally installed on
the Airframe on delivery thereof pursuant to the Lease, or (2) any Replacement
Engine, in any case whether or not from time to time installed on the Airframe
or installed on any other airframe or aircraft, including (for both clauses (1)
and (2)) any and all Parts incorporated or installed in or attached or
appurtenant to such engine, and any and all Parts removed from such engine,
unless title to such Parts does not vest in Lessor in accordance with ss. 8.1
and Annex C of the Lease. Upon substitution of a Replacement Engine under and in
accordance with the Lease, such Replacement Engine shall become subject to the
Lease and shall be an "Engine" for all purposes of the Operative Agreements, and
the replaced Engine shall cease to be subject to the Lease and shall cease to be
an "Engine".
ENGINE MANUFACTURER: CFM International.
[ENGINE MANUFACTURER WARRANTY AGREEMENT: Engine Manufacturer Warranty
Agreement N___AT, dated the Delivery Date, among Engine Manufacturer, Owner
Trustee and Lessee.]
ERISA: the Employee Retirement Income Security Act of 1974.
EVENT OF LOSS with respect to the Aircraft, the Airframe, or any Engine:
any of the following circumstances, conditions, or events with respect to such
property, which shall have occurred for any reason whatsoever:
(1) the destruction of such property, damage to such property beyond
economic repair, or rendition of such property permanently unfit for normal use
by Lessee;
(2) the actual or constructive total loss of such property, or any damage
to such property, or requisition of title or use of such property, which results
in an insurance settlement with respect to such property on the basis of a total
loss or constructive or compromised total loss;
(3) any theft, hijacking, or disappearance of such property for 90
consecutive days or more or, if earlier, the fifth day following the end of the
Term;
(4) any seizure, condemnation, confiscation, taking, or requisition
(including loss of title) of such property by any Government Entity or purported
Government Entity (other than a requisition of use by the U.S. Government) for
180 consecutive days or, if earlier, at the end of the Term;
(5) any seizure, condemnation, confiscation, taking, or requisition of use
of such property by the U.S. Government that continues until the 30th day after
the last day of the Term; and (6) as a result of any law, rule, regulation,
order, or other action by the Aviation Authority or by any Government Entity of
the government of registry of the Aircraft or by any Government Entity otherwise
having jurisdiction over the operation or use of the Aircraft, the use of the
Aircraft, the Airframe, or any Engine in the normal course of Lessee's business
of passenger air transportation is prohibited for 180 consecutive days, unless,
before the expiration of such 180-day period, Lessee undertakes and is
diligently carrying forward such steps as are necessary or desirable to permit
the normal use of such property by Lessee, but in any event if such use is
prohibited for a continuous period of 360 days, PROVIDED, that such prohibition
shall not create an Event of Loss if such prohibition applies to other B737-800
aircraft (or CFM 56-7 engines) in Lessee's fleet and also applies to Boeing
737-800 aircraft (or CFM 56-7 engines) not owned or operated by Lessee and,
before the expiration of such 360-day period, Lessee conforms at least one unit
of such property in its fleet to the requirements of any such law, rule,
regulation, order, or other action, begins regular commercial use of the same in
such jurisdiction, and is diligently carrying forward, in a manner which does
not discriminate against such property in so conforming such property, steps
which are necessary or desirable to permit the normal use of the Aircraft by
Lessee, but in any event if such use is prohibited for a continuous period of
540 days or such use is prohibited at the expiration of the Term.
EXPENSES: any and all liabilities, obligations, losses, damages,
settlements, penalties, claims, actions, suits, costs, demands, judgments,
expenses, and disbursements (including reasonable fees, disbursements, and
reasonable out of pocket costs and expenses of legal counsel, accountants,
appraisers, inspectors, or other professionals, and costs of investigation).
FAA: the Federal Aviation Administration of the United States, or any
Government Entity succeeding to the functions of such Federal Aviation
Administration.
FAA BILL OF SALE: a bill of sale for the Aircraft on AC Form 8050-2 (or any
other FAA-approved form), delivered to Owner Trustee on the Delivery Date by
Seller.
FAA COUNSEL: Crowe & Dunlevy.
FAA-FILED DOCUMENTS: the Lease, the Trust Agreement, the FAA Bill of Sale,
and an application for registration of the Aircraft with the FAA in Owner
Trustee's name.
FARS: the Federal Aviation Regulations issued or promulgated pursuant to
the Transportation Code from time to time.
FAIR MARKET RENTAL VALUE: the fair market rental value in Dollars for the
Aircraft that would apply in an arm's-length transaction between an informed and
willing lessee under no compulsion to lease, and an informed and willing lessor
under no compulsion to lease, for the applicable period, assuming that (1)
except as provided in ss. 15.4 of the Lease, the Aircraft has been maintained in
accordance with, and is in the condition required by, the Lease, (2) rent would
be paid quarterly, and (3) except as provided in ss. 15.4 of the Lease, the
Aircraft would be leased during any such period on the same terms and conditions
(except for Basic Rent amount) as during the Base Term.
FAIR MARKET SALES VALUE: the fair market sales value in Dollars for the
Aircraft that would apply in an arm's-length transaction between an informed and
willing buyer under no compulsion to buy, and an informed and willing seller
under no compulsion to sell, in a transaction that would close on or about the
relevant time of determination, assuming that (1) except as provided in ss. 15.4
of the Lease, the Aircraft has been maintained in accordance with the Lease, and
is in the condition required by the Lease, and (2) the Aircraft will be
delivered to such informed and willing buyer in the return condition required by
the Lease.
FINANCING STATEMENTS: UCC-1 (and, where appropriate, UCC-3) financing
statements covering the Aircraft, as a precautionary matter, by Lessee, as
lessee, showing Owner Trustee as lessor, for filing in Indiana and each other
jurisdiction where (in Owner Trustee's opinion) filing is reasonably desirable.
FIXED RATE: defined in Schedule 1 to the Lease.
FSB: First Security Bank, National Association, a national banking
association, not in its capacity as trustee under the Trust Agreement, but in
its individual capacity.
GAAP: generally accepted accounting principles as set forth in the
statements of financial accounting standards issued by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants, as
varied by any applicable financial accounting rules or regulations issued by the
SEC, and applied on a basis consistent with prior periods except as disclosed in
the pertinent Person's financial statements.
GOVERNMENT ENTITY: (1) any federal, state, provincial, or similar
government, and any body, board, department, commission, court, tribunal,
authority, agency, or other instrumentality of any such government or otherwise
exercising any executive, legislative, judicial, administrative, or regulatory
functions of such government, or (2) any other government entity having
jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
GTA: the General Terms Agreement, as defined in the Purchase Agreement
Assignment.
GUARANTEE: Guarantee N___AT, dated the Delivery Date, issued by Guarantor
in favor of Owner Trustee, FSB, and each Owner Participant.
GUARANTOR: AmTran, Inc., an Indiana corporation.
INDEMNITEE: (1) FSB and Owner Trustee, (2) each separate or additional
trustee appointed pursuant to the Trust Agreement, (3) each Owner Participant,
(4) the Trust Estate, (5) each Affiliate of the Persons described in clauses (1)
through (3), (6) the directors, officers, employees, and agents of each of the
Persons described in clauses (1) through (3) and in clause (5) and (7) the
successors and permitted assigns of the Persons described in clauses (1) through
(3), and in clauses (5) and (6). If any Indemnitee is Airframe Manufacturer or
Engine Manufacturer or any subcontractor or supplier of either thereof, such
Person shall be an Indemnitee only in its capacity as Owner Participant.
IRS: the Internal Revenue Service of the United States, or any Government
Entity succeeding to the functions of such Internal Revenue Service.
JAA: the Joint Aviation Authority of the European Union.
LAW: (1) any constitution, treaty, statute, law, decree, regulation, order,
rule, or directive of any Government Entity, and (2) any judicial or
administrative interpretation or application of, or decision under, any of the
foregoing.
LEASE or LEASE AGREEMENT: Lease Agreement N___AT, dated the Delivery Date,
between Owner Trustee and Lessee.
DEFAULT: (1) any condition, circumstance, act, or event that, with the
giving of notice or the lapse of time, would constitute an Event of Default, or
(2) any Event of Default.
EVENT OF DEFAULT: any one or more of the conditions, circumstances, acts,
or events set forth inss. 14 of the Lease.
LESSEE: American Trans Air, Inc., an Indiana corporation.
LESSEE ADVISOR: Capstar Partners, LLC, in its capacity as special advisor
to Lessee.
LESSEE OPERATIVE AGREEMENTS: the Participation Agreement, the Lease, the
Tax Indemnity Agreement, the Purchase Agreement Assignment [, the Engine
Manufacturer Warranty Agreement,] and each other agreement between Lessee and
any other party to the Participation Agreement, relating to the Transactions,
delivered on the Delivery Date.
LESSEE PERSON: Lessee, any sublessee, assignee, successor, or other user or
Person in possession of the Aircraft, the Airframe, or an Engine with or without
color of right, or any Affiliate of any of the foregoing (excluding any Tax
Indemnitee or any related Tax Indemnitee with respect thereto, or any Person
using or claiming any rights with respect to the Aircraft, the Airframe, or an
Engine directly by or through any of the Persons in this parenthetical phrase,
but not excluding any Person claiming directly or indirectly through or under
the Lease).
LESSEE'S ADVISOR(S): defined in Schedule 3 to the Participation Agreement.
LESSOR: Owner Trustee in its capacity as lessor under the Lease.
LESSOR LIEN, with respect to any Person, on any property (including the
Trust Estate, the Aircraft, Airframe, Engines, Parts, or Aircraft Documents) or
any payments: any Lien on such property or payments that results from (1) claims
against such Person (if such Person is a trustee, whether in its individual
capacity or in its capacity as a trustee) not related to any of the
Transactions, (2) acts or omissions of such Person (if such Person is a trustee,
whether in its individual capacity or in its capacity as a trustee) in violation
of its obligations under any of the terms of the Operative Agreements, or not
related to the Transactions, (3) Taxes against such Person (if such Person is a
trustee, whether in its individual capacity or in its capacity as a trustee) or
any of its Affiliates that Lessee is not required to indemnify under the
Participation Agreement, or (4) claims against such Person arising out of its
transfer of all or part of its interest in the Aircraft, the Trust Estate, or
the Operative Agreements, other than a Transfer required by the terms of the
Operative Agreements or attributable to the existence of an Event of Default.
LESSOR'S COST: the amount paid by Owner Trustee to Seller to purchase the
Aircraft pursuant to the Purchase Agreement Assignment and the Participation
Agreement, as designated by Dollar amount in Schedule 3 to the Participation
Agreement.
LIEN: any mortgage, pledge, lien, charge, claim, encumbrance, lease, or
security interest affecting the title to or any interest in property.
LOSS PAYMENT DATE: defined inss. 10.1.2(a)(1) of the Lease.
MAINTENANCE PROGRAM: defined in Annex C to the Lease.
MATERIALLY ADVERSE CHANGE with respect to any Person: any event, condition,
or circumstance that materially adversely affects such Person's business,
prospects, or consolidated financial condition, or its ability to observe or
perform its obligations, liabilities, and agreements under the Operative
Agreements.
MINIMUM LIABILITY INSURANCE AMOUNT: defined in Schedule 1 to the Lease.
MOODY'S: Moody's Investors Service, Inc.
NET ECONOMIC RETURN: Owner Participant's net after-tax book yield, using
the "multiple investment sinking fund" method of analysis, and aggregate and
present value (discounted at 6% per annum) of the net after-tax cash flow,
computed both through the EBO Date (assuming Lessee's exercise of the early
buy-out option in ss. 17.3.1(a)(1) of the Lease) and through the end of the Base
Term, and computed on the basis of the same methodology and assumptions as the
initial Owner Participant used in determining Basic Rent payments and
allocations, Stipulated Loss Value percentages, and Termination Value
percentages, as of the Delivery Date, as such assumptions are adjusted for
events that have been the basis for adjustments to Basic Rent pursuant to ss.
3.2.1(b) of the Lease or events giving rise to indemnity payments pursuant to
ss. 5 of the Tax Indemnity Agreement; PROVIDED, that, even if the initial Owner
Participant transfers its interest, Net Economic Return shall be calculated as
if the initial Owner Participant had retained its interest; PROVIDED FURTHER,
that, notwithstanding the preceding proviso, solely for purposes of ss. 11 of
the Participation Agreement and calculating any adjustments to Basic Rent
payments and allocations, Stipulated Loss Values, EBO Price, and Termination
Values in connection with a refunding pursuant to such ss. 11 at a time when
Owner Participant is a transferee (other than an Affiliate of the initial Owner
Participant), the after-tax yield (but not the after-tax cash flow) component of
Net Economic Return shall be calculated on the basis of the methodology and
assumptions used by the transferee Owner Participant as of the date when it
acquires its interest.
NET PRESENT VALUE OF RENTS: the present value, as of the date of
determination, discounted at 10% per annum, compounded quarterly to the date of
determination, of all unpaid Basic Rent payments during the then-remaining
portion of the Base Term, expressed as a percentage of Lessor's Cost.
NET WORTH for any Person: the excess of its total assets over its total
liabilities.
NON-U.S. PERSON: any Person, other than a United States person as defined
in Codess. 7701(a)(30).
OFFICER'S CERTIFICATE of any party to the Participation Agreement: a
certificate signed by the Chairman, the President, any Vice President (including
those with varying ranks such as Executive, Senior, Assistant, or Staff Vice
President), the Treasurer, or the Secretary of such party.
OPERATIVE AGREEMENTS: the Participation Agreement, the Trust Agreement, the
Purchase Agreement Assignment, the Guarantee, the Consent and Agreement, the
Engine Manufacturer Warranty Agreement, the Lease, the Bills of Sale, and the
Tax Indemnity Agreement.
OP JURISDICTION: defined in Schedule 3 to the Participation Agreement.
OWNER PARTICIPANT: the Person executing the Participation Agreement as
"Owner Participant"; except that, after an Owner Participant Transfers its
interest to a successor Owner Participant, such transferor shall not be an
"Owner Participant" (except as provided in ss. 10.2 of the Participation
Agreement) and the successor Owner Participant shall be the "Owner Participant".
OWNER PARTICIPANT AGREEMENTS: the Participation Agreement, the Tax
Indemnity Agreement, the Trust Agreement and each other agreement between Owner
Participant and any other party to the Participation Agreement relating to the
Transactions, delivered on the Delivery Date.
OWNER TRUSTEE: First Security Bank, National Association, a national
banking association, not in its individual capacity, except as expressly
provided in any Operative Agreement, but solely as Owner Trustee under the Trust
Agreement.
OWNER TRUSTEE AGREEMENTS: the Participation Agreement, the Lease, the Trust
Agreement, the Purchase Agreement Assignment, [the Engine Manufacturer Warranty
Agreement,] and each other agreement between Owner Trustee and any other party
to the Participation Agreement, relating to the Transactions, delivered on the
Delivery Date.
PARTICIPATION AGREEMENT: Participation Agreement N___AT, dated the Delivery
Date, among Lessee, Owner Participant, Owner Trustee, and FSB.
PARTS: all appliances, parts, components, instruments, appurtenances,
accessories, furnishings, seats, and other equipment of whatever nature (other
than (1) Engines or engines, and (2) any items leased by Lessee from a third
party other than Lessor) from time to time installed or incorporated in or
attached or appurtenant to the Airframe or any Engine.
PAST-DUE RATE: defined in Schedule 1 to the Lease.
PAYMENT DATE: each __________, __________, __________, and __________
during the Term, commencing with the first such date to occur after the
Commencement Date.
PAYMENT PERIOD: each of the consecutive quarterly periods (or such
applicable shorter period beginning on the Delivery Date or the first day of a
Renewal Term) during the Term and ending on a Payment Date, the first such
period commencing on and including the Delivery Date.
PERMITTED AIR CARRIER: (1) any manufacturer of commercial airframes or
commercial aircraft engines, or any Affiliate thereof, (2) any Permitted Foreign
Air Carrier, (3) any Person approved in writing by Owner Participant, or (4) any
U.S. Air Carrier.
PERMITTED COUNTRY: any country listed on Schedule 5 to the Lease, subject
to the notes set forth on such Schedule.
PERMITTED FOREIGN AIR CARRIER: any air carrier that (1) has its principal
executive offices in a Permitted Country, and (2) is authorized to conduct
commercial airline operations and to operate jet aircraft similar to the
Aircraft under the applicable Laws of such Permitted Country.
PERMITTED INSTITUTION: any bank, trust company, insurance company,
financial institution, or corporation or limited liability company (other than,
without Lessee's consent, a commercial air carrier, a commercial aircraft
operator, a freight forwarder, an airframe manufacturer (other than Airframe
Manufacturer) or aircraft engine manufacturer (other than Engine Manufacturer),
or an Affiliate of any of the foregoing), in each case with a combined capital
and surplus or net worth of at least $50,000,000.
PERMITTED LIEN: any Lien described in clauses (a) through (g) ofss. 6 of
the Lease.
PERMITTED SUBLEASE: a sublease permitted underss. 7.2.7 of the Lease.
PERMITTED SUBLESSEE: the sublessee under a Permitted Sublease.
PERSON or PERSON: an individual, firm, business, partnership, joint
venture, trust, trustee, Government Entity, organization, association,
corporation, limited liability company, government agency, governmental
committee, governmental department, governmental authority, and other body or
organization, corporate or incorporate, whether having distinct legal status or
not, or any member of any of the same.
PLAN: any employee benefit plan within the meaning of ERISAss. 3(3), or any
plan within the meaning of Codess. 4975(e)(1).
PRELIMINARY NOTICE: defined inss. 17.1 of the Lease.
PURCHASE AGREEMENT: shall mean Purchase Agreement No. _____ by and between
Lessee and the Airframe Manufacturer, dated as of __________, 2000, including
the exhibits and letter agreements appended thereto and incorporated therein
(except Letter Agreement Nos. __________, __________, and ----------).
PURCHASE AGREEMENT ASSIGNMENT: Purchase Agreement and Engine Warranties
Assignment N___AT, dated the Delivery Date, between Lessee and Owner Trustee.
PURCHASE DATE: the last Business Day of the Base Term or a Renewal Term, as
specified in any Purchase Notice.
PURCHASE NOTICE: defined inss. 17.3.1 of the Lease.
REMOVABLE PARTS: defined inss. D of Annex C to the Lease.
RENEWAL NOTICE: defined inss. 17.2.1 of the Lease.
RENEWAL RENT: the basic rent payable for a Renewal Term, determined
pursuant toss. 17.2.2 of the Lease.
RENEWAL TERM: a one-year term for which the Lease is extended by Lessee (if
applicable) pursuant toss. 17 of the Lease.
RENT: Basic Rent and Supplemental Rent.
REPLACEMENT AIRFRAME: an airframe substituted for the Airframe pursuant
toss. 10 of the Lease.
REPLACEMENT ENGINE: an engine substituted for an Engine pursuant to the
Lease.
RETURN ACCEPTANCE SUPPLEMENT: a Return Acceptance Supplement, dated as of
the date the Aircraft is returned to Lessor pursuant toss. 5 of the Lease,
entered into by Lessor and Lessee, substantially in the form of Exhibit B to the
Lease.
SCHEDULED DELIVERY DATE: the expected Delivery Date that Lessee notifies to
each Owner Participant, and Owner Trustee pursuant to ss. 4.1 of the
Participation Agreement, which must be a Business Day not later than the
Commitment Termination Date.
SCHEDULED EXPIRATION DATE: defined in Schedule 1 to the Lease.
SEC: the Securities and Exchange Commission of the United States, or any
Government Entity succeeding to the functions of the Securities and Exchange
Commission.
SECTION 1110: Bankruptcy Codess. 1110.
SECURITIES ACT: the Securities Act of 1933.
SECURITY: a "security" as defined inss. 2(1) of the Securities Act.
SELLER: _______________ [Lessee] [Airframe Manufacturer] [other].
SIGNIFICANT EXPENDITURE: expenditures in excess of $5,000,000 for
non-severable improvements to the Aircraft which constitute "Mandatory
Modifications" as defined inss. D of Annex C to the Lease.
SIMILAR AIRCRAFT: defined in Schedule 1 to the Lease.
SLV RATE: defined in Schedule 1 to the Lease.
SPECIAL DEFAULT: (1) Lessee's failure to pay any amount of Basic Rent,
Stipulated Loss Value, or Termination Value when due, or (2) any Default
referred to inss. 14.5 of the Lease.
STANDARD & POOR'S: Standard & Poor's Ratings Services.
STIPULATED LOSS VALUE for the Aircraft: (1) during the Base Term, Lessor's
Cost multiplied by the percentage in Schedule 3 to the Lease (as adjusted from
time to time in accordance with ss. 3.2.1 of the Lease) for the pertinent
Stipulated Loss Value Date, and (2) during any Renewal Term, the amount
determined pursuant to ss. 17.2.3 of the Lease. If the event giving rise to an
obligation to pay any Stipulated Loss Value occurs and the actual date that the
loss of tax benefits resulting from such event shall be earlier or later than
the date assumed in calculating the federal income tax consequences reflected in
the applicable Stipulated Loss Value, such Stipulated Loss Value shall be
appropriately adjusted upwards or downwards to reflect the actual date of such
loss.
STIPULATED LOSS VALUE DATE for any month: the day in that month specified
in Schedule 3 to the Lease or, if that day is not a Business Day, the following
Business Day.
SUPPLEMENTAL RENT: all Expenses, Transaction Expenses, and all other
amounts, liabilities, indemnities, and obligations (other than Basic Rent) that
Lessee assumes or becomes obligated to pay or agrees to pay under any Lessee
Operative Agreement to or on behalf of Lessor or any other Person, including
Stipulated Loss Value, Termination Value, and indemnity payments under ss. 9 of
the Participation Agreement.
TAX ATTRIBUTE PERIOD: the period from the Delivery Date through December
31, 20__ [DELIVERY DATE YEAR PLUS SEVEN] or such longer period of depreciation
as may be allowable by reason of an indemnifiable event under the Tax Indemnity
Agreement;
TAX INDEMNITEE: (1) FSB and Owner Trustee, (2) each separate or additional
trustee appointed pursuant to the Trust Agreement, (3) each Owner Participant,
(4) the Trust Estate, and (5) the successors, assigns, and agents of the
foregoing. For purposes of this definition, the term "Owner Participant" shall
include any member of an affiliated group (within the meaning of Code ss. 1504)
of which Owner Participant is a member at the pertinent time, if consolidated,
joint, or combined returns are filed for such affiliated group for federal,
state, or local income tax purposes.
TAX INDEMNITY AGREEMENT: Tax Indemnity Agreement N___AT, dated the Delivery
Date, between Lessee and Owner Participant.
TAXES: all fees (including license, recording, documentation, and
registration fees), taxes, including income, gross receipt franchise sales, use,
rental, turnover, business, occupational, excise, value-added, tangible and
intangible property and stamp taxes, levies, imposts, duties, charges,
assessments, or withholdings of any nature whatsoever imposed by any Taxing
Authority, and any penalties, additions to tax, fines, or interest thereon or
additions thereto.
TAXING AUTHORITY: any federal, state, or local government or other taxing
authority in the United States or its possessions, any foreign government or
political subdivision or taxing authority thereof, any international taxing
authority, or any territory or possession of the United States or taxing
authority thereof.
TERM: the term, commencing on the Delivery Date, for which the Aircraft is
leased pursuant to ss. 3 of the Lease, consisting of the Base Term and any
Renewal Term(s); PROVIDED, that, if at the scheduled end of the Term the
Aircraft or Airframe is being used, or was within the previous six months being
used, by the U.S. Government pursuant to CRAF, the Term shall be deemed extended
for the period necessary to accommodate usage of the Aircraft or Airframe
pursuant to CRAF plus six months thereafter, and Lessee shall be obligated to
pay Basic Rent for any such extension period at a quarterly rate equal to the
average of the Basic Rent paid during the Base Term or the applicable Renewal
Term (whichever ended immediately before such extension).
TERMINATION DATE: any Payment Date occurring after the seventh anniversary
of the Delivery Date on which the Lease terminates in accordance withss. 9 of
the Lease.
TERMINATION VALUE for the Aircraft: Lessor's Cost multiplied by the
percentage in Schedule 4 to the Lease (as adjusted from time to time in
accordance with ss. 3.2.1 of the Lease) for the pertinent Termination Value
Date. If the event giving rise to an obligation to pay any Termination Value
occurs and the actual date that the loss of tax benefits resulting from such
event shall be earlier or later than the date assumed in calculating the federal
income tax consequences reflected in the applicable Termination Value, such
Termination Value shall be appropriately adjusted upwards or downwards to
reflect the actual date of such loss.
TERMINATION VALUE DATE for any month: the day in such month specified in
Schedule 4 to the Lease or, if such day is not a Business Day, the following
Business Day.
THRESHOLD AMOUNT: defined in Schedule 1 to the Lease.
TRANSACTION EXPENSES: (1) the reasonable and actual fees and disbursements
incurred in connection with the negotiation, execution, and delivery of the
Operative Agreements of (a) Ray, Quinney & Nebeker, special counsel for Owner
Trustee under the Trust Agreement, such information to be furnished by Owner
Trustee, (b) FAA Counsel, such information to be furnished by Lessee, (c) Dewey
Ballantine LLP, special counsel to Owner Participant (as defined in Schedule 3
to the Participation Agreement), such information to be furnished by Owner
Participant, (d) Troutman Sanders LLP, special counsel to Lessee, such
information to be furnished by Lessee, and (e) Lessee Advisor, such information
to be furnished by Lessee, (2) all fees, taxes, and other charges payable in
connection with the recording or filing of instruments and financing statements,
such information to be furnished by Lessee, (3) the initial fee and reasonable
and actual disbursements of Owner Trustee under the Trust Agreement, such
information to be furnished by Owner Trustee, (4) the fee of the Appraiser with
respect to the appraisal of the Aircraft referred to in ss. 5.1.2(l) of the
Participation Agreement, such information to be furnished by Owner Participant,
and (5) the equity placement fee and reasonable disbursements of Lessee's
Advisor(s), such information to be furnished by Lessee.
TRANSACTIONS: the transactions contemplated by the Operative Agreements.
TRANSFER: the transfer, sale, assignment, or other conveyance of all or any
interest in any property, right, or interest.
TRANSFEREE: a Person to whom Owner Participant or Owner Trustee purports or
intends to Transfer any or all of its right, title, or interest in the Trust
Estate, as described in ss. 10.1.1(a), ss. 10.1.2, or ss. 10.1.3 (but excluding
participants in any participation referred to in ss. 10.1.3) of the
Participation Agreement.
TRANSPORTATION CODE: subtitle VII of title 49, United States Code.
TRUST: the trust created by the Trust Agreement.
TRUST AGREEMENT: Trust Agreement N___AT, dated as of __________ 1, 200_,
between Owner Participant and FSB.
TRUST ESTATE: all Owner Trustee's estate, right, title, and interest in and
to the Aircraft, the Lease, the Purchase Agreement, [and the Engine Manufacturer
Warranty Agreement,] including all Basic Rent and Supplemental Rent (including
insurance proceeds and requisition, indemnity, or other payments of any kind for
of with respect to the Aircraft), but excluding any Excluded Payment.
UCC: the Uniform Commercial Code as in effect in any applicable
jurisdiction.
UNITED STATES or U.S.: the United States of America; PROVIDED, that
for geographic purposes, "United States" means the 50 states and the District of
Columbia of the United States of America.
U.S. AIR CARRIER: any United States air carrier who is a Citizen of the
United States holding an air carrier operating certificate issued by the
Secretary of Transportation pursuant to chapter 447 of the Transportation Code
for aircraft capable of carrying 10 or more individuals or 6000 pounds or more
of cargo, and as to whom there is in force an air carrier operating certificate
issued pursuant to FAR Part 121, or who may operate as an air carrier by
certification or otherwise under any successor or substitute provisions therefor
or in the absence thereof.
U.S. GOVERNMENT: the federal government of the United States, or any
instrumentality or agency thereof the obligations of which are guaranteed by the
full faith and credit of the federal government of the United States.
U.S. PERSON: any Person described in Codess. 7701(a)(30).
WET LEASE: any arrangement whereby Lessee or a Permitted Sublessee agrees
to furnish the Aircraft, the Airframe, or any Engine to a third party pursuant
to which the Aircraft, Airframe, or Engine is at all times in the operational
control of Lessee or a Permitted Sublessee, PROVIDED, that Lessee's obligations
under the Lease shall continue in full force and effect notwithstanding any such
arrangement.