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EXHIBIT 4.37
________________________________________________________________________________
PARTICIPATION AGREEMENT
dated as of August 1, 1995
among
SOUTHWEST AIRLINES CO.,
Lessee,
AMSOUTH LEASING CORPORATION,
Owner Participant,
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
Original Loan Participant
SHAWMUT BANK CONNECTICUT, NATIONAL ASSOCIATION,
in its individual capacity only
as expressly provided herein and
otherwise solely as Owner Trustee,
and
WILMINGTON TRUST COMPANY,
in its individual capacity and as Indenture Trustee
__________________________
One Boeing Model 000-0X0 Xxxxxxxx
XXXXXXXXX XXXXXXXX 0000 TRUST N604SW
________________________________________________________________________________
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TABLE OF CONTENTS
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SECTION 1. Certain Definitions; Participations in Lessor's Cost of the Aircraft . . . . . . . . . . . . 2
SECTION 2. Lessee's Notice of Delivery Date; Closing Procedures . . . . . . . . . . . . . . . . . . . . 3
SECTION 3. Instructions to the Owner Trustee and Indenture Trustee . . . . . . . . . . . . . . . . . . . 5
SECTION 4. Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(a) Conditions Precedent to the Participations in the
Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(i) Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(ii) No Change in Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
(iii) Original Loan Participant's Commitment . . . . . . . . . . . . . . . . . . . 6
(iv) Owner Participant's Commitment . . . . . . . . . . . . . . . . . . . . . . . 7
(v) Authorization, Execution and Delivery of Documents . . . . . . . . . . . . . 7
(vi) UCC-1's . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
(vii) Proof of Corporate Action, Etc . . . . . . . . . . . . . . . . . . . . . . . 8
(viii) Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(ix) Title, Registration, Airworthiness, Etc. . . . . . . . . . . . . . . . . . . 9
(x) Representations and Warranties Accurate; No Event of
Default; No Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . 10
(xi) Opinions of Lessee's Counsel . . . . . . . . . . . . . . . . . . . . . . . . 10
(xii) [Intentionally omitted.] . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(xiii) Opinion of Owner Trustee's Counsel . . . . . . . . . . . . . . . . . . . . . 10
(xiv) Opinions of Owner Participant's Counsel . . . . . . . . . . . . . . . . . . . 10
(xv) Opinion of Oklahoma City Counsel . . . . . . . . . . . . . . . . . . . . . . 10
(xvi) Opinion of Indenture Trustee's Counsel . . . . . . . . . . . . . . . . . . . 10
(xvii) Opinion of Original Loan Participant's Counsel . . . . . . . . . . . . . . . 11
(xviii) Lessee's Bringdown Certificate . . . . . . . . . . . . . . . . . . . . . . . 11
(xix) Guarantor's Financial Statements . . . . . . . . . . . . . . . . . . . . . . 11
(xx) Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(xxi) Insurance Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(xxii) No Event of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(xxiii) No Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(xxiv) Bringdown of Other Parties' Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
(xxv) Opinion of Owner Participant's Tax Counsel . . . . . . . . . . . . . . . . . 12
(xxvi) No Tax Law Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(xxvii) Lender Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
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(xxviii) Withholding Tax Forms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(b) Conditions Precedent to the Obligations of Lessee . . . . . . . . . . . . . . . . . . 13
SECTION 5. Confidentiality of Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 6. Extent of Interest of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 7. Lessee's Representations and Warranties; Indemnities . . . . . . . . . . . . . . . . . . . . 14
(a) In General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
(i) Organization, Citizenship, Etc. . . . . . . . . . . . . . . . . . . . . . . . 15
(ii) Corporate Authorization, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 15
(iii) Governmental Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(iv) Valid Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
(v) No Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(vi) Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(vii) Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(viii) Registration and Recordation . . . . . . . . . . . . . . . . . . . . . . . . 16
(ix) Chief Executive Office . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
(x) Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(xi) No Misstatement or Omission . . . . . . . . . . . . . . . . . . . . . . . . . 17
(xii) Investment Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(xiii) No Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(xiv) Effective Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(xv) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
(xvi) Title to Aircraft, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(xvii) Condition of Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(xviii) Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(xix) No Federal Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(xx) Section 1110 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
(b) General Tax Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(i) Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(ii) Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
(iii) Calculation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
(iv) Notice and Contest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(v) Withholdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(c) General Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(i) Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(ii) Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(iii) Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(iv) Right to Defend; Subrogation; Fees and Expenses of
Trustees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
(d) Owner Participant's Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(e) Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(f) Interest on Overdue Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
(g) Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
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SECTION 8. Other Representations, Warranties, Covenants and Indemnities . . . . . . . . . . . . . . . . 28
(a) Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(b) Citizenship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(c) Chief Executive Office of SBC . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(d) Securities Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(e) [Intentionally Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
(f) Owner Participant's Representations and Warranties . . . . . . . . . . . . . . . . . . 29
(g) Lessor Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(h) Indenture Trustee Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
(i) Termination Instructions to Owner Trustee . . . . . . . . . . . . . . . . . . . . . . 31
(j) Excess Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(k) Representations and Warranties of Indenture Trustee in Individual
Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
(l) Transfers of Equity Interests; Rights of Owner Participant and
Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
(m) Obligations of Trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(n) Compliance with Trust Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(o) ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
(p) SBC's Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 34
(q) Owner Participant's Lease Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(r) Lessee's Assumption of Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(s) [Intentionally Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(t) [Intentionally Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(u) Lease Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(v) Revocation of Trust Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
(w) [Intentionally Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(x) Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
(y) Discharge of Trust Indenture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(z) Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(aa) Special Purchase Option. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
(bb) Transfers of Debt Interests. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(cc) [Intentionally Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(dd) Deferred Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
(ee) Lessee as Pricing Agent for Certificate . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 9. Payments to Lessee of Trust Indenture Monies . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 10. Other Documents; Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 11. Certain Covenants of Lessee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(a) Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
(b) Filing and Recording, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(c) FAA Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(d) Annual Compliance Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
(e) Engine Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
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(f) Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
(g) Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(h) Certificate Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
(i) No Certificate Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 12. Ownership of Aircraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 13. Notices; Consent to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 14. Change of Situs of Owner Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 15. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(a) Consents under Lease and Trust Indenture . . . . . . . . . . . . . . . . . . . . . . . 46
(b) Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(c) Counterparts; Waivers; Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 46
(d) No Recourse Against Owner Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 46
(e) Duties Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(f) Binding on Parties and Successors . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(g) Enforceability Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(h) Quiet Enjoyment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 16. Transaction Costs; Invoices and Payment of Expenses . . . . . . . . . . . . . . . . . . . . . 47
SECTION 17. Optional Redemption of Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 18. Interim Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 19. Section 1110 Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SCHEDULE I
Names and Addresses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
SCHEDULE II
Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-3
EXHIBIT A
Form of Guaranty
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PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT dated as of August 1, 1995 (the
"Agreement") is among (i) SOUTHWEST AIRLINES CO., a Texas corporation
("Lessee"), (ii) AMSOUTH LEASING CORPORATION, an Alabama corporation (the
"Owner Participant"), (iii) TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a
national banking association (the "Original Loan Participant"), (iv) SHAWMUT
BANK CONNECTICUT, NATIONAL ASSOCIATION, a national banking association, in its
individual capacity, only as expressly provided herein (in such capacity,
"SBC") and otherwise, solely as Owner Trustee under the Trust Agreement (in
such capacity, the "Owner Trustee"), and (v) WILMINGTON TRUST COMPANY, a
Delaware banking corporation, in its individual capacity and as Indenture
Trustee under the Trust Indenture (the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS, pursuant to the Purchase Agreement (such capitalized
term and other capitalized terms used herein without definition being defined
in Section 1 hereof) between Lessee and the Manufacturer, the Manufacturer has
agreed to sell to Lessee, among other things, certain Boeing Model 737-3H4
aircraft, one of which having U.S. Registration No. N604SW and Manufacturer's
serial number 27955 has been recently purchased by Lessee and is the subject of
this Agreement; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant is entering into the Trust Agreement pursuant
to which Trust Agreement the Owner Trustee agrees, among other things, to hold
the Trust Estate defined in Section 1.01 thereof (the "Trust Estate") for the
use and benefit of the Owner Participant; and
WHEREAS, concurrently with the execution and delivery of this
Agreement,
(i) Lessee and the Owner Trustee are
entering into the Purchase Agreement Assignment whereby Lessee agrees
to assign to the Owner Trustee certain rights and interests of Lessee
under the Purchase Agreement with respect to the Aircraft; and
(ii) the Manufacturer has executed the
Manufacturer's Consent with respect to the Purchase Agreement
Assignment; and
WHEREAS, the Indenture Trustee and the Owner Trustee
concurrently with the execution and delivery of this Agreement are entering
into the Trust Indenture pursuant to which the Owner Trustee agrees, among
other things, to issue one or more Certificates as evidence of the Owner
Trustee's indebtedness to the Holders, which Certificates are to be secured by
the mortgage and security interest in, among other things, the Aircraft created
pursuant to the Trust Indenture by the Owner Trustee in favor of the Indenture
Trustee, and the Owner Trustee shall execute and deliver the Trust Supplement
covering the Aircraft, supplementing the Trust Agreement and the Trust
Indenture; and
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WHEREAS, as described in Section 2 hereof, the Owner Trustee
and Lessee are entering into the Lease whereby, subject to the terms and
conditions set forth therein, the Owner Trustee agrees to purchase the Aircraft
from Lessee and to lease the same back to Lessee, and Lessee agrees to sell the
Aircraft to the Owner Trustee and to lease the same back from the Owner
Trustee;
NOW THEREFORE, in consideration of the mutual agreements
herein contained, the parties hereto agree as follows:
SECTION 1. Certain Definitions; Participations in
Lessor's Cost of the Aircraft. (a) The terms "Lessee," "Owner Participant,"
"Original Loan Participant," "Owner Trustee" and "Indenture Trustee" shall have
the further meanings attributed thereto in the Sale and Lease Agreement dated
as of the date hereof (the "Lease") between the Owner Trustee and Lessee
relating to the Aircraft referred to in the first recital herein, and, except
as otherwise defined in this Agreement, terms used herein in capitalized form
shall have the meanings attributed thereto in the Lease or the Trust Indenture.
The term "Trust Supplement" has the meaning attributed to the term "Indenture
and Trust Supplement" in the Lease and to the term "Trust Supplement" in the
Trust Indenture. The terms "Indenture Estate," "Outstanding," "Permitted
Investments," "Register" and "Trust Office" shall have the meanings set forth
in the Trust Indenture, and the term "Trust Estate" shall have the meaning set
forth in the Trust Agreement. Unless the context otherwise requires, any
reference herein to any of the Operative Agreements refers to such document as
it may be amended from time to time in accordance with its terms and the terms
of each other agreement restricting the amendment thereof.
(b) Subject to the terms and conditions of this
Agreement, (i) the Original Loan Participant agrees to finance, in part, the
Owner Trustee's payment of Lessor's Cost for the Aircraft by making a secured
loan to the Owner Trustee (herein called the "Loan") on a date to be designated
pursuant to Section 2 hereof, but in no event later than September 30, 1995, in
the amount in Dollars equal to the percentage of Lessor's Cost set forth
opposite its name on Schedule II hereto and (ii) the Owner Participant hereby
agrees, in connection with its equity investment in the beneficial ownership of
the Aircraft and the sale of the Aircraft by Lessee to the Owner Trustee
pursuant to the Lessee FAA Xxxx of Sale and Lessee Warranty Xxxx of Sale, as
contemplated hereby, to make its equity investment in the beneficial ownership
of the Aircraft on a date to be designated pursuant to Section 2 hereof, but in
no event later than September 30, 1995, in an amount in Dollars equal to the
percentage of Lessor's Cost set forth opposite its name on Schedule II hereto.
In the case of the Owner Participant, the amount of its participation to be
made as provided above in the payment of Lessor's Cost and, in the case of the
Original Loan Participant, the aggregate principal amount of the Series SWA
1995 Trust N604SW-I Certificate to be simultaneously issued to it, is
hereinafter called such Participant's "Commitment" for the Aircraft. In case
either Participant shall default in its obligation to make the amount of its
Commitment available pursuant to Section 2 hereof in respect of the Aircraft,
the other Participant shall have no obligation to make any portion of such
Commitment available or to increase the amount of its Commitment and the
obligation of the nondefaulting Participant shall remain subject to the terms
and conditions set forth in this Agreement.
(c) In the event that either Participant shall for any
reason fail or refuse to make the full amount of its Commitment available to
the Owner Trustee in accordance with the terms of paragraph (b) of this Section
1 (such Participant, for the purpose of this Agreement, being called a
"Defaulting Participant"), the Owner Trustee shall give, at the earliest
practicable time (which may
PARTICIPATION AGREEMENT [N604SW]
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be the next Business Day), each party hereto telephonic notice (to be confirmed
promptly in writing) of such failure or refusal and the funds received by the
Owner Trustee in connection with the Aircraft will be held in accordance with
the terms of, and for the period provided in, paragraph (b) of Section 2. In
such event the Defaulting Participant will have no further right to participate
in, or make a loan for, as the case may be, the payment of Lessor's Cost for
the Aircraft. Lessee shall have the right to designate a financial institution
(which term, as used in this paragraph (c), shall mean any banking or financial
institution, institutional investor or fund which is not affiliated with Lessee
or with Owner Participant) to be substituted for the Defaulting Participant;
provided, however, that (i) such substituted financial institution shall sign
and deliver an amendment to this Agreement, in form and substance satisfactory
to the Owner Trustee, the Indenture Trustee and the remaining Participant,
whereby such financial institution agrees to be a party to this Agreement, to
be bound by all the terms hereof and to undertake all the obligations of the
Defaulting Participant contained herein, other than obligations, if any,
arising from the aforesaid failure or refusal by such Defaulting Participant,
(ii) if the Defaulting Participant is Owner Participant (A) such substituted
financial institution shall have been approved by the Original Loan
Participant, (B) each such substituted financial institution shall be domiciled
in the United States and shall be a citizen of the United States within the
meaning of the Act and shall have the requisite power and authority to enter
into and carry out the transactions contemplated by this Agreement and the
Trust Agreement, (C) such substituted financial institution shall enter into
amendments to the Trust Agreement, in form and substance satisfactory to the
Owner Trustee, the Indenture Trustee and the Original Loan Participant, whereby
such substituted financial institution agrees to be a party to the Trust
Agreement, to be bound by all the terms thereof and to undertake all the
obligations of the Defaulting Participant contained therein, and (D) the
substitution of such substituted financial institution as above provided shall
not violate any provisions of the Act or the regulations promulgated
thereunder, or create a relationship which would be in violation thereof and
such substituted financial institution shall so represent in writing to each
other party hereto, and (iii) if the Defaulting Participant is the Original
Loan Participant, such substituted financial institution shall be approved in
writing by Owner Participant. No action by Lessee in finding a financial
institution to be substituted as above provided shall be deemed to constitute a
waiver or release of any right which Lessee may have against the Defaulting
Participant. Each financial institution substituted for the Original Loan
Participant pursuant to this paragraph (c) shall be deemed the Original Loan
Participant for all purposes of this Agreement; and each financial institution
substituted for the Owner Participant pursuant to this paragraph (c) shall
(collectively, if more than one) be deemed the Owner Participant for all
purposes of this Agreement.
SECTION 2. Lessee's Notice of Delivery Date;
Closing Procedures. (a) Lessee agrees to give the Owner Participant, the Owner
Trustee, the Original Loan Participant and the Indenture Trustee at least three
(3) Business Days' written notice of the Delivery Date for the Aircraft, which
Delivery Date shall be a Business Day not later than September 30, 1995, which
notice shall specify (i) the amount of Lessor's Cost, (ii) the amount of each
Participant's Commitment for the Aircraft, and (iii) the model and FAA
registration number of the Aircraft and the manufacturer's serial numbers of
the Airframe and each Engine. As to each Participant, the making of its
Commitment for such Aircraft available in the manner required by this Section 2
shall constitute a waiver of such notice. The Owner Trustee and the Indenture
Trustee shall be deemed to have waived such notice if the Owner Trustee shall
have received from the Owner Participant funds in the full amount of the Owner
Participant's Commitment and the proceeds of the sale of the Series SWA 1995
Trust N604SW-I Certificate in the full amount of the Original Loan
Participant's Commitment.
PARTICIPATION AGREEMENT [N604SW]
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Subject to the terms and conditions of this Agreement, and
simultaneously with receipt by the parties hereto of all amounts to be paid to
them on the Delivery Date pursuant to this Section 2, Lessee shall transfer
title to and deliver the Aircraft to the Owner Trustee, the Owner Trustee shall
purchase and take title to, and accept delivery of, the Aircraft, and the Owner
Trustee shall lease the Aircraft to Lessee, it being understood that the
transactions described in this Section 2 are simultaneous and mutually
dependent. The Owner Trustee shall issue and the Indenture Trustee shall
authenticate the Series SWA 1995 Trust N604SW-I Certificates which shall be
delivered simultaneously to the Original Loan Participant. On the Delivery
Date, subject to the terms and conditions of this Agreement, and in
consideration for the transfer of title to the Aircraft to the Owner Trustee,
the Owner Trustee shall pay over the funds made available to it pursuant to the
succeeding paragraph to Lessee in an aggregate amount equal to Lessor's Cost to
Lessee's Account No. 00000000 at Bank One, Dallas, N.A., ABA No. 000000000,
0000 Xxxx Xxxxxx, Xxxxxx, Xxxxx.
The Original Loan Participant and the Owner Participant each
agree to make its Commitment available to Shawmut Bank Connecticut, National
Association, Hartford, Connecticut, Account No. 0067548290, ABA No.
000-000-000, Reference: Southwest Airlines 1995 Trust N604SW, at or before
10:00 a.m. Dallas time, on the Delivery Date specified in Lessee's notice
referred to in the first paragraph of this Section 2 (such specified Delivery
Date being herein called the "Scheduled Delivery Date").
(b) If for any reason whatsoever the closing of the
transactions contemplated hereby is not consummated on the Scheduled Delivery
Date, Lessee may by telephonic notice given by 4:30 p.m., New York City time,
on the Scheduled Delivery Date to each Participant, the Owner Trustee and the
Indenture Trustee designate a delayed date for such closing (the "Delayed
Delivery Date"), not later than the fifth Business Day after the Scheduled
Delivery Date and in no event later than September 30, 1995. In the event that
no Delayed Delivery Date is designated or, if designated, such closing does not
occur on the Delayed Delivery Date, or if any Participant shall so request,
such funds of each Participant shall be promptly returned to it by the Owner
Trustee or the Indenture Trustee, as the case may be.
If the closing of the transactions contemplated hereby is not
consummated on the Scheduled Delivery Date, Lessee will reimburse each
Participant which has made its funds available pursuant to this Section 2 for
the loss of the use of its funds by paying to such Participant a sum equal to
interest on such funds at the Applicable Rate (as defined below) on the amount
for the period from and including the Scheduled Delivery Date to but excluding
the Delayed Delivery Date, or, as the case may be, to but excluding the
Business Day on which such Participant's funds are returned if such return is
made by 10:00 a.m. (New York City time) or to but excluding the next following
Business Day if such return is not made by such time and, in the case of the
Original Loan Participant, for the Break Amount, if any, applicable to the
Series SWA 1995 Trust N604SW-I Certificate.
"Applicable Rate" shall mean with respect to the Owner
Participant the Federal Funds Effective Rate and, with respect to the Original
Loan Participant, the rate per annum borne by the Series SWA 1995 Trust
N604SW-I Certificates in respect of which such Original Loan Participant's
Commitment is made available. "Federal Funds Effective Rate" means, for any
period, a fluctuating interest rate per annum equal for each day during such
period to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
PARTICIPATION AGREEMENT [N604SW]
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federal funds brokers, as published on the succeeding Business Day by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for the day of such
transactions received by the Owner Participant from three federal funds brokers
of recognized standing selected by it; provided, that the "Federal Funds
Effective Rate" for any non-Business Day shall be the "Federal Funds Effective
Rate" for the previous Business Day.
SBC agrees that in the event it has received telephonic notice
(to be confirmed promptly in writing) from Lessee on the Scheduled Delivery
Date that the closing of the transactions contemplated hereby will not be
consummated on the Scheduled Delivery Date, it will, if instructed in the
notice from Lessee in regard to the funds received by it from the Participants,
use reasonable efforts to invest, at the risk, expense and direction of Lessee,
the funds received by it from the Participants in marketable direct obligations
of the United States of America or obligations of any of its agencies that are
guaranteed as to principal and interest by the United States of America, in any
such case having a stated maturity not later than 91 days from the date of
acquisition. Any such investment may be made through a repurchase agreement in
commercially reasonable form with SBC or a bank or other financial institution
having capital, surplus and undivided profits of at least $100,000,000;
provided, that title to the underlying obligations shall pass to SBC and that
such underlying securities shall be segregated in a custodial or trust account.
Any such obligations purchased by SBC, whether directly or through a repurchase
agreement, shall be so held in trust by SBC (but not as part of the Trust
Estate or Trust Indenture Estate) for the benefit of the respective
Participant. Lessee shall, on the Delayed Delivery Date or the date the funds
furnished by the Participants are required to be returned to the Participants,
as the case may be, reimburse SBC for the benefit of the respective
Participant, for any losses incurred on such investments.
All income and profits on the investment of such funds not in
excess of the Applicable Rate shall be for the respective accounts of the
Participants (such income and profits to be credited against Lessee's
obligation to reimburse the Participants for the loss of use of funds made
available to SBC) and all other income and profits and all losses on the
investment of such funds shall be for the account of Lessee; and SBC shall not
be liable for failure to invest such funds or for any losses incurred on such
investments except for its own willful misconduct or negligence.
SECTION 3. Instructions to the Owner Trustee and
Indenture Trustee. Subject to the terms and conditions of this Agreement, the
Owner Trustee, upon its receipt in full of the Owner Participant's and the
Original Loan Participant's Commitment for the Aircraft, as provided in Section
2 hereof, together with instructions from such Participant or its special
counsel to release such funds to Lessee, shall transfer such funds to Lessee
and the Owner Trustee shall purchase the Aircraft from Lessee and lease the
Aircraft to Lessee and such action shall constitute, without further act,
authorization and direction by the Owner Participant to the Owner Trustee:
(a) to pay to Lessee (on behalf of the Owner Trustee) the
Lessor's Cost in the manner set forth in Section 2;
(b) to the extent not previously accomplished by a prior
authorization, to authorize a representative or representatives of the Owner
Trustee (who shall be an employee or employees, or an agent or agents, of
Lessee designated by Lessee) to accept delivery of the Aircraft on the Delivery
Date;
PARTICIPATION AGREEMENT [N604SW]
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(c) to accept from Lessee the Lessee Warranty Xxxx of
Sale and the Lessee FAA Xxxx of Sale and the invoice with respect to the
Aircraft;
(d) to execute an aircraft registration application, a
Lease Supplement and a Trust Supplement, in each case covering the Aircraft;
(e) to borrow the Loan from the Original Loan Participant
to finance a portion of Lessor's Cost and to issue to the Original Loan
Participant a Series SWA 1995 Trust N604SW-I Certificate in a principal amount
equal to the amount borrowed pursuant to the Trust Indenture; and
(f) to take such other action as may be required to be
taken by the Owner Trustee on the Delivery Date by the terms of any Operative
Agreement.
SECTION 4. Conditions. (a) Conditions Precedent to
the Participations in the Aircraft. It is agreed that the respective
obligations of the Participants to participate in the payments of Lessor's Cost
are subject to the satisfaction prior to or on the Delivery Date of the
following conditions precedent, except that paragraphs (iii), (xx), (xxiv)
(insofar as it relates to the Original Loan Participant), (xxv) and (xxvi)
shall not be a condition precedent to the obligation of the Original Loan
Participant, and paragraphs (iv), (x) (insofar as it relates to the Owner
Participant), (xiv), (xvii), (xix), (xxiv) (insofar as it relates to the Owner
Participant) and (xxvii) shall not be a condition precedent to the obligation
of the Owner Participant:
(i) Notice. Each Participant shall have
received due notice with respect to such participation pursuant to
Section 2 hereof (or shall have waived such notice either in writing
or as provided in Section 2).
(ii) No Change in Law. No change shall have
occurred after the date of the execution and delivery of this
Agreement in applicable law or regulations thereunder or
interpretations thereof by appropriate regulatory or judicial
authorities which, in the opinion of the Owner Participant or the
Original Loan Participant, as the case may be, would make it a
violation of law or regulations for (x) Lessee, the Indenture Trustee,
any Participant or the Owner Trustee to execute, deliver and perform
the Operative Agreements to which any of them is a party or (y) the
Original Loan Participant or the Owner Participant to make its
Commitment available or, in the case of the Original Loan Participant,
to acquire the Series SWA 1995 Trust N604SW-I Certificate or to
realize the benefits of the security afforded by the Trust Indenture.
(iii) Original Loan Participant's Commitment.
In the case of the Owner Participant, the Original Loan Participant
shall have made available the amount of its Commitment for the
Aircraft in accordance with Section 1 hereof.
(iv) Owner Participant's Commitment. In the
case of the Original Loan Participant, the Owner Participant shall
have made available the amount of its Commitment for the Aircraft in
accordance with Section 1 hereof.
(v) Authorization, Execution and Delivery of
Documents. The following documents shall have been duly authorized,
executed and delivered by the
PARTICIPATION AGREEMENT [N604SW]
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respective party or parties thereto, shall each be satisfactory in
form and substance to the Participants and shall be in full force and
effect and executed counterparts shall have been delivered to each
Participant and its respective counsel; provided, that only the
Original Loan Participant shall receive an executed original of the
Series SWA 1995 Trust N604SW-I Certificate, only the Indenture
Trustee, acting on behalf of the Holders, shall receive the original
counterpart of the Lease and the initial Lease Supplement, and only
Lessee and the Owner Participant shall receive copies of the Tax
Indemnity Agreement:
(1) the Lease;
(2) a Lease Supplement covering
the Aircraft and dated the Delivery Date;
(3) the Tax Indemnity Agreement;
(4) the Trust Agreement;
(5) a Trust Supplement covering
the Aircraft and dated the Delivery Date;
(6) the Bills of Sale and an
invoice from Lessee specifying the Lessor's Cost and dated the
Delivery Date;
(7) the Purchase Agreement
Assignment;
(8) an acceptance certificate
covering the Aircraft in the form agreed to by the
Participants and Lessee (the "Acceptance Certificate") duly
completed and executed by the Owner Trustee or its agent,
which shall be a representative of Lessee, and by such
representative on behalf of Lessee;
(9) the Trust Indenture;
(10) the Series SWA 1995 Trust
N604SW-I Certificate;
(11) the Manufacturer's Consent;
and
(12) the Guaranty.
(vi) UCC-1's. Uniform Commercial Code
financing statement or statements covering all of the security
interests created by or pursuant to the Granting Clause of the Trust
Indenture and precautionary Uniform Commercial Code financing
statement or statements with respect to the Lease shall have been
executed and delivered, and all such financing statement or statements
shall have been duly filed in all places necessary or advisable, and
any additional Uniform Commercial Code financing statements deemed
advisable by the Owner Participant or the Original Loan Participant
shall have been executed and delivered by Lessee, the Indenture
Trustee or the Owner Trustee and duly filed.
PARTICIPATION AGREEMENT [N604SW]
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(vii) Proof of Corporate Action, Etc. Each
Participant and the Indenture Trustee shall have received the
following, in each case in form and substance satisfactory to it:
(1) a certified copy of the
Restated Articles of Incorporation and Bylaws of Lessee and a
copy of resolutions of the board of directors of Lessee or the
executive committee thereof, certified by the Secretary or an
Assistant Secretary of Lessee, duly authorizing the execution,
delivery and performance by Lessee of this Agreement, the
Lease, the Purchase Agreement Assignment, the Lessee Warranty
Xxxx of Sale, the Lessee FAA Xxxx of Sale, the Tax Indemnity
Agreement and each other document required to be executed and
delivered by Lessee on the Delivery Date in accordance with
the provisions hereof and thereof;
(2) such other documents and
evidence with respect to Lessee, the Manufacturer, the Owner
Trustee, the Indenture Trustee and the Participants, as the
Original Loan Participant or the Owner Participant, or their
respective counsel, may reasonably request in order to
establish the authority of such parties to consummate the
transactions contemplated by this Agreement, the taking of all
corporate proceedings in connection therewith and the
compliance with the conditions herein set forth;
(3) a certificate of Lessee as
to the person or persons authorized to execute and deliver
this Agreement, the other Lessee Documents, and any other
documents to be executed on behalf of Lessee in connection
with the transactions contemplated hereby and as to the
signature of such person or persons;
(4) a copy of the Purchase
Agreement (to the Owner Participant and the Indenture Trustee
only) certified by the Treasurer, the Assistant Treasurer or
an Assistant Secretary of Lessee as being a true and accurate
copy of the same with all amendments attached thereto that
relate to the Manufacturer's warranties or related obligations
or any right in such Agreement assigned by Lessee to the Owner
Trustee pursuant to the Purchase Agreement Assignment; and
(5) a copy of the general
authorizing resolutions of the boards of directors (or
executive committees) or other satisfactory evidence of
authorization of the Indenture Trustee (in its individual
capacity), SBC and the Owner Participant, certified as of the
Delivery Date by the Secretary or an Assistant Secretary of
the Indenture Trustee (in its individual capacity), SBC and
the Owner Participant, respectively, which authorize the
execution, delivery and performance by the Indenture Trustee
(in its individual capacity), SBC and the Owner Participant,
respectively, of all of the Operative Agreements to which it
is a party, together with such other documents and evidence
with respect to the Indenture Trustee (in its individual
capacity), SBC and the Owner Participant as either the
Original Loan Participant (or its counsel) or the Owner
Participant (or its counsel) may reasonably request in order
to establish the consummation of the transactions contemplated
by this Agreement, the taking of all corporate proceedings in
connection therewith and compliance with the conditions herein
set forth; provided, this clause shall not be a
PARTICIPATION AGREEMENT [N604SW]
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condition precedent as to any Participant as to documents to
be provided by that Participant.
(viii) Governmental Approvals. All appropriate
action required to have been taken by the Federal Aviation
Administration, or any other governmental or political agency,
subdivision or instrumentality of the United States, prior to the
Delivery Date in connection with the transactions contemplated by this
Agreement shall have been taken, and all orders, permits, waivers,
authorizations, exemptions and approvals of such entities required to
be in effect on the Delivery Date in connection with the transactions
contemplated by this Agreement shall have been issued, and all such
orders, permits, waivers, authorizations, exemptions and approvals
shall be in full force and effect on the Delivery Date.
(ix) Title, Registration, Airworthiness, Etc.
On the Delivery Date, the following statements shall be true, and the
Participants, the Owner Trustee and the Indenture Trustee shall have
received evidence satisfactory to each of them to the effect that:
(1) the Owner Trustee has good
and marketable title (subject to filing and recording of the
Lessee FAA Xxxx of Sale with the Federal Aviation
Administration in accordance with the Act) to the Aircraft,
free and clear of Liens other than the rights of Lessee under
the Lease and Lease Supplement covering the Aircraft, the
mortgage and security interest created by the Trust Indenture,
the rights of the Owner Participant under the Trust Agreement
and the Trust Supplement and Liens permitted by clause (d)
(solely for taxes not yet due) or (e) of Section 6 of the
Lease;
(2) application for registration
of the Aircraft in the name of the Owner Trustee (together
with any required affidavits), the FAA Xxxx of Sale and the
Lessee FAA Xxxx of Sale have been duly filed with the FAA;
(3) the Trust Agreement, the
Trust Indenture and the Trust Supplement and the Lease and the
Lease Supplement have been duly filed with the FAA for
recordation pursuant to the Act;
(4) each of the Owner Trustee,
as lessor under the Lease, and the Indenture Trustee, as
assignee thereof, is entitled to the protection of Section
1110 of the United States Bankruptcy Code in connection with
its right to take possession of the Airframe and Engines in
the event of a case under Chapter 11 of the United States
Bankruptcy Code in which Lessee is a debtor; and
(5) the Aircraft has been duly
certificated by the FAA as to type and airworthiness in
accordance with the terms of the Lease and has a current,
valid U.S. standard certificate of airworthiness issued by the
FAA.
(x) Representations and Warranties Accurate;
No Event of Default; No Adverse Change. On the Delivery Date, (A) the
representations and warranties of Lessee contained in Section 7 hereof
and in the Tax Indemnity Agreement shall be true and accurate as
though made on and as of such date except to the extent that such
representations and
PARTICIPATION AGREEMENT [N604SW]
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warranties relate solely to an earlier date (in which case such
representations and warranties shall be true and accurate on and as of
such earlier date), (B) no event shall have occurred and be
continuing, or would result from the purchase, sale, lease or mortgage
of the Aircraft, which constitutes (or would, with the passage of time
or the giving of notice or both, constitute) a Lease Event of Default
or an Indenture Event of Default, and (C) no material adverse change
shall have occurred in the consolidated financial condition of Lessee
and its subsidiaries from that shown in the consolidated financial
statements of Lessee and its subsidiaries as of June 30, 1995.
(xi) Opinions of Lessee's Counsel. Each
Participant shall have received a favorable opinion, in form and
substance satisfactory to it, addressed to the Participants, the
Indenture Trustee and the Owner Trustee from Xxxxxxx Xxxxxxxx,
Associate General Counsel for Lessee.
(xii) [Intentionally omitted.]
(xiii) Opinion of Owner Trustee's Counsel.
Each Participant shall have received a favorable opinion, in form and
substance satisfactory to it, addressed to the Participants, the
Indenture Trustee, the Owner Trustee and Lessee, from Xxxxxxx &
Xxxxxxx, counsel for the Owner Trustee.
(xiv) Opinions of Owner Participant's Counsel.
The Original Loan Participant shall have received a favorable opinion,
in form and substance satisfactory to it, addressed to the Indenture
Trustee, the Original Loan Participant, the Owner Trustee and Lessee
from (a) Xxxxxxxxxx & Xxxxx LLP, special counsel to the Owner
Participant, and (b) in-house or other counsel for the Owner
Participant in a position to address the Owner Participant's due
incorporation and due authorization and execution of the Operative
Agreements to which the Owner Participant is a party.
(xv) Opinion of Oklahoma City Counsel. Each
Participant shall have received a favorable opinion, in form and
substance satisfactory to it, addressed to the Participants, the
Indenture Trustee, the Owner Trustee and Lessee, from Xxxxxxxxx,
Xxxxxx & Xxxxxxxx, special counsel in Oklahoma City, Oklahoma.
(xvi) Opinion of Indenture Trustee's Counsel.
Each Participant shall have received a favorable opinion, in form and
substance satisfactory to it, addressed to the Participants, the Owner
Trustee and Lessee from Potter Xxxxxxxx & Xxxxxxx, special counsel for
the Indenture Trustee.
(xvii) Opinion of Original Loan Participant's
Counsel. The Original Loan Participant shall have received a
favorable opinion, in form and substance satisfactory to it, addressed
to it from Xxxxxxxx Xxxxxxxx & Xxxxxx P.C., special counsel to the
Original Loan Participant.
(xviii) Lessee's Bringdown Certificate. Each
Participant, and the Indenture Trustee shall have received a
certificate signed by the President, any Vice President, the Treasurer
or the Assistant Treasurer of Lessee, dated the Delivery Date,
certifying as to
PARTICIPATION AGREEMENT [N604SW]
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the fulfillment of all conditions in this Section 4(a) insofar as they
relate to Lessee and as to the matters stated in paragraphs (x)
(insofar as it relates to Lessee), (xxii) and (xxiii) (to the
knowledge of Lessee, except in regard to matters relating to the
Participants, the Indenture Trustee or the Owner Trustee, in which
event such representation shall be to the knowledge of Lessee without
any investigation whatsoever) of this Section 4(a).
(xix) Guarantor's Financial Statements.
Lessee, the Original Loan Participant, and the Indenture Trustee shall
have received copies of the June 30, 1995 call report of AmSouth Bank
of Alabama, the parent of the Owner Participant.
(xx) Appraisal. The Owner Participant shall
have received an opinion, in form and substance reasonably
satisfactory to the Owner Participant, from Aero Economics, Inc.,
independent aircraft appraisers, or such other recognized aircraft
appraiser selected by the Owner Participant.
(xxi) Insurance Certificates. Each
Participant, the Owner Trustee and the Indenture Trustee shall have
received an independent insurance broker's report and certificates of
insurance, in form and substance reasonably satisfactory to the
Participants, as to the due compliance with the terms of Section 11 of
the Lease relating to insurance with respect to the Aircraft.
(xxii) No Event of Loss. On the Delivery Date,
it shall be true that no Event of Loss (or event which with the
passage of time would become an Event of Loss) with respect to the
Airframe or any Engine has occurred.
(xxiii) No Proceedings. No action or proceeding
shall have been instituted, nor shall action or proceeding be
threatened before any court or governmental agency, nor shall any
order, judgment or decree have been issued or proposed to be issued by
any court or governmental agency at the time of the Delivery Date to
set aside, restrain, enjoin or prevent the completion and consummation
of this Agreement or the transactions contemplated hereby.
(xxiv) Bringdown of Other Parties'
Representations and Warranties. The respective representations and
warranties of each Participant, the Indenture Trustee and the Owner
Trustee contained in Section 8 hereof shall be true and accurate as of
the Delivery Date as though made on and as of such date except to the
extent that such representations and warranties relate solely to an
earlier date (in which event such representations and warranties shall
have been true and accurate on and as of such earlier date) and (a)
each Participant shall, by making its Commitment available as provided
in Section 1(b) of this Agreement, (b) the Indenture Trustee shall, by
authenticating the Series SWA 1995 Trust N604SW-I Certificate issued
on the Delivery Date, and (c) the Owner Trustee shall, by accepting
the Lessee Warranty Xxxx of Sale and the Lessee FAA Xxxx of Sale, be
respectively deemed to have reaffirmed as of the Delivery Date the
representations and warranties made by it (individually or in its
trust capacities, as the case may be) in Section 8 of this Agreement.
(xxv) Opinion of Owner Participant's Tax
Counsel. The Owner Participant shall have received from Xxxxxxxxxx &
Xxxxx LLP, special counsel to the Owner
PARTICIPATION AGREEMENT [N604SW]
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Participant, a favorable opinion, in form and substance satisfactory
to the Owner Participant, with respect to income tax aspects of the
transactions contemplated by the Operative Agreements.
(xxvi) No Tax Law Change. In the opinion of
the Owner Participant and its special counsel, no amendment,
modification, addition or change in or to the provisions of the Code
(including for this purpose, any non-Code provisions of legislation
affecting the Code such as transition rules or effective date
provisions), the regulations promulgated under the Code (including
temporary or proposed regulations), Internal Revenue Service Revenue
Procedures or Revenue Rulings, or other administrative
interpretations, applicable judicial precedents or Executive Orders of
the President of the United States shall have been made or proposed
after August 10, 1995 which might adversely affect the accuracy of the
Tax Assumptions set forth in Section 2 of the Tax Indemnity Agreement
or which might otherwise adversely affect the Owner Participant.
(xxvii) Lender Appraisal. The Original Loan
Participant shall have received an opinion from the Appraiser referred
to in paragraph (xx) above (without any tax-sensitive provisions) in
form and substance reasonably satisfactory to the Original Loan
Participant to the effect that the fair market value of the Aircraft
on the Delivery Date is at least equal to Lessor's Cost.
(xxviii) Withholding Tax Forms. If the Original
Loan Participant is required to execute any form or document in order
for payments to it to qualify for exemption from, or reduction of,
withholding tax imposed by the Government, in respect to such
payments, such Original Loan Participant shall have executed such form
or document (including, without limitation, United States Internal
Revenue Forms 1001, W-8 and/or 4224) and delivered it to the Indenture
Trustee in accordance with applicable regulations to qualify for such
exemption or reduction.
Promptly upon the registration of the Aircraft and the
recording of the Lease, the Trust Indenture, the Trust Agreement, the Lease
Supplement and the Trust Supplement covering the Aircraft pursuant to the
Federal Aviation Act, Lessee will request Xxxxxxxxx, Xxxxxx & Xxxxxxxx, special
counsel in Oklahoma City, Oklahoma, to deliver to the Owner Participant, the
Indenture Trustee, the Original Loan Participant, the Owner Trustee and Lessee
an opinion as to the due and valid registration of the Aircraft in the name of
the Owner Trustee, the due recording of the FAA Xxxx of Sale, the Lessee FAA
Xxxx of Sale, the Trust Indenture, the Lease Supplement, the Trust Supplement,
the Lease and the Trust Agreement and the lack of filing of any intervening
documents with respect to the Aircraft.
(b) Conditions Precedent to the Obligations of Lessee.
It is agreed that the obligations of Lessee (A) to sell the Aircraft to the
Owner Trustee, (B) to accept delivery of the Aircraft under the Lease, and (C)
to enter into its other Operative Agreements, are all subject to the
fulfillment to the satisfaction of Lessee prior to or on the Delivery Date of
the following conditions precedent:
PARTICIPATION AGREEMENT [N604SW]
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(i) The conditions specified in Sections
4(a)(iii), 4(a)(iv), 4(a)(viii), 4(a)(xxii), 4(a)(xxiii) and
4(a)(xxviii) hereof shall have been satisfied, unless such
nonsatisfaction is the result of the actions of Lessee.
(ii) Those documents described in Section
4(a)(v) shall have been duly authorized, executed and delivered by the
respective party or parties thereto (other than Lessee) in the manner
specified in Section 4(a)(v), shall each be satisfactory in form and
substance to Lessee, shall be in full force and effect on the Delivery
Date, and an executed counterpart of each thereof (other than the
Series SWA 1995 Trust N604SW-I Certificate) shall have been delivered
to Lessee or its counsel.
(iii) Lessee shall have received a copy of the
general authorizing resolutions of the boards of directors (or
executive committees) or other satisfactory evidence of authorization
of the Indenture Trustee (in its individual capacity), SBC and the
Owner Participant, certified as of the Delivery Date by the Secretary
or an Assistant Secretary of the Indenture Trustee (in its individual
capacity), SBC and the Owner Participant, respectively, which
authorize the execution, delivery and performance by the Indenture
Trustee (in its individual capacity), SBC and the Owner Participant,
respectively, of all the Operative Agreements to which it is a party,
together with such other documents and evidence with respect to the
Indenture Trustee (in its individual capacity), SBC and the Owner
Participant as Lessee or its counsel may reasonably request in order
to establish the consummation of the transactions contemplated by this
Agreement, the taking of all corporate proceedings in connection
therewith and compliance with the conditions herein set forth.
(iv) The representations and warranties of
each Participant, the Indenture Trustee and the Owner Trustee
contained in Section 8 hereof shall be true and accurate as of the
Delivery Date as though made on and as of such date except to the
extent that such representations and warranties relate solely to an
earlier date (in which event such representations and warranties shall
have been true and accurate on and as of such earlier date).
(v) Lessee shall have received the opinions
set forth in Sections 4(a)(xiii), 4(a)(xiv), 4(a)(xv) and 4(a)(xvi),
in each case addressed to Lessee and dated the Delivery Date.
(vi) No change shall have occurred after the
date of the execution and delivery of this Agreement in applicable law
or regulations thereunder or interpretations thereof by appropriate
regulatory or judicial authorities which, in the opinion of Lessee,
would make it a violation of law or regulations for Lessee to execute,
deliver or perform the Operative Agreements to which it is a party.
(vii) In the opinion of Lessee and its
counsel, there shall have been, since August 1, 1995, no amendment,
modification, addition or change in or to the Code (including for this
purpose, any non-Code provisions of legislation affecting the Code
such as transition rules or effective date provisions), the
regulations promulgated under the Code (including temporary or
proposed regulations), Internal Revenue Service Revenue Procedures or
Revenue Rulings, or other administrative interpretations, applicable
judicial precedents or
PARTICIPATION AGREEMENT [N604SW]
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Executive Orders of the President of the United States which might
give rise to an indemnity obligation under any of the Operative
Agreements, or as a result of which any adjustments to the Lease
payments are requested by the Owner Participant which would adversely
affect the accuracy of the Tax Assumptions set forth in Section 2 of
the Tax Indemnity Agreement.
SECTION 5. Confidentiality of Purchase Agreement.
The Owner Trustee, the Participants and the Indenture Trustee shall keep the
Purchase Agreement confidential and shall not disclose the same to any Person,
except (A) to prospective and permitted transferees of the Owner Trustee's, the
Original Loan Participant's, the Owner Participant's or the Indenture Trustee's
interest who agree to hold such information confidential, (B) to the
aforementioned prospective and permitted transferees', the Owner Trustee's, the
Original Loan Participant's, the Owner Participant's or the Indenture Trustee's
counsel or special counsel, independent insurance brokers or other agents who
agree to hold such information confidential, (C) as may be required by any
statute, court or administrative order or decree or governmental ruling or
regulation, or as may be necessary or reasonable in connection with matters
involving federal or state banking examiners, tax auditors or taxing
authorities, or (D) as may be necessary or desirable for purposes of protecting
the interest of any such Person or for enforcement of any Operative Agreement
by the Owner Trustee, the Original Loan Participant, the Owner Participant or
the Indenture Trustee; provided, however, that any disclosures of any part of
the Purchase Agreement which are permitted by clause (C) or (D) above shall be
made only to the extent necessary to meet the specific requirements or needs of
the Persons to whom such disclosures are hereby permitted.
SECTION 6. Extent of Interest of Holders. No
Holder shall have any further interest in, or other right with respect to, the
mortgage and security interests created by the Trust Indenture when and if the
outstanding principal amount of, Break Amount, if any, Premium, if any, and
interest on all Certificates held by such Holder and all other sums payable to
such Holder hereunder, under the Trust Indenture and under such Certificates
shall have been paid in full. Each Holder, by its acceptance of a Certificate,
agrees that it will look solely to the income and proceeds from the Trust
Indenture Estate to the extent available for distribution to such Holder as
provided in Section 2.09 of the Trust Indenture and that neither the Owner
Participant nor the Owner Trustee shall be personally liable to any Holder for
any amounts payable under the Certificates, the Trust Indenture, hereunder, or
under any other Operative Agreement (including, without limitation, amounts
payable as Premium or Break Amount), except as expressly provided in this
Agreement or (in the case of the Owner Trustee) in the Trust Indenture.
SECTION 7. Lessee's Representations and Warranties;
Indemnities. (a) In General. Lessee represents warrants, covenants and agrees
that:
(i) Organization, Citizenship, Etc. Lessee
(A) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Texas, (B) is a "citizen of
the United States" (as defined in Section 40102 of Title 49, U.S.C.)
holding an air carrier operating certificate issued by the Secretary
of Transportation pursuant to Chapter 447 of Title 49, U.S.C. for
aircraft capable of carrying 10 or more individuals or 6,000 pounds or
more of cargo, (C) has the corporate power and authority to carry on
its business as now conducted, to own or hold under lease its
properties and to enter into and perform its obligations under this
Agreement and the other Operative Agreements to which Lessee is or
will be a party, and (D) is duly qualified to do business as a foreign
corporation in good
PARTICIPATION AGREEMENT [N604SW]
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standing in each state in which the nature of its business makes such
qualification necessary or the failure to be so qualified or so to be
in good standing would have a material adverse effect on its business
or operations or would impair its ability to perform its obligations
under the Operative Agreements.
(ii) Corporate Authorization, Etc. The
execution, delivery and performance of this Agreement and the other
Operative Agreements to which Lessee is or will be a party (A) have
been duly authorized by all necessary corporate action on the part of
Lessee, (B) do not require any shareholder approval, or approval or
consent of any trustee or holders of indebtedness or obligations of
Lessee or of any lessor under any lease to Lessee except such as have
been duly obtained, and (C) do not and will not (1) contravene any
law, judgment, governmental rule, regulation or order applicable to or
binding on Lessee or any of its subsidiaries or the articles of
incorporation or by-laws of Lessee (each as amended to date), or (2)
contravene or result in any breach of, or constitute any default
under, or result in the creation of any Lien (other than Permitted
Liens) upon any property of Lessee under, its articles of
incorporation or by-laws, or any indenture, mortgage, chattel
mortgage, deed of trust, conditional sales contract, lease, note or
bond purchase agreement, license, bank loan, credit agreement or other
agreement to which Lessee is a party or by which it or its properties
may be bound or affected.
(iii) Governmental Approvals. Neither the
execution and delivery by Lessee of this Agreement or the other
Operative Agreements to which Lessee is or will be a party, nor the
consummation of any of the transactions by Lessee contemplated hereby
or thereby, requires the consent or approval of, the giving of notice
to, the registration with, or the taking of any other action in
respect of, the FAA, the DOT, the SEC, any court or any other federal,
state or foreign governmental authority or agency, except for (A)
routine filings of copies of such Operative Agreements with the SEC,
(B) the certification referred to in Section 4(a)(ix)(5), the
registration referred to in Section 4(a)(ix)(2) and the filings and
recordings referred to in Sections 4(a)(vi), 4(a)(ix)(1), 4(a)(ix)(2)
and 4(a)(ix)(3), and (C) such federal and state securities law
approvals or filings that will be required in connection with the
public offering, if any, of the Certificates.
(iv) Valid Agreements. This Agreement and
the other Operative Agreements to which Lessee is or will be a party,
as and when entered into, do or will, assuming due authorization,
execution and delivery by the party or parties thereto other than
Lessee, constitute legal, valid and binding obligations of Lessee
enforceable against Lessee in accordance with the respective terms
hereof and thereof.
(v) No Proceedings. There are no pending
or, to Lessee's knowledge, threatened actions or proceedings before
any court or administrative agency which, having regard to both the
size of the claim and the possibility of an adverse determination, are
likely to materially adversely affect the consolidated financial
condition of Lessee and its subsidiaries, or the ability of Lessee to
perform its obligations under this Agreement and the other Operative
Agreements to which Lessee is or will be a party.
(vi) Taxes. Lessee and its subsidiaries have
filed or caused to be filed all federal, state, local and foreign tax
returns which are required to be filed and have paid
PARTICIPATION AGREEMENT [N604SW]
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or caused to be paid all taxes shown to be due and payable on such
returns or on any assessment received by Lessee or any of its
subsidiaries to the extent that such taxes have become due and payable
(except to the extent being contested in good faith and by appropriate
proceedings and for the payment of which adequate provisions have been
made).
(vii) Financial Condition. The audited
consolidated financial statements of Lessee and its subsidiaries
contained in Lessee's Annual Report to Shareholders for the year ended
December 31, 1994 and the unaudited consolidated financial statements
of Lessee and its subsidiaries contained in Lessee's Quarterly Report
on Form 10-Q for the period ended June 30, 1995 (copies of each of
which have been furnished to each Participant) have been prepared in
accordance with generally accepted accounting principles, present
fairly, in all material respects, the consolidated financial position
of Lessee and its subsidiaries as of such dates and the consolidated
results of their operations and their cash flows for the periods then
ended, and since June 30, 1995, there has been no material adverse
change in such consolidated financial position.
(viii) Registration and Recordation. Except
for (A) the registration of the Aircraft with the FAA pursuant to the
Act in the name of Owner Trustee, (B) the filing for recordation of
the instruments referred to in Section 4(a)(ix)(2) and (3) and this
Agreement, if deemed necessary due to the incorporation by reference
in such other instruments of terms defined herein, (C) the filing of
the UCC financing statements referred to in Section 4(a)(vi) and
continuation statements at periodic intervals, (D) the taking of
possession by the Indenture Trustee of the original counterparts of
the Lease and the initial Lease Supplement, and (E) the affixation of
the nameplate referred to in Section 7.1.2 of the Lease, no further
action, including any filing or recording of any document (including
any financing statement in respect thereof under Article 9 of the
Uniform Commercial Code of any applicable jurisdiction), is necessary
or advisable in order to establish and perfect the right, title or
interest of Owner Trustee in the property constituting the Trust
Estate, or of Indenture Trustee in the property constituting the Trust
Indenture Estate, in any applicable jurisdiction within the United
States of America.
(ix) Chief Executive Office. The chief
executive office (as such term is defined in Article 9 of the UCC) of
Lessee is 0000 Xxxx Xxxxx Xxxxx, Xxxxxx, Xxxxx 00000, and Lessee
agrees to give the Participants, Owner Trustee and Indenture Trustee
10 days' prior written notice of any relocation of said chief
executive office from its present location.
(x) Securities Laws. Neither Lessee nor
anyone acting on behalf of Lessee 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 or the Trust
Indenture Estate, or any of the Certificates or any other interest in
or security under the Trust Indenture, or any similar interest or
security, 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 and not more than 27 other
leasing companies or other institutional investors (in the case of
such beneficial interest or securities), or six other institutional
investors (in the case of the Certificates and other similar interests
and securities) or (assuming the accuracy of the representations in
Sections 8(a), 8(d), 8(k)(vi) and 8(p)(viii))
PARTICIPATION AGREEMENT [N604SW]
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to any Person in violation of the Securities Act or applicable state
securities laws, or both, and Lessee will take no action which would
constitute or cause such violation.
(xi) No Misstatement or Omission. Neither
the financial statements referred to in Section 7(a)(vii) nor any
other documents furnished by Lessee to Owner Trustee, Indenture
Trustee, or any Participant in connection with the transactions
contemplated by this Agreement or the other Operative Agreements
contains any untrue statement of a material fact or omits a material
fact necessary to make the statements contained therein (in the case
of statements referred to in Section 7(a)(vii), as of the date made)
not misleading; there is no fact known by Lessee which Lessee has not
disclosed to such parties in writing which materially adversely
affects or, so far as Lessee can now reasonably foresee, will
materially adversely affect the ability of Lessee to carry on its
business and perform its obligations under this Agreement or the other
Operative Agreements to which it is a party.
(xii) Investment Company. Neither Lessee nor
any subsidiary of Lessee is an "investment company" or a company
controlled by an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
(xiii) No Event of Default. No Lease Event of
Default or Lease Default has occurred and is continuing under the
Lease.
(xiv) Effective Sale. On the Delivery Date,
the Aircraft will be situated in Texas and the sale of the Aircraft by
Lessee to Owner Trustee shall be complete and effective and not
voidable or void.
(xv) ERISA. Lessee has never sponsored,
maintained or made contributions to any defined benefit plan subject
to the provisions of Title IV of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), and (in reliance upon the
Participants' representations in Section 8(o)) the transactions
contemplated by this Agreement do not constitute a "prohibited
transaction" within the meaning of Section 406 of ERISA or Section
4975 of the Code for which an exemption is not available by statute,
regulation or class exemption. The execution and delivery of this
Agreement and the other Operative Agreements and the consummation of
the transactions contemplated hereby and thereby will not involve any
non-exempt prohibited transaction within the meaning of Section 406 of
ERISA or Section 4975 of the Code (such representation being made
solely in reliance upon and subject to the accuracy of the
representations contained in Section 8(o)).
(xvi) Title to Aircraft, etc. Good and
marketable title to the Aircraft will be at the time of delivery to
Owner Trustee vested in Lessee free and clear of all Liens other than
the rights of Lessee under the Lease and the Lease Supplement covering
the Aircraft, the Lien of the Trust Indenture, the beneficial interest
of the Owner Participant in the Aircraft and the Liens permitted by
clause (d) (solely for taxes not yet due) or (e) of Section 6 of the
Lease; and, subject to the filing for recordation of the Lessee FAA
Xxxx of Sale in accordance with the Act, good and marketable title to
the Aircraft will have been duly conveyed by Lessee to Owner Trustee,
free and clear of all Liens other than the rights of Lessee under the
Lease and the Lease Supplement covering the Aircraft, the Lien of the
Trust
PARTICIPATION AGREEMENT [N604SW]
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Indenture, the beneficial interest of the Owner Participant in the
Aircraft, and the Liens permitted by clause (d) (solely for taxes not
yet due) or (e) of Section 6 of the Lease.
(xvii) Condition of Aircraft. The Aircraft has
been duly certificated by the FAA as to type and airworthiness, is
fully equipped to operate in commercial service and complies with all
material governmental requirements governing such service; the
Aircraft has been continuously operated and maintained by Lessee (in a
manner that would satisfy the provisions of Sections 7.1.3 and 8.1 of
the Lease) since its delivery to Lessee by Manufacturer, Lessee is
unaware of any material mechanical or structural defects in or damage
to the Aircraft since its delivery to Lessee by Manufacturer and there
has not occurred any event which constitutes or would, with the
passage of time or the giving of notice, or both, constitute an Event
of Loss.
(xviii) Use of Proceeds. None of the proceeds
from the issuance of the Certificates or from the acquisition by the
Owner Participant of its beneficial interest in the Trust Estate will
be used directly or indirectly by Lessee so as to result in a
violation of Regulation G or U of the Board of Governors of the
Federal Reserve System.
(xix) No Federal Approvals. No governmental
approval in the United States of any kind is required of the Owner
Participant, the Original Loan Participant, the Owner Trustee or the
Indenture Trustee for their respective execution of or performance
under this Agreement or any agreement contemplated hereby solely by
reason of any fact or circumstance peculiar to: (a) Lessee (as
contrasted to other airlines), (b) the nature of the Aircraft, or (c)
Lessee's proposed operations or use of the Aircraft.
(xx) Section 1110. Owner Trustee, as lessor
under the Lease, and the Indenture Trustee, as assignee thereof, are
entitled to the protection of Section 1110 of the United States
Bankruptcy Code in connection with their right to take possession of
the Airframe and Engines in the event of a case under Chapter 11 of
the United States Bankruptcy Code in which Lessee is a debtor. Lessee
acquired the Aircraft new from the Manufacturer after October 22,
1994, and Lessee first placed the Aircraft in service after such date.
(b) General Tax Indemnity.
(i) Indemnity. Lessee hereby agrees to pay,
to indemnify, and, on written demand, reimburse and hold each
Indemnified Party (which, unless otherwise indicated herein, for
purposes of this Section 7(b) shall include any Affiliate of any
Participant, and all entities which are included in a consolidated,
combined or unitary return with such Indemnified Party) harmless from,
any and all license, documentation, recording and registration fees
and any and all taxes (including, without limitation, sales, use,
turnover, value-added, property (tangible and intangible), ad valorem,
consumption, rental, license, excise and stamp taxes), levies,
imposts, duties, charges, assessments or withholdings of any nature
whatsoever together with any and all penalties, fines, additions to
tax or interest thereon or computed with reference thereto
(collectively "Taxes"), howsoever imposed by any federal, state or
local government or governmental subdivision or taxing authority in or
of the United States of
PARTICIPATION AGREEMENT [N604SW]
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America (including any possession or territory of the United States of
America), or by any foreign government, taxing authority or
governmental subdivision of a foreign country, upon, against, or with
respect to any Indemnified Party, Lessee, the Aircraft, Airframe, any
Engine, any other engine installed on the Airframe, Part or any other
part thereof or interest therein or upon or with respect to the
purchase, acquisition, acceptance, rejection, mortgaging, financing,
refinancing, manufacture, sale, transfer of title, ownership,
delivery, nondelivery, insuring, inspection, leasing, possession, use,
registration, reregistration, deregistration, operation, repair,
replacement, abandonment, redelivery, modification, rebuilding,
importation, exportation, return or other disposition thereof, or the
imposition of any Lien (or the occurrence of any liability to refund
or pay over any amount as a result of any Lien) thereon, or upon or
with respect to the rentals, receipts or earnings arising therefrom,
or upon or with respect to this Agreement, the Trust Agreement, the
Trust Indenture, the Lease, a Lease Supplement, the Purchase
Agreement, the Purchase Agreement Assignment, the Certificates or the
issuance, reissuance, acquisition, redemption, expiration or
subsequent transfer thereof under the Trust Indenture, or the
beneficial interest in the Trust Estate or the creation thereof, or
any payment made pursuant to any such agreement or instrument or upon
or with respect to the property, held by Owner Participant or by the
Trust Estate or by Indenture Trustee under the Trust Indenture, or
otherwise with respect to or in connection with the transactions
contemplated by the Operative Agreements.
(ii) Exceptions. The indemnity set forth in
Section 7(b)(i) shall not extend in the case of any Indemnified Party
to Taxes (1) on, based on, or measured by, the receipts, gross or net
income, capital or net worth of such Indemnified Party (whether
denominated as franchise, excess profits, conduct of business, capital
gains, minimum and/or alternative minimum taxes) or accumulated
earnings, personal holding company, succession taxes and estate or
franchise taxes (other than taxes which are in the nature of sales or
use taxes, value-added taxes, rental taxes, license taxes, consumption
taxes, ad valorem taxes or property taxes) imposed by (A) the federal
government of the United States (including without limitation any
taxes collected by withholding) (but specifically excluding any excise
taxes imposed in connection with the occurrence of a "prohibited
transaction," within the meaning of Section 406 of ERISA or Section
4975 of the Code, for which an exemption is not available by statute,
regulation or class exemption) or (B) any state or local government or
governmental subdivision or state or local taxing authority in the
United States of America other than in the case of (B) any such tax
which is a Covered Income Tax, as defined below; (2) on, based on, or
measured by, any fees or compensation received by Owner Trustee or
Indenture Trustee in its individual capacity for services rendered in
connection with the transactions contemplated hereby; (3) relating to
the Aircraft for any period after the later of (A) the expiration or
early termination of the Lease and the return of the Aircraft in
connection therewith in accordance with the terms thereof and (B)
payment in full of Stipulated Loss Value or Termination Value, as the
case may be, and all Rent due and owing in accordance with the Lease;
(4) arising out of or caused by the wilful misconduct or gross
negligence of such Indemnified Party (other then willful misconduct or
gross negligence imputed to such Indemnified Party solely by reason of
its interest in the Aircraft) or the inaccuracy or breach of any
representation, warranty or covenant of such Indemnified Party
contained in any Operative Agreement; (5) imposed on the income of
such Indemnified Party by a foreign government or taxing authority or
a possession or territory of the United States or any tax authority
therein, except to the extent such Taxes are imposed by reason of the
location, operation, registration, use or rental of the Aircraft or
any Part thereof in such
PARTICIPATION AGREEMENT [N604SW]
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jurisdiction or the presence, incorporation or other organization of
Lessee or Sublessee or other user or an Affiliate of any thereof in
such jurisdiction or the making of payments from such jurisdiction;
(6) which may become payable in connection with the occurrence of a
"prohibited transaction," within the meaning of Section 406(b) of
ERISA or Section 4975(c)(1)(E) or (F) of the Code, involving the
assets of any "employee benefit plan" within the meaning of Section
3(3) of ERISA, or of any "plan" within the meaning of Section
4975(e)(1) of the Code, with respect to which the Owner Participant is
the "plan sponsor" within the meaning of Section 3(16)(B) of ERISA;
and (7) which become payable as a result of any involuntary
disposition attributable to the bankruptcy of the Owner Participant or
Owner Trustee or any voluntary sale, transfer, mortgaging, pledging or
financing by such Indemnified Party of all or a portion of its
interest in the Aircraft, the Trust Estate, the Trust Indenture
Estate, the Lease, or any other Operative Agreement in a transaction
not contemplated by the Operative Agreements. As used in clause
(1)(B) of this Section 7(b)(ii), the term "Covered Income Tax" means a
Tax described in said clause (1)(B) imposed on an Indemnified Party by
any taxing authority (A) in whose jurisdiction such Indemnified Party
(including for this purpose all entities with which it is combined,
integrated or consolidated in such taxing authority's jurisdiction)
did not engage in business, did not maintain an office or other place
of business and was not otherwise located, if such Tax resulted from
the operation of the Aircraft or any Engine in such jurisdiction or
the transactions contemplated by the Operative Agreements, or (B) in
whose jurisdiction such Indemnified Party in fact is doing business,
maintaining an office or other place of business or is otherwise
located, if such circumstance was no factor in the imposition of such
Tax.
(iii) Calculation. Lessee agrees that, with
respect to any payment or indemnity pursuant to Section 7(b)(i)
hereof, such payment or indemnity shall include an amount payable to
the Indemnified Party sufficient to hold such Indemnified Party
harmless on an after-tax basis from all Taxes required to be paid by
such Indemnified Party with respect to such payment or indemnity under
the laws of any federal, state or local government or governmental
subdivision or taxing authority in or of the United States of America,
including any possession or territory of the United States, or under
the laws of any foreign government, taxing authority or governmental
subdivision of a foreign country; provided, that if any Indemnified
Party realizes a reduction in Taxes not subject to indemnification
hereunder (a "tax benefit") by reason of such payment or indemnity
(whether such tax benefit shall be by means of investment tax credit,
foreign tax credit, depreciation deduction or otherwise), such
Indemnified Party shall, so long as no Lease Default (of the type
described in Section 14.1 or 14.5 of the Lease) or Lease Event of
Default shall have occurred or be continuing, pay Lessee (but not
before Lessee shall have made all payments or indemnities to such
Indemnified Party then due under the Operative Agreements) an amount
equal to the sum of such tax benefit plus any other tax benefit
realized by such Indemnified Party as the result of any payment made
pursuant to this proviso; provided, however, that such payment by an
Indemnified Party shall not exceed the aggregate payments by Lessee to
such Indemnified Party under Section 7(b)(i) hereof (but any such
excess shall be carried forward and shall reduce Lessee's obligation
to make any subsequent payments to such Indemnified Party pursuant to
Section 7(b) or 7(c) hereof). Each such Indemnified Party 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
of which it is actually aware or of which it has been given notice.
Any Taxes that are imposed on any Indemnified Party as a result of the
PARTICIPATION AGREEMENT [N604SW]
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disallowance or reduction of such tax benefit referred to in the next
preceding sentence in a taxable year subsequent to the year of
allowance and utilization by such Indemnified Party (including the
expiration of any tax credit carryovers or carrybacks of such
Indemnified Party that would not otherwise have expired) shall be
indemnifiable pursuant to the provisions of Section 7(b)(i) without
regard to Section 7(b)(ii). In determining the amount of any net
reduction in Taxes which is attributable to more than one transaction,
an Indemnified Party shall be deemed to have utilized its deductions
and credits attributable first, to all transactions other than
leveraged equipment leasing transactions and then to this transaction
and to all such other leveraged equipment leasing transactions on a
pari passu basis.
If as a result of any Advance (as hereinafter
defined) to an Indemnified Party the aggregate taxes paid or accrued
by such Indemnified Party for any taxable year shall be more than the
amount of such taxes which would have been payable by the Indemnified
Party had no such Advance been made, and if such increase in taxes was
not taken into account in determining the amount of the Advance, then
such increase in taxes will be treated as Taxes for which Lessee must
indemnify the Indemnified Party pursuant to this Section 7(b). Upon
the final determination of any contest pursuant to Section 7(b)(iv)
hereof in respect of any Taxes for which Lessee has made an Advance,
the amount of Lessee's obligation shall be determined under this
Section 7(b)(iii) as if such Advance had not been made. Any
obligation of Lessee under this Section 7(b) and the Indemnified
Party's obligation to repay the Advance will be satisfied first by set
off against each other and any difference owing by either party will
be paid within 10 days of such final determination.
(iv) Notice and Contest. If written claim is
received by an Indemnified Party for Taxes, which claim, if sustained,
would require the payment of an indemnity by Lessee pursuant to this
Section 7(b), such Indemnified Party shall notify Lessee of such claim
within 15 days after its receipt; provided, that failure to provide
such notice within 15 days will not relieve Lessee of any
indemnification obligation pursuant to this Section 7(b) if such
failure does not preclude Lessee from exercising its contest rights
hereunder. Payments due from Lessee to such Indemnified Party
pursuant to this Section 7(b) shall be made directly to such
Indemnified Party within 30 days of written demand by such Indemnified
Party to Lessee. If requested by Lessee in writing (provided, that
Lessee shall have furnished Indemnified Party with a written opinion
of Xxxxxx & Xxxxxx L.L.P. or other independent counsel selected by
Lessee and reasonably satisfactory to Indemnified Party to the effect
that a reasonable basis in law and fact exists under ABA opinion
85-352), such Indemnified Party shall upon receipt of indemnity
reasonably satisfactory to it and at the expense of Lessee (including,
without limitation, all reasonable costs, expenses, losses, legal and
accountants' fees, and disbursements, penalties, interest incurred in
contesting such claim, and additions to tax) in good faith contest, in
the name of such Indemnified Party or, if requested by Lessee, in the
name of Lessee (or permit Lessee, if desired by Lessee, to contest in
the name of Lessee) if permissible under applicable laws, the
validity, applicability or amount of such Taxes by (i) resisting
payment thereof if practicable, (ii) not paying the same except under
protest, if protest shall be necessary and proper, (iii) if payment
shall be made, using reasonable efforts to obtain a refund thereof in
appropriate administrative or judicial proceedings, and (iv) taking
such other action as is reasonably requested by Lessee from time to
time. The Indemnified Party shall determine the method of any contest
and (in good faith consultation with Lessee) control the conduct
thereof. Notwithstanding anything contained
PARTICIPATION AGREEMENT [N604SW]
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in this Section 7(b)(iv), an Indemnified Party will not be required to
contest, or to continue to contest, the validity, applicability or
amount of any Tax (or portion thereof) (w) unless Lessee shall have
acknowledged in writing its obligation to indemnify the Indemnified
Party hereunder in the event the Indemnified Party does not prevail in
such contest, (x) if such contest would result in any material risk of
criminal penalties or any material risk of sale, forfeiture or loss
(or loss of use) of the Aircraft, the Airframe or any Engine or any
Part or any interest therein, (y) if a Lease Event of Default has
occurred and is continuing or (z) if the claim (when aggregated with
related or correlative adjustments with respect to such Indemnified
Party) will not exceed $10,000. The Owner Participant shall not be
required to appeal, or seek leave to appeal, an adverse judicial
determination with respect to such Taxes to the United States Supreme
Court. If an Indemnified Party contests a Tax by making a payment and
seeking a refund thereof, then Lessee shall advance to such
Indemnified Party, on an interest-free basis, an amount equal to the
Taxes and any penalties, additions to tax, fines and interest thereon
(which shall collectively be known, only for the purpose of this
Section 7(b), as an "Advance") that are paid by such Indemnified Party
in connection with such contest. Such Advance shall be repayable to
Lessee at the time and in the manner specified in the last paragraph
of Section 7(b)(iii). If any Indemnified Party shall obtain a refund
of all or any part of such Taxes for which an indemnity was paid by
Lessee, such Indemnified Party shall pay Lessee the amount of such
refund as is attributable to the Taxes for which such indemnity was
paid; provided, however, that such amount shall not be payable before
such time as Lessee shall have made all payments or indemnities to
such Indemnified Party then due under this Section 7(b) and under the
Lease. If in addition to such refund such Indemnified Party shall
receive an amount representing interest on the amount of such refund,
Lessee shall be paid that proportion of such interest which is fairly
attributable to Taxes paid with an indemnity payment or Advance by
Lessee prior to the receipt of such refund, reduced by taxes imposed
on such Indemnified Party on receipt of such refund or interest and
increased by any taxes saved by reason of the deductibility of such
payment by the Indemnified Party. Any subsequent determination that
such Indemnified Party was not entitled to all or any portion of any
refund paid to Lessee shall be treated as a Tax indemnifiable under
Section 7(b)(i) without regard to Section 7(b)(ii). Lessee shall not
be deemed to be in default under any of the indemnification provisions
under this Section 7(b) so long as it or any Indemnified Party shall
diligently prosecute such contest; provided, that Lessee shall
nonetheless be required to pay all Advances and expenses required
hereunder. In case any report or return is required to be made with
respect to any obligation of Lessee under this Section 7(b) or arising
out of this Section 7(b), Lessee will either timely make such report
or return in such manner as will show the ownership of the Aircraft in
Owner Trustee, and send a copy of such report or return to Owner
Trustee (except for any report or return that an Indemnified Party has
notified Lessee that the Indemnified Party intends to file or that the
Indemnified Party is required by law to file), or will notify Owner
Trustee of such requirement and prepare and deliver such report or
return to the Indemnified Party in such manner as shall be
satisfactory to such Indemnified Party and Owner Trustee.
Notwithstanding the above provisions of this Section
7(b), any Indemnified Party in its sole discretion (by written notice
to Lessee) may unconditionally waive its rights to the indemnities
provided for in this Section 7(b) with respect to any Taxes, and
refrain from contesting, or continuing the contest of such Taxes, in
which event Lessee shall have no liability to such Indemnified Party
hereunder with respect to such Taxes. In addition, if
PARTICIPATION AGREEMENT [N604SW]
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an Indemnified Party shall agree to a settlement of any contest under
this Section 7(b) without the prior written consent of Lessee, then
the Indemnified Party shall be deemed to have waived its rights to the
indemnities provided in this Section 7(b) with respect to the subject
matter of such settlement. Lessee agrees to consider in good faith
any settlement proposal made with respect to any contest under this
Section 7(b).
(v) Withholdings. Notwithstanding the
exceptions in Section 7(b)(ii), Lessee agrees that each payment of
Rent and any amount payable on the Certificates shall be free of all
withholdings (other than a U.S. withholding tax, except to the extent
described in Section 15.05(d) of the Trust Indenture) of any nature
whatsoever except to the extent otherwise required by law, and in the
event that any such withholding is so required, Lessee shall pay an
additional amount of Rent such that after the deduction of all amounts
required to be withheld, the net amount actually received by each
Indemnified Party will equal the amount that would be due absent such
withholding. In the event additional Rent is paid by Lessee to
provide for withholdings pursuant to the preceding sentence in respect
of Taxes that are excepted from indemnification hereunder pursuant to
Section 7(b)(ii)(2)-(7), the Indemnified Party on whom the Tax is
imposed by way of withholding on payments to such person shall,
promptly upon receipt of notice from Lessee, reimburse Lessee for such
additional Rent. As used in this Section 7(b)(v), a "U.S. withholding
tax" shall mean any withholding tax imposed by the United States of
America (A) with respect to any Certificate pursuant to treaty or
federal law imposing withholding tax generally on payments to Persons
not organized or resident in the United States or (B) in the nature of
backup withholding under section 3406 of the Code and the regulations
thereunder, or any successor or similar provision of the Code, federal
tax law or regulations thereunder. All U.S. withholding taxes with
respect to any Certificate shall be borne by the Holder of the
relevant Certificate and none of Lessee, Owner Participant, Indenture
Trustee or Owner Trustee shall be responsible for any U.S. withholding
tax with respect to such Certificate, except that Lessee shall be
responsible to pay any such withholding taxes, at no after-tax cost to
Owner Participant, Lessor or the Estate, to the extent described in
Section 15.05(d) of the Trust Indenture. Owner Trustee may (or, if
Lessee is making any payment directly to the Holder of any Certificate
or to the Indenture Trustee, Lessee shall) or Indenture Trustee shall
withhold any applicable U.S. withholding tax from the amount then due
and pay (and, if Lessee is making any payment to the Holder or the
Indenture Trustee, Lessee shall pay) any amount withheld to the
appropriate federal taxing authority; provided, that Lessee shall
indemnify and hold the Owner Trustee and the Owner Participant
harmless on an after-tax basis from and against any and all liability
arising from any failure by any Person to withhold any U.S.
withholding taxes with respect to payments required to be made with
respect to the Certificates, and Lessee shall timely prepare and file,
or, if required by applicable law, present to the Owner Trustee for
filing, all information returns required to be prepared with respect
to any such withholding tax payments or otherwise with respect to
payments under the Certificates.
(c) General Indemnity.
(i) Indemnity. Lessee hereby agrees,
whether or not any of the transactions contemplated hereby shall be
consummated, to pay, assume liability for and indemnify, protect,
defend, save and keep harmless each Indemnified Party from and
against, on a net after-tax basis as provided in Section 7(b)(iii),
any and all liabilities, obligations,
PARTICIPATION AGREEMENT [N604SW]
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losses, damages, settlements, claims, actions, suits, penalties,
costs, expenses and disbursements (including but not limited to
reasonable legal and investigative fees and expenses and Transaction
Costs to the extent not required to be paid by Owner Participant
pursuant to Section 16 hereof, and all costs and expenses relating to
amendments, supplements, waivers and consents to and under the
Operative Agreements, but excluding internal overhead costs and
expenses such as salaries) of whatsoever kind and nature, including
but not limited to negligence, liability of an owner, strict or
absolute liability, liability without fault and liability in tort (any
of the foregoing being called a "Loss") which may from time to time be
imposed on, incurred by or asserted against any Indemnified Party or
the Aircraft, Airframe, any Engine or any Part or any portion of the
Trust Estate or the Trust Indenture Estate (whether or not any such
Loss is also indemnified or insured against by any other Person or
such Indemnified Party has also indemnified any other Person against
such Loss) in any way relating to or arising out of (a) any Operative
Agreement, the enforcement thereof or any of the transactions
contemplated thereby (including, without limitation, the performance
or observance of all obligations and conditions of Lessee thereunder,
or the falsity of any representations or warranties of Lessee therein
or thereunder or in any document or certificate delivered pursuant
thereto), (b) the purchase, acceptance or rejection of the Aircraft,
(c) the Aircraft, the Airframe, any Engine, any engine or any Part,
any data or any other thing delivered or to be delivered under an
Operative Agreement, including without limitation, the ownership,
financing, refinancing, delivery, nondelivery, lease, sublease,
assignment, registration, reregistration, deregistration, possession,
use, non-use, presence, operation, condition, storage, preparation,
installation, testing, manufacture, design, fitness for use,
merchantability, modification, replacement, substitution, alteration,
maintenance, repair, re-lease, sale, return, transportation, transfer,
abandonment or other disposition thereof or any portion thereof
(including, without limitation, latent and other defects, whether or
not discoverable, and any claim for patent, trademark or copyright
infringement, or arising under environmental control, noise or
pollution laws or regulations, and loss of or damage to any property
or the environment or death or injury to any person), or (d) the
offer, sale or delivery of the Certificates, whether before or after
the Delivery Date (the indemnity in this clause (d) to extend also to
any Person who controls an Indemnified Party, its successors, assigns,
employees, servants and agents within the meaning of Section 15 of the
Securities Act).
(ii) Exceptions. The indemnity set forth in
Section 7(c)(i) shall not extend to any Loss with respect to such
Indemnified Party (A) to the extent that such Loss is caused by acts,
omissions or events which occur after full and final compliance by
Lessee with all the terms of the Operative Agreements, (B) to the
extent such Loss is caused by acts, omissions or events which occur
following the earlier of: (I) acceptance of possession of the Airframe
or any Engine or Part by Lessor or its designee pursuant to the terms
of the Lease (other than pursuant to Section 15 thereof, in which case
Lessee's liability under this Section 7(c) shall survive for so long
as Lessor shall be entitled to exercise remedies under such Section
15), (II) the termination of the Term in accordance with Section 9 of
the Lease, or (III) the transfer of title to the Aircraft to Lessee
(or its designee) pursuant to Section 10.1.4 or Section 18.2 of the
Lease, (C) to the extent that such Loss is a Tax or a loss of tax
benefits, whether or not Lessee is required to indemnify therefor
pursuant to Section 7(b) hereof, (D) to the extent that such Loss is
caused by the willful misconduct or gross negligence of such
Indemnified Party (other than willful misconduct or gross negligence
PARTICIPATION AGREEMENT [N604SW]
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imputed to such Indemnified Party solely by reason of its interest in
the Aircraft) or any material misrepresentation or violation or breach
of any obligations of such Indemnified Party contained in the
Operative Agreements then in force unless such misrepresentation,
violation or breach is a result of Lessee's failure to comply with the
terms of any Operative Agreement to which it is a party, or (E) to the
extent such Loss is associated with a sale, assignment or transfer by
such Indemnified Party of its respective interest in the Aircraft, the
Certificates or the transactions contemplated hereby (other than (1)
as required by the Operative Agreements and (2) during the continuance
of a Lease Default (of the type described in Section 14.1 or 14.5 of
the Lease) or a Lease Event of Default or the exercise of remedies
under the Lease). This Section 7(c) does not constitute a guarantee
of the useful life or residual value of the Aircraft or a guarantee
that the Certificates will be paid.
(iii) Notice. If any Indemnified Party or
Lessee has knowledge of any Loss for which Lessee is obligated to
indemnify under this Section 7(c), it shall give prompt written notice
thereof to Lessee or such Indemnified Party, as the case may be, but
failure to give such notice shall not relieve Lessee of its
obligations hereunder or from any other obligation that Lessee may
have to such Indemnified Party at law or in equity, and no payment by
Lessee to an Indemnified Party pursuant to this Section 7(c) shall be
deemed to constitute a waiver or release of any right or remedy which
Lessee may have against such Indemnified Party for any actual damages
as a result of the failure by such Indemnified Party to give Lessee
such notice.
(iv) Right to Defend; Subrogation; Fees and
Expenses of Trustees. Lessee shall be entitled (and, at the
Indemnified Party's election, shall be obligated), at its sole cost
and expense, acting through counsel selected by Lessee reasonably
acceptable to the respective Indemnified Party, (A) in any judicial or
administrative proceeding that involves solely a claim for which
payment or indemnity is sought under this Section 7(c), to assume
responsibility for and control thereof, (B) in any judicial or
administrative proceeding involving a claim for which payment or
indemnity is sought under this Section 7(c), and other claims related
or unrelated to the transactions contemplated by the Operative
Agreements, to assume responsibility for and the control of such claim
for which payment or indemnity is sought under this Section 7(c) to
the extent that the same may be and is severed from such other claims
(and such Indemnified Party shall use its reasonable best efforts to
obtain such severance), and (C) in any other case, to be consulted by
such Indemnified Party with respect to judicial proceedings subject to
the control of such Indemnified Party. Notwithstanding any of the
foregoing to the contrary, Lessee shall not be entitled to assume
responsibility for and control of any such judicial or administrative
proceedings (1) while any Lease Default (of the type described in
Section 14.1 or 14.5 of the Lease) or Lease Event of Default shall
have occurred and be continuing, (2) if such proceedings will involve
a material risk of the sale, forfeiture or loss of, or the creation of
any Lien (other than a Permitted Lien) on, the Aircraft or the Trust
Estate or the Trust Indenture Estate or any part thereof or the loss
or impairment of the Lien of the Trust Indenture on all or any part of
the Trust Indenture Estate, (3) if such proceedings could, in the good
faith opinion of the Indemnified Party, entail any risk of material
criminal liability or material civil penalty or (4) if in the written
opinion of counsel to such Indemnified Party an actual or potential
material conflict of interest exists making it advisable for such
Indemnified Party to be represented by separate counsel. The
Indemnified
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Party may participate at its own expense and with its own counsel in
any judicial proceeding controlled by Lessee pursuant to the preceding
provisions.
The Indemnified Party shall supply Lessee, at Lessee's
expense, with such information within its possession reasonably requested by
Lessee as is necessary or advisable for Lessee to control or participate in any
proceeding to the extent permitted by this Section 7(c). Such Indemnified
Party shall not enter into a settlement or other compromise with respect to any
Loss without the prior written consent of Lessee (except during the continuance
of a Lease Default (of the type described in Section 14.1 or 14.5 of the Lease)
or Lease Event of Default when such consent shall not be required if such
Indemnified Party gives 10 days' prior written notice to Lessee describing the
proposed settlement or other compromise), which consent shall not be
unreasonably withheld or delayed, unless such Indemnified Party waives its
right to be indemnified with respect to such Loss under this Section 7(c).
Lessee shall supply the Indemnified Party with such
information reasonably requested by the Indemnified Party as is necessary or
advisable for the Indemnified Party to control or participate in any proceeding
to the extent permitted by this Section 7(c).
Upon payment or indemnification of any amount pursuant to this
Section 7(c), Lessee, without any further action, shall be subrogated to any
claims the Indemnified Party may have relating thereto other than claims under
Section 5.03 or 7.01 of the Trust Agreement or Section 9.06 of the Trust
Indenture, comparable claims arising in favor of the Owner Trustee or the
Indenture Trustee as a matter of trust law and claims under any insurance
maintained by any Indemnified Party or any of its Affiliates. The Indemnified
Party agrees to give such further assurances or agreements and to cooperate in
all reasonable respects with Lessee and its insurers to permit Lessee to pursue
such claims.
In the event that Lessee shall have paid an amount to an
Indemnified Party pursuant to this Section 7(c), and such Indemnified Party
subsequently shall be reimbursed in respect of such indemnified amount by any
other Person, such Indemnified Party shall (provided no Lease Default or Lease
Event of Default shall have occurred and be continuing) promptly pay (but not
before Lessee shall have made all payments then due to such Indemnified Party
pursuant to this Section 7(c) and any other payments then due under the
Operative Agreements) an amount equal to the amount of such reimbursement
(adjusted for any net tax impact of such receipt and payment, but in no event
more than such indemnified amount previously paid to such Person) to Lessee.
Subject to the provisions of the preceding sentence, Lessee's obligations under
the indemnities provided for in this Agreement shall be those of a primary
obligor, whether or not the Person indemnified shall also be indemnified with
respect to the same matter under the terms of any other document or instrument,
and the Person seeking indemnification from Lessee pursuant to any provision of
this Agreement may proceed directly against Lessee without first seeking to
enforce any other right of indemnification.
Lessee agrees to pay the reasonable and continuing fees and
expenses of the Indenture Trustee (including the reasonable fees and expenses
of its counsel and any agent appointed in accordance with Section 9.02(c) of
the Trust Indenture) and, as provided in Section 6.07 of the Trust Agreement,
the Owner Trustee (including, but not limited to, the reasonable fees and
expenses of its counsel), without cost, on a net after-tax basis, to the Owner
Participant, for acting as such, other than such fees and expenses which
constitute Transaction Costs. Lessee agrees that it will pay the
PARTICIPATION AGREEMENT [N604SW]
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reasonable fees and expenses of any separate owner trustee or co-trustee
appointed pursuant to Section 9.02 of the Trust Agreement as a result of any
requirement of law or if otherwise required by any Operative Agreement or if
requested, or consented to, by the Lessee.
(d) Owner Participant's Indemnity. Owner Participant
covenants and agrees that if (i) Lessee has elected pursuant to Section 9.1 of
the Lease to terminate the Lease by causing the Aircraft to be sold pursuant to
Section 9.2 of the Lease and (ii) Owner Trustee has, pursuant to Section 9.3 of
the Lease, given to Lessee written notice of Lessor's election to retain title
to the Aircraft, and (iii) Owner Trustee has failed to make, on or before the
proposed termination date, any payment required to be made by Owner Trustee
pursuant to Section 9.3 in connection with its retention of title to the
Aircraft, Owner Participant will indemnify Lessee for any losses, damages,
costs or expenses of any kind (including any excess of the highest bid received
on or before the proposed termination date over the price for which the
Aircraft may subsequently be sold (but disregarding any portion of such bid or
such price in excess of the applicable Termination Value), any additional Rent
paid by Lessee (less an amount representing the fair value to Lessee of its use
of the Aircraft for the period of time in respect of which such Rent was paid)
and any reasonable fees and expenses of lawyers, appraisers, brokers or
accountants) incurred as a consequence of such failure by Owner Trustee.
(e) Payments. Any payments made pursuant to this Section
7 shall be made directly to the Person entitled thereto within 10 Business Days
of demand therefor in immediately available funds at such bank or to such
account as specified by the payee in written directions to the payor, or, if no
such direction shall have been given, by check of the payor payable to the
order of the payee and mailed to the payee by certified mail, postage prepaid
at its address as set forth in this Agreement.
(f) Interest on Overdue Amounts. If any amount payable
by Lessee or any Indemnified Party, as the case may be, under this Section 7 is
not paid when due, Lessee or such Indemnified Party, as the case may be, shall
pay an additional amount equal to interest at the Overdue Rate on the overdue
amount for the period from and including the due date for the overdue payment
to but excluding the date of payment of the overdue amount.
(g) Survival. All indemnities, obligations, adjustments
and payments provided for in this Section 7 shall survive, and remain in full
force and effect, notwithstanding the expiration or other termination of this
Agreement, the Lease or any other Operative Agreement. The obligations of
Lessee in respect of all such indemnities, obligations, adjustments and
payments are expressly made for the benefit of, and shall be enforceable by,
each Indemnified Party or other indemnitee entitled thereto, without taking any
action under the Lease.
SECTION 8. Other Representations, Warranties,
Covenants and Indemnities. (a) Securities Laws. The Owner Participant
represents that it is acquiring its interest in the Trust Estate for investment
purposes only and not with a present intent as to any resale or distribution
thereof (subject nonetheless to any requirement of law that the disposition of
its properties shall at all times be and remain within its control) and that
neither it nor anyone acting on its behalf has directly or indirectly offered
any interest in the Trust Estate or any Certificates or any similar securities
for sale to, or solicited any offer to acquire any of the same from, anyone in
a manner
PARTICIPATION AGREEMENT [N604SW]
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which would result in a violation of the Securities Act or the securities laws,
rules and regulations of any state.
(b) Citizenship. Each of the Owner Participant and SBC,
in its individual capacity, represents and warrants to the other parties to
this Agreement that it is a "citizen of the United States" as defined in 49
U.S.C. Section 40102(a)(15)(C). The Owner Participant agrees, solely for the
benefit of Lessee, each Sublessee, the Indenture Trustee and the Holders, that
if at any time (i) it shall not be a "citizen of the United States" within the
meaning of 49 U.S.C. Section 40102(a)(15)(C) and (ii) the Aircraft shall be, or
would therefore become, ineligible for registration in the name of the Owner
Trustee under the Act and regulations then applicable thereunder (it being
understood that the effect of any such status shall be determined without
giving consideration to any provision of the Act (or any superseding statute)
which permits United States registration of an aircraft based on conditions
which impose restrictions on the location and use of such aircraft or otherwise
restrict the ability of an air carrier to operate an aircraft in the ordinary
course of its business), then the Owner Participant shall (at its own expense
and without any reimbursement or indemnification from Lessee) as soon as is
reasonably practicable but in any event within 30 days after obtaining actual
knowledge of such loss of citizenship (A) effect voting trust or other similar
arrangements or take any other action as may be necessary to prevent any
deregistration or to maintain the United States registration of the Aircraft
and (to the extent such recordation is dependent on the U.S. registration of
the Aircraft) the recordation with the FAA of the Trust Indenture and the
Lease, or (B) transfer its beneficial interest in the Trust Estate in
accordance with Section 8(l) hereof. It is understood that: (1) the Owner
Participant shall be liable to any of the other parties hereto for any damages
suffered by any such other party as the result of the representation and
warranty of the Owner Participant in the first sentence of this Section 8(b)
proving to be untrue as of the Delivery Date; and (2) the Owner Participant
shall be liable to Lessee, any Sublessee and any Holder for any damages which
may be incurred by Lessee, any Sublessee or such Holder as a result of such
loss of citizenship by the Owner Participant and the inability to register (or
maintain the registration of) the Aircraft in the name of the Owner Trustee
under the Act and regulations then applicable thereunder as a result of such
loss of citizenship. Each of Lessee (as provided in Section 11(b)), the
Original Loan Participant, the Owner Trustee and the Indenture Trustee agrees,
upon the request and at the sole expense of the Owner Participant, to take all
reasonable acts requested by the Owner Participant in complying with its
obligations under clause (A) or (B) of the second sentence of this Section
8(b). SBC, in its individual capacity, agrees that if at any time a
responsible officer of SBC shall obtain actual knowledge that SBC has ceased to
be a "citizen of the United States" within the meaning of Section 101(16) of
the Act, it will promptly resign as Owner Trustee (if and so long as such
citizenship is necessary under the Act as in effect at such time or, if it is
not necessary, if and so long as the Owner Trustee's citizenship would have any
adverse effect on a Holder, Lessee, a Sublessee or the Owner Participant),
effective upon the appointment of a successor Owner Trustee in accordance with
Section 9.01 of the Trust Agreement.
(c) Chief Executive Office of SBC. SBC in its individual
capacity represents and warrants that both the principal place of business of
the Owner Trustee and the place where its records concerning the Aircraft and
all of its interest in, to and under the Operative Agreements to which it is a
party are or will be kept is Hartford, Connecticut (other than such as may be
maintained or held by the Indenture Trustee pursuant to the Trust Indenture)
and has its chief executive office (as such term is used in Article 9 of the
Uniform Commercial Code) in Hartford, Connecticut. SBC in its individual
capacity agrees that it will not change the location of such office to a
location outside
PARTICIPATION AGREEMENT [N604SW]
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of Hartford, Connecticut, without 10 days' prior written notice to Lessee,
Indenture Trustee and the Owner Participant.
(d) Securities Laws. The Original Loan Participant
represents and warrants that the Series SWA 1995 Trust N604SW-I Certificate to
be issued to it pursuant to the Trust Indenture is being acquired by it with no
present intent to make any resale or distribution thereof which would require
registration under the Securities Act and it will not offer or sell any
Certificate in violation of the Securities Act; provided, that the disposition
of its property shall at all times be and remain within its control, and that
neither it nor anyone acting on its behalf has offered any Certificates or any
similar securities relating to the Aircraft for sale to, or solicited any offer
to buy any Certificates or any similar securities relating to the Aircraft
from, any person or entity other than in a manner required by the Securities
Act and the rules and regulations thereunder and the securities laws, rules and
regulations of any state.
(e) [Intentionally Reserved].
(f) Owner Participant's Representations and Warranties.
The Owner Participant represents and warrants as follows:
(i) the Owner Participant is a corporation
duly organized and validly existing in good standing under the laws of
the State of Alabama, and has the corporate power and authority to
carry on its business as now conducted, to own or hold under lease its
properties and to enter into and perform its obligations under the
Owner Participant Agreements;
(ii) the Owner Participant Agreements have
been duly authorized by all necessary corporate action on the part of
the Owner Participant, do not require any approval not already
obtained of stockholders of the Owner Participant or any approval or
consent not already obtained of any trustee or holders of any
indebtedness or obligations of the Owner Participant, and have been
duly executed and delivered by the Owner Participant, and, subject to
and in reliance upon the representations made by the Original Loan
Participant and Lessee in Sections 8(o) and 7(a)(xv), respectively,
and compliance with the covenants of Section 8(d), neither the
execution and delivery thereof by the Owner Participant, nor the
consummation of the transactions contemplated thereby by the Owner
Participant, nor compliance by the Owner Participant with any of the
terms and provisions thereof will contravene any United States federal
or state law, judgment, governmental rule, regulation or order
applicable to or binding on the Owner Participant (it being understood
that no representation or warranty is made with respect to laws, rules
or regulations relating to aviation or to the nature of the equipment
owned by the Owner Trustee, other than such laws, rules or regulations
relating to the citizenship requirements of the Owner Participant
under applicable aviation law) or contravene or result in any breach
of or constitute any default under, or result in the creation of any
Lien (other than Permitted Liens of the type described in clause (a)
of the definition thereof) upon the Trust Estate under, any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales contract,
bank loan or credit agreement, corporate charter, by-law or other
agreement or instrument to which the Owner Participant is a party or
by which it or its properties may be bound or affected;
PARTICIPATION AGREEMENT [N604SW]
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(iii) assuming that each such agreement is the
legal, valid and binding obligation of each other party thereto, each
of the Owner Participant Agreements constitutes a legal, valid and
binding obligation of the Owner Participant enforceable against the
Owner Participant in accordance with the terms thereof;
(iv) there are no pending or, to the
knowledge of the Owner Participant, threatened actions or proceedings
against the Owner Participant before any court or administrative
agency which, if determined adversely to the Owner Participant, would
materially adversely affect the financial condition of the Owner
Participant or the ability of the Owner Participant to perform its
obligations under the Owner Participant Agreements; and
(v) on the Delivery Date, there will be no
Lessor Liens attributable to the Owner Participant.
(g) Lessor Liens. Each of SBC in its individual capacity
and the Owner Participant severally covenants and agrees (i) that it shall not
cause or permit to exist a Lessor Lien attributable to it with respect to the
Aircraft or any other portion of the Trust Estate, (ii) that it will promptly,
at its own expense, take such action as may be necessary duly to discharge such
Lessor Lien attributable to it, and (iii) that it will make restitution to the
Trust Estate for any actual diminution of the assets of the Trust Estate
resulting from such Lessor Liens attributable to it.
(h) Indenture Trustee Liens. Wilmington Trust Company in
its individual capacity covenants and agrees that it shall not cause or permit
to exist any Lien, arising as a result of (i) claims against the Indenture
Trustee not related to its interest in the Aircraft or the administration of
the Trust Estate pursuant to the Trust Indenture, (ii) acts of the Indenture
Trustee not permitted by, or failure of the Indenture Trustee to take any
action required by, the Operative Agreements to the extent such acts arise or
such failure arises from or constitutes gross negligence or willful misconduct,
(iii) claims against the Indenture Trustee relating to Taxes or Losses which
are excluded from the indemnification provided by Section 7 hereof pursuant to
said Section 7, or (iv) claims against the Indenture Trustee arising out of the
transfer by the Indenture Trustee of all or any portion of its interest in the
Aircraft, the Trust Estate, the Trust Indenture Estate or the Operative
Agreements other than (A) a transfer of the Aircraft pursuant to Section 9, 10
or 18 of the Lease or Article 5 or 8 of the Trust Indenture, (B) any borrowing
pursuant to Section 17 hereof, or (C) a transfer of the Aircraft pursuant to
Section 15 of the Lease while a Lease Event of Default is continuing and prior
to the time that the Indenture Trustee has received all amounts due pursuant to
the Trust Indenture.
(i) Termination Instructions to Owner Trustee. The Owner
Participant will not instruct the Owner Trustee to terminate any Operative
Agreement in violation of the terms thereof.
(j) Excess Payment. If (i) all or any part of the Trust
Estate becomes the property of, or the Owner Participant becomes, a debtor
subject to the reorganization provisions of the Bankruptcy Reform Act of 1978
or any successor provision, (ii) pursuant to such reorganization provisions the
Owner Trustee (in its individual capacity) or the Owner Participant is
required, by reason of the Owner Trustee (in its individual capacity) or the
Owner Participant being held to have recourse liability to any Holder or the
Indenture Trustee, directly or indirectly (other than the recourse liability of
the Owner Participant under this Agreement), to make payment on account of any
amount payable as principal, Break Amount, if any, Premium, if any, or interest
on the Certificates, and
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(iii) any such Holder or the Indenture Trustee actually receives any Excess
Payment (as hereinafter defined) which reflects any payment by the Owner
Trustee (in its individual capacity) or the Owner Participant on account of
clause (ii) above, then such Holder or the Indenture Trustee shall promptly
refund to the Owner Trustee or the Owner Participant (whichever shall have made
such payment) such Excess Payment. For purposes of this Section 8(j), "Excess
Payment" means the amount by which such payment exceeds the amount which would
have been received by such Holder or the Indenture Trustee if the Owner Trustee
(in its individual capacity) or the Owner Participant had not become subject to
the recourse liability referred to in clause (ii) above. Nothing contained in
this Section 8(j) shall prevent such Holder or the Indenture Trustee from
enforcing any personal recourse obligation (and retaining the proceeds thereof)
of the Owner Trustee (in its individual capacity) or the Owner Participant
under this Agreement or the Trust Indenture (and any exhibits or annexes
thereto).
(k) Representations and Warranties of Indenture Trustee
in Individual Capacity. The Indenture Trustee represents and warrants, in its
individual capacity, as follows:
(i) it is a "citizen of the United States"
as defined in 49 U.S.C. Section 40102(a)(15)(C) that it will notify
promptly all parties to this Agreement if in its reasonable opinion
its status as a "citizen of the United States" is likely to change and
that it will resign as Indenture Trustee as provided in Section 9.07
of the Trust Indenture if it should cease to be a "citizen of the
United States";
(ii) it is a banking corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power and authority to enter
into and perform its obligations under the Trust Indenture and this
Agreement and to authenticate the Certificates;
(iii) the Indenture Trustee Agreements, and
the authentication of the Certificates have been duly authorized by
all necessary corporate action on its part, and neither the execution
and delivery thereof nor its performance of any of the terms and
provisions thereof will violate any federal or Delaware law or
regulation governing its banking or trust powers or any judgment or
order binding on it or contravene or result in any breach of, or
constitute any default under its charter or by-laws or the provisions
of any indenture, mortgage, contract or other agreement to which it is
a party or by which it or its properties may be bound or affected;
(iv) each of the Indenture Trustee Agreements
has been duly executed and delivered by it and, assuming that each
such agreement is the legal, valid and binding obligation of each
other party thereto, is the legal, valid and binding obligation of the
Indenture Trustee, enforceable against it in accordance with its
terms;
(v) neither the execution and delivery by
it, in its individual capacity or as Indenture Trustee, as the case
may be, of this Agreement or the Trust Indenture nor the consummation
of any of the transactions contemplated hereby or thereby requires the
consent or approval of, the giving of notice to, or the registration
with, any governmental authority or agency pursuant to any law of the
State of Delaware or the United States governing the banking or trust
powers of the Indenture Trustee; and
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(vi) neither it nor anyone 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 or the Trust Indenture
Estate, or any of the Certificates or any other interest in or
security under the Trust Indenture, for sale to, or solicited any
offer to acquire any such interest or security from, or has sold any
interest or security to, any Person, and it will not directly or
indirectly make any such offer, solicitation or sale.
(l) Transfers of Equity Interests; Rights of Owner
Participant and Owner Trustee. So long as the Aircraft shall be leased to
Lessee under the Lease and so long as the Certificates are outstanding, the
Owner Participant will not sell, assign, convey or otherwise transfer any of
its right, title or interest in and to this Agreement, the Trust Estate or the
Trust Agreement to any Person unless (i) the proposed transferee is a
"Transferee" (as defined below) and (ii) the Owner Participant shall have
delivered to the Owner Trustee, Lessee and the Indenture Trustee an opinion (in
form, scope and substance reasonably satisfactory to the Indenture Trustee and
Lessee) of counsel reasonably satisfactory to the Indenture Trustee and Lessee
to the effect that the agreement referred to in clause (O) below and any
guaranty required by clause (B) or (C) below, are the legal, valid, binding and
enforceable obligations of the Transferee and the guarantor, if any, as the
case may be. A "Transferee" shall mean either (A) a U.S. bank or other
financial institution with a combined capital, surplus and undivided profits of
at least $75,000,000 or a limited partnership or corporation whose net worth is
at least $75,000,000, (B) any subsidiary of such a bank, financial institution,
limited partnership or corporation; provided, that such bank, financial
institution, limited partnership or corporation furnishes to the Owner Trustee,
the Indenture Trustee and Lessee a guaranty in the form attached as Exhibit A
hereto with respect to the Owner Participant's obligations, in the case of the
Owner Trustee, under the Trust Agreement and, in the case of the Indenture
Trustee and Lessee, the Owner Participant's obligations hereunder, or (C) any
other corporation or limited partnership, provided such obligations are
guaranteed by the transferor Owner Participant; provided, however, that unless
otherwise consented to by Lessee any Transferee shall not be an air carrier, an
air freight forwarder or other similar Person or a corporation controlling,
controlled by or under common control with such an air carrier, an air freight
forwarder or other similar Person. Each such transfer to a Transferee shall be
subject to the conditions that (M) upon giving effect to such transfer, the
Transferee is a "citizen of the United States" within the meaning of 49 U.S.C.
Section 40102(a)(15)(C) or the Transferee, at its sole cost and expense on an
after-tax basis (including any continuing costs of any voting trust), shall
have entered into a voting trust or similar arrangement which permits the
registration of the Aircraft under the Act in the name of the Owner Trustee
without any restriction on the operation of the Aircraft, (N) the Transferee
has the full power and authority to enter into and carry out the transactions
contemplated hereby, (O) the Transferee enters into an agreement or agreements,
in form and substance reasonably satisfactory to the Owner Trustee, Lessee and
the Indenture Trustee, whereby the Transferee confirms that it shall be deemed
a party to this Agreement and a party to the Trust Agreement and agrees to be
bound by all of the terms of, and to undertake all of the obligations of the
transferor Owner Participant contained in the Owner Participant Agreements and
makes representations of the scope provided for as to the Owner Participant in
each of the Operative Agreements, (P) such transfer does not result in a
nonexempt prohibited transaction under Section 4975 of the Code or Section 406
of ERISA with respect to such Holders about which the Owner Participant shall
have received such information as may be reasonably necessary in making such
determination (and Owner Participant shall request such information and each of
Lessee, the Original Loan Participant and the Indenture Trustee shall cooperate
in providing such information as
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may be available), (Q) such transfer does not violate any applicable law
including, without limitation, the Act, or any rules or regulations promulgated
thereunder, the Securities Act or the Trust Indenture Act of 1939, (R) after
giving effect to such transfer, there shall be no more than one Owner
Participant of record at that time, and (S) such transfer will not give rise to
an Indenture Default or Indenture Event of Default; and Lessee or the Indenture
Trustee may request such Transferee to provide an opinion of counsel (who shall
be reasonably satisfactory to Lessee and the Indenture Trustee) in form, scope
and substance reasonably satisfactory to Lessee and the Indenture Trustee as to
any matter set forth in clause (Q) and as to such other matters as Lessee or
the Indenture Trustee may reasonably request. Upon any such transfer by the
Owner Participant as above provided, the Transferee shall be deemed the Owner
Participant for all purposes hereof and of the other Operative Agreements and
each reference herein to the transferor Owner Participant shall be deemed for
all purposes, with respect to circumstances existing and requirements arising
thereafter, to be to the Transferee and the transferor Owner Participant shall
be relieved of all obligations of the transferring Owner Participant under the
Owner Participant Agreements arising after the date of such transfer except to
the extent fairly attributable to acts or events occurring prior thereto and
not assumed by the transferee Owner Participant. If the Owner Participant
intends to transfer its interests hereunder, it shall give prior written notice
thereof as soon as practicable, but in no event less than ten (10) Business
Days prior thereto, to the Indenture Trustee, the Owner Trustee and Lessee,
specifying the name and address of the proposed Transferee and the facts
necessary to determine whether or not the requirements for a Transferee, as set
forth herein, are satisfied. The Owner Participant shall pay, or shall cause
the transferee Owner Participant to pay, all of the reasonable costs and
expenses (including, without limitation, legal fees and expenses) of the
Original Loan Participant and the other parties hereto (except the costs and
expenses of Lessee if such transfer is effected during the continuance of a
Lease Default (of the type described in Section 14.1 or 14.5 of the Lease) or a
Lease Event of Default or in connection with the exercise of remedies under the
Lease), on a net after-tax basis, of any such transfer. For purposes of this
Agreement, "net worth" shall mean the excess of total tangible assets over
total liabilities, each to be determined in accordance with generally accepted
accounting principles consistently applied.
(m) Obligations of Trustees. The Indenture Trustee shall
be responsible for the payment, performance and discharge of, and shall fully
and completely pay, perform and discharge, all of its obligations under the
Trust Indenture in accordance with the terms thereof. Subject to the terms and
provisions of the Trust Agreement, the Owner Trustee shall be responsible for
the payment, performance and discharge of, and shall fully and completely pay,
perform and discharge, all of its obligations under the Lease in accordance
with the terms thereof.
(n) Compliance with Trust Indenture. SBC and Wilmington
Trust Company, each in its individual capacity, agrees for the benefit of
Lessee to comply with the terms of the Trust Indenture which it is required to
comply with in its individual capacity.
(o) ERISA. The Owner Participant represents and warrants
that no part of the funds used by it to acquire its interest in the Trust
Estate constitutes "plan assets" of any "employee benefit plan" within the
meaning of ERISA or of any "plan" within the meaning of Section 4975(e)(1) of
the Code, as interpreted by the Department of Labor. The Original Loan
Participant represents and warrants that no part of the funds used by it to
acquire the Certificates or any interest therein (including any participation
in such Certificates) constitutes "plan assets" of any "employee benefit
PARTICIPATION AGREEMENT [N604SW]
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plan" within the meaning of ERISA or any "plan" within the meaning of Section
4975(e)(1) of the Code.
(p) SBC's Representations and Warranties. SBC, in its
individual capacity, represents, warrants and covenants that:
(i) each of the Owner Trustee Documents has
been duly executed and delivered by one of its officers who is duly
authorized to execute and deliver such instruments on behalf of the
Owner Trustee or SBC, as the case may be;
(ii) the Trust Estate is free and clear of
Lessor Liens attributable to SBC in its individual capacity, and there
are no Liens affecting the title of the Owner Trustee to the Aircraft
or resulting from any act or claim against SBC in its individual
capacity arising out of any event or condition not related to the
ownership, leasing, use or operation of the Aircraft or to any other
transaction contemplated by this Agreement or any of the other
Operative Agreements, including any Lien resulting from the nonpayment
by SBC in its individual capacity of any Taxes imposed or measured by
its net income;
(iii) there has not occurred any event which
constitutes (or to the best of its knowledge would, with the passage
of time or the giving of notice or both, constitute) an Indenture
Event of Default which has been caused by or relates to SBC in its
individual capacity and which is presently continuing;
(iv) it is a national banking association
duly organized, validly existing and in good standing under the laws
of the United States and (assuming due authorization, execution and
delivery of the Trust Agreement by the Owner Participant) has the
corporate power and authority to enter into and perform its
obligations under the Trust Agreement and this Agreement (in its
individual capacity), and (assuming due authorization, execution and
delivery of the Trust Agreement by the Owner Participant) has full
right, power and authority to enter into and perform its obligations
as Owner Trustee pursuant to the Trust Agreement under each of the
other Owner Trustee Documents;
(v) each of the Trust Agreement and this
Agreement (in its individual capacity) and the Owner Trustee Documents
(in its trust capacity) has been duly authorized by all necessary
corporate action on its part, and neither the execution and delivery
thereof nor its performance of any of the terms and provisions thereof
will violate any federal or Connecticut law or regulation relating to
its banking or trust powers or contravene or result in any breach of,
or constitute any default under, its charter or by-laws or the
provisions of any indenture, mortgage, contract or other agreement to
which it is a party or by which it or its properties may be bound or
affected;
(vi) assuming due authorization, execution
and delivery of the Trust Agreement by the Owner Participant, each of
the Owner Trustee Documents has been duly executed and delivered by it
and, each of the Trust Agreement and this Agreement (to the extent
executed by the Owner Trustee in its individual capacity) is a legal,
valid and binding obligation of SBC in its individual capacity and as
Owner Trustee, as the case may be, enforceable against such party in
accordance with the terms thereof;
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(vii) on the Delivery Date, the Owner Trustee
shall have received whatever title to the Aircraft as was conveyed to
it by Lessee;
(viii) neither it nor anyone acting on its
behalf has offered any interest in the Trust Estate or any
Certificates or any similar securities for sale to, or solicited any
offer to acquire the same from, anyone, and no responsible officer or
responsible employee of SBC has knowledge of any such offer or
solicitation, except as set forth in Section 7(a)(x) hereof;
(ix) assuming due authorization, execution
and delivery of each of the Owner Trustee Documents by each of the
parties thereto (other than the Owner Trustee), each of the Owner
Trustee Documents is a legal, valid and binding obligation of the
Owner Trustee, enforceable against the Owner Trustee in accordance
with its respective terms;
(x) there are no proceedings pending or, to
the best knowledge of SBC, threatened, against SBC in any court or
before any governmental authority or arbitration board or tribunal
which, if adversely determined, would materially and adversely affect
the right, power and authority of SBC to enter into or perform its
obligations under the Owner Trustee Documents;
(xi) neither the due execution and delivery
of the Owner Trustee Documents by SBC, in its individual capacity or
as Owner Trustee under the Trust Agreement, as the case may be, nor
the consummation by it of any of the transactions contemplated thereby
require the consent or approval of, the giving of notice to, or the
registration with, any federal or Connecticut governmental authority
or agency pursuant to any federal or Connecticut law governing the
banking or trust powers of SBC; and
(xii) no later than sixty (60) days after
Lessee shall so request in writing, Owner Trustee shall execute and
deliver to Lessee (on a form to be supplied by Lessee) a Texas Sales
and Use Tax Certificate of Resale reflecting Owner Trustee's Texas or
Connecticut sales tax permit number and Owner Trustee's purchase of
the Aircraft pursuant to the Lease for lease to Lessee thereunder,
and, if necessary to permit Owner Trustee to issue such Certificate,
Owner Trustee shall apply for (on a form to be supplied by Lessee) a
Texas sales tax permit.
(q) Owner Participant's Lease Expenses. The Owner
Participant covenants and agrees to pay or cause the Owner Trustee to pay those
costs and expenses specified to be paid by the Owner Participant pursuant to
the Lease.
(r) Lessee's Assumption of Debt. Subject to compliance
by Lessee with all of its obligations under the Operative Agreements and
provided that the Series SWA 1995 Trust N604SW-I Certificates are no longer
outstanding, each of the Owner Trustee, the Indenture Trustee and the Owner
Participant covenants and agrees that, at Lessee's expense at no net after-tax
cost to any of such parties (including, without limitation, reasonable
attorneys' fees and expenses of each of such parties), (i) if Lessee elects to
terminate the Lease and to purchase the Aircraft pursuant to Section 18.2(b) of
the Lease, each of such parties will, subject to due compliance by Lessee with
the provisions of said Section 18.2(b), execute and deliver appropriate
documentation to Transfer to
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Lessee the Aircraft, and (ii) Lessee, in connection with such purchase, may (if
no Lease Default (of the type described in Section 14.1 or 14.5) or Lease Event
of Default shall have occurred and be continuing), assume (and, as set forth in
Section 18.2(c) of the Lease, receive a credit in an amount equal to the
principal amount of the debt assumed, against the purchase price payable by
Lessee pursuant to Section 18.2(b) of the Lease) the obligations of the Owner
Trustee pursuant to Section 7.03 of the Trust Indenture and the Certificates
(and the Lease, to the extent that the Owner Trustee's obligations thereunder
are incorporated into the Trust Indenture or the Certificates), and in such
event each of the parties shall execute and deliver appropriate documentation
as contemplated by Section 7.03 of the Trust Indenture.
(s) [Intentionally Reserved].
(t) [Intentionally Reserved].
(u) Lease Adjustments. Section 3.7 of the Lease
contemplates that, under certain circumstances, the Owner Participant will make
certain recalculations and the Owner Participant hereby agrees to promptly take
such actions as may be necessary or desirable to give effect to and to cause
the Owner Trustee to give effect to the provisions of Section 3.7 of the Lease.
(v) Revocation of Trust Agreement. The Owner Participant
agrees, notwithstanding anything to the contrary contained in the Trust
Agreement, (i) solely for the benefit of the Indenture Trustee and the Holders
that it will not revoke or otherwise terminate the Trust Agreement as long as
the Trust Indenture is in effect, and (ii) solely for the benefit of Lessee
that it will not revoke or otherwise terminate the Trust Agreement during the
Term without the prior written consent of Lessee, except that, notwithstanding
the foregoing clauses (i) and (ii), or any other provision of the Operative
Agreements to the contrary, the Owner Participant shall have the right to
terminate the trusts set forth in the Trust Agreement without the consent of
any other party to the Operative Agreements, at any time, if in connection
therewith the Owner Participant shall simultaneously create a new trust upon
substantially the same terms and conditions as the trusts so terminated and
shall cause the Trust Estate to be vested in the Owner Trustee under the new
trust upon the same terms and conditions so applied to such terminated trust;
provided, however, that in connection with any such termination (A) none of the
creation of such new trust, the termination of the trust set forth in the Trust
Agreement or the transactions consummated in connection therewith will have any
adverse impact on any of Lessee's rights or the Indenture Trustee's rights
under the Operative Agreements (including the first priority lien status of the
Lien of the Trust Indenture), (B) Lessee shall have no responsibility to
indemnify any Indemnified Party under any provision of any Operative Agreement
for any Taxes or other consequences that in either case would not have been
incurred but for such termination and transfer, (C) the Owner Participant shall
indemnify Lessee and the Indenture Trustee for any costs, expenses, taxes or
other consequences that in either case would not have been incurred but for
such termination and transfer, (D) the Owner Participant shall provide Lessee
and the Indenture Trustee with an opinion in form and substance reasonably
satisfactory to them as to the effect of such termination and transfer, and (E)
immediately after such transfer, the beneficiary of the new trust shall be the
same as the beneficiary of the trust set forth in the Trust Agreement. The
Owner Participant further agrees (x) promptly to provide instructions to the
Owner Trustee, upon the request of the Owner Trustee and as otherwise required
or permitted under the Trust Agreement, so as to enable the Owner Trustee to
perform its duties and obligations under the Operative Agreements in accordance
with the terms and provisions thereof and (y) not to
PARTICIPATION AGREEMENT [N604SW]
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remove the institution acting as Owner Trustee, and not to replace the
institution acting as Owner Trustee in the event that such institution resigns
as Owner Trustee, unless the Owner Participant shall have consulted in good
faith with Lessee prior to such removal or replacement; provided, that no such
consultation shall be required if a Lease Event of Default shall have occurred
and be continuing.
(w) [Intentionally Reserved].
(x) Withholding Taxes. The Original Loan Participant
represents that it is exempt from United States withholding taxes, and
covenants that, if required to obtain or renew such exemption, it will properly
prepare and promptly furnish to each of the Owner Trustee, the Indenture
Trustee, and Lessee Internal Revenue Service Form 1001, Form 4224 (with respect
to each tax year) or Form W-8, whichever is applicable. The Original Loan
Participant represents, warrants and covenants that it will promptly notify the
Owner Trustee, the Indenture Trustee and Lessee if it transfers any interest in
its Series SWA 1995 Trust N604SW-I Certificate to any Person, other than
pursuant to Section 17 or 18 hereof or Section 8.03(e)(ii) of the Indenture.
The Original Loan Participant shall indemnify (on an after-tax
basis) and hold harmless the Indenture Trustee, the Owner Trustee, Lessee and
the Owner Participant against any United States withholding taxes (and related
interest and penalties) which the Indenture Trustee fails to withhold on
payments to it as a result of its failure to provide the required certificate
or form or the invalidity of any certificate or form provided by it pursuant to
this Section 8(x) or as a result of any inaccuracy of the representations set
forth in the immediately preceding paragraph. Any amount payable hereunder
shall be paid within 30 days after receipt by the Original Loan Participant of
a written demand therefor and shall include interest at the Overdue Rate from
the date any withholding tax has been paid by such party until the date
indemnified by the Original Loan Participant.
(y) Discharge of Trust Indenture. The Owner Participant
agrees that, at Lessee's expense (including, without limitation, reasonable
attorneys' fees and other out-of-pocket expenses of the Owner Trustee and Owner
Participant), upon request of Lessee, the Owner Participant will negotiate
promptly in good faith with respect to any arrangements pursuant to which the
Trust Indenture may be satisfied and discharged in respect of the Certificates
in accordance with subsection (ii) or (iii) of Section 10.01(a) of the Trust
Indenture, and the Owner Trustee agrees to act upon the instructions of the
Owner Participant in connection therewith; provided, however, that the
determination whether to so satisfy and discharge the Certificates shall be in
the Owner Participant's sole discretion. The Owner Trustee agrees that it will
not, and the Owner Participant agrees that during such time as a Lease Event of
Default has not occurred it will not cause the Owner Trustee to, take any
action to effect such satisfaction and discharge except upon the request of
Lessee made pursuant to this Section 8(y).
(z) Permitted Investments. The Owner Trustee agrees that
(i) so long as the Trust Indenture has not been duly discharged, any profit,
income, interest, dividend or gain realized upon the maturity, sale or other
disposition of any Permitted Investment made by the Indenture Trustee pursuant
to Section 9.04 of the Trust Indenture, and paid to Lessee on behalf of the
Owner Trustee by the Indenture Trustee in accordance with the terms of such
Section 9.04, shall be entirely for the account of, and the sole property of,
Lessee who, for such purposes, shall not be deemed to be acting as agent of the
Owner Trustee, and Lessee shall have no obligation to pay over such profit,
income, interest, dividend or gain to the Owner Trustee, (ii) any such profit,
income, interest, dividend or gain
PARTICIPATION AGREEMENT [N604SW]
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not theretofore distributed shall, upon discharge of the Trust Indenture, be
paid by the Indenture Trustee to Lessee, unless instructed by the Owner
Participant to distribute such funds to the Owner Participant or the Owner
Trustee to the extent the Owner Participant or the Owner Trustee is owed any
amounts under the Operative Agreements that have not been paid when due, and
(iii) except to the extent the Owner Trustee or Owner Participant is owed any
amounts under the Operative Agreements by Lessee and such amounts are not paid
when due, the Owner Participant may cause the Indenture Trustee to distribute
and apply such profit, income, interest, dividend or gain realized upon the
maturity, sale or other disposition of investment of funds pursuant to Section
22.1 of the Lease, in satisfaction or partial satisfaction of the amounts so
due.
(aa) Special Purchase Option. If Lessee shall have
elected both (i) to assume all of the rights and obligations of Lessor under
the Trust Indenture in accordance with Section 7.03 of the Trust Indenture and
(ii) to pay to Lessor the installments specified in the proviso to Section
18.2(c) of the Lease, then, as further conditions precedent to those specified
in paragraphs (c) and (d) of Section 18.2 of the Lease to such assumption:
(1) the Indenture Trustee shall have received evidence reasonably
satisfactory to it that the Trust Indenture, after giving effect to the
transactions contemplated by Section 18.2(d) of the Lease, constitutes a first
priority and perfected security interest in the Aircraft, which evidence shall
include an opinion of the tenor contemplated by Section 7.03(h) of the Trust
Indenture and the Owner Trustee shall have received evidence reasonably
satisfactory to it that it has a second priority and perfected security
interest in the Aircraft; and (2) the Indenture Trustee and the Owner Trustee
shall execute and deliver an intercreditor agreement that covers the following
matters:
(x) the Owner Trustee shall not, notwithstanding any
Lease Event of Default, exercise any remedy accorded to it pursuant to
Section 15 of the Lease until the Trust Indenture shall have been
discharged pursuant to Section 10.01 of the Trust Indenture;
(y) payment of the Supplemental Rent under the Lease in
respect of the installments specified in Section 18.2(c) of the Lease,
and all other amounts owing to the Owner Trustee (other than Excluded
Payments) (collectively, "Equity Payments"), shall be fully and
unconditionally subordinated to the payment in full in cash of
principal, interest, Break Amount or Premium, if any, and all other
amounts owing to the Holders or the Indenture Trustee under or in
respect of the Certificates or the Trust Indenture (collectively,
"Debt Payments"), all pursuant to such terms of subordination as shall
be effectively and substantively equivalent to the manner in which
Debt Payments are paid or payable in priority to the Equity Payments,
and such other customary terms of subordination as shall be reasonably
required by the Indenture Trustee; and
(z) the Owner Trustee shall have the substantive
equivalent of the cure and buy-out rights specified in clauses (e)(i)
and (e)(ii) of Section 8.03 of the Trust Indenture.
(2) The opinion to be delivered pursuant to Section 7.03(g) of the
Trust Indenture shall be given with the following additional requirements:
(y) it shall be addressed to the Owner Trustee, as well;
PARTICIPATION AGREEMENT [N604SW]
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(z) in the case of the opinion called for by Section
7.03(g)(iv), it shall be given by Xxxxxx & Xxxxxx L.L.P., or such other counsel
reasonably satisfactory to the Owner Trustee; the proviso included in such
Section 7.03(g)(iv) shall not apply; and such opinion shall be delivered to the
Owner Trustee 30 days prior to the Assumption Date.
(bb) Transfers of Debt Interests. Except in connection
with any transfer pursuant to Section 17 or 18 hereof, or Section 8.03(e)(ii)
of the Indenture, the Original Loan Participant covenants that it will not (i)
transfer or (ii) grant participations in, its Certificate to any Person unless
such Person represents, warrants and covenants in writing to the Original Loan
Participant and, in the case of a transfer, to the Owner Participant and
Lessee, (A) to the effect set forth in Section 8(x) hereof and (B) further
represents and warrants to the Original Loan Participant and, in the case of a
transfer, to the Owner Participant and Lessee either that (a) no part of the
funds used by it to acquire its Series SWA 1995 Trust N604SW-I Certificate or
participation constitutes "plan assets" of any "employee benefit plan" within
the meaning of ERISA or any "plan" within the meaning of Section 4975(e)(1) of
the Code, or (b) its purchase or acquisition of such Series SWA 1995 Trust
N604SW-I Certificate or participation will not result in a nonexempt prohibited
transaction under Section 4975 of the Code or Section 406 of ERISA. Any such
Person shall require any transferee of its interest to make the
representations, warranties and covenants in the preceding sentence.
(cc) [Intentionally Reserved].
(dd) Deferred Equity. The Owner Participant hereby
unconditionally agrees with Lessee, and only with Lessee (and not with any
other party to this Agreement or the Holders of any Certificates), that, so
long as no Lease Event of Default or Lease Default (of the type described in
Section 14.1 or 14.5 of the Lease) shall have occurred and be continuing, it
will pay or cause to be paid to the Indenture Trustee on the Deferred Equity
Date sufficient funds to effect the payment of an amount (the "Deferred Equity
Amount") equal to the amount due on such date in respect of accrued interest on
the Certificates from their date of issuance to and including the Deferred
Equity Date. The Owner Participant and the Owner Trustee hereby direct the
Indenture Trustee, and the Indenture Trustee hereby agrees, to apply the
Deferred Equity Amount to the payment of interest on the Certificates which may
be due and payable pursuant to the provisions of the Trust Indenture on the
Deferred Equity Date. The Owner Participant agrees to make payment of the
Deferred Equity Amount in immediately available funds on or before 11:00 a.m.,
New York City time, on the Deferred Equity Date; provided, that the Owner
Participant agrees to give Lessee notice by 11:00 a.m., New York City time, on
the second Business Day prior to the Deferred Equity Date, if it shall not make
such payment. The Indenture Trustee agrees to give Lessee prompt notice if it
shall not have received such payment by noon, New York City time, on the
Deferred Equity Date. The Owner Participant further agrees to fund the
obligations of the Owner Trustee arising pursuant to clause (5) of Section
18(a). In the event the Owner Participant fails to make any such payment, or
if the Owner Trustee shall fail to make the payment required pursuant to clause
(5) of Section 18(a), and in either case Lessee shall make an Advance as
required by Section 3.8 of the Lease, Lessee may obtain reimbursement in the
manner and to the extent provided in Section 3.8 of the Lease for the Advance,
together with interest on such amount at the rate described below from (and
including) the date of the making of such Advance to (but excluding) the date
of reimbursement by the Owner Participant or the date Lessee deducts such
Advance from other payments to the extent and as provided in Section 3.8 of the
Lease and, without duplication of the foregoing, shall have such remedies as
may be available to it against the Owner Participant at law or in equity in
respect of the
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recovery of any such Advance. Interest shall accrue on the amount of the
Advance at an annual rate equal to 5% in excess of the Base Rate, unless the
Advance is made when any Lease Event of Default or Lease Default (of the type
described in Section 14.1 or 14.5 of the Lease) shall have occurred and be
continuing, in which event interest shall accrue on the amount of the Advance
at the Base Rate, but in each case not to exceed to maximum rate permitted by
applicable law. All amounts paid to Lessee by the Owner Participant in respect
of the Advance or deducted by Lessee pursuant to Section 3.8 of the Lease shall
be applied first to payment to Lessee of interest and then to payment to Lessee
of amounts equal to the Advance.
(ee) Lessee as Pricing Agent for Certificate. The Owner
Trustee hereby appoints Lessee as its agent to select the pricing provisions
and related Interest Periods in respect of the Series SWA 1995 Trust N604SW-I
Certificate, such appointment to be effective so long as no Lease Default or
Lease Event of Default shall have occurred and be continuing.
SECTION 9. Payments to Lessee of Trust Indenture
Monies. The Owner Participant hereby agrees to instruct the Owner Trustee to
promptly distribute any money received by it pursuant to Section 7.01 or 10.04
of the Trust Indenture to Lessee to the extent such amounts were paid by Lessee
or on behalf of Lessee and the Owner Trustee or the Owner Participant is not
owed any amounts under any of the Operative Agreements by Lessee (and if the
Owner Trustee or Owner Participant is owed any such amount, the monies received
under Section 7.01 or 10.04 of the Trust Indenture may be applied in
satisfaction or partial satisfaction thereof). Lessee agrees to hold any money
received by it pursuant to the foregoing sentence in trust for the benefit of
the Owner Participant and may, in its discretion, invest and reinvest all money
so held by it in such Permitted Investments as Lessee deems appropriate.
Lessee will apply such money to the payment of previously unclaimed payments
with respect to the Certificates when and as claims for payment are made by the
Holders of such Certificates. As compensation for its services pursuant to
this Section 9, Lessee shall be entitled to an annual fee from the Owner
Participant in an amount to be agreed to at the time by Lessee and the Owner
Participant but in no event shall such fee exceed at any time the amount of
earnings on the monies so held in trust distributable at such time to the Owner
Participant. Any net losses on such investment shall be for the account of
Lessee. Any net earnings on such investment shall be distributed from time to
time by Lessee to the Owner Participant after deducting therefrom any portion
of such fee then due and unpaid. Upon the date required by applicable law
dealing with unclaimed property, Lessee will distribute to the Owner
Participant any amount held by it pursuant to this Section 9 and not previously
applied to the payment of the Certificates, after deducting therefrom any
portion of such fee then due and unpaid.
SECTION 10. Other Documents; Amendment. Lessee
acknowledges receipt of executed copies of the Trust Agreement and Trust
Indenture and hereby consents in all respects to the execution and delivery of
the Trust Agreement and Trust Indenture and to all the terms thereunder,
including, without limitation, the assignment under the Trust Indenture of
Lessor's rights under the Lease. Each of the Owner Participant and the Owner
Trustee hereby (A) agrees with Lessee and the Indenture Trustee to comply with
all of the terms of the Trust Agreement and, to the extent the same purports or
is stated to bind the Owner Participant, the Trust Indenture (each as the same
may hereafter be amended or supplemented from time to time in accordance with
the terms thereof) applicable to it, to the extent such non-compliance would be
adverse to such party; and (B) subject to Section 8(v), agrees with Lessee and
the Indenture Trustee not to amend, supplement or otherwise modify any
provision of the Trust Agreement in a manner adversely affecting such party
PARTICIPATION AGREEMENT [N604SW]
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without the prior written consent of such party. In addition, unless a Lease
Default (of the type referred to in Section 14.1 or 14.5 of the Lease) or Lease
Event of Default shall have occurred and be continuing and so long as the Lease
has not been terminated, the Indenture Trustee and the Owner Trustee hereby
agree for the benefit of Lessee that without the consent of Lessee they will
not (and the Owner Participant agrees that it will not cause the Owner Trustee
to) amend, supplement or otherwise modify any provision of the Trust Indenture
in a manner adversely affecting Lessee. The Indenture Trustee and the Owner
Trustee agree to promptly furnish to Lessee copies of any supplement,
amendment, waiver or modification of any of the Operative Agreements to which
Lessee is not a party. Each Holder agrees that it will not take any action in
respect of the Trust Indenture Estate except through the Indenture Trustee
pursuant to the Trust Indenture or as otherwise permitted by the Trust
Indenture.
SECTION 11. Certain Covenants of Lessee. Lessee
covenants and agrees with the Participants, the Indenture Trustee and the Owner
Trustee, in its capacity as such and in its individual capacity, as follows:
(a) Further Assurances. Lessee will cause to be done,
executed, acknowledged and delivered all and every such further acts,
conveyances and assurances as the Owner Trustee, the Indenture Trustee or any
Participant shall reasonably require for accomplishing the purposes of this
Agreement and the other Operative Agreements. Lessee, forthwith upon delivery
of the Aircraft under the Lease, shall cause the Aircraft to be duly
registered, and at all times thereafter to remain duly registered, in the name
of the Owner Trustee, or shall furnish to the Owner Trustee such information as
may be required to enable the Owner Trustee to make application for such
registration (at the expense of Lessee, including, without limitation,
reasonable attorneys' fees and expenses), and shall promptly furnish to the
Owner Trustee such information as may be required to enable the Owner Trustee
to timely file any reports required to be filed by it as the lessor under the
Lease or as the owner of the Aircraft with any governmental authority
(including tax authorities), it being understood that Lessee shall not be
required to comply with this covenant to the extent that SBC's or the Owner
Participant's failure to comply with its covenant in Section 8(b) with regard
to its citizenship makes such compliance by Lessee impossible.
(b) Filing and Recording, Etc. Lessee, at its expense,
will, at the request of any party hereto, take, or cause to be taken, such
action with respect to the recording, filing, rerecording and refiling of the
Trust Agreement, the Lease, all Lease Supplements, the Trust Indenture, all
Trust Supplements and any financing statements or other instruments as are
necessary to maintain, so long as the Trust Indenture or the Lease is in
effect, the perfection of the security interests created by the Trust Indenture
and any security interest that may be claimed to have been created by the Lease
and the ownership interest of the Owner Trustee in the Aircraft. Lessee
agrees, upon the request and at the sole expense of the Owner Participant, to
take all reasonable acts requested by the Owner Participant in complying with
its obligations under clause (A) or (B) of the second sentence of Section 8(b).
(c) FAA Filings. Upon the execution and delivery of the
Lessee FAA Xxxx of Sale, the Lease Supplement and Trust Supplement covering the
Aircraft, the Lease and the Trust Indenture shall be filed for recording with
the FAA in the following order of priority: first, the Lessee FAA Xxxx of
Sale; second, the FAA registration application; third, the Trust Indenture,
with the Trust Agreement and the Trust Supplement covering the Aircraft
attached; and fourth, the Lease, with the
PARTICIPATION AGREEMENT [N604SW]
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Lease Supplement covering the Aircraft, the Trust Indenture and the Trust
Supplement covering the Aircraft attached. Lessee agrees to furnish the
Participants and the Indenture Trustee with copies of the foregoing documents
with recording data as promptly as practicable following the issuance of same
by the FAA.
(d) Annual Compliance Opinions. Lessee will furnish to
Owner Trustee and Indenture Trustee annually after the execution hereof (but
not later than December 1 of each year), commencing with the year 1996,
opinions of counsel for Lessee selected by Lessee and reasonably satisfactory
to Owner Trustee and Indenture Trustee stating that, in the opinion of such
counsel, either (a) such action has been taken (or specifying any action which
must be taken) with respect to the recording, filing, rerecording and refiling
of (i) the appropriate Operative Agreements and any supplements and amendments
thereto, (ii) UCC financing statements, and (iii) such other filings or
recordings as are necessary to maintain for the 15-month period succeeding the
date of such opinion the perfection of Owner Trustee's and Indenture Trustee's
title to and interest in the Aircraft and the Operative Agreements and the
ownership interest of Owner Trustee in the Aircraft, reciting the details of
such actions, or (b) no such action is necessary to maintain for the 15-month
period succeeding the date of such opinion the perfection of such title and
interest.
(e) Engine Purchase Agreement. Lessee agrees to furnish
the Owner Trustee and the Indenture Trustee, promptly upon demand therefor, an
agreement (the "Engine Purchase Agreement Assignment") assigning the rights of
Lessee under the purchase agreement pursuant to which Lessee originally
acquired the Engines (the "Engine Purchase Agreement") to the Owner Trustee
(which rights are collaterally assigned to the Indenture Trustee),
substantially in the form of the Purchase Agreement Assignment, and to use its
best efforts to obtain from the Engine Manufacturer a consent and agreement in
substantially the form of the Manufacturer's Consent.
(f) Merger. Lessee will not consolidate with or merge
into any other corporation or convey, transfer or lease all or substantially
all of its assets to any Person unless:
(i) the corporation formed by such
consolidation or into which Lessee is merged or the Person which
acquires by conveyance, transfer or lease all or substantially all of
the assets of Lessee as an entirety, as the case may be (the
"Successor") shall be (i) a corporation organized and existing under
the laws of the United States of America or any state thereof or the
District of Columbia, (ii) a "citizen of the United States" as defined
in the Act, and (iii) a United States certificated air carrier;
(ii) the Successor shall execute and deliver
to the Owner Trustee, the Indenture Trustee and the Participants an
agreement in form reasonably satisfactory to the Owner Trustee, the
Indenture Trustee and each Participant containing an assumption by the
Successor of the due and punctual performance and observance of each
covenant and condition of the Operative Agreements to be performed or
observed by Lessee;
(iii) immediately after giving effect to such
transaction and as a result of giving effect to such transaction, no
Lease Default or Lease Event of Default shall have occurred and be
continuing;
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(iv) Lessee shall have delivered to the Owner
Trustee, the Indenture Trustee and each Participant an Officer's
Certificate and an opinion of counsel to the Successor reasonably
satisfactory to the Owner Trustee, the Indenture Trustee and each
Participant, each stating that such consolidation, merger, conveyance,
transfer or lease and the assumption agreement mentioned in
subparagraph (ii) above comply with this Section 11(f) (except that
such opinion need not refer to subparagraph (iii) above), that the
agreements entered into to effect such consolidation, merger,
conveyance, transfer or lease and such assumption agreement are legal,
valid and binding obligations of the Successor, enforceable against
the Successor in accordance with their respective terms (subject to
applicable bankruptcy, insolvency and similar laws affecting the
enforcement of creditors' rights generally and to general principles
of equity), and that all conditions precedent herein provided for
relating to such transaction have been complied with; and
(v) the Successor shall make such filings
and recordings with the FAA pursuant to the Act, as shall be necessary
or desirable to evidence such consolidation, merger, conveyance,
transfer or lease with or to such Successor.
Upon any such consolidation, merger, conveyance, transfer or
lease, the Successor shall succeed to, and be substituted for, and may exercise
every right and power of, Lessee under the applicable Operative Agreements with
the same effect as if the Successor had been named as Lessee therein. No such
conveyance, transfer or lease of all or substantially all of the assets of
Lessee as an entirety shall have the effect of releasing Lessee or any
successor corporation or Person which shall theretofore have become such in the
manner prescribed in this Section 11(f) from its liability in respect of any
Operative Agreement to which it is a party. Nothing contained herein shall
permit any lease, sublease or other arrangement for the use, operation or
possession of the Aircraft except in compliance with the applicable provisions
of the Lease (or any assignment by Lessee of its rights under the Lease, except
in connection with a transaction in compliance with the express provisions of
this Section 11(f)).
(g) Corporate Existence. Except as permitted by Section
11(f) hereof, Lessee shall at all times maintain its corporate existence.
Lessee covenants and agrees that it will at all times be a "citizen of the
United States" within the meaning of the Act.
(h) Certificate Schedule. Lessee will provide on behalf
of the Owner Trustee the amortization schedule for the Certificate to be issued
to the Original Loan Participant at least two days before the Delivery Date.
(i) No Certificate Ownership. Lessee agrees that it will
not, at any time, hold any Certificates, or any participation or other interest
therein.
SECTION 12. Ownership of Aircraft. It is hereby
agreed among Lessee, the Owner Participant and the Owner Trustee that for all
purposes the Owner Trustee will be the owner of the Aircraft (except that the
Owner Participant will be the owner for income tax purposes and except under
the circumstances contemplated by the proviso to Section 18.2(d) of the Lease)
and Lessee will be the lessee thereof, and each party hereto agrees to
characterize the Lease as a lease for income tax purposes and all other
relevant purposes (subject to the election referred to above).
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SECTION 13. Notices; Consent to Jurisdiction. (a)
Except as otherwise provided in this Agreement respecting telephone notices,
all notices, demands, instructions and other communications required or
permitted to be given to or made upon any party hereto shall be in writing and
shall be personally delivered or sent by registered or certified mail, postage
prepaid, or by prepaid telex, TWX or telegram (with messenger delivery
specified in the case of a telegram), or by telecopier, or by prepaid courier
service, and shall be deemed to be given for purposes of this Agreement on the
day that such writing is delivered or, if given by certified mail, three (3)
Business Days after being deposited in the mails, in accordance with the
provisions of this Section 13(a). Unless otherwise specified in a notice sent
or delivered in accordance with the foregoing provisions of this Section 13(a),
notices, demands, instructions and other communications in writing shall be
given to or made upon the respective parties hereto at their respective
addresses (or to their respective telex, TWX or telecopier numbers) as follows:
(A) if to Lessee, the Owner Trustee, the Original Loan Participant, the
Indenture Trustee or the Owner Participant, to the respective addresses set
forth on Schedule I hereto (and in the case of Owner Trustee a copy shall be
sent to the Owner Participant) or (B) if to a subsequent Owner Participant,
addressed to such subsequent Owner Participant at such address as such
subsequent Owner Participant shall have furnished by notice to the parties
hereto or (C) if to any subsequent Holder, addressed to such Holder at its
address set forth in the Register maintained pursuant to Section 2.03 of the
Trust Indenture.
(b) Each party to this Agreement (individually a "Party"
and collectively "Parties") irrevocably agrees that any legal suit, action or
proceeding brought by any other Party, which arises solely out of or relates
solely to the Operative Agreements or any of the transactions contemplated
hereby or thereby or any document referred to herein or therein, may be
instituted in the competent courts of the State of New York in New York County
or the United States District Court for the Southern District of New York and
that they, to the maximum extent permitted by law, hereby waive the right to
trial by jury in any such proceeding; provided, however, that the foregoing
provisions shall not apply to third party tort claims (but shall apply to an
indemnity claim with respect to such tort claim) and that the foregoing shall
not apply to any right a party may have to seek removal of such legal suit,
action or proceeding to federal court or to seek consolidation of any separate
legal suits, actions or proceedings brought by any one or more of the other
parties in the same or different jurisdictions. The agreement set forth in
this Section 13(b) is given solely for the benefit of the Parties, and such
agreement is not intended to and shall not (i) confer exclusive jurisdiction on
any court or (ii) inure to the benefit of any other Person.
SECTION 14. Change of Situs of Owner Trust. The
Owner Participant agrees that if, at any time, the Trust Estate becomes subject
to any Taxes for which it is indemnified pursuant to Section 7(b) hereof and
if, as a consequence thereof, Lessee should request that the situs of the trust
be moved to another state in the United States from the state in which it is
then located, the situs of the trust may be moved and the Owner Participant
will take whatever action may be reasonably necessary to accomplish such
removal; provided, that (A) Lessee shall provide such additional tax
indemnification as the Owner Participant may reasonably request, (B) the rights
and obligations under the Operative Agreements of the Owner Participant shall
not be adversely altered as a result of the taking of such action, or the Owner
Participant shall be indemnified by Lessee to its reasonable satisfaction for
any such alteration, (C) the lien of the Trust Indenture on the Trust Indenture
Estate shall not be adversely affected by such action, and Lessee shall execute
and deliver such documents as may be requested by the Indenture Trustee to
continue the perfection and priority of the lien on the Trust Indenture Estate,
(D) the Owner Participant shall have received an opinion
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or opinions of counsel (reasonably satisfactory to the Owner Participant) in
scope, form and substance reasonably satisfactory to the Owner Participant to
the effect that (I) the trust, as thus removed, shall remain a validly
established trust and the Trust Agreement and other Operative Agreements shall
remain valid, binding and enforceable in accordance with their terms, (II) any
amendments to the Trust Agreement necessitated by such removal shall have been
duly authorized, executed and delivered by the parties thereto and shall
constitute the legal, valid and binding obligations of such parties,
enforceable in accordance with their terms, (III) such removal will not result
in the imposition of, or increase in the amount of, any Tax for which Lessee is
not required to indemnify the Owner Participant, the Owner Trustee or the Trust
Estate pursuant to Section 7(b) hereof (taking into account any additional
indemnification provided by Lessee pursuant to clause (A) of this sentence),
(IV) such removal will not result in any Loss of MACRS Deductions, Transaction
Expense Deductions, Interest Deductions or an Inclusion (as defined in the Tax
Indemnity Agreement) with respect to which Lessee is not required to indemnify
the Owner Participant pursuant to Section 6 of the Tax Indemnity Agreement
(taking into account any additional indemnification provided by Lessee pursuant
to clause (A) of this sentence), (V) the rights and obligations of the Owner
Participant under the Operative Agreements shall be substantially the same
under the laws of the new situs and (VI) covering such other matters as the
Owner Participant may reasonably request, (E) if such removal involves the
replacement of the Owner Trustee, the Owner Participant shall have received an
opinion of counsel to such successor Owner Trustee in form and substance
reasonably satisfactory to the Owner Participant covering the matters addressed
by the opinion delivered pursuant to Section 4(a)(xiii) hereof, and (F) Lessee
shall indemnify and hold harmless the Owner Participant on a net after-tax
basis against any and all reasonable and actual costs and expenses including
attorneys' fees and disbursements, registration, recording or filing fees
incurred by the Owner Trustee or Owner Participant, in connection with such
change of situs.
SECTION 15. Miscellaneous.
(a) Consents under Lease and Trust Indenture. Each of
the Owner Participant and each Holder covenants and agrees that it shall not
unreasonably withhold its consent to any consent requested of the Owner
Trustee, as Lessor, or the Indenture Trustee under the terms of the Lease,
which by its terms is not to be unreasonably withheld by the Owner Trustee, as
Lessor, or by the Indenture Trustee. Each Holder covenants and agrees that it
shall not unreasonably withhold its consent to any consent requested of the
Indenture Trustee under the terms hereof or in the Trust Indenture, which by
its terms is not to be unreasonably withheld by the Indenture Trustee.
(b) Survival. The representations, warranties,
indemnities and agreements of Lessee, the Owner Trustee, the Indenture Trustee,
the Owner Participant and the Original Loan Participant provided for in this
Agreement, and Lessee's, the Owner Trustee's, the Indenture Trustee's, the
Original Loan Participant's and the Owner Participant's obligations under any
and all thereof, shall survive the making available of the respective
Commitments by the Participants, the delivery or return of the Aircraft, the
transfer of any interest of the Owner Participant in the Trust Estate or the
Aircraft or any Engine or the transfer of any interest by any Holder in any
Certificate or the Trust Indenture Estate and the expiration or other
termination of this Agreement or any other Operative Agreement, except as
otherwise expressly provided herein or therein.
(c) Counterparts; Waivers; Governing Law. This Agreement
may be executed by the parties hereto in separate counterparts, each of which
when so executed and delivered shall be an
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original, but all such counterparts shall together constitute but one and the
same instrument. Neither this Agreement nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified, except by an instrument
in writing signed by the party against which the enforcement of the
termination, amendment, supplement, waiver or modification is sought; and no
such termination, amendment, supplement, waiver or modification shall be
effective unless a signed copy thereof shall have been delivered to Lessee, the
Indenture Trustee and the Owner Trustee. The terms of this Agreement shall be
binding upon, and inure to the benefit of and shall be enforceable by, Lessee,
the Participants, the Indenture Trustee and the Owner Trustee. THIS AGREEMENT
SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE. THIS AGREEMENT IS BEING DELIVERED IN THE STATE OF
NEW YORK.
(d) No Recourse Against Owner Trustee. The parties
hereto agree that all of the statements, representations, covenants and
agreements made by the Owner Trustee (when made in such capacity) contained in
this Agreement and any agreement referred to herein other than the Trust
Agreement, unless expressly otherwise stated, are made and intended only for
the purpose of binding the Trust Estate and establishing the existence of
rights and remedies which can be exercised and enforced against the Trust
Estate. Therefore, anything contained in this Agreement or such other
agreements to the contrary notwithstanding (except for any express provisions
that the Owner Trustee is responsible for or is acting in or making
representations or agreements in its individual capacity), no recourse shall be
had with respect to this Agreement or such other agreements against the Owner
Trustee in its individual capacity or against any institution or person which
becomes a successor trustee or co-trustee or any officer, director, trustee,
servant or direct or indirect parent or controlling person or persons of any of
them; provided, however, that this Section 15(d) shall not be construed to
prohibit any action or proceeding against any party hereto for its own willful
misconduct or grossly negligent conduct; and provided, further, that nothing
contained in this Section 15(d) shall be construed to limit the exercise and
enforcement in accordance with the terms of this Agreement or such other
agreements of rights and remedies against the Trust Estate. The foregoing
provisions of this Section 15(d) shall survive the termination of this
Agreement and the other Operative Agreements.
(e) Duties Limited. No Participant shall have any
obligation or duty to Lessee, to any other Participant or to others with
respect to the transactions contemplated hereby except those obligations or
duties of such Participant expressly set forth in this Agreement and the other
Operative Agreements and no Participant shall be liable for performance by any
other party hereto of such other party's obligations or duties hereunder.
Without limitation of the generality of the foregoing, under no circumstances
whatsoever (except as provided in Section 7(d) hereof) shall the Participant be
liable to Lessee, nor shall any Participant be liable to any other Participant,
for any action or inaction on the part of the Indenture Trustee or the Owner
Trustee in connection with the transactions contemplated herein, whether or not
such action or inaction is caused by the willful misconduct or gross negligence
of the Indenture Trustee or the Owner Trustee.
(f) Binding on Parties and Successors. This Agreement
shall be binding upon and shall inure to the benefit of and shall be
enforceable against, the parties hereto and their respective successors and
permitted assigns including each successive holder of the Owner Participant's
interest and each successive holder of any Certificate issued and delivered
pursuant to this Agreement or the
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Trust Indenture whether or not an express assignment to such holder of rights
and obligations under this Agreement has been made.
(g) Enforceability Representations. Every representation
or warranty contained herein as to the enforceability of any Operative
Agreement shall be deemed to be made subject to the effects of applicable
bankruptcy, insolvency and similar laws affecting the enforcement of creditors'
rights generally and of general principles of equity.
(h) Quiet Enjoyment. So long as no Lease Event of
Default shall have occurred and be continuing during the Term, none of the
Participants, the Indenture Trustee or the Owner Trustee will, through its own
actions or breaches of any of its obligations under the Operative Agreements,
interfere in the quiet enjoyment of the Aircraft by Lessee or any Permitted
Sublessee.
SECTION 16. Transaction Costs; Invoices and Payment
of Expenses. (a) The parties hereto agree that the term "Transaction Costs"
shall mean (i) with respect to the closing on the Delivery Date and the
subsequent placement of the permanent debt pursuant to Section 18 hereof, the
reasonable and actual fees, expenses and disbursements of (1) Potter Xxxxxxxx &
Xxxxxxx, special counsel for the Indenture Trustee, (2) Xxxxxxx & Xxxxxxx,
counsel for the Owner Trustee, (3) Xxxxxxxxx, Xxxxxx & Xxxxxxxx, special
counsel in Oklahoma City, Oklahoma, (4) Shearman & Sterling, special counsel
for the underwriters in a potential refinancing transaction pursuant to Section
18 hereof, (5) Xxxxxx & Xxxxxx L.L.P., special counsel for Lessee, but only to
the extent of their expenses and disbursements, and (6) Xxxxxxxx, Xxxxxxxx &
Xxxxxx, special counsel for the Original Loan Participant, (ii) all fees, taxes
and other charges payable in connection with the recording or filing of
instruments and financing statements, (iii) the initial fee and initial
reasonable and actual disbursements of the Owner Trustee under the Trust
Agreement, (iv) the initial fee and initial reasonable and actual disbursements
of the Indenture Trustee under the Trust Indenture, (v) the fee and expenses of
Aero Economics, Inc. (or of such other appraiser as shall be acceptable to
Lessee and the Owner Participant) with respect to the appraisal of the Aircraft
required on or before the Delivery Date pursuant to Section 4(a) hereof, (vi)
the advisory fees and expenses of Xxxxxxx & Xxxxx Financial Corporation, (vii)
the reasonable out-of-pocket disbursements, costs and expenses of the Original
Loan Participant relating to the transactions contemplated hereby, (viii) the
reasonable out-of-pocket expenses of the Owner Participant relating to the
transactions contemplated hereby, excluding the fees and expenses of Owner
Participant's counsel, (ix) the initial fee, if any, of the Original Loan
Participant, (x) the placement or underwriting fees, commissions and expenses,
if any, in placing the permanent debt pursuant to Section 18 hereof and all
costs and expenses associated with a public offering, if any, pursuant thereto,
and (xi) printing and distribution costs.
(b) Each of the Owner Trustee, the Indenture Trustee,
Lessee and the Participants shall promptly submit to the Owner Participant
copies of invoices of the Transaction Costs as they are received. Lessee shall
also be provided with a copy of any xxxx for legal expenses, with an
opportunity to review and approve it (such approval not to be unreasonably
withheld or delayed). The Owner Participant agrees to pay such amounts
directly or to transfer to the Owner Trustee from time to time promptly upon
receipt of invoices of Transaction Costs such amount as shall be necessary in
order to enable the Owner Trustee to pay such Transaction Costs. To the extent
of funds received by it, the Owner Trustee agrees to pay all invoices of
Transaction Costs that have been so approved promptly upon receipt thereof.
Notwithstanding the foregoing, Lessee, at its option, may pay directly any
Transaction Costs in excess of (i) .365% of Lessor's Cost incurred in
connection
PARTICIPATION AGREEMENT [N604SW]
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with the closing of this transaction on the Delivery Date and (ii) .625% of
Lessor's Cost incurred in connection with the refinancing or refunding of the
Certificates pursuant to Section 18, (y) shall pay the fees of its special
counsel and, (z) in the event that the transactions contemplated hereby shall
not be consummated, Lessee shall pay all Transaction Costs, plus the fees,
expenses and disbursements of Owner Participant's counsel, except that the fees
and expenses referred to in clause (a) (viii) above, and the fees, expenses and
disbursements of the Owner Participant's counsel, shall be borne by the Owner
Participant if such failure to consummate the transactions results from the
failure of the Owner Participant to close after all conditions precedent to the
Owner Participant's funding (other than those conditions within the control of
the Owner Participant) of its Commitment set forth herein have been satisfied.
In any and all events, Lessee agrees to pay on a net after-tax basis the
reasonable out-of-pocket costs and expenses (including counsel fees) of each
Indemnified Party incurred in connection with the entering into or giving or
withholding of any future waiver, modification, supplement, consent, amendment
or other action with respect to any Operative Agreement which (a) is requested
by Lessee, (b) results from any adjustment pursuant to Section 3.7 of the
Lease, or (c) is necessary to effectuate the intent of any Operative Agreement.
In addition, upon such failure to consummate, Lessee shall pay the Original
Loan Participant any applicable Break Amount.
SECTION 17. Optional Redemption of Certificates.
(a) Subject to paragraph (d) below, in the event that Lessee shall have given
written notice to the Owner Trustee, the Indenture Trustee and the Owner
Participant requesting that there be effected a voluntary redemption of all of
the Outstanding Certificates by the Owner Trustee as part of a refunding or
refinancing transaction, the Owner Participant agrees to negotiate promptly in
good faith to conclude an agreement with Lessee as to the terms of such
refunding or refinancing transaction (including the terms of any debt to be
issued in connection with such refunding or refinancing transaction and the
documentation to be executed in connection therewith), and if after such good
faith negotiation Lessee and the Owner Participant shall have concluded an
agreement with respect to such terms:
(1) within ten (10) Business Days after the
reaching of such agreement, the Owner Participant will deliver to
Lessee a certificate of an authorized representative of the Owner
Participant (the "Refinancing Certificate") setting forth (i) the
proposed date on which the Outstanding Certificates will be redeemed,
describing the new debt to be issued and the other aspects of such
refunding or refinancing transaction to be consummated (such date, the
"Refinancing Date", which date shall be determined so as to comply
with Section 6.03(a) of the Trust Indenture) and (ii) the following
information: (A) subject to the limitations set forth in this Section
17, the proposed adjusted ratio of debt evidenced by the Certificates
to the Owner Participant's investment in the beneficial ownership of
the Aircraft (such ratio, the "Debt/Equity Ratio"), (B) the principal
amount of debt to be issued by the Owner Trustee on the Refinancing
Date, and (C) the proposed revised debt amortization and schedules of
Interim Rent, Basic Rent, Stipulated Loss Value percentages and
Termination Value percentages and the revised Special Purchase Price
(including any installments thereof). The Refinancing Certificate
shall not provide for a Debt/Equity ratio of more than 4:1. Within
ten (10) Business Days of its receipt of the Refinancing Certificate,
Lessee may demand a verification of the information set forth in the
Refinancing Certificate in the manner described in Section 3.7 of the
Lease. Upon the acceptance by Lessee of the accuracy of the
information set forth in the Refinancing Certificate or the
determination of such information pursuant to such verification
procedures
PARTICIPATION AGREEMENT [N604SW]
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(such information, the "Refinancing Information") the appropriate
parties will take the actions specified in subparagraphs (2) through
(6) below;
(2) the appropriate parties will enter into
a financing or loan agreement in form and substance reasonably
satisfactory to the Owner Participant, the Owner Trustee and Lessee
(which may involve an underwriting agreement in connection with a
public offering of such debt or the purchase of such debt by a
publicly funded entity (or entities)) with the institution or
institutions to be named therein (A) providing for (i) the issuance
and sale by the Owner Trustee to such institution or institutions on
the Refinancing Date of debt securities in an aggregate principal
amount specified in the Refinancing Information, which amount shall be
at least equal to the aggregate principal amount of all Certificates
Outstanding on the Refinancing Date (such debt securities, the "New
Debt"), (ii) the application of the proceeds of the sale of the New
Debt to the redemption of all such Certificates on the Refinancing
Date and the payment of any other amounts payable to the Holders under
the Operative Agreements on the Refinancing Date, and (iii) the
payment of the excess, if any, of such proceeds over the amount
necessary to effect such redemption to the Owner Trustee for payment
to the Owner Participant and (B) pursuant to which the parties to the
refinancing transaction (including the Owner Participant and Lessee
but excluding any public holders of debt) make such representations,
warranties and covenants as the Owner Participant or Lessee may
reasonably require;
(3) Lessee and the Owner Trustee will amend
the Lease to provide that (i) Interim Rent (if applicable) and Basic
Rent payable in respect of the period from and after the Refinancing
Date shall be as provided in the Refinancing Information (and shall
take into account any variation of either Deferred Equity Amount paid
by or on behalf of the Owner Participant pursuant to Section 8(dd), if
applicable, from the corresponding Assumed Interest Amount with
respect to the Deferred Equity Date or the first Rent Payment Date, as
the case may be), (ii) amounts payable in respect of Stipulated Loss
Value and Termination Value from and after the Refinancing Date shall
be as provided in the Refinancing Information, and (iii) in the event
that the Series SWA 1995 Trust N604SW Certificates shall have been
publicly issued, the early termination notice revocation and payment
provisions shall be modified to comport with the applicable notice and
payment requirements of The Depository Trust Company or any other
depository;
(4) the Owner Trustee will enter into an
agreement to provide for the securing thereunder of the New Debt in
like manner as the Certificates and will enter into such amendments
and supplements to the Trust Indenture (or such new indenture or other
security agreement) as may be necessary to effect such security;
(5) unless otherwise agreed to or required
by the Owner Participant to be paid as a Transaction Cost and whether
or not such refunding or refinancing transaction is consummated,
Lessee shall pay at no net after-tax cost to any other party all of
the reasonable out-of-pocket expenses of all parties to such refunding
or refinancing, including without limitation, the reasonable fees and
expenses of such parties' counsel and any related loan or commitment
fees; and
PARTICIPATION AGREEMENT [N604SW]
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(6) subject to compliance by the Owner
Trustee with all applicable terms and conditions for voluntary
redemption under the Trust Indenture and this Agreement, each Holder
of a Certificate being refinanced or refunded will transfer on the
applicable Redemption Date to the Owner Trustee each Certificate held
by it immediately prior to such refunding or refinancing for
cancellation (and the Owner Trustee shall cancel the same), against
simultaneous receipt by such Holder of payment for the then
outstanding principal amount of such Certificate, accrued and unpaid
interest thereon, Premium, if any, plus in the case of the Series SWA
1995 Trust N604SW-I Certificates, Break Amount, if any, together with
payment in full of all other amounts then payable to such Holder and
the Indenture Trustee hereunder or under the Trust Indenture.
(b) In the case of a refunding or refinancing involving a
public offering of the New Debt, the Owner Participant shall have the right
(but not the obligation) to review and approve (which approval shall not be
unreasonably withheld) any registration statement filed with the SEC to be
employed in connection therewith. Any public offering of the New Debt shall
not, except as required by Lessee, contain any restrictions on the sale to
Holders who may use ERISA funding sources. It is expressly understood that the
Owner Participant shall have no obligation hereunder to consent to such public
refunding or refinancing if, in its good faith judgment, such refunding or
refinancing increases its or any of its Affiliates' exposure to (i) liabilities
under federal or state securities laws, (ii) regulation under state or federal
securities laws, (iii) the need to disclose publicly information that is not
generally available to the public, or (iv) being adversely affected in its
ability to engage in any other financing transaction, in each case to a level
unacceptable to it in its reasonable, good faith judgment. Any trustee of
public debt shall be (i) Wilmington Trust Company or (ii) a bank or trust
company in the United States and having a combined capital and surplus of at
least $100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of trustee upon reasonable or customary terms.
(c) Lessee shall give the Indenture Trustee at least
thirty (30) days' irrevocable written notice of the proposed date of the
optional refunding or refinancing.
(d) Anything in this Section 17 to the contrary
notwithstanding, (i) all agreements and instruments to be executed and
delivered by the Owner Participant or the Owner Trustee under this Section 17
shall be reasonably satisfactory in form and substance to the Owner
Participant, (ii) neither Owner Participant nor the Owner Trustee shall be
required to execute and deliver any such agreement or instrument or to make any
other arrangements which in its opinion would result in any unreimbursed
increased costs or liability, including any adverse tax consequences or risk
thereof (unless indemnified against to its reasonable satisfaction) or would
result in any other material detriment or disadvantage to it, and (iii) the
Owner Participant shall have no obligation to make any additional investment in
connection with any such refinancing.
(e) Without the consent of the Owner Participant, there
shall be no more than two optional refundings or refinancings under this
Section 17.
(f) Any refunding or refinancing pursuant to this Section
17 shall be of all Certificates then Outstanding and shall be effected in
accordance with Section 6.03(a) of the Trust Indenture.
PARTICIPATION AGREEMENT [N604SW]
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(g) When calculating any of the information required to
be set forth in a Refinancing Certificate, the Owner Participant shall make
such calculations in a manner which (A) maintains its Net Economic Return, (B)
minimizes the Net Present Value of Rents to the extent possible consistent with
clause (A), (C) is consistent with Rev. Proc. 75-21 and Rev. Proc. 75-28 (or
any successor thereto) and would not cause the Lease to constitute a
"disqualified leaseback or long term agreement" within the meaning of Section
467 of the Code (or any successor thereto), and (D) uses the same methodology
and assumptions used by the Owner Participant in determining Interim Rent,
Basic Rent, Stipulated Loss Values, Termination Values and Special Purchase
Price on the Delivery Date (except to the extent such assumptions have been
altered since the Delivery Date in connection with an adjustment to Rent
pursuant to Section 3.7 of the Lease).
(h) No refinancing or refunding pursuant to this Section
17 shall be permitted during the continuance of a Lease Default or a Lease
Event of Default.
SECTION 18. Interim Debt. (a) The parties hereto
acknowledge and agree that the Series SWA 1995 Trust N604SW-I Certificate
originally issued to the Original Loan Participant on the Delivery Date
represents interim debt financing and that it is intended that the Series SWA
1995 Trust N604SW-I Certificate be refinanced by Series SWA 1995 Trust N604SW
Certificates issued to new Holders. In connection therewith, in the event that
Lessee shall have given written notice to the Owner Trustee, the Indenture
Trustee, the Owner Participant and the Original Loan Participant that Lessee is
requesting a voluntary redemption of the Series SWA 1995 Trust N604SW-I
Certificate (in compliance with the provisions of Articles 6 and 15 of the
Trust Indenture) by the Owner Trustee as part of a refunding or refinancing
transaction, the Owner Participant agrees to negotiate promptly in good faith
with Lessee in connection therewith (including the terms of any debt to be
issued in connection with such refunding or refinancing transaction, the
documentation to be executed in connection therewith and with respect to such
amendments to the Operative Agreements as may be necessary in order to
facilitate such permanent debt financing), and if after such good faith
negotiation Lessee and the Owner Participant shall have concluded an agreement
with respect to such terms:
(1) within five (5) Business Days after the
reaching of such agreement, the Owner Participant will deliver to
Lessee a certificate of an authorized representative of the Owner
Participant (the "Section 18 Refinancing Certificate") setting forth
(i) the proposed date on which the Outstanding Series SWA 1995 Trust
N604SW-I Certificate will be redeemed, describing the new debt to be
issued and the other aspects of such refunding or refinancing
transaction to be consummated (such date, to be determined so as to
comply with Section 6.03(a) or 6.03(b) of the Trust Indenture (as
appropriate), the "Section 18 Refinancing Date") and (ii) the
following information: (A) the principal amount of debt to be issued
by the Owner Trustee on the Section 18 Refinancing Date, (B) and, if
such amount is less than the principal amount of the outstanding
Series SWA 1995 Trust N604SW-I Certificate, then the amount of any
additional contribution to the Trust Estate to be made by the Owner
Participant on the Section 18 Refinancing Date and (C) the proposed
revised debt amortization and schedules of Interim Rent, Basic Rent,
Stipulated Loss Value percentages and Termination Value percentages
and the revised Special Purchase Price (including any installments
thereof). The principal amount of debt to be issued by the Owner
Trustee on the Section 18 Refinancing Date shall not equal more than
80.00% of Lessor's Cost. Within five (5) Business Days of its receipt
of the Section 18 Refinancing Certificate,
PARTICIPATION AGREEMENT [N604SW]
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Lessee may demand a verification of the information set forth in the
Section 18 Refinancing Certificate in the manner described in Section
3.7 of the Lease. Upon the acceptance by Lessee of the accuracy of
the information set forth in the Section 18 Refinancing Certificate or
the determination of such information pursuant to such verification
procedures (such information, the "Section 18 Refinancing
Information") the appropriate parties will take the actions specified
in paragraphs (2) through (10) below;
(2) the appropriate parties will enter into
a financing or loan agreement in form and substance reasonably
satisfactory to Lessee, the Owner Participant and the Owner Trustee
(which, subject to subsection (d) below, may involve an underwriting
agreement in connection with a public offering of such debt or the
purchase of such debt by a publicly funded entity (or entities)) with
the institution or institutions to be named therein (A) providing for
(i) the issuance and sale by the Owner Trustee to such institution or
institutions on the Section 18 Refinancing Date of Series SWA 1995
Trust N604SW Certificates in an aggregate principal amount specified
in the Section 18 Refinancing Information (such debt securities, the
"Section 18 New Debt"), (ii) the application of the proceeds of the
sale of the Section 18 New Debt, plus any additional contribution to
the Trust Estate, to the redemption of the Series SWA 1995 Trust
N604SW-I Certificate Outstanding on the Section 18 Refinancing Date
and the payment of any other amounts payable to the Holders under the
Operative Agreements on the Section 18 Refinancing Date, all in
accordance with Section 6.03(b) of the Trust Indenture, and (iii) the
payment of the excess, if any, of such proceeds over the amount
necessary to effect such redemption to the Owner Trustee for payment
to the Owner Participant and (B) pursuant to which the parties to the
refinancing transaction (including the Owner Participant and Lessee
but excluding any public holders of debt) make such representations,
warranties and covenants as the Owner Participant or Lessee may
reasonably require;
(3) Lessee and the Owner Trustee will amend
the Lease to provide that (i) Interim Rent (if applicable) and Basic
Rent payable in respect of the period from and after the Section 18
Refinancing Date shall be as provided in the Section 18 Refinancing
Information (and shall take into account any variation of the sum of
any interest payment made pursuant to paragraph (5) or (5A) of this
Section 18(a) and the Deferred Equity Amount paid by or on behalf of
the Owner Participant pursuant to Section 8(dd), if applicable, from
the Assumed Interest Amount with respect to the Deferred Equity Date),
(ii) amounts payable in respect of Stipulated Loss Value, Termination
Value and Special Purchase Price from and after the Section 18
Refinancing Date shall be as provided in the Section 18 Refinancing
Information, and (iii) in the event that the Series SWA 1995 Trust
N604SW Certificates shall have been publicly issued, the early
termination notice revocation and payment provisions shall be modified
to comport with the applicable notice and payment requirements of The
Depository Trust Company or any other depository;
(4) the Owner Trustee will enter into an
agreement to provide for the securing thereunder of the Section 18 New
Debt in like manner as the Series SWA 1995 Trust N604SW-I Certificate
and will enter into such amendments and supplements to the Trust
Indenture (or such new indenture or other security agreement) as may
be necessary to effect such security;
PARTICIPATION AGREEMENT [N604SW]
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(5) if such refunding or refinancing shall
be consummated on or prior to the Deferred Equity Date, the Owner
Trustee shall pay to the Original Loan Participant the Break Amount,
if any (as indemnification for the loss resulting from such refunding
or refinancing), and all accrued and unpaid interest on the
Certificates, subject to Lessee's obligations under Section 3.4 of the
Lease;
(5A) if such refunding or refinancing shall
be consummated after the Deferred Equity Date, Lessee on behalf of the
Owner Trustee shall pay to the Original Loan Participant as
Supplemental Rent the Break Amount, if any (as indemnification for the
loss resulting from such refunding or refinancing), and all accrued
and unpaid interest on the Certificates (in each case, without
duplication of other amounts, if any, payable pursuant to any other
provision of the Operative Agreements);
(6) except as provided in paragraph (5)
above, the Owner Trustee shall pay all of the costs of any such
refunding or refinancing so consummated, such costs shall be
considered as Transaction Costs and paid in accordance with and
subject to the limitations of Section 16 above and such Transaction
Costs shall be appropriately considered in calculating the proposed
revised debt amortization and schedules of Basic Rent, Stipulated Loss
Value percentages and Termination Value percentages;
(7) each Holder of the Series SWA 1995 Trust
N604SW-I Certificates will deliver to the Owner Trustee the Series SWA
1995 Trust N604SW-I Certificate held by it immediately prior to such
refunding or refinancing for cancellation (and the Owner Trustee shall
cancel the same), against simultaneous receipt by such Holder of
payment of the then outstanding principal amount of such Series SWA
1995 Trust N604SW-I Certificate, accrued and unpaid interest thereon
plus Break Amount, if any, together with payment in full of all other
amounts then payable to such Holder hereunder or under the Series SWA
1995 Trust N604SW-I Certificates or the Trust Indenture;
(8) the appropriate parties will amend such
of the Operative Agreements in such respects as shall be necessary to
reflect any amendments agreed upon by the parties thereto; provided,
that (i) all agreements and instruments to be executed and delivered
by the Owner Participant or the Owner Trustee under this Section 18
shall be reasonably satisfactory in form and substance to the Owner
Participant, (ii) neither Owner Participant nor the Owner Trustee
shall be required to execute and deliver any such agreement or
instrument or to make any other arrangements which in its opinion
would result in any unreimbursed increased costs or liability,
including any adverse tax consequences or risk thereof (unless
indemnified against to its reasonable satisfaction) or would result in
any other material detriment or disadvantage to it, and (iii) the
Owner Participant shall have no obligation to make any additional
investment in connection with any such refinancing (other than the
Deferred Equity Amount, if applicable);
(9) the appropriate parties will execute and
deliver appropriate closing documents, execute and deliver appropriate
closing certificates and deliver appropriate opinions of counsel; and
PARTICIPATION AGREEMENT [N604SW]
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(10) the Owner Participant shall not be
obligated to proceed with any refinancing under this Section 18 if, in
its opinion, there is a risk that such refinancing would result in any
unindemnified adverse consequences (including tax consequences);
provided, however, that the Owner Participant will be obligated to
proceed with such refinancing if Lessee agrees to indemnify the Owner
Participant for such unindemnified adverse consequences (any such
indemnity to be satisfactory to the Owner Participant).
Notwithstanding the foregoing, the Owner Participant shall not be
obligated to proceed with any refinancing under this Section 18 unless
(i) the Lessee requires in the case of a private refinancing, each
Holder to represent to the Lessee that it is not using ERISA funding
sources, or that an exemption is available with respect to its
purchase and holding of the debt, or (ii) in the case of a public
refinancing, an exemption with respect to pass through certificates
(such as Prohibited Transaction Exemption 89-89 or 90-24 or any other
comparable exemption) is available.
(b) Only one optional refinancing or refunding pursuant
to this Section 18 shall be permitted during the Term and such refinancing
shall occur on or prior to the second anniversary of the Delivery Date.
(c) Any refinancing or refunding pursuant to this Section
18 shall be of all Series SWA 1995 Trust N604SW-I Certificates then
Outstanding.
(d) Any public refinancing pursuant to this Section 18
shall comply with all the restrictions, limitations and conditions applicable
in the case of a public refinancing pursuant to Section 17(b) hereof.
(e) No refunding or refinancing pursuant to this Section
18 shall be permitted during the continuance of a Lease Default (of the type
described in Section 14.1 or 14.5 of the Lease) or a Lease Event of Default.
(f) When calculating any of the information required to
be set forth in a Section 18 Refinancing Certificate, the Owner Participant
shall make such calculations in a manner which (A) maintains its Net Economic
Return, (B) minimizes the Net Present Value of Rents to the extent possible
consistent with clause (A), (C) is consistent with Rev. Proc. 75-21 and Rev.
Proc. 75-28 (or any successor thereto) and would not cause the Lease to
constitute a "disqualified leaseback or long term agreement" within the meaning
of Section 467 of the Code (or any successor thereto), and (D) uses the same
methodology and assumptions used by the Owner Participant in determining
Interim Rent, Basic Rent, Stipulated Loss Values, Termination Values and
Special Purchase Price on the Delivery Date (except to the extent such
assumptions have been altered since the Delivery Date in connection with an
adjustment to Rent pursuant to Section 3.7 of the Lease).
SECTION 19. Section 1110 Compliance. The
Participants and Lessee agree that the transactions contemplated by this
Agreement and the other Operative Agreements are intended to be, shall be and
should be construed so as to be, entitled to the full benefits of 11 U.S.C.
Section 1110.
PARTICIPATION AGREEMENT [N604SW]
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
SOUTHWEST AIRLINES CO.,
Lessee
By: /s/ Xxxx X. Xxxx
Treasurer
AMSOUTH LEASING
CORPORATION,
Owner Participant
By: /s/ Xxxxxxx X. Xxxxx
President
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION,
Original Loan Participant
By: /s/ Xxxx Xxxxxx
Vice President
SHAWMUT BANK CONNECTICUT,
NATIONAL ASSOCIATION, in its individual
capacity only as expressly provided
herein and otherwise solely as Owner
Trustee
By: /s/ Xxxxxxxx X. Xxxxxxx
Corporate Trust Officer
WILMINGTON TRUST COMPANY, not in
its individual capacity, except as
otherwise expressly provided herein,
but solely as Indenture Trustee
By: /s/ Xxxxx X. Xxxxxxxx, Xx.
Title: Senior Financial Services
Officer
PARTICIPATION AGREEMENT [N604SW]
61
SCHEDULE I
Names and Addresses
Lessee:
Southwest Airlines Co.
0000 Xxxx Xxxxx Xxxxx
X.X. Xxx 00000
Xxxxxx, Xxxxx 00000-0000
Attn: Treasurer
Telecopy: (000) 000-0000
Owner Participant:
AmSouth Leasing Corporation
0000 Xxxxx Xxxxxx Xxxxx, 0xx Xxxxx
Xxxxxxxxxx, XX 00000
Attn: President
Telecopy: (000) 000-0000
Payment Instructions:
AmSouth Bank of Alabama
ABA No. 000000000
For the account of AmSouth
Leasing Corporation
Account No. 00000000
Reference: Southwest Airlines 1995
Notify: AmSouth Leasing Operations: 205/326-5588
Original Loan Participant:
Texas Commerce Bank
National Association
0000 Xxxx Xxxxxx
Xxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxxx
Telecopy: (000) 000-0000
Telephone: (000) 000-0000
Payment Instructions:
Texas Commerce Bank N.A.
ABA No. 000000000
For the account of Texas Commerce Bank
National Association
Account No. 13576
Reference: SWA Interim Debt
Attn: Xxxx Xxxxxxx
PARTICIPATION AGREEMENT [N604SW]
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SCHEDULE II
Commitments
Original Percentage of
Loan Participant: Lessor's Cost Dollar Amount
---------------- ------------- -------------
Texas Commerce Bank
National Association 73.86842358% $24,376,579.78
Owner Participant:
-----------------
AmSouth Leasing
Corporation 26.13157642% $ 8,623,420.22
------------ --------------
Total Commitments: 100.00000% $33,000,000.00
================= =========== ==============
PARTICIPATION AGREEMENT [N604SW]
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EXHIBIT A
FORM OF GUARANTY
GUARANTY
GUARANTY AGREEMENT dated ________________ (this "Guaranty"), from
______________________________________________________ (the "Guarantor"), to
___________________________ (the "Lessee"), _________________________, in its
individual capacity and as Owner Trustee (the "Owner Trustee"), THE ENTITIES
IDENTIFIED AS LOAN PARTICIPANTS IN THE PARTICIPATION AGREEMENT (as defined
below) (the "Loan Participants"), and ____________________, as Indenture Trustee
(the "Indenture Trustee") (the Lessee, the Owner Trustee, the Loan Participants,
and the Indenture Trustee, together with their respective permitted successors,
transferees and assigns, each being herein called a "Beneficiary" and
collectively, the "Beneficiaries").
R E C I T A L S:
WHEREAS, AMSOUTH LEASING CORPORATION (the "Owner Participant") is a
wholly-owned subsidiary of the Guarantor and has entered into (i) the
Participation Agreement dated as of ___________________, among the Owner
Participant, the Lessee, the Loan Participants, the Owner Trustee and the
Indenture Trustee (as such agreement may be amended, modified and supplemented
in accordance with the terms thereof, the "Participation Agreement"), (ii) the
Trust Agreement dated ___________________, between the Owner Participant and
______________________________ (as such agreement may be amended, modified or
supplemented in accordance with the terms thereof, the "Trust Agreement"), and
(iii) the Tax Indemnity Agreement dated ______________________, between the
Owner Participant and the Lessee (as such agreement may be amended, modified
and supplemented in accordance with the terms thereof, the "Tax Indemnity
Agreement") (collectively, the "Owner Participant Agreements"); and
WHEREAS, in order to induce the Beneficiaries to enter into the Owner
Participant Agreements, the Guarantor desires to enter into this Guaranty to
guarantee the Owner Participant's performance and compliance with the
covenants, agreements, obligations, terms and conditions of or applicable to
the Owner Participant under and pursuant to the Owner Participant Agreements.
NOW, THEREFORE, in consideration of the premises set forth herein, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Guarantor hereby covenants and agrees as follows:
SECTION 1. Definitions. Capitalized terms used in this
Guaranty without other definition have the respective meanings specified in the
Participation Agreement.
SECTION 2. The Guaranty. (a) The Guarantor hereby
irrevocably and unconditionally guarantees to each of the Beneficiaries (i) the
due, punctual and full payment of all obligations of the Owner Participant
which are payable by the Owner Participant under or pursuant to any of the
Owner Participant Agreements and in accordance with the terms thereof, by
acceleration or otherwise, without offset or deduction; and (ii) the due and
punctual performance by the Owner Participant of, and compliance by the Owner
Participant with, all of its other obligations, covenants, and undertakings
contained in or arising under or pursuant to each of the Owner Participant
Agreements (the obligations referred to in clauses (i) and (ii) being
collectively hereinafter referred to as the
EXHIBIT A
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64
"Guaranteed Obligations"); provided, however, the Guaranteed Obligations shall
not include any obligations of the Owner Participant which are non-recourse to
the Owner Participant pursuant to the terms of the Owner Participant
Agreements. Without limitation of the foregoing, in case the Owner Participant
shall for any reason whatsoever fail to pay duly and punctually any payment
required to be made by the Owner Participant under any of the Owner Participant
Agreements when and as the same shall be due and payable in accordance with the
terms of such Owner Participant Agreement, by acceleration or otherwise, the
Guarantor will immediately pay the same to the Person entitled thereto and, in
addition, such further amount, if any, as shall be sufficient to cover the
costs and expenses of collection and in case the Owner Participant shall fail
to perform or comply with any of its other obligations, covenants or
undertakings contained in or arising under or pursuant to any of the Owner
Participant Agreements for any reason whatsoever, the Guarantor will forthwith
perform or comply with such obligation, covenant or undertaking or cause the
same forthwith to be performed or complied with.
(b) Without limitation of the Guarantor's obligations
hereunder, all amounts payable by the Guarantor hereunder shall in any event be
paid immediately upon demand by the respective Beneficiary entitled thereto, in
immediately available funds, as such party may direct and at the place
specified by such Beneficiary.
SECTION 3. Unconditional Nature of Obligations; Waiver.
(a) Unconditional Nature of Obligations. The obligations of the
Guarantor contained in Section 2 above are direct, independent and primary
obligations of the Guarantor and are absolute, present, unconditional and
continuing obligations and are not conditioned in any way upon the institution
of suit or the taking of any other action or any attempt to enforce performance
of or compliance with the obligations, covenants or undertakings (including,
without limitation, any payment obligations) of the Owner Participant and,
without limitation, shall constitute a guaranty of payment and performance and
not of collection, binding upon the Guarantor and its successors and assigns
and irrevocable without regard to the genuineness, validity, legality or
enforceability of any of the Owner Participant Agreements or the lack of power
or authority of the Owner Participant to enter into any of the Owner
Participant Agreements or any substitution, release or exchange of any other
guaranty or any other security for any of the Guaranteed Obligations or any
other circumstance whatsoever (other than payment or performance) that might
otherwise constitute a legal or equitable discharge of a surety or guarantor
and shall not be subject to any right of set-off, recoupment or counterclaim
and are in no way conditioned or contingent upon any attempt to collect from
the Owner Participant or any other entity or to perfect or enforce any security
or upon any other condition or contingency or upon any other action,
occurrence, or circumstance whatsoever. Without limiting the generality of the
foregoing, the Guarantor shall have no right to terminate this Guaranty, or to
be released, relieved or discharged from its obligations hereunder, and such
obligations shall be neither affected or diminished for any reason whatsoever,
including, without limitation, (i) any amendment or supplement to or
modification of any Owner Participant Agreement, any extension or renewal of
the Owner Participant's obligations under any Owner Participant Agreement, or
any subletting, assignment or transfer of any Beneficiary's interest in the
Owner Participant Agreements, (ii) any bankruptcy, insolvency, readjustment,
composition, liquidation or similar proceeding with respect to the Owner
Participant or any other Person, (iii) any furnishing or acceptance of
additional security or any exchange, surrender, substitution or release of any
security, (iv) any waiver, consent or other action or inaction or any exercise
or nonexercise of any right, remedy or power with respect to the Guaranteed
Obligations or any of the Owner Participant Agreements, (v) any merger or
consolidation of the Owner Participant or the Guarantor into or with any other
Person, or any change in the structure of the Owner Participant or in the
ownership of the Owner Participant by the Guarantor, (vi) any default,
misrepresentation, negligence, misconduct or other action or inaction of any
kind by any
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Beneficiary under or in connection with any Operative Document or any other
agreement relating to this Guaranty, except to the extent that any such
default, misrepresentation, negligence, misconduct or other action or inaction
would limit the Guaranteed Obligations, (vii) any defect in the title,
condition, design, operation or fitness of, or any interference with operation,
use or possession of, the Aircraft, (viii) any failure to establish, perfect or
preserve title to or any security interest in or to the Aircraft or any other
collateral security for the Guaranteed Obligations, or (ix) any other
circumstance whatsoever (except the complete payment and performance of the
Guaranteed Obligations).
(b) Waiver. The Guarantor unconditionally waives, to
the fullest extent permitted by law, any right it may have to (i) the notice of
any waiver or extension granted to the Owner Participant, (ii) all notices
which may be required by statute, rule of law or otherwise to preserve any of
the rights of any of the Beneficiaries against the Owner Participant, the
Guarantor or any other Person, (iii) require any of the Beneficiaries to
proceed against the Owner Participant or any other Person or pursue any
collateral or remedy within such Beneficiary's power, (iv) require acceptance
of this Guaranty, diligence, presentment, demand for payment, protest and all
other notices, including notice of the creation, renewal, extension or accrual
of any of the Guaranteed Obligations, (v) require any election of remedies,
(vi) require the marshalling of assets or the resort to any other security or,
(vii) except as otherwise expressly provided herein, claim any other defense,
contingency, circumstance or matter which might constitute a legal or equitable
discharge of a surety or guarantor.
SECTION 4. Term of the Obligations of the Guarantor. The
obligations of the Guarantor under this Guaranty shall be discharged and
released upon the earlier of (a) the payment, performance and satisfaction in
full of the Guaranteed Obligations after the termination of all of the Owner
Participant Agreements, and (b) the transfer by the Owner Participant of its
rights and obligations under the Operative Documents, or any other assignment
or other transfer of the Owner Participant's rights and obligations pursuant to
the Operative Agreements to any Person who is not an Affiliate of the
Guarantor, in either case in accordance with, and as permitted by, the
Participation Agreement; provided, however, that any such transfer shall not
relieve the Guarantor of any of its obligations hereunder arising out of events
occurring prior to such transfer.
SECTION 5. Representations, Warranties and Covenants of the
Guarantor.
(a) Corporate Existence and Power. The Guarantor is a
corporation duly organized, validly existing and in good standing as a
__________________________________ under the laws of _______________________.
The Guarantor has the corporate power and authority (i) to own or lease its
properties and to carry on its present business and operations, and (ii) to
enter into and perform its obligations under this Guaranty. The Owner
Participant is a wholly-owned subsidiary of the Guarantor.
(b) Due Authorization, Etc. The execution and
delivery by the Guarantor of this Guaranty and compliance by the Guarantor with
all of the provisions hereof do not and will not contravene any law,
governmental rule or regulation or any order, writ, injunction or decree of any
court or governmental authority or agency applicable to or binding on the
Guarantor or contravene the provisions of, or constitute a default under, its
charter or by-laws or any indenture, mortgage, contract or any agreement or
instrument to which the Guarantor is a party or by which it or any of its
property may be bound or affected.
(c) Validity; Enforceability. This Guaranty has been
duly authorized, executed and delivered by the Guarantor, constitutes a legal,
valid and binding obligation of the Guarantor and is enforceable against the
Guarantor in accordance with its terms.
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(x) Governmental Consents. No authorization or other
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for the due execution, delivery or performance by
the Guarantor of this Guaranty or in connection herewith.
(e) Financial Information. The Guarantor has a
combined capital, surplus and undivided profits equal to at least $75,000,000.
The Guarantor will promptly upon receiving a written request therefor from any
of the Lessee, the Owner Trustee or the Indenture Trustee, provide copies of
the originally-signed cover page and the consolidated balance sheet (Schedule
RC) of the Guarantor's most recently-filed "call report" (that is, the
quarterly consolidated reports of condition and income for a bank with domestic
and foreign offices -- FFIEC), or any successor or other form applicable to the
Guarantor. Since the date of the consolidated balance sheet (Schedule RC) of
the Guarantor dated _______________________, there has been no material adverse
change in the financial condition of the Guarantor.
(f) Litigation. There are no pending or, to the
knowledge of the Guarantor, threatened actions or proceedings before any court
or administrative agency which would adversely affect the ability of the
Guarantor to perform its obligations hereunder.
The representations and warranties set forth in this Section 5
shall survive the execution and delivery of this Guaranty, provided that each
such representation and warranty is made only on and as of the date hereof.
SECTION 6. Survival of Guaranty. Notwithstanding anything to
the contrary herein, this Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time any of the amounts paid to any
of the Beneficiaries, in whole or in part, is required to be repaid upon the
insolvency, bankruptcy, dissolution, liquidation, or reorganization of the
Guarantor or the Owner Participant or any other Person, or as a result of the
appointment of a custodian, receiver, trustee, or other officer with similar
powers with respect to the Guarantor or the Owner Participant or any other
Person or any substantial part of the property of the Guarantor or the Owner
Participant or such other Person, all as if such payments had not been made.
SECTION 7. Remedies; Subrogation. (a) In the event the
Guarantor shall fail to pay immediately any amounts due under this Guaranty, or
to comply with any other term of this Guaranty within three Business Days of
the date of demand therefor, each Beneficiary shall be entitled to all rights
and remedies to which it may be entitled hereunder or at law, in equity or by
statute.
(b) Subrogation. The Guarantor will not exercise any
rights that it may acquire by way of subrogation under this Guaranty, by any
payment made hereunder or otherwise, until all the Guaranteed Obligations shall
have been paid in full. If any amount shall be paid to the Guarantor on
account of such subrogation rights at any time when all the Guaranteed
Obligations shall not have been paid in full, such amount shall be held in
trust for the benefit of the Beneficiary to whom such Guaranteed Obligation is
payable and shall forthwith be paid to such Beneficiary to be credited and
applied to such Guaranteed Obligation, whether matured or unmatured, in
accordance with the terms of the Owner Participant Agreement under which such
Guaranteed Obligation arose. If (i) the Guarantor shall make payment to any
Beneficiary of all or any part of the Guaranteed Obligations and (ii) all the
Guaranteed Obligations shall be paid in full, such Beneficiary will at the
Guarantor's request and expense, execute and deliver to the Guarantor
appropriate documents, without recourse and with representation or warranty,
necessary to evidence the transfer by subrogation to the Guarantor of an
interest in the Guaranteed Obligations resulting from such payment by the
Guarantor.
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(c) The provisions of this paragraph shall survive the
term of this Guaranty and the payment in full of the Guaranteed Obligations and
the termination of the Operative Documents.
SECTION 8. Limitation. Nothing in this Guaranty shall
expressly or by implication increase or expand the rights or obligations of any
Beneficiary or the Owner Participant under the Operative Documents.
SECTION 9. No Waiver; Amendments. No failure on the part of
any party hereto to exercise, no delay in exercising and no course of dealing
with respect to, any right or remedy hereunder will operate as a waiver
thereof; nor will any single or partial exercise of any right or remedy
hereunder preclude any other further exercise of any other right or remedy.
All remedies of the Beneficiaries against the Owner Participant are cumulative
without duplication. This Guaranty may not be waived, amended, supplemented or
modified except by an instrument in writing executed by the Beneficiaries.
SECTION 10. Assignment and Assumption. This Guaranty may not
be assigned by the Guarantor to, or assumed by, any successor to or assign of
the Guarantor without the prior written consent of the Beneficiaries except in
connection with a sale of all or substantially all of the Guarantor's assets
and pursuant to an assignment and assumption agreement, in form and substance
satisfactory to the Beneficiaries, of the Guarantor's obligations hereunder, or
as otherwise provided in Section 4 hereof, by a Person complying with the
requirements of the Operative Agreements for a transferee of the Owner
Participant.
SECTION 11. Notices. All notices, demands or other
communications required or otherwise provided under this Agreement shall be in
writing and shall be delivered to the Beneficiaries at the address set forth in
Section 14.01 of the Participation Agreement and, if to the Guarantor:
at: ______________________
______________________
______________________
______________________
with a copy to: ______________________
______________________
______________________
______________________
or to such other address as the Guarantor or any Beneficiary may specify by
written notice. All notices shall be deemed duly given if given in any manner
provided for in Section 14.01 of the Participation Agreement.
SECTION 12. Successors and Assigns. This Agreement shall bind
the Guarantor and its successors and permitted assigns and inure to the benefit
of the Beneficiaries and their successors and permitted assigns.
SECTION 13. Severability. The invalidity or unenforceability
of any one or more provisions of this Agreement shall not affect the validity
or enforceability of the remaining portions of this Agreement.
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XXXXXXX 00. Governing Law. THIS GUARANTY SHALL FOR ALL
PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE
OF _____________________.
IN WITNESS WHEREOF, the party hereto has caused this Guaranty
Agreement to be duly executed on the day and year first above written.
________________________________
By:_____________________________
Title:__________________________
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