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EXHIBIT 4.22
*
Aircraft N398
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THIRD AMENDMENT TO LEASE AGREEMENT
(1994 737 B)
Dated as of December 23, 1997
between
STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
not in its individual capacity
except as expressly provided herein,
but solely as Owner Trustee,
Lessor
and
UNITED AIR LINES, INC.,
Lessee
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United Air Lines, Inc.
1994 737 B Equipment Trust
One Boeing 737-322 Aircraft
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As set forth in Section 20 of the Lease, Lessor has assigned to the Indenture
Trustee (as defined in the Lease) certain of its right, title and interest in
and to the Lease, including all amendments thereto. To the extent, if any,
that this Third Amendment to Lease Agreement constitutes chattel paper (as such
term is defined in the Uniform Commercial Code as in effect in any applicable
jurisdiction) no security interest herein may be created through the transfer
or possession of any counterpart other than the original executed counterpart,
which shall be identified as the counterpart containing the receipt therefor
executed by the Indenture Trustee on the signature page thereof.
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THIRD AMENDMENT TO LEASE AGREEMENT
(1994 737 B)
THIS THIRD AMENDMENT TO LEASE AGREEMENT (1994 737 B) dated as
of December 23, 1997 (this "Amendment") between STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL ASSOCIATION, a national banking association,
not in its individual capacity (as assignee of First Security Bank, National
Association (formerly known as First Security Bank of Utah, National
Association; the "Original Lessor")), except as expressly provided herein, but
solely as Owner Trustee under Trust Agreement (1994 737 B) (in such capacity,
"Lessor"), and UNITED AIR LINES, INC., a corporation organized and existing
pursuant to the laws of the State of Delaware ("Lessee"), amends that certain
Lease Agreement (1994 737 B) dated as of September 1, 1994 (the "Original
Lease") between Lessee and Original Lessor, as supplemented by Lease Supplement
No. 1 (1994 737 B) dated September 28, 1994 ("Lease Supplement No. 1") between
Original Lessor and Lessee, as amended by that certain First Amendment to Lease
Agreement (1994 737 B) dated January 26, 1996 (the "First Amendment") between
Original Lessor and Lessee, and as further amended by that certain Second
Amendment to Lease Agreement (1994 737 B) dated January 26, 1996 (the "Second
Amendment") between Original Lessor and Lessee (the Original Lease, as
supplemented by Lease Supplement No. 1 and as amended by the First Amendment
and the Second Amendment, is referred to herein collectively as the "Lease").
WITNESSETH:
WHEREAS, except as otherwise defined in this Amendment,
capitalized terms used herein shall have the meanings attributed thereto in the
Lease;
WHEREAS, pursuant to the Lease, Lessee has leased from Lessor
the Aircraft more particularly described in Lease Supplement No. 1;
WHEREAS, a counterpart of the Original Lease, to which was
attached and made a part thereof a counterpart of Lease Supplement No. 1, was
recorded by the Federal Aviation Administration on November 1, 1994 and
assigned Conveyance No. II002366;
WHEREAS, a counterpart of the First Amendment was recorded by
the Federal Aviation Administration on March 7, 1996 and assigned Conveyance
No. HKOO5883;
WHEREAS, a counterpart of the Second Amendment was recorded by
the Federal Aviation Administration on March 7, 1996 and assigned Conveyance
No. HKOO5884; and
WHEREAS, pursuant to that certain Assignment and Assumption
Agreement (1994 737 B) dated as of December 11, 1997 between the Lessor and the
Original Lessor, the
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[Third Amendment to Lease Agreement (1994 737 B)]
Original Lessor assigned to the Lessor, and the Lessor assumed, all of the
obligations of the Original Lessor under the Operative Documents); and
WHEREAS, Lessor and Lessee desire to amend the Lease in
certain respects.
NOW, THEREFORE, in consideration of the mutual agreements
contained herein, the parties hereto agree as follows:
SECTION 1. Amendment to Exhibits ▇, ▇, ▇ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇,
▇, ▇ and H to the Lease are hereby deleted in their entirety and replaced with
Exhibits B, C, D and H, respectively, to this Amendment (there being no
Exhibits A, E, F and G to this Amendment).
SECTION 2. Amendments to Section 1. Section 1 of the Lease
is hereby amended in the following manner:
(a) The following defined terms are hereby added to Section 1
in alphabetical order:
""Appraisers" means, collectively, Aircraft
Information Services, Inc., BK Associates, Inc. and
AvSolutions, Inc., or such other independent aircraft
appraiser as may be acceptable to Owner Participant and the
Indenture Trustee."
""Assignment and Assumption Agreements" means each of
(i) that certain Assignment and Assumption Agreement (1994 737
B) dated as of December 11, 1997, between the Owner Trustee
and the Original Owner Trustee and (ii) that certain
Assignment and Assumption Agreement (1994 737 B) dated as of
December 11, 1997 between the Original Indenture Trustee and
the Indenture Trustee."
""Basic Pass Through Trust Agreement" means the Pass
Through Trust Agreement dated as of December 23, 1997 between
Lessee and Pass Through Trustee, but does not include any Pass
Through Trust Supplement."
""Closing Date" means December 23, 1997."
""Equipment Note" or "Equipment Notes" has
the meaning set forth in the Trust Indenture."
""First Amendment to Lease Agreement" means that
certain First Amendment to Lease Agreement (1994 737 B) dated
January 26, 1996 by and between Lessee and Original Lessor."
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[Third Amendment to Lease Agreement (1994 737 B)]
""First Amendment to Participation Agreement" means
that certain First Amendment to Participation Agreement (1994
737 B) dated January 26, 1996 among Lessee, the Owner
Participant, the Original Owner Trustee, the Original Loan
Participants and the Original Indenture Trustee."
""First Amendment to Trust Agreement" means that
certain First Amendment to Trust Agreement (1994 737 B) dated
December 23, 1997 by and between the Owner Participant and
State Street Bank and Trust Company of Connecticut, National
Association."
""First Amendment to Trust Indenture" means that
certain First Amendment to Trust Indenture and Security
Agreement (1994 737 B) dated June 1, 1995 between Original
Owner Trustee and Original Indenture Trustee."
""Fundamental Documents" means, collectively, the
Operative Documents and the Pass Through Documents."
""Intercreditor Agreement" means that certain
Intercreditor Agreement among the Pass Through Trustees, the
Primary Liquidity Providers and the Subordination Agent, dated
as of December 23, 1997; provided that, for purposes of any
obligation of Lessee or Owner Trustee, no amendment,
modification or supplement to, or substitution or replacement
of, such Intercreditor Agreement shall be effective unless
consented to by Lessee or Owner Trustee, as applicable."
""Make-Whole Amount" has the meaning set forth in the
Trust Indenture."
""Note Purchase Agreement" has the meaning specified
therefor in the Trust Indenture."
""Noteholder" has the meaning set forth in the Trust
Indenture."
""Original Indenture" means the Trust Indenture and
Security Agreement (1994 737 B) dated as of September 1, 1994,
as supplemented by Trust Agreement and Trust Indenture and
Security Agreement Supplement (1994 737 B) dated September 28,
1994, as amended by that certain First Amendment to Trust
Indenture and Security Agreement (1994 737 B) dated as of June
1, 1995, that certain Second Amendment to Trust Indenture and
Security Agreement (1994 737 B) dated as of December 1, 1995
and that certain Third Amendment to Trust Indenture and
Security Agreement (1994 737 B) dated January 26, 1996, in
each case between the Original Owner Trustee and the Original
Indenture Trustee."
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[Third Amendment to Lease Agreement (1994 737 B)]
""Original Indenture Trustee" means State Street Bank
and Trust Company."
""Original Owner Trustee" means First Security Bank
of Utah, National Association, not in its individual capacity,
but solely as Owner Trustee under the Trust Agreement, except
as otherwise expressly stated."
""Owner Trustee Parent" means State Street Bank and
Trust Company, a Massachusetts trust company."
""Owner Trustee Parent Guaranty" means the guaranty
of the Owner Trustee's obligations under the Operative
Documents as delivered by the Owner Trustee Parent in
connection with the assumption by the Owner Trustee of the
Original Owner Trustee's obligations under the Trust
Agreement."
""Pass Through Certificates" means any of the Pass
Through Certificates issued pursuant to any of the Pass
Through Trust Agreements."
""Pass Through Documents" means the Pass Through
Trust Agreements, the Intercreditor Agreement, Registration
Rights Agreement, Note Purchase Agreement and the Primary
Liquidity Facilities."
""Pass Through Trust" means each of the four separate
pass through trusts created pursuant to the related Pass
Through Trust Agreement."
""Pass Through Trust Agreements" means each of the
four separate Pass Through Trust Supplements, together in each
case with the Basic Pass Through Trust Agreement, each dated
as of December 23, 1997 and entered into by and between the
Lessee and a Pass Through Trustee."
""Pass Through Trust Supplement" shall have the
meaning specified for the term "Trust Supplement" in the Basic
Pass Through Trust Agreement."
""Pass Through Trustee" means First Security Bank,
National Association in its capacity as trustee under each
Pass Through Trust Agreement, and such other Person that may
from time to time be acting as successor trustee under any
such Pass Through Trust Agreement."
""Primary Liquidity Facilities" has the meaning set
forth in the Trust Indenture."
""Primary Liquidity Providers" has the meaning set
forth in the Trust Indenture."
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[Third Amendment to Lease Agreement (1994 737 B)]
""Redemption Date" has the meaning set forth in the
Trust Indenture."
""Registration Rights Agreement" has the meaning
specified in the Intercreditor Agreement."
""Related Indemnitee" with respect to an Indemnitee,
means any director, officer, employee, agent, servant or
Affiliate thereof."
""Second Amendment to Lease Agreement " means that
certain Second Amendment to Lease Agreement (1994 737 B) dated
January 26, 1996 between Lessor and Lessee."
""Second Amendment to Participation Agreement" means
that certain Second Amendment to Participation Agreement (1994
737 B) dated as of December 23, 1997 among Lessee, the Owner
Participant, the Owner Trustee, the Indenture Trustee, the
Pass Through Trustees and the Subordination Agent."
""Second Amendment to Trust Indenture" means that
certain Second Amendment to Trust Indenture and Security
Agreement (1994 737 B) dated as of December 1, 1995 between
the Original Owner Trustee and the Original Indenture
Trustee."
""Series" has the meaning set forth in the Trust
Indenture."
""Series A" or "Series A Equipment Notes" has the
meaning set forth in the Trust Indenture."
""Series B" or "Series B Equipment Notes" has the
meaning set forth in the Trust Indenture."
""Series C" or "Series C Equipment Notes" has the
meaning set forth in the Trust Indenture."
""Series D" or "Series D Equipment Notes" has the
meaning set forth in the Trust Indenture."
""Subordination Agent" has the meaning set forth in
the Trust Indenture."
""Third Amendment to Lease" means that certain Third
Amendment to Lease Agreement (1994 737 B) dated as of December
23, 1997 between Lessor and Lessee."
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[Third Amendment to Lease Agreement (1994 737 B)]
""Third Amendment to Trust Indenture" means that
certain Third Amendment to Trust Indenture and Security
Agreement (1994 737 B) dated January 26, 1996 between Original
Owner Trustee and Original Indenture Trustee."
(b) The definition of "Additional Insured" is hereby amended
to be and read in its entirety as follows:
""Additional Insured" means Lessor, in its individual
capacity and as owner of the Aircraft, the Indenture Trustee,
the Owner Participant, Lessee in its capacity as sublessor
under any Sublease, each Pass Through Trustee (so long as it
is the holder of any Equipment Note), the Subordination Agent
(so long as it is the holder of any Equipment Note), each
Primary Liquidity Provider and each of their respective
Affiliates, successors and permitted assigns, and the
respective directors, officers, employees, servants and agents
of each of the foregoing."
(c) The definition of "Base Rate is hereby amended to be and
read in its entirety as follows:
""Base Rate" means the rate of interest announced
from time to time by The First National Bank of Chicago at its
principal office in Chicago, Illinois as its "corporate base
rate" (or its equivalent successor rate if the corporate base
rate is no longer used)."
(d) The definition of "Business Day" is hereby amended to be
and read in its entirety as follows:
""Business Day" means any day (x) other than a
Saturday or Sunday or a day on which commercial banks are
required or authorized to close in: Chicago, Illinois; New
York, New York; Frankfurt, Germany; the city and state in
which the principal place of business of the Owner Trustee is
located; and, so long as any Equipment Note is outstanding,
the city and state in which the Indenture Trustee, the
Subordination Agent or any Pass Through Trustee has its
principal place of business or receives and disburses funds
and (y) on which dealings are carried on in the London
interbank market."
(e) The definition of "Certificate" is hereby amended to be
and read in its entirety as follows:
""Certificate" means each "Equipment Note" as defined
in the Trust Indenture."
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[Third Amendment to Lease Agreement (1994 737 B)]
(f) The definition of "Corporate Trust Department" is hereby
amended by deleting the reference to "each Holder" contained therein
and inserting a reference to "each Pass Through Trustee" in lieu
thereof."
(g) The definition of "Debt Rate" is hereby amended to be and
read in its entirety as follows:
""Debt Rate" means at any time, the interest rate
equal to the weighted average of the "Applicable Rate" then in
effect with respect to each Equipment Note then outstanding."
(h) The definition of "Event of Loss" is hereby amended such
that clause (vi) shall be and read in its entirety as follows:
"(vi) the operation of or location of the Aircraft,
while under requisition for use by any government, in any area
excluded from coverage by any insurance policy in effect with
respect to the Aircraft required by the terms of Section 11,
unless in the case of a requisition by the government of the
United States or any government of registry or any agency or
instrumentality thereof, Lessee shall have obtained an
indemnity in lieu thereof from such government (provided that
in the case of any indemnity provided by a government other
than the government of the United States (or any agency or
instrumentality thereof), the Owner Participant, Lessor and
the Indenture Trustee (so long as the Lien of the Trust
Indenture shall not have been discharged in accordance with
the terms thereof) shall have received an opinion, in form and
substance reasonably satisfactory to Owner Participant, as to
the enforceability of such indemnity within 15 Business Days
of such requisition);"
(i) The definition of "Holder" is hereby amended to be and
read in its entirety as follows:
""Holder" means each "Noteholder" as defined in the
Trust Indenture."
(j) The definition of "Indemnitees" is hereby amended to be
and read in its entirety as follows:
""Indemnitees" means the Owner Participant, the Owner
Participant Guarantor, the Owner Trustee, in its individual
capacity and as trustee under the Trust Agreement, the Trust
Estate, the Indenture Estate, the Indenture Trustee, in its
individual capacity and as trustee under the Trust Indenture,
each Pass Through Trustee (so long as it is the holder of any
Equipment Note) (in its individual capacity and as Pass
Through Trustee), the Pass Through Trusts, each Primary
Liquidity Provider, each Noteholder and the Subordination
Agent
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[Third Amendment to Lease Agreement (1994 737 B)]
(so long as it is the holder of any Equipment Note) and each
of their respective Affiliates, successors, permitted assigns,
directors, officers, employees, servants and agents."
(k) The definition of "Lease Period Date" is hereby amended
to be and read in its entirety as follows:
""Lease Period Date" means, (A) with respect to the
Basic Term, each of (i) January 1, 1996, (ii) each July 1 and
January 1 which occurs after January 1, 1996 through and
including July 1, 1997, (iii) March 2, 1998 and each March 2,
June 2, September 2 and December 2 thereafter through and
including March 2, 2016 and (iv) the Basic Term Expiry Date
and (B) with respect to any Renewal Term, each March 28 and
September 28 which occurs after the Basic Term Expiry Date
(with respect to the initial Renewal Term) or the last day of
the preceding Renewal Term (with respect to any subsequent
Renewal Term), as the case may be, through and including the
last day of such Renewal Term."
(l) The definition of "Operative Documents" is hereby amended
to be and read in its entirety as follows:
""Operative Documents" means the Lease (including any
Lease Supplement); the Participation Agreement; the Second
Amendment to Participation Agreement; the Tax Indemnity
Agreement; the Trust Agreement; any Trust Supplement; the
Purchase Agreement; the Owner Trustee's ▇▇▇▇ of Sale; the
Owner Trustee's FAA ▇▇▇▇ of Sale; the Owner Trustee's Purchase
Agreement; an acceptance certificate covering the Aircraft in
the form agreed to by the Participants and Lessee (the
"Acceptance Certificate"); the Trust Indenture; the Equipment
Notes outstanding at the time of reference; the Owner
Participant Guaranty; and the Consent and Agreement."
(m) The definition of "Stipulated Loss Value Date" is hereby
amended to be and read in its entirety as follows:
""Stipulated Loss Value Date" means, notwithstanding
Section 3(b) of the initial Lease Supplement, the 2nd day of
each calendar month during the Basic Term and the 28th
calendar day of each calendar month during any Renewal Term."
(n) The definition of "Trust Indenture" is hereby amended to
be and read in its entirety as follows:
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[Third Amendment to Lease Agreement (1994 737 B)]
""Trust Indenture" means the Amended and Restated
Trust Indenture and Security Agreement (1994 737 B) dated as
of December 23, 1997 between the Owner Trustee and the
Indenture Trustee, as originally executed or as modified,
amended or supplemented in accordance with the provisions
thereof and the terms of the Participation Agreement,
including, without limitation, any Trust Supplement entered
into pursuant to the applicable provisions thereof."
(o) The definition of "Trust Office" is hereby amended by
deleting the words "each Holder" contained therein and inserting the
words "the Pass Through Trustee" in lieu thereof.
(p) The following defined terms are hereby deleted in their
entirety:
"Extraordinary Purchase Option Date"; "Failed
Refinancing Notice"; "Initial Interest Set-Up Date"; "Lending
Office"; "Qualifying Interest Rate"; "Qualifying Interest Rate
Spread"; "Qualifying Refinancing"; and "Refinancing Mandate
Request Letter"
SECTION 3. Amendments to Section 3. Section 3 of the Lease
is hereby amended in the following manner:
(a) The paragraph of Section 3(b) following the second
sentence of Section 3(b) is hereby amended to be and read in its
entirety as follows:
"Although the Basic Rent amounts set forth in Exhibit
B hereto have been computed on the assumption that the
aggregate amount of interest payable on all of the Equipment
Notes on each Lease Period Date during the Basic Term will be
the amount set forth in Exhibit B hereto opposite such Lease
Period Date under the column with the heading "Assumed
Interest Amount" (herein referred to as the "Assumed Interest
Amount" for such Lease Period Date), Lessor and Lessee
recognize that the actual aggregate amount of interest due and
payable on all Equipment Notes on any Lease Period Date may,
from time to time during the Basic Term, be greater or less
than the Assumed Interest Amount for such Lease Period Date
and that the basis upon which the actual amount of interest on
the Equipment Notes will be computed will be as provided in
the Trust Indenture. Accordingly, Basic Rent shall be
increased or decreased (but not below zero), as the case may
be, by the Rent Differential Amount (as defined herein). For
purposes hereof, "Rent Differential Amount" shall mean, as of
any Lease Period Date, the absolute value of the difference
between (i) the aggregate amount of interest actually due and
payable on such Lease Period Date on each Series of Equipment
Notes (or due and payable on the next following Business Day
if such date shall not constitute a Business Day) and (ii) the
Assumed Interest Amount for such Lease Period Date. If, as
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[Third Amendment to Lease Agreement (1994 737 B)]
of such date, the amount determined in accordance with clause
(i) of the immediately preceding sentence shall be greater
than the amount determined in accordance with clause (ii) of
such sentence, the amount of Basic Rent payable on such date
shall be increased by the Rent Differential Amount. If, as of
such date, the amount determined in accordance with such
clause (ii) shall exceed the amount determined in accordance
with such clause (i), the amount of Basic Rent due on such
date shall be decreased (but not below zero) by the Rent
Differential Amount."
(b) The first sentence of Section 3(c)(iv) is hereby
amended to be and read in its entirety as follows:
"(iv) Anything contained in the Participation
Agreement, this Lease or any other Operative Document to the
contrary notwithstanding, each installment of Basic Rent and
Interim Rent payable hereunder, whether or not adjusted in
accordance with this Section 3(c), together with the amount of
Supplemental Rent, if any, in respect of the date on which
such installment is payable, and each payment of Termination
Value, Stipulated Loss Value and EBO Percentage, whether or
not adjusted in accordance with this Section 3(c) or Section 8
of the Tax Indemnity Agreement, and all other amounts
excluding Excluded Payments payable simultaneously by Lessee
pursuant to this Lease, in each case, on the date on which
such payment is due, shall be in an amount at least sufficient
to pay in full, and shall be available to be applied by Lessor
in payment on account of, any payments then required to be
made on account of the principal amount (and Break Amount, if
any and/or Make-Whole Amount, if any) of and accrued and
unpaid interest on the Certificates then outstanding."
(c) The second sentence of Section 3(c)(iv) of the Lease is
hereby amended by adding the word "judicial" immediately prior to the
words "attachment or diversion of Rent" which appear therein.
(d) The second sentence of Section 3(d) is hereby amended to
be and read in its entirety as follows:
"Lessee shall also pay on behalf of Lessor as
Supplemental Rent (i) an amount equal to any amount payable by
the Lessor to the Indenture Trustee pursuant to the second
paragraph of Section 2.01 of the Trust Indenture or Section
9.06(a) of the Trust Indenture and (ii) an amount equal to any
amount payable by Lessor as Break Amount and/or Make-Whole
Amount as and when any such Break Amount and/or Make-Whole
Amount shall be due and payable; provided, however, that
Lessee shall have no obligation to pay to Lessor any Break
Amount and/or Make-Whole Amount payable due to or in
connection
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[Third Amendment to Lease Agreement (1994 737 B)]
with the occurrence of an Indenture Event of Default if no
Lease Event of Default has occurred and is then continuing."
(e) Section 3(e) is hereby amended to be and read in its
entirety as follows:
"(e) Payments in General. All payments of Rent
other than Excluded Payments payable to Lessor shall be made
directly by Lessee by wire transfer of immediately available
funds prior to 11:00 a.m., Chicago time, on the date of
payment in Dollars, to Lessor at its office at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate
Trust Department (or such other office of Lessor in the
continental United States or such other account as Lessor
shall direct in a notice to Lessee at least 10 Business Days
prior to the date such payment of Rent is due); provided, that
so long as the Trust Indenture shall not have been fully
discharged, Lessor hereby directs and Lessee agrees, that all
Basic Rent (other than Excluded Payments) and all other
amounts which are required to be paid to or deposited with the
Owner Trustee hereunder (other than Excluded Payments) shall
be paid directly to the Indenture Trustee at the times and in
funds specified in this Section 3(e) at the offices of the
Indenture Trustee at First Security Bank, National
Association, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
Attention: Corporate Trust Department (or such other office
of Indenture Trustee in the continental United States or such
other account as Indenture Trustee shall direct in a notice to
Lessee at least 10 Business Days prior to the date such
payment of Basic Rent is due). Excluded Payments shall by
paid in Dollars in immediately available funds to the Person
to whom payable at the address of such Person specified in
Schedule I of the Participation Agreement. Notwithstanding
anything to the contrary contained herein, if any date on
which a payment of Rent becomes due and payable is not a
Business Day then such payment shall not be made on such
scheduled date but shall be made on the next succeeding
Business Day and interest at the then effective Debt Rate
shall accrue on the amount of such payment during such
extension."
SECTION 4. Amendment to Section 4. The parenthetical clause
contained in clause (v) of Section 4 of the Lease is hereby amended to be and
read in its entirety as follows:
"(if and so long as such citizenship is necessary
under the Transportation Code 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 the Owner
Participant or Lessee or the Indenture Trustee (so long as the
Lien of the Indenture shall not have been discharged in
accordance with the terms thereof)"
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[Third Amendment to Lease Agreement (1994 737 B)]
SECTION 5. Amendment to Section 5. Clause (B) in the
parenthetical contained in clause (iii) of the third sentence of Section 5(a)
is hereby amended to be and read in its entirety as follows:
"(B) that are being diligently contested in good
faith by Lessee, so long as such contest does not interrupt
the normal use of the Aircraft and such contest does not
involve any material risk of criminal liability or any
unindemnified material risk of civil liability to Lessor in
its individual capacity, the Indenture Trustee (as long as the
Lien of the Trust Indenture shall not have been discharged in
accordance with the terms thereof) or the Owner Participant,
jeopardize the right, title and interest of Lessor in its
individual capacity, the Indenture Trustee (as long as the
Lien of the Trust Indenture shall not have been discharged in
accordance with the terms thereof) or the Owner Participant in
and to the Airframe and/or the Engines, or result in a claim,
loss or expense for which Lessor, the Owner Participant or the
Indenture Trustee is not indemnified and for which Lessee is
not then willing to indemnify Lessor in its individual
capacity, the Indenture Trustee (as long as the Lien of the
Trust Indenture shall not have been discharged in accordance
with the terms thereof) or the Owner Participant in a manner
reasonably satisfactory to the Lessor in its individual
capacity and the Owner Participant, provided that if Lessee
does not prevail in such contest then Lessee shall, at its
sole expense, cause the Aircraft to be promptly put in the
condition it would have been on the last day of the Term but
for this clause (B)),"
SECTION 6. Amendments to Section 7. Section 7 of the Lease
is hereby amended in the following manner:
(a) Section 7(a)(2) is hereby amended to be and read in its
entirety as follows:
"(2) Operation. Lessee will not (or permit any
Sublessee to) maintain, use, service, repair, overhaul or
operate the Aircraft in violation of any law or any rule,
regulation, treaty, order or certificate of any government or
governmental authority (domestic or foreign) having
jurisdiction, or in violation of any airworthiness
certificate, license or registration relating to the Aircraft
issued by any such authority, except that, after Lessee shall
have provided Lessor with a certificate of its President, any
Vice President, the Treasurer or any Assistant Treasurer
stating all relevant facts pertaining thereto, Lessee or any
Sublessee may contest in good faith the validity or
application of any such law, rule, regulation, order,
certificate, license, registration or violation in any
reasonable manner which does not jeopardize the right, title
and interest of the Lessor in its individual capacity or, the
Owner Participant or the Indenture Trustee (so long as the
Lien of the Trust Indenture shall not have been discharged in
accordance with the terms thereof) in and to the Airframe
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[Third Amendment to Lease Agreement (1994 737 B)]
and/or the Engines, result in a claim, loss or expense for
which Lessor in its individual capacity or the Owner
Participant or the Indenture Trustee (so long as the Lien of
the Trust Indenture shall not have been discharged in
accordance with the terms thereof) is not indemnified and for
which Lessee is not then willing to indemnify Lessor in its
individual capacity or Owner Participant or the Indenture
Trustee (so long as the Lien of the Trust Indenture shall not
have been discharged in accordance with the terms thereof) in
a manner reasonably satisfactory to Lessor in its individual
capacity and the Owner Participant or otherwise materially
adversely affect Lessor in its individual capacity or the
Owner Participant, but only so long as such proceedings do not
involve any material risk of criminal liability or any
unindemnified material risk of civil liability to Lessor in
its individual capacity or the Owner Participant or the
Indenture Trustee (so long as the Lien of the Trust Indenture
shall not have been discharged in accordance with the terms
thereof) for which Lessor in its individual capacity or the
Owner Participant is not indemnified and for which Lessee is
not then willing to indemnify Lessor in its individual
capacity or the Owner Participant or the Indenture Trustee (so
long as the Lien of the Trust Indenture shall not have been
discharged in accordance with the terms thereof) in a manner
reasonably satisfactory to the Owner Trustee or the Owner
Participant, as the case may be. If the indemnities or
insurance specified in Section 11(f), or some combination
thereof, have not been obtained, Lessee will not operate the
Aircraft, or permit any Sublessee to operate the Aircraft, in
or to any area excluded from coverage by any insurance
required to be maintained by the terms of Section 11,
provided, however, that the failure of Lessee to comply with
the provisions of this sentence shall not give rise to an
Event of Default hereunder where such failure is attributable
to a hijacking, medical emergency, equipment malfunction,
weather conditions, navigational error or other isolated
extraordinary event beyond the control of Lessee and Lessee is
taking all reasonable steps to remedy such failure as soon as
is reasonably practicable."
(b) Section 7(a)(3) is hereby amended to be and read in its
entirety as follows:
"(3) Reregistration. At any time after the close
of the calendar year in which occurs the seventh anniversary
of the Delivery Date, Lessor shall, at the request and sole
expense of Lessee, cooperate with Lessee and take all actions
required to change the country of registration of the Aircraft
upon compliance by Lessee with all of the terms of Section
8(e) of the Participation Agreement and Section 7.02 of the
Trust Indenture."
(c) The lead-in paragraph of Section 7(b) of the Lease is
hereby amended to be and read in its entirety as follows:
13
15
[Third Amendment to Lease Agreement (1994 737 B)]
"Lessee will not, without the prior written consent
of Lessor, sublease or otherwise in any manner deliver,
transfer or relinquish possession of the Airframe or any
Engine or install or permit any Engine to be installed on any
airframe other than the Airframe; provided that, so long as no
Section 14(a), (b), (f) or (g) Default or, in the case of
paragraph (viii) of this Section 7(b), no Section 14(d)
(solely with respect to Lessee's obligations under Section
7(a) or (b)(viii) hereof or Section 8 hereof) Default, or any
Event of Default shall have occurred and be continuing at the
time of such sublease, delivery, transfer or relinquishment of
possession or installation, and so long as the action to be
taken shall not deprive the Indenture Trustee of the perfected
lien of the Trust Indenture on the Airframe or any Engine and
Lessee and any Sublessee shall continue to comply with the
provisions of Sections 6, 7(a) and 11 hereof, Lessee may,
without the prior written consent of Owner Participant or any
other Person:"
(d) Clause (viii) of Section 7(b) is hereby amended to be and
read in its entirety as follows:
"(viii) so long as the Sublessee is not subject to a
proceeding or final order under applicable bankruptcy,
insolvency or reorganization laws on the date the Sublease is
entered into, Lessee may, at any time in its sole discretion,
enter into a sublease with (1) a U.S. Air Carrier, (2) after
the close of the calendar year in which there occurs the
seventh anniversary of the Delivery Date, any Permitted
Sublessee, or (3) after the close of the calendar year in
which there occurs the seventh anniversary of the Delivery
Date, any other Person approved in writing by the Owner
Participant, which approval shall not be unreasonably withheld
if in regard to this subclause (3) Lessor and the Indenture
Trustee receive an opinion of counsel reasonably acceptable to
the Owner Participant that the terms of the sublease and other
Operative Documents will be valid in the country where
Sublessee is domiciled and that such country would give effect
to the priority and validity of the Lien of the Trust
Indenture; that no Participant, the Lessor or the Indenture
Trustee (so long as the Lien of the Trust Indenture shall not
have been discharged in accordance with the terms thereof) is
required to register to do business in the Sublessee's country
of domicile; that there is no tort liability for owners or
financiers not in possession that is more extensive than under
United States law or any state law (it being understood that
if such opinion cannot be given
14
16
[Third Amendment to Lease Agreement (1994 737 B)]
in a form satisfactory to the Owner Participant such opinion
will be waived if insurance reasonably satisfactory to the
Owner Participant and the Lessor, in its individual capacity,
is provided at Lessee's expense to cover such risk); that fair
compensation in a currency freely convertible into Dollars is
mandated if there is a requisition of use or title of the
Aircraft by the country in which the Sublessee is domiciled
(it being understood that if such opinion cannot be given in a
form reasonably satisfactory to the Owner Participant such
opinion will be waived if insurance reasonably satisfactory to
the Owner Participant, is provided at Lessee's expense to
cover such risk); that there exist no possessory rights in
favor of the Sublessee which upon Lessee's bankruptcy or other
Default hereunder (assuming the Sublessee is not bankrupt)
would prevent the return of the Aircraft in accordance with
the terms hereof or inhibit the Lessor's rights therein;
provided, however, (A) that no sublease, including all
permissible renewal periods, shall extend beyond the Basic
Term or any Renewal Term then in effect, unless Lessee shall
have irrevocably committed to purchase the Aircraft or renew
this Lease in accordance with the terms hereof at the end of
the Basic Term or Renewal Term, as the case may be, to a date
beyond the latest permissible expiration date of such
sublease, and (B) that, on the date of such sublease, the
United States and the country in which sublessee is domiciled
and principally located maintain diplomatic relations."
SECTION 7. Amendments to Section 9. Section 9 of the Lease
is hereby amended in the following manner:
(a) Section 9(b) is hereby amended to be and read in its
entirety as follows:
"So long as no Event of Default under Section 14(d)
hereunder (solely with respect to Lessee's obligations under
Section 7(a)(1) hereof and Section 8 hereof) shall have
occurred and be continuing, Lessee shall have the right to
terminate this Lease on the third Business Day prior to any
Lease Period Date occurring on or after the close of the
calendar year in which occurs the seventh anniversary of the
Delivery Date if Lessee shall have made a good faith
determination that the Aircraft is surplus to Lessee's
requirements or economically obsolete to Lessee. Lessee shall
give to Lessor and Indenture Trustee at least one hundred and
eighty (180) days revocable (except as provided below) advance
written notice of Lessee's intention to so terminate this
Lease (any such notice, a "Termination Notice") (i) specifying
the date on which Lessee intends to terminate this Lease in
accordance with this Section 9(b) (such specified date, a
"Termination Date") and (ii) attaching a certificate of the
Assistant Treasurer or any more senior officer of Lessee which
states that the Aircraft is surplus to Lessee's requirements
or economically obsolete to Lessee. The Termination Notice
shall become irrevocable twenty (20) days prior to the
Termination Date, except that, so long as the Subordination
Agent or any Pass Through Trustee is the registered holder of
any Equipment Note, the Termination Notice shall become
irrevocable twenty-six (26) days prior to the Termination
Date; provided, however, that if no sale of the Aircraft shall
have occurred on or prior to the Termination Date and if
Lessor shall not have elected to retain the Aircraft, Lessee's
Termination Notice shall be deemed withdrawn."
15
17
[Third Amendment to Lease Agreement (1994 737 B)]
(b) Section 9(c) is hereby amended to be and read in its entirety as
follows:
"(c) Sale of the Aircraft. In the event that
Lessee shall have proposed to terminate this Lease under
Section 9(b), then during the period commencing with the date
of the Termination Notice until the proposed Termination Date,
Lessee, as non-exclusive agent for Lessor and at no expense to
Lessor, shall use reasonable efforts to obtain bids in Dollars
for the purchase of the Aircraft and, in the event it receives
any bid, Lessee shall, within five Business Days after receipt
thereof and at least ten Business Days prior to the proposed
Termination Date, advise Lessor in writing of the amount and
terms of such bid, and the name and address of the party or
parties (who shall not be Lessee or any Affiliate of Lessee or
any person with whom Lessee or any such Affiliate has an
arrangement or understanding regarding the future use of the
Aircraft by Lessee or any such Affiliate but who may be the
Owner Participant, any Affiliate thereof or any Person
contacted by the Owner Participant) submitting such bid.
After Lessee shall have advised Lessor of all bids received,
the Owner Participant, any Affiliate thereof or any Person
contacted by the Owner Participant may submit a further bid or
bids to Lessee not later than five Business Days prior to the
Termination Date proposed by Lessee (unless Lessee shall have
revoked the Termination Notice specifying such proposed
Termination Date). Subject to the next succeeding sentence,
on or before the Termination Date, subject to the release of
all mortgage and security interests with respect to the
Aircraft under the Trust Indenture: (1) Lessee shall deliver
the Aircraft, or cause the Aircraft to be delivered to the
highest bidder as determined below, in the same manner and in
the same condition and otherwise in accordance with all the
terms of this Lease as if redelivery were made to Lessor
pursuant to Section 5 hereof, and Lessee shall duly transfer
to Lessor title to any engine installed on the Airframe and
not owned by Lessor, all in accordance with the terms of
Section 5 hereof (but subject to the provisions of Section
5(e) hereof), (2) Lessor shall comply with the terms of the
Trust Indenture and shall, without recourse or warranty
(except as to the absence of Lessor Liens (including for this
purpose Liens that would be Lessor Liens but for the proviso
to the definition of Lessor Liens)), subject to prior or
concurrent payment by Lessee of all amounts due under clause
(3) of this sentence, sell the Aircraft for cash in Dollars to
the entity, if any, which shall have submitted the highest
bona fide bid (evaluated on a net cash basis) therefor, the
total selling price realized at such sale to be retained by
Lessor, and (3) Lessee shall simultaneously pay or cause to be
paid to Lessor in the manner provided in Section 3(e), (A) if
the proceeds of the sale of the Aircraft so sold, net of
reasonable out-of-pocket costs and expenses incurred by Lessor
and the Owner Participant in connection therewith, including,
without limitation, applicable sales or transfer taxes and
legal fees, are less than the Termination Value for the
Aircraft computed as of the Redemption Date
16
18
[Third Amendment to Lease Agreement (1994 737 B)]
immediately succeeding the Termination Date, the difference in
Dollars, (B) all unpaid Basic Rent due on or prior to such
Redemption Date (other than Basic Rent payable in advance on
such Redemption Date, if any) and all unpaid Supplemental Rent
with respect to the Aircraft due on or prior to such
Redemption Date, and (C) Break Amount, if any, and Make-Whole
Amount, if any, due as of such Redemption Date on the
Certificates and upon receiving all such payments referred to
in clauses (2) and (3) above Lessor simultaneously will
transfer to Lessee, without recourse or warranty (except as to
the absence of Lessor Liens (including for this purpose Liens
that would be Lessor Liens but for the proviso to the
definition of Lessor Liens)), all of Lessor's right, title and
interest in and to any Engines constituting part of the
Aircraft which were not sold with the Aircraft.
Notwithstanding the preceding sentence, Lessor may, if Lessee
has not already revoked the Termination Notice, elect to
retain title to the Aircraft. If Lessor so elects, Lessor
shall give to Lessee written notice of such election at least
ten Business Days prior to the Termination Date accompanied by
an irrevocable undertaking by the Owner Participant to make
available to Lessor for payment to the Indenture Trustee on
the Termination Date the amount required to pay in full the
unpaid principal of the Certificates outstanding on such
Redemption Date together with all other amounts due on such
Redemption Date thereunder less amounts to be paid by Lessee
as a result of the payment thereof as set forth in the second
following sentence. Upon receipt of notice of such an
election by Lessor and the accompanying undertaking by the
Owner Participant, Lessee shall cease its efforts to obtain
bids as provided above and shall reject all bids theretofore
or thereafter received. On the Termination Date, Lessor shall
(subject to the payment by Lessee of all Rent due on or prior
to such Redemption Date as set forth below) pay (or deposit,
in accordance with Article 10 of the Trust Indenture) in full
the unpaid principal amount of the Certificates outstanding on
such Redemption Date, plus interest accrued to, or to accrue
thereon to but excluding such Redemption Date, together with
all other amounts due thereunder less any amounts to be paid
by Lessee as a result of the payment thereof and, provided
that the Certificates are paid as aforesaid, Lessee shall
deliver the Airframe and Engines or engines to Lessor in
accordance with Section 5 and shall pay all Basic Rent due on
or prior to such Redemption Date (other than Basic Rent
payable in advance on such Redemption Date, if any) and all
unpaid Supplemental Rent due on or prior to such Redemption
Date, and Break Amount, if any, and Make-Whole Amount, if any,
on the Certificates as of such Redemption Date. If no sale
shall have occurred on the Termination Date for any reason
(including, without limitation, by reason of Lessee's
revocation of its Termination Notice) or Lessor has not, after
making its election referred to above, made the payment
contemplated by the preceding sentence and thereby caused this
Lease to terminate, this Lease shall continue in full force
and effect as to the Aircraft, Lessee shall be entitled to
keep any deposits or
17
19
[Third Amendment to Lease Agreement (1994 737 B)]
other advances received from the proposed purchaser(s) of the
Aircraft (without in any way limiting any other rights or
remedies against such proposed purchaser(s) available to
Lessor or Lessee), Lessee shall pay the reasonable
out-of-pocket costs and expenses, including legal fees,
incurred by the Owner Participant, Indenture Trustee and
Lessor (unless such failure to terminate the Lease is a
consequence of the failure of Lessor or the Owner Participant
without due cause to make, or cause to be made, the payment
referred to in the immediately preceding sentence), if any, in
connection with preparation for such sale and Lessee may give
one or more additional Termination Notices, provided no more
than three such notices may be given during the Term and only
one such notice may be given during any 365 day period (not
counting, in either case, any Termination Notice for a
Termination Date on which this Lease does not terminate as a
consequence of the failure of Lessor or the Owner Participant
without due cause to make or cause to be made the payment
referred to in the immediately preceding sentence). In the
event of any such sale or such retention of the Aircraft by
Lessor and upon compliance by Lessee with the provisions of
this paragraph, the obligation of Lessee to pay Basic Rent or
any other amounts hereunder shall cease to accrue. Upon
payment of all amounts that may then be due hereunder, this
Lease shall terminate. Lessor may, but shall be under no duty
to, solicit bids, inquire into the efforts of Lessee to obtain
bids or otherwise take any action in connection with any such
sale other than to transfer (in accordance with the foregoing
provisions) to the purchaser named in the highest bid
certified by Lessee to Lessor all of Lessor's right, title and
interest in the Aircraft, against receipt of the payments
provided herein."
SECTION 8. Amendments to Section 10. Section 10 of the Lease
is hereby amended in the following manner:
(a) The introduction to Section 10(a) of the Lease is hereby
amended to be and read in its entirety as follows:
"SECTION 10. Loss, Destruction, Requisition, etc.
(a) Event of Loss with Respect to the Aircraft. Upon the
occurrence of an Event of Loss with respect to the Airframe or
the Airframe and the Engines and/or engines then installed
thereon, Lessee shall (1) forthwith (and in any event, within
fifteen days after such occurrence) give Lessor written notice
of such Event of Loss and (2) within 60 days after such
occurrence, give Lessor written notice of its election to
perform one of the following options, which, in the case of an
election of clause (i) below shall be irrevocable (it being
understood that the failure to give such notice shall be
deemed to be an election of the option set forth in clause (i)
below):
18
20
[Third Amendment to Lease Agreement (1994 737 B)]
(b) Clause (i) of Section 10(a) is hereby amended to
be and read in its entirety as follows:
"(i) Not later than the earlier of (x) the Lease
Period Date next succeeding the 100th day following the
occurrence of such Event of Loss or (y) the first Lease Period
Date that is at least three Business Days following receipt by
the loss payee of the insurance proceeds in respect to such
Event of Loss (but not earlier than the first Business Day
next succeeding the 65th day following the occurrence of such
Event of Loss) (the applicable date being the "Loss Payment
Date"), Lessee shall, to the extent not paid to Lessor or
Indenture Trustee, as the case may be, as insurance proceeds,
pay or cause to be paid to Lessor as specified in Section 3(e)
hereof, (A) the Stipulated Loss Value of the Aircraft computed
as of the Stipulated Loss Value Date occurring on or
immediately following the date of such Event of Loss, plus (B)
if such Stipulated Loss Value Date is a Lease Period Date,
Basic Rent due on such Lease Period Date, plus (C) unpaid
Supplemental Rent with respect to the Aircraft due on or prior
to the date of payment, plus (D) Break Amount, if any, due on
the Certificates, plus (E) interest on such Stipulated Loss
Value at the Debt Rate from and including such Stipulated Loss
Value Date to, but not including, the date of any advance
payment in respect of Stipulated Loss Value as provided below,
and thereafter on the unpaid balance of such Stipulated Loss
Value from and including the date of such advance payment to,
but excluding, the date such Stipulated Loss Value is paid in
full; provided, however, that if any Lease Period Date shall
occur after the Stipulated Loss Value Date with respect to
which Stipulated Loss Value is determined but prior to the
date of such payment of the sum of the amounts specified in
clauses (A), (B), (C), (D) and (E) above, Lessee shall pay on
each such Lease Period Date an amount equal to the Basic Rent
that would have been due on such Lease Period Date if such
Event of Loss had not occurred, which amount shall be credited
as an advance against the amounts payable pursuant to clauses
(A), (B), (C), (D) and (E) above, or"
SECTION 9. Amendments to Section 11. Section 11 of the Lease
is hereby amended in the following manner:
(a) The first sentence of the second paragraph of Section
11(b) is hereby amended to be and read in its entirety as follows:
"All losses will be adjusted by Lessee with the
insurers giving due regard to Lessor's and, so long as the
Lien of the Trust Indenture shall not have been discharged in
accordance with its terms, the Indenture Trustee's interest,
provided, however, that during a period when a Section 14(a),
(b), (f) or (g) Default or an Event of Default has occurred
and is continuing, Lessee
19
21
[Third Amendment to Lease Agreement (1994 737 B)]
shall not agree to any such adjustment without the consent of
the Owner Participant."
(b) Section 11(c) is hereby amended to be and read in its
entirety as follows:
"(c) Reports, etc. Lessee will furnish, or cause
to be furnished, to Lessor, the Indenture Trustee and the
Owner Participant, on or before the Delivery Date, and each
annual renewal of the applicable insurances during the Term, a
report, signed by AON Risk Services of Illinois, Inc. or any
other independent firm of insurance brokers reasonably
acceptable to Lessor which brokers may be in the regular
employ of Lessee (the "Insurance Broker"), describing in
reasonable detail the hull and liability insurance (and
property insurance for detached engines and parts) then
carried and maintained with respect to the Aircraft and
stating the opinion of such firm that (a) such insurance
complies with the terms hereof and (b) that such insurance
together with any self-insurance permitted hereby provides
coverage that are in substantially similar forms, are of such
types and have limits within the range of limits as are
customarily carried by U.S. carriers; provided, however, that
the opinion set forth in clause (b) shall not be required if
the Insurance Broker then generally does not provide such an
opinion or will provide such an opinion for material
additional cost; and provided further that all information
contained in the foregoing report shall not be made available
by Lessor, the Indenture Trustee or the Owner Participant to
anyone except (A) to prospective and permitted transferees of
Lessor's, the Owner Participant's or the Indenture Trustee's
interest or their respective counsel, independent certified
public accountants, independent insurance brokers or other
agents, who agree to hold such information confidential, (B)
to Lessor's, Owner Participant's or the Indenture Trustee's
counsel or independent certified public accountants,
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 (D) as may be necessary
for purposes of protecting the interest of any such Person or
for enforcement of this Lease by Lessor or the Indenture
Trustee; provided, however, that any and all disclosures
permitted by clauses (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. Lessee will cause such Insurance Broker to agree
to advise Lessor, the Indenture Trustee and the Owner
Participant, in writing of any act or omission on the part of
Lessee of which it has knowledge and which might invalidate or
render unenforceable, in whole or in part, any insurance on
the Aircraft and to advise such Persons in writing at least 30
days (7 days in the case of war risk and allied perils
coverage) prior to the cancellation or material adverse change
of any insurance maintained pursuant to this Section 11,
provided that if the notice
20
22
[Third Amendment to Lease Agreement (1994 737 B)]
period specified above is not reasonably obtainable, the
Insurance Broker shall provide for as long a period of prior
notice as shall then be reasonably obtainable. In addition,
Lessee will also cause such Insurance Broker to deliver to
Lessor, the Indenture Trustee and the Owner Participant, on or
prior to the date of expiration of any insurance policy
referenced in a previously delivered certificate of insurance,
a new certificate of insurance, substantially in the same form
as delivered by Lessee to such parties on the Delivery Date
except for the changes in the report or the coverage
consistent with the terms hereof. In the event that Lessee or
any Sublessee shall fail to maintain or cause to be maintained
insurance as herein provided, Lessor or the Indenture Trustee
may at its sole option, but shall be under no duty to, provide
such insurance and, in such event, Lessee shall, upon demand,
reimburse Lessor or the Indenture Trustee as Supplemental
Rent, for the cost thereof to Lessor or the Indenture Trustee,
as the case may be; provided, however, that no exercise by
Lessor or the Indenture Trustee, as the case may be, of said
option shall affect the provisions of this Lease, including
the provisions that failure by Lessee to maintain the
prescribed insurance shall constitute an Event of Default."
(c) Clause (A) of Section 11(h) is hereby amended to be and
read in its entirety as follows:
"(A) shall name the Additional Insureds as additional insureds
and, subject to Clause (H) of this Section 11(h), Lessor (or,
so long as the Lien of the Indenture shall remain in effect,
the Indenture Trustee) as loss payee, as their respective
interests may appear (but without imposing on any such party
liability to pay premiums with respect to such insurances),"
(d) Section 11(h) is hereby further amended by adding the
words ", in which case such proceeds shall be payable to Lessor (or,
so long as the Indenture shall remain in effect, the Indenture
Trustee)" immediately prior to the period at the end thereof.
SECTION 10. Amendment to Section 14. Paragraphs (a) through
(f) of Section 14 of the Lease are hereby amended to be and read in their
entirety as follows:
"(a) Lessee shall not have made a payment of Basic Rent,
Interim Rent, Stipulated Loss Value, Termination Value, EBO
Percentage, amounts payable pursuant to Section 9(c)(3)(A) or Section
19(b)(i), Break Amount or Make-Whole Amount, if any (other than any
Break Amount or Make-Whole Amount payable pursuant to the Note
Purchase Agreement) within 10 days after the same shall have become
due; or
(b) Lessee shall have failed to make a payment of
Supplemental Rent (other than Stipulated Loss Value, Termination
Value, EBO Percentage, amounts payable
21
23
[Third Amendment to Lease Agreement (1994 737 B)]
pursuant to Section 9(c)(3)(A) or Section 19(b)(1), Break Amount,
Make-Whole Amount or any other amounts measured thereby or any amounts
payable pursuant to the Note Purchase Agreement) after the same shall
have become due and such failure shall continue for 15 days after
Lessee's receipt of written demand therefor by the party entitled
thereto (provided that any failure to pay any amount owed by Lessee
under the Tax Indemnity Agreement or any failure of Lessee to pay to
Lessor or the Owner Participant when due any Excluded Payments shall
not constitute an Event of Default unless written notice is given by
the Owner Participant to Lessee and the Indenture Trustee that such
failure shall constitute an Event of Default); or
(c) Lessee shall fail to carry and maintain on or with
respect to the Aircraft (or cause to be carried and maintained)
insurance required to be maintained in accordance with the provisions
of Section 11 hereof; or
(d) Lessee shall have failed to perform or observe in any
material respect (or caused to be performed and observed) any other
covenant or agreement to be performed or observed by it under any
Operative Document (other than the Note Purchase Agreement), and such
failure shall continue unremedied for a period of thirty days after
written notice thereof by Lessor or the Indenture Trustee; provided,
however, that if Lessee shall have undertaken to cure any such failure
and, notwithstanding the reasonable diligence of Lessee in attempting
to cure such failure, such failure is not cured within said thirty day
period but is curable with future due diligence, there shall exist no
Event of Default under this Section 14 so long as Lessee is proceeding
with due diligence to cure such failure and such failure is in fact
cured within one year; or
(e) any representation or warranty made by Lessee herein or
in the Participation Agreement or any document or certificate (other
than the Note Purchase Agreement) furnished by Lessee in connection
herewith or therewith or pursuant hereto or thereto (except the
representations and warranties set forth in Section 4 of the Tax
Indemnity Agreement) shall prove to have been incorrect in any
material respect at the time made and shall remain material at the
time in question; provided, however, such incorrectness shall
constitute a default hereunder only if such incorrectness shall
continue uncured for a period of thirty (30) days after the receipt by
Lessee of a written notice from Lessor or the Indenture Trustee
advising Lessee of the existence of such incorrectness; or
(f) the commencement of an involuntary case or other
proceeding in respect of Lessee in an involuntary case under the
federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar
law in the United States or seeking the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or similar
official) of Lessee or for all or substantially all of its property,
or seeking the winding-up or liquidation of its affairs
22
24
[Third Amendment to Lease Agreement (1994 737 B)]
and the continuation of any such case or other proceeding undismissed
or unstayed for a period of 90 consecutive days or an order for relief
under Chapter 11 of the Bankruptcy Code with respect to Lessee as
debtor or any other order, judgment or decree shall be entered in any
proceeding by any court of competent jurisdiction appointing, without
the consent of Lessee, a receiver, trustee or liquidator of Lessee, or
for all or substantially all of its property, or sequestering of all
or substantially all of the property of Lessee and any such order,
judgment or decree or appointment or sequestration shall be final or
shall remain in force undismissed, unstayed or unvacated for a period
of 90 consecutive days after the date of entry thereof; or"
SECTION 11. Amendment to Section 17. Section 17(d)(ii) of
the Lease is hereby amended to be and read in its entirety as follows:
"(ii) if to Lessor, at ▇/▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ and Trust
Company, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn:
Corporate Trust Department, Telecopier (▇▇▇) ▇▇▇-▇▇▇▇ (or, if by
overnight courier, ▇/▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ and Trust Company), ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attn: Corporate
Trust Department, or to such other address or telex or telecopier
number as Lessor shall from time to time designate in writing to
Lessee; and"
SECTION 12. Amendment to Section 18. The last sentence of
Section 18(a) of the Lease is hereby amended to be and read in its entirety as
follows:
"Notwithstanding anything contained in this Section 18(a) to
the contrary, Lessee's right to deduct any amount pursuant to the
foregoing sentence shall be limited to amounts which would (absent
such deduction) be distributable under the Trust Indenture at the time
such payment is made to Owner Participant (and shall not include any
amounts distributable to Indenture Trustee in its individual capacity
or to the Noteholders); provided further, that neither the amount so
deducted at any one time nor the aggregate amount so applied at
different times shall reduce the amount of any installment or payment
of Rent (whether upon the termination of this Lease or otherwise)
payable by Lessee to an amount insufficient to pay in full the amounts
required to be paid on account of the principal of, Break Amount, if
any, Make-Whole Amount, if any, and any interest on the Equipment
Notes or otherwise owing to a Noteholder under the Trust Indenture."
SECTION 13. Amendment to Section 19. Clause (1) of the first
sentence of Section 19(b) of the Lease is hereby amended to be and read in its
entirety as follows:
"(1) on any Special Purchase Option Date for a purchase
price equal to the greater of the Fair Market Sales Value or the
Termination Value of the Aircraft on such date;"
23
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[Third Amendment to Lease Agreement (1994 737 B)]
SECTION 14. Amendment to Section 20. The last sentence of
Section 20 of the Lease is hereby amended by deleting the reference to "Section
6.08 or Article IX" which appears therein and inserting a reference to "The
Granting Clause or Article 11" in lieu thereof.
SECTION 15. Amendment to Section 22. The first sentence of
Section 22(a) of the Lease is hereby amended by adding the following proviso
immediately prior to the period at the end of such sentence:
"; provided, that any moneys held by the Indenture
Trustee or the Lessor pursuant to this Section 22(a) shall either be
(a) registered in the name of, payable to the order of, or specially
indorsed to, the Indenture Trustee or the Lessor, as the case may be,
or (b) held in an account established by and with an Eligible
Institution at the request of the Indenture Trustee or the Lessor, as
the case may be, which institution agrees, for all purposes of the
applicable Uniform Commercial Code ("UCC") including Article 8
thereof, that (a) such account shall be a "securities account" (as
defined in Section 8-501 of the UCC), (b) all property (other than
cash) credited to such account shall be treated as a "financial asset"
(as defined in Section 8-102(9) of the UCC), (c) the Indenture Trustee
or the Lessor, as the case may be, shall be the "entitlement holder"
(as defined in Section 8-102(7) of the UCC) in respect of such
account, (d) the Eligible Institution will comply with all entitlement
orders issued by the Indenture Trustee or the Lessor, as the case may
be, to the exclusion of the Lessee, and (e) the "securities
intermediary jurisdiction" (under Section 8- 110(e) of the UCC) shall
be the State of Illinois, and "Eligible Institution" means the
corporate trust department of (a) First Security Bank, National
Association, acting solely in its capacity as a "securities
intermediary" (as defined in Section 8-102(14) of the UCC), or (b) a
depository institution organized under the laws of the United States
of America or any one of the states thereof or the District of
Columbia (or any U.S. branch of a foreign bank), which has a
long-term unsecured debt rating from Moody's and Standard & Poor's of
at least A-3 or its equivalent."
SECTION 16. Ratification; References to Lease; Effective
Date. Except as amended hereby, the Lease continues and shall remain in full
force and effect in all respects. From and after the date of this Amendment,
each and every reference in the Lease to "this Lease", "this Agreement",
"herein", "hereof" or similar words and phrases referring to the Lease or any
word or phrase referring to a section or provision of the Lease is deemed for
all purposes to be a reference to the Lease or such section or provision as
amended pursuant to this Amendment. The amendments to the Lease contemplated
by this Amendment shall be effective from and after the date this Amendment is
filed for record with the FAA.
SECTION 17. Miscellaneous. Any provision of this Amendment
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining
24
26
[Third Amendment to Lease Agreement (1994 737 B)]
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. No term or provision of this Amendment may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by Lessor, Lessee and any assignee of Lessor's rights hereunder.
Nothing contained herein shall be construed as conveying to Lessee any right,
title or interest in the Aircraft except as a lessee only. The section
headings in this Amendment are for convenience of reference only and shall not
modify, define, expand or limit any of the terms or provisions hereof. THIS
AMENDMENT HAS BEEN DELIVERED IN THE STATE OF ILLINOIS AND SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF ILLINOIS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. This Amendment may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall be an
original, but all of such counterparts shall together constitute but one and
the same instrument.
* * *
25
27
[Third Amendment to Lease Agreement (1994 737 B)]
IN WITNESS WHEREOF, Lessor and Lessee have each caused this
Third Amendment to Lease Agreement to be duly executed on the day and year
first above written.
STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION, not in its individual capacity,
but solely as Owner Trustee,
Lessor
By:
-------------------------------------
UNITED AIR LINES, INC.
Lessee
By:
-------------------------------------
Vice President and Treasurer
Approved and Consented to:
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Indenture Trustee
By:
-------------------------------------
Its:
----------------------------------
(1) Receipt of this original counterpart of the foregoing Third Amendment
to Lease Agreement is hereby acknowledged on this ____ day of December, 1997.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, as Indenture Trustee
By:
-------------------------------------
Its:
---------------------------------
-------------------------------
(1) This language contained in the original counterpart only.
26
