Document:

Exhibit 10.5

 

CONFIDENTIAL:  Annex A - Parts 2 and 3, Annexes B, C and D, and Annex E — Parts 1 and 2, and Schedule 1-Parts A and B, Schedules 2 and 3, Schedule 4 — Parts A and B, and Schedules 5 and 6 of this Lease Agreement are subject to Restrictions on Dissemination set forth in § 8 of the Participation Agreement

	
 
    

 

LEASE AGREEMENT N491HA

 

dated as of June 28, 2011

 

between

 

WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
  not in its individual capacity, except as expressly
  provided herein, but solely as Owner Trustee,

 

Lessor

 

and

 

HAWAIIAN AIRLINES, INC.,

 

Lessee

 

 

One Boeing Model 717-200 Aircraft bearing United States Registration Number N912ME (to be N491HA) Manufacturer’s Serial Number 55175, and including Two Rolls-Royce Deutschland Ltd & Co KG Model BR715 A1-30 Engines bearing Manufacturer’s Serial Numbers 13454 and 13411

 

	
 
    

 

This Lease Agreement has been executed in multiple counterparts; to the extent, if any, that this Lease Agreement constitutes chattel paper (as defined in the Uniform Commercial Code as in effect in any applicable jurisdiction), no security interest in Lessor’s right, title, and interest in and to this Lease Agreement may be perfected by possession except as provided in § 17.5 hereof.

 

 

CONTENTS

 

	
1.
    	
DEFINITIONS AND CONSTRUCTION
    	
 
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
2.
    	
DELIVERY AND ACCEPTANCE; REGISTRATION OF INTERNATIONAL   INTERESTS
    	
 
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
2.1
    	
Delivery and Lease of Aircraft
    	
 
    	
1
    
	
2.2
    	
Acceptance by Lessee
    	
 
    	
1
    
	
 
    	
 
    	
 
    	
 
    
	
3.
    	
TERM AND RENT
    	
 
    	
2
    
	
 
    	
 
    	
 
    	
 
    
	
3.1
    	
Term
    	
 
    	
2
    
	
3.2
    	
Rent
    	
 
    	
2
    
	
3.3
    	
Payments
    	
 
    	
3
    
	
 
    	
 
    	
 
    	
 
    
	
4.
    	
DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION 1110   MATTERS
    	
 
    	
4
    
	
 
    	
 
    	
 
    	
 
    
	
4.1
    	
Disclaimer of Warranties
    	
 
    	
4
    
	
4.2
    	
Warranty Rights
    	
 
    	
5
    
	
4.3
    	
Quiet Enjoyment
    	
 
    	
5
    
	
4.4
    	
Investment of Funds Held as Security
    	
 
    	
6
    
	
4.5
    	
Title Transfers by Lessor
    	
 
    	
7
    
	
4.6
    	
Lease For U.S. Federal Income Tax Law Purposes;   Section 1110 of Bankruptcy Code
    	
 
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
5.
    	
DELIVERY AND RETURN OF AIRCRAFT
    	
 
    	
8
    
	
 
    	
 
    	
 
    	
 
    
	
5.1
    	
Compliance with Annex B
    	
 
    	
8
    
	
5.2
    	
Delivery
    	
 
    	
8
    
	
5.3
    	
Storage and Related Matters
    	
 
    	
9
    
	
5.4
    	
Return of Other Engines
    	
 
    	
9
    
	
5.5
    	
Failure to Return Aircraft
    	
 
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
6.
    	
LIENS
    	
 
    	
10
    
	
 
    	
 
    	
 
    	
 
    
	
7.
    	
REGISTRATION; OPERATION; POSSESSION AND SUBLEASING
    	
 
    	
12
    
	
 
    	
 
    	
 
    	
 
    
	
7.1
    	
Registration and Operation
    	
 
    	
12
    
	
7.2
    	
Possession
    	
 
    	
13
    
	
7.3
    	
Certain Limitations on Subleasing or Other Relinquishment   of Possession
    	
 
    	
20
    
	
7.4
    	
Security Assignment of Subleases
    	
 
    	
21
    
	
7.5
    	
Lessor’s Interest in Certain Engines
    	
 
    	
21
    
	
 
    	
 
    	
 
    	
 
    
	
8.
    	
MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; 
    	
 
    	
 
    

 

i

 

	
 
    	
ALTERATIONS, MODIFICATIONS, AND ADDITIONS; OTHER LESSEE   COVENANTS
    	
 
    	
22
    
	
 
    	
 
    	
 
    	
 
    
	
8.1
    	
Maintenance; Replacement and Pooling of Parts; Alterations,   Modifications, and Additions
    	
 
    	
22
    
	
8.2
    	
Information, Certificates, Notices, and Reports
    	
 
    	
22
    
	
8.3
    	
Lessee Undertakings in Other Documents
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
9.
    	
LOSS, DESTRUCTION, REQUISITION, ETC.
    	
 
    	
25
    
	
 
    	
 
    	
 
    	
 
    
	
9.1
    	
Event of Loss to the Aircraft
    	
 
    	
25
    
	
9.2
    	
Event of Loss to an Engine; Engine Exchanges
    	
 
    	
28
    
	
9.3
    	
Conditions to any Replacement
    	
 
    	
29
    
	
9.4
    	
Conveyance to Lessee
    	
 
    	
33
    
	
9.5
    	
Application of Payments
    	
 
    	
33
    
	
9.6
    	
Requisition of Aircraft for Use
    	
 
    	
34
    
	
9.7
    	
Requisition of an Engine for Use
    	
 
    	
34
    
	
9.8
    	
Application of Requisition Payments
    	
 
    	
34
    
	
9.9
    	
Application of Payments During Default
    	
 
    	
34
    
	
 
    	
 
    	
 
    	
 
    
	
10.
    	
INSURANCE
    	
 
    	
35
    
	
 
    	
 
    	
 
    	
 
    
	
10.1
    	
Lessee’s Obligation to Insure
    	
 
    	
35
    
	
10.2
    	
Insurance for Own Account
    	
 
    	
35
    
	
10.3
    	
Indemnification by Government in Lieu of Insurance
    	
 
    	
35
    
	
10.4
    	
Application of Insurance Proceeds
    	
 
    	
36
    
	
10.5
    	
Application of Payments During Special Default
    	
 
    	
36
    
	
10.6
    	
Lessor’s Right to Maintain Insurance
    	
 
    	
37
    
	
 
    	
 
    	
 
    	
 
    
	
11.
    	
INSPECTION
    	
 
    	
37
    
	
 
    	
 
    	
 
    	
 
    
	
12.
    	
ASSIGNMENT; SUCCESSOR LESSOR
    	
 
    	
38
    
	
 
    	
 
    	
 
    	
 
    
	
12.1
    	
In General
    	
 
    	
38
    
	
12.2
    	
Successor Lessor
    	
 
    	
38
    
	
 
    	
 
    	
 
    	
 
    
	
13.
    	
LEASE EVENTS OF DEFAULT
    	
 
    	
39
    
	
 
    	
 
    	
 
    	
 
    
	
13.1
    	
Payments
    	
 
    	
39
    
	
13.2
    	
Insurance
    	
 
    	
39
    
	
13.3
    	
Corporate Existence and Commercial Airlines Operations
    	
 
    	
40
    
	
13.4
    	
Certain Covenants
    	
 
    	
40
    
	
13.5
    	
Other Covenants
    	
 
    	
40
    
	
13.6
    	
Representations and Warranties
    	
 
    	
41
    
	
13.7
    	
Bankruptcy and Insolvency
    	
 
    	
41
    
	
13.8
    	
Other Obligations
    	
 
    	
42
    
	
13.9
    	
Judgments
    	
 
    	
42
    
	
 
    	
 
    	
 
    	
 
    
	
14.
    	
REMEDIES AND WAIVERS
    	
 
    	
42
    

 

ii

 

	
14.1
    	
Remedies
    	
 
    	
42
    
	
14.2
    	
Limitations Under CRAF
    	
 
    	
46
    
	
14.3
    	
Right to Perform for Lessee
    	
 
    	
46
    
	
14.4
    	
Determination of Fair Market Rental Value and Fair Market   Sales Value
    	
 
    	
46
    
	
14.5
    	
Lessor Appointed Attorney-in-Fact
    	
 
    	
47
    
	
14.6
    	
Remedies Cumulative
    	
 
    	
47
    
	
 
    	
 
    	
 
    	
 
    
	
15.
    	
LESSEE’S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC.
    	
 
    	
48
    
	
 
    	
 
    	
 
    	
 
    
	
16.
    	
ADDITIONAL RIGHTS AND OBLIGATIONS
    	
 
    	
49
    
	
 
    	
 
    	
 
    	
 
    
	
17.
    	
MISCELLANEOUS
    	
 
    	
49
    
	
 
    	
 
    	
 
    	
 
    
	
17.1
    	
Amendments
    	
 
    	
49
    
	
17.2
    	
Severability
    	
 
    	
50
    
	
17.3
    	
Third-Party Beneficiary
    	
 
    	
50
    
	
17.4
    	
Reproduction of Documents
    	
 
    	
50
    
	
17.5
    	
Counterparts
    	
 
    	
51
    
	
17.6
    	
Notices
    	
 
    	
51
    
	
17.7
    	
Governing Law; Jurisdiction and Venue; No Jury Trial
    	
 
    	
51
    
	
17.8
    	
No Waiver
    	
 
    	
53
    
	
17.9
    	
Survival
    	
 
    	
53
    
	
17.10
    	
Further Assurances 
    	
 
    	
53
    
	
17.11
    	
Entire Agreement
    	
 
    	
54
    

 

EXHIBITS, SCHEDULES AND ANNEXES

 

	
EXHIBIT A
    	
Lease   Supplement
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
EXHIBIT B
    	
Aircraft   Description
    	
 
    	
 
    
	
EXHIBIT C
    	
Form of   Return Acceptance Supplement
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
SCHEDULE 1- Part A
    	
Certain   Terms
    	
 
    	
 
    
	
                        - Part B
    	
Additional   Terms
    	
 
    	
 
    
	
SCHEDULE 2
    	
Basic   Rent
    	
 
    	
 
    
	
SCHEDULE 3
    	
Stipulated   Loss Values
    	
 
    	
 
    
	
SCHEDULE 4 -
    	
[RESERVED]
    	
 
    	
 
    
	
SCHEDULE 5
    	
Notional   Debt Amortization
    	
 
    	
 
    
	
SCHEDULE 6
    	
Permitted   Countries
    	
 
    	
 
    
	
SCHEDULE 7
    	
Placards
    	
 
    	
 
    
	
SCHEDULE 8
    	
Pool   of B717-200 Aircraft
    	
 
    	
 
    

 

iii

 

	
ANNEX A - Part 1
    	
Definitions
    	
 
    	
 
    
	
                   - Part 2
    	
Additional   Definitions
    	
 
    	
 
    
	
                   - Part 3
    	
Other   Definitions
    	
 
    	
 
    
	
ANNEX B - Part 1
    	
Delivery   Conditions
    	
 
    	
 
    
	
                   - Part 2
    	
Return   Conditions
    	
 
    	
 
    
	
ANNEX C
    	
Maintenance
    	
 
    	
 
    
	
ANNEX D
    	
Insurance
    	
 
    	
 
    
	
ANNEX E - Part 1
    	
Certain   Rights and Obligations
    	
 
    	
 
    
	
                     - Part 2
    	
Additional   Rights and Obligations
    	
 
    	
 
    

 

iv

 

LEASE AGREEMENT N491HA

 

This Lease Agreement N491HA (this “Lease”) is entered into as of June 28, 2011, between (1) Wells Fargo Bank Northwest, National Association, a national banking association, not in its individual capacity (except as expressly provided herein) but solely as Owner Trustee (“Lessor”), and (2) Hawaiian Airlines, Inc. (“Lessee”), a Delaware corporation.

 

Lessor and Lessee agree as follows:

 

1.                                      DEFINITIONS AND CONSTRUCTION

 

The terms defined in Annex A, when capitalized as in Annex A, have the same meanings when used in this Lease.  Annex A also contains rules of usage that control construction in this Lease. The parties agree that this Lease shall constitute a “finance lease” (as defined by UCC § 2A-103(g)) for purposes of UCC Article 2A.

 

2.                                      DELIVERY AND ACCEPTANCE; REGISTRATION OF INTERNATIONAL INTERESTS

 

2.1                                                                               Delivery and Lease of Aircraft

 

Lessor hereby leases the Aircraft to Lessee for the Term, and Lessee hereby leases the Aircraft from Lessor for the Term.

 

2.2                                                                               Acceptance by Lessee

 

On the Delivery Date, Lessee shall execute and deliver Lease Supplement No. 1 upon Lessee’s due and irrevocable acceptance of delivery of the Aircraft for all purposes of this Lease and the other Operative Agreements.

 

2.3                                                                               Registration of International Interests

 

Lessee and Lessor intend that the lease of the Airframe and each Engine by Lessor to Lessee shall create International Interests vested in, and in favor of, Lessor, and accordingly, Lessor and Lessee shall cause the CTC Registrations to be effected on the International Registry, and Lessee hereby consents to the CTC Registrations and agrees that Lessor shall be entitled to all of the benefits provided for under the CTC with respect such International Interests.

 

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3.                                      TERM AND RENT

 

3.1                                                                               Term

 

The Aircraft shall be leased hereunder for the Term, unless this Lease or the leasing of the Aircraft is earlier terminated in accordance with any provision of this Lease.

 

3.2                                                                               Rent

 

3.2.1                                                                     Basic Rent

 

During the Base Term, Lessee shall pay to Lessor, on each Payment Date, Basic Rent in the amount specified on Schedule 2 for such Payment Date.

 

3.2.2                                                                     Supplemental Rent

 

Lessee shall pay to Lessor, or to whomever is entitled to it, any and all Supplemental Rent (including any Make-Whole Amount that is Supplemental Rent) when and as it becomes due and owing.  Lessee will also pay to Lessor, or to whomever is entitled to it, as Supplemental Rent, to the extent permitted by applicable Law, interest at the Past-Due Rate on any part of any amount of Rent (including Supplemental Rent) not paid by 2:00 p.m., New York time, on the date when due (so long as, in the case of any Person not a party to the Participation Agreement, Lessee had received timely notice of the account to which such payment was required to be made), for the period from and including the date on which the same was due to (but excluding) the date of payment in full.

 

3.2.3                                                                     Security Deposit

 

(a)                                  On or before the date that is 15 Business Days after the date hereof, Lessee shall pay to Lessor the first installment of a security deposit (“First Installment”) in the amount set forth on Schedule 1- Part A hereto, and on or before the Delivery Date, Lessee shall pay to Lessor a second installment of a security deposit (“Second Installment” and, together with the First Installment, the “Security Deposit”) in the amount set forth on Schedule 1-Part A hereto.  The Security Deposit will be held by Lessor for the entire remaining Term of this Lease and may be commingled with other amounts of Lessor.

 

(b)                                 The Security Deposit shall be held by Lessor as security for the due and punctual payment by Lessee of all amounts payable by it, and the due and punctual observance and performance by Lessee of all of its obligations, hereunder and under each other Operative Agreement.  Lessee hereby assigns, transfers and pledges to Lessor, and hereby grants to Lessor, a first-priority

 

2

 

security interest in, the Security Deposit to secure such payment, observance and performance.  Any interest earned on the Security Deposit shall be solely for the account of Lessor.  If an Event of Default shall occur and be continuing, then in addition to any other rights Lessor may have under applicable Law as a lessor, secured party or otherwise, or under this Lease or any other Operative Agreement, Lessor may set off against, use, apply or retain all or any portion of the Security Deposit in full or partial payment for amounts payable by Lessee under this Lease or any other Operative Agreement or for amounts necessary to compensate Lessor and the Indemnitees for their Expenses arising in connection with such Event of Default.  Any such use or application shall not, however, be deemed a cure by Lessee, or waiver by Lessor, of any Event of Default, unless so agreed by Lessor in writing.

 

(c)                                  So long as no Default or Event of Default shall have occurred and be continuing, that portion, if any, of the Security Deposit that has not previously been used or applied, or set off against, as provided for in this Lease, shall be returned to Lessee by wire transfer of immediately available Dollars to an account of Lessee located in the United States of America, specified in writing by Lessee to Lessor at least 10 Business Days prior to the date of such transfer, (A) on or before the date that is 15 Business Days after and excluding the date upon which the Aircraft is returned to Lessor in the condition, and in the manner, required under Annex B to this Lease and otherwise in accordance with the terms of this Lease, or (B) if an Event of Loss shall have occurred, and Lessee shall have elected, or shall be deemed to have elected, the option set forth in Section 9.1.2 hereof, then on or before the date that is 15 Business Days after and excluding the date upon which Lessor has been paid all amounts required to be paid under, and as provided in, Section 9.1.2(a) hereof.

 

3.3                                                                               Payments

 

(a)                                  Payments of Rent by Lessee shall be paid by wire transfer of immediately available Dollars, not later than 2:00 p.m., New York City time, on the date when due, to the account of Lessor specified in Schedule 1 to the Participation Agreement (or to such other account in the United States as Lessor specifies to Lessee in writing at least 10 Business Days before such payment of Rent is due), or, in the case of any payment of Supplemental Rent expressly payable to a Person other than Lessor, to the Person that shall be entitled thereto, to such account in the United States as such Person specifies from time to time to Lessee at least 10 Business Days before such payment of Rent is due.

 

(b)                                 Except as otherwise expressly provided herein, whenever any payment of Rent shall be due on a day that is not a Business Day, such payment shall be made on the next day that is a Business Day, and, if such payment is made on such next Business Day, no interest shall accrue on the amount of such payment during such extension.

 

3

 

(c)                                  Except as expressly set forth herein, all computations of interest under this Lease shall be made on the basis of a year of 365/366 days and actual days elapsed.

 

(d)                                 The percentages set forth in Schedule 3 with respect to Stipulated Loss Value Dates have been computed on the assumption that the Basic Rent payable on the Payment Date corresponding to any such Stipulated Loss Value Date has not been paid to Lessor.

 

4.                                      DISCLAIMER; CERTAIN AGREEMENTS OF LESSOR; SECTION 1110 MATTERS

 

4.1                                                                               Disclaimer of Warranties

 

Lessor leases and Lessee takes the Aircraft “as-is, where-is.” Lessee acknowledges and agrees that, as between Lessee and each of Lessor and Owner Participant, (a) the Airframe and each Engine are of a size, design, capacity, and manufacture selected by and acceptable to Lessee, (b) Lessee is satisfied that the Airframe and each Engine are suitable for their respective purposes, and (c) Lessor does not make, has not made, and shall not be deemed to have made, and will be deemed to have expressly disclaimed, and Lessee hereby waives, releases, and renounces, any warranty, representation, guaranty, liability, and obligation of Lessor, and any right, claim and remedy of Lessee against Lessor, express or implied, arising by operation of law, course of performance, course of dealing, usage of trade, or otherwise, as to:

 

(1)                                 the title, airworthiness, value, condition, design, operation, or any implied warranty of merchantability or fitness for use or for any particular purpose of the Airframe, any Engine, any Part, any data, or any other thing delivered, sold, or transferred hereunder,

 

(2)                                 the quality of the material or workmanship with respect to the Airframe, any Engine, any Part, any data, or any other thing delivered, sold, or transferred hereunder,

 

(3)                                 the absence of latent or any other defect or nonconformance in the Airframe, any Engine, any Part, any data, or any other thing delivered, sold, or transferred hereunder, whether or not discoverable, or

 

4

 

(4)                                 the absence of any actual or alleged infringement of any patent, trademark, or copyright, or the like.

 

Lessee further waives, disclaims, releases, and renounces any liability, right, claim, remedy, or obligation based on tort, including strict liability, whether or not arising from the negligence (whether active, passive, or imputed) of Lessor, any obligation, liability, right, claim, or remedy for loss of or damage to the Airframe, any Engine, any Part, any data, or any other thing delivered, sold, or transferred hereunder, or any other representation or warranty whatsoever, express or implied, with respect to the Airframe, any Engine, any Part, any data, or any other thing delivered, sold or transferred hereunder, except as expressly set forth in the Operative Agreements.

 

Nothing set forth in this § 4.1 shall limit or impair Lessee’s rights and interests under, and as set forth in, § 7.4.5(a) of the Participation Agreement.

 

4.2                                                                               Warranty Rights

 

Unless an Event of Default shall have occurred and be continuing, Lessor agrees to make available to Lessee such rights as Lessor may have under any warranty with respect to the Aircraft made, or made available, by Airframe Manufacturer or Engine Manufacturer, or any of their subcontractors or suppliers.  If an Event of Default shall have occurred and be continuing, and if at such time Owner Participant is an Affiliate of Airframe Manufacturer, then until such time as Lessor commences the exercise of any right or remedy in respect of such Event of Default (whether pursuant to Section 14 or otherwise, and which may include, without limitation, a suspension of performance by Lessor of any of its obligations under this Lease or any of the other Operative Agreements), Lessor shall not, without Lessee’s prior written consent (such consent not to be unreasonably withheld or delayed), waive or release any such rights under any such warranty made by Airframe Manufacturer.

 

4.3                                                                               Quiet Enjoyment

 

So long as no Event of Default exists, Lessor shall not interfere with (or permit any Person acting at the instruction of, or on behalf of, Lessor or Owner Participant to interfere with) Lessee’s rights hereunder (or, subject always to § 7.2.7(d)(3), the rights of any Permitted Sublessee under a Permitted Sublease and any permitted sub-sub-lessee pursuant to § 7.2.7(j))to continued possession, use, and operation of, and quiet enjoyment of, the Aircraft during the Term. The foregoing, however, shall not be construed or deemed to modify or condition in any respect the obligations of Lessee pursuant to § 15, which obligations are absolute and unconditional.

 

5

 

4.4                                                                               Investment of Funds Held as Security

 

4.4.1                                                                     Investment

 

Any money required to be paid to, or retained or otherwise applied by, Lessor and that (i) is not required to be paid to Lessee pursuant to § 9.9 or § 10.5 or otherwise applied by Lessor (whether because a Special Default or an Event of Default exists or otherwise), or (ii) is held by Lessor pending payment to Lessee pursuant to § 9.5, § 9.8, § 10.5, Schedule 2 (with respect to its application to Basic Rent) or otherwise, or (iii) is required to be paid to Lessee pursuant to § 9.5, § 9.8, or § 10.5 after completion of a replacement to be made pursuant to § 9.1, § 9.2, or § 9.3, shall, until paid to Lessee as provided in § 9 or § 10 or otherwise, or applied as provided herein or otherwise, be held by Lessor as security for the obligations of Lessee under this Lease and the other Operative Agreements (and Lessee hereby grants to Lessor a security interest in such money) and shall be invested by Lessor from time to time as directed in writing by Lessee (or, if Lessee does not so direct, by or as directed by Lessor in its sole discretion) and at Lessee’s risk and expense in Cash Equivalents so long as such Cash Equivalents specified by Lessee or Lessor (as applicable) can be acquired by Lessor using its commercially reasonable efforts.  Notwithstanding the foregoing, this Section 4.4.1 shall not apply in any respect to (i) the Security Deposit (Sections 3.2.3 and 14.1.6 hereof shall govern the payment, possession, use, application and repayment of the Security Deposit), or (ii) the Maintenance Reserves (Section F of Annex C hereto shall govern the payment, possession, use, application and repayment of the Maintenance Reserves).

 

4.4.2                                                                     Payment of Gain or Loss

 

Any net gain (including interest received) realized as the result of investments pursuant to § 4.4.1 (net of any fees, commissions, and other reasonable expenses incurred in connection with such investment) shall be held, retained or applied in the same manner as the subject principal amount is to be held, retained or applied, as set forth in § 9, § 10, Schedule 2 (with respect to its application to Basic Rent) or otherwise.  Lessee will promptly pay to Lessor, on demand, the amount of any loss realized as the result of any such investment (together with any fees, commissions, and other reasonable expenses incurred in connection with such investment), such amount so paid to be held and applied by Lessor as contemplated in § 4.4.1.

 

6

 

4.4.3                                                                     Limitation of Liability

 

All investments under this § 4.4 shall be at Lessee’s risk and expense, and Lessor shall not be liable for any loss resulting from any investment made under this § 4.4 other than by reason of its willful misconduct or gross negligence. Any such investment may be sold (without regard to its maturity) by Lessor without instructions whenever such sale is necessary to make a distribution required by this Lease.

 

4.5                                                                               Title Transfers by Lessor

 

(a)                                  If Lessor shall be required to transfer title to the Aircraft, the Airframe, or any Engine to Lessee or any other Person pursuant to § 5.4 or § 9 of this Lease, then

 

(1) Lessor shall (aa) transfer to Lessee or such other Person (as applicable) all of Lessor’s right, title, and interest in and to the Aircraft, the Airframe, or such Engine (as applicable), free and clear of all Lessor Liens attributable to Lessor or Owner Participant, (bb) [RESERVED], (cc) [RESERVED], and (dd) assign to Lessee or such other Person (as applicable), if and to the extent permitted, all claims, if any, for damage to the Aircraft, the Airframe, or such Engine, in each case on an “as is, where is, and with all faults” basis, free of all Lessor Liens attributable to Lessor or Owner Participant, and without recourse or warranty of any kind whatsoever (except as to the transfer described in clause (aa) above and as to the absence of such Lessor Liens), and

 

(2) Lessor shall promptly deliver to Lessee or such other Person (as applicable), a bill of sale and agreements of assignment, evidencing such transfer and assignment, and such other instruments of transfer, all in form and substance reasonably satisfactory to Lessor and Lessee (or such other Person, as applicable), as Lessee (or such other Person, as applicable) may reasonably request; and Lessor shall also promptly consent to the making of such filings on the International Registry as shall be necessary and sufficient to register any such transfer and assignment, and Lessor shall also consent to the discharge on the International Registry of any registrations of International Interests in favor of Lessor with respect to the subject Airframe or Engine(s) under this Lease.

 

(b)                                 Any assignment, sale, transfer, or other conveyance of the Aircraft, the Airframe, or any Engine by Lessor pursuant to this Lease shall be effective to transfer or convey all right, title, and interest of Lessor in and to such Aircraft, Airframe or Engine, as the case may be.  No purchaser or other grantee shall be required to inquire as to the authorization, necessity, expediency, or regularity of such assignment, sale, transfer, or conveyance, or as to the application of any sale or other proceeds with respect thereto by Lessor.

 

7

 

4.6                                                                               Lease For U.S. Federal Income Tax Law Purposes; Section 1110 of Bankruptcy Code

 

(a)                                  Lessee and Lessor agree that this Lease is, and shall be treated as, a lease for U.S. federal income tax purposes of the Aircraft, Airframe, Engines, and Parts.

 

(b)                                 Lessee and Lessor intend that Lessor shall be entitled to the rights and benefits of Section 1110 (or any successor provision of federal bankruptcy Law), including the right to take possession of the Aircraft, Airframe, Engines, Parts and Returnable Records as provided in this Lease, and in any instance where more than one construction of the terms and conditions of this Lease or any other Operative Agreement is possible, or of the facts and circumstances underlying the transactions contemplated herein or therein, Lessor and Lessee agree that a construction which would create and preserve such rights and benefits shall control over any construction which would not create and preserve such rights and benefits.

 

(c)                                  Lessor and Lessee agree that, for all purposes of applicable Law, this Lease constitutes an agreement of lease, and nothing contained herein shall be construed as conveying to Lessee any right, title, or interest in the Aircraft, Airframe, Engines, or Parts except as a lessee only.

 

5.                                      DELIVERY AND RETURN OF AIRCRAFT

 

5.1                                                                               Compliance with Annex B

 

Lessee and Lessor shall comply with each of the provisions of Annex B, which provisions are hereby incorporated by this reference as if set forth in full herein.

 

5.2                                                                               Delivery

 

On the Delivery Date, the Aircraft shall meet the delivery conditions set forth in Part 1 of Annex B.  Lessor shall tender the Aircraft for delivery on the Scheduled Delivery Date.  If on the Scheduled Delivery Date the Aircraft is in the condition required by Part 1 of Annex B, then Lessee shall accept the Aircraft, and Lessor and Lessee shall each sign and deliver to each other a Lease Supplement dated as of the Delivery Date.  Lessee agrees that acceptance of the delivery of the Aircraft irrevocably constitutes acceptance of the Aircraft for all purposes of this Lease.

 

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5.3                                                                               Storage and Related Matters

 

If Lessor gives written notice to Lessee, not less than 30 days nor more than 120 days before the end of the Term, requesting storage of the Aircraft upon its return hereunder, Lessee will provide Lessor (or cause Lessor to be provided) with outdoor parking facilities for the Aircraft for a period up to 180 days, starting on the date of such return, at Mojave, California or Marana, Arizona or Victorville, California, as Lessor may specify, or if Lessor elects not to store the Aircraft at any of such locations, then the Aircraft shall be stored at such storage facility in the 48 contiguous states of the United States as Lessee may select and which is used as a location for the storage of large commercial aircraft.  At Lessor’s written request, Lessee shall maintain insurance (if available) for the Aircraft during such storage period, provided, that Lessor shall reimburse Lessee for Lessee’s actual incremental out-of-pocket cost of providing such insurance for any period following the initial 90 days of such storage period.  Such storage shall be at Lessor’s risk, and Lessor shall pay all applicable storage fees, except that Lessee shall pay the parking fees for the initial 90 days of such storage period; provided,  that Lessee’s obligation to provide parking shall be subject to Lessor’s entering into an agreement with the storage facility, before the storage period begins, providing that, as between the storage facility, Lessee, and Lessor, Lessor shall bear all maintenance charges (other than maintenance required as a result of Lessee’s failure to comply with the provisions of Annex B hereto) and other costs incurred (other than parking fees for the initial 90 days of such storage period).  In addition, upon the return of the Aircraft, Lessor shall have no obligation with respect to the amount of any fuel or oil contained in the fuel or oil tanks of the Aircraft, it being agreed, however, that Lessee shall not be obligated to return the Aircraft with any fuel or oil other than as required pursuant to § 7(13) of Annex B.

 

5.4                                                                               Return of Other Engines

 

If any Engine owned by Lessor is not installed on the Airframe at the time of return hereunder, Lessee shall return the Airframe hereunder with a Replacement Engine meeting the requirements of, and in accordance with, § 9 and Annex B, as if the Engine replaced had suffered an Event of Loss on or before the return date and had been replaced on the return date. Thereupon, Lessor will transfer to Lessee the Engine constituting part of the Aircraft but not installed on the Airframe at the time of the return of the Airframe, and will deliver the documentation required therefor pursuant to § 4.5.

 

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5.5                                                                               Failure to Return Aircraft

 

If Lessee shall, for any reason whatsoever, fail to return the Aircraft and the Returnable Records at the time and in the manner specified herein, all obligations of Lessee under this Lease (including the obligation to pay Basic Rent, as provided in § 4 of Annex B) shall continue in effect with respect to the Aircraft until the Aircraft and Returnable Records are returned to Lessor; provided, that (i) this § 5.5 shall not be construed as permitting Lessee to fail to meet its obligation to return the Aircraft or the Returnable Records at the time and in the manner specified herein or constitute, or be deemed to constitute, a waiver of any Event of Default resulting from Lessee’s failure to return the Aircraft or the Returnable Records or otherwise, and (ii) if Lessee fails to return any Returnable Records at the time and in the manner specified herein, and if such failure does not materially impair, delay or otherwise interfere with the inspection, operation, maintenance, testing, repair, overhaul, marketing, storage, sale, lease or other disposition of the Aircraft, Airframe or any Engine, and if Lessee otherwise fully performs its obligation to return the Aircraft and the Returnable Records at the time and in the manner specified herein, then, notwithstanding any such failure, Lessee shall not be obligated to continue to pay Basic Rent, as set forth above in this § 5.5.

 

6.                                      LIENS

 

Lessee shall not, directly or indirectly, create, incur, assume, or suffer to exist any Lien on or with respect to the Aircraft, the Airframe, any Engine, any Part, or the Returnable Records, title to any of the foregoing, or any interest of Lessee therein, or Lessee’s rights in and to this Lease or any Permitted Sublease, except

 

(a) the rights of Lessor (including, without limitation, the International Interests of Lessor constituted under this Lease with respect to the Airframe and Engines), the Owner Participant, and Lessee under the Operative Agreements, and the rights of any Permitted Sublessee under any Permitted Sublease, and the rights of Lessor under any assignment by Lessee to Lessor of a Permitted Sublease (including, without limitation, the Assignment of any International Interests by Lessee to Lessor, in respect of any such Permitted Sublease);

 

(b) Lessor Liens attributable to Owner Trustee (both in its capacity as trustee under the Trust Agreement and in its individual capacity) or Owner Participant;

 

(c) the rights of others under agreements or arrangements to the extent permitted by § 7.2, § 7.3, or § C of Annex C;

 

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(d) Liens for Taxes either not yet due or being contested in good faith by appropriate proceedings if such Liens and such proceedings do not involve any material risk of the sale, forfeiture, or loss (including loss of use) of the Aircraft, the Airframe, any Engine or any of the Returnable Records, or any interest therein or any discernible risk of criminal liability or any material risk of civil penalty against Lessor or any Owner Participant;

 

(e) materialmen’s, mechanics’, workers’, repairers’, employees’, or other like Liens arising in the ordinary course of business for amounts the payment of which either is not yet delinquent or is being contested in good faith by appropriate proceedings, if such Liens and such proceedings do not involve any material risk of the sale, forfeiture, or loss (including loss of use) of the Aircraft, the Airframe, any Engine, or any of the Returnable Records, or any interest therein or any discernible risk of criminal liability or any material risk of civil penalty against Lessor or any Owner Participant;

 

(f) Liens arising out of any judgment or award against Lessee or any Permitted Sublessee, if, within 45 days after the entry thereof, that judgment or award is discharged or vacated, or has its execution stayed pending appeal, or is discharged, vacated, or reversed within 45 days after the expiration of such stay, and if during any such 45-day period there is not, or any such judgment or award does not involve, any material risk of the sale, forfeiture, or loss (including loss of use)of the Aircraft, the Airframe, any Engine or any of the Returnable Records, or any interest therein or any discernible risk of criminal liability or any material risk of civil penalty against Lessor or any Owner Participant;

 

(g) any other Lien with respect to which Lessee or any Permitted Sublessee provides a bond, cash collateral, or other security that, in the reasonable opinion of Lessor, fully covers the obligations and liabilities associated with such Lien; and

 

(h) only at the sole discretion of, and only upon the prior written consent of, Lessor, any other Lien.

 

Lessee, at its own cost and expense, shall promptly take or cause to be taken such action as may be necessary duly to discharge and remove (by bonding or otherwise) any Lien not excepted above that arises in respect of the Aircraft, the Airframe, any Engine, any Part, any of the Returnable Records, or all or any other part of the Trust Estate during the Term, and shall promptly notify Lessor of, and provide to Lessor evidence of, such discharge and removal.

 

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7.                                      REGISTRATION; OPERATION; POSSESSION AND SUBLEASING

 

7.1                                                                               Registration and Operation

 

7.1.1                                                                     Registration and Recordation

 

Lessee shall cause the Aircraft to be, and at all times during the Term to remain, duly registered with the FAA under the Transportation Code, in the name of Lessor as owner and lessor (except to the extent that such registration under the Transportation Code is prevented or lost because of Lessor’s or Owner Participant’s failure to comply with the citizenship requirements for registration of the Aircraft under the Transportation Code).  Lessor shall execute and deliver all such documents as Lessee reasonably requests for the purpose of effecting and continuing such registration.

 

7.1.2                                                                     Markings

 

On or reasonably promptly after the Delivery Date, Lessee will cause to be affixed to, and maintained in, the cockpit of the Airframe and on each Engine, in each case in a clearly visible location, a placard of a reasonable size and shape bearing the legend set forth in Schedule 7. Such placards may be removed temporarily, if necessary, in the course of maintenance of the Airframe or Engines. If any such placard is damaged or becomes illegible, Lessee shall promptly replace it with a placard complying with the requirements of this § 7.1.2. Lessee will not allow the name of any Person to be placed on the Airframe or any Engine as a designation that reasonably would be interpreted as a claim of ownership.

 

7.1.3                                                                     Compliance With Laws

 

Lessee shall not, and shall not allow any other Person to, operate, use, maintain, service, test, inspect, repair, or overhaul the Aircraft (a) in violation of any Law binding on or applicable to Lessee or to the Aircraft, the Airframe, any Engine, or any of the Aircraft Documents, or to the operation, use, maintenance, service, repair, or overhaul of the Aircraft, the Airframe, or any Engine, or (b) in violation of any airworthiness certificate, license, or registration of any Government Entity relating to Lessee or to the Aircraft, the Airframe, or any Engine, except (1) immaterial and non-recurring violations with respect to which corrective measures are taken promptly by Lessee or a Permitted Sublessee (as applicable) upon discovery thereof, and (2) to the extent Lessee or any Permitted Sublessee is contesting the validity or application of any such Law or requirement relating to any such certificate, license, or registration in good faith in any reasonable manner which does not involve any material risk of the sale, forfeiture, or loss (including loss of use) of the Aircraft, the Airframe, any Engine, or any of the Returnable Records, or any interest therein, or any discernible risk of criminal liability or any material risk of civil penalty against Lessor or Owner Participant.

 

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7.1.4                                                                     Operation

 

Lessee agrees not to operate, use, or locate the Aircraft, the Airframe, or any Engine, or allow the Aircraft, the Airframe, or any Engine to be operated, used, or located, (a) in any area excluded from coverage by any insurance required by the terms of § 10, except in the case of a requisition by the U.S. Government where the U.S. Government provides an indemnity in lieu of such insurance, or insurance from the U.S. Government, covering such area, in accordance with § 10.3, or (b) in any recognized or threatened area of hostilities unless fully covered in accordance with Annex D by war-risk insurance as required by the terms of § 10 (including § 10.3), unless in any case referred to in this § 7.1.4 the Aircraft is only temporarily operated, used, or located in such area as a result of an emergency, equipment malfunction, navigational error, hijacking, weather condition, or other similar unforeseen circumstances, so long as Lessee diligently and in good faith proceeds to remove the Aircraft from such area immediately.

 

7.1.5                                                                     Grounding and Storage

 

Subject to § 7.1.4, and the other provisions hereof, Lessee may voluntarily store or ground the Aircraft, Airframe or any Engine or Part if and for so long as (i) the equipment so stored or grounded is fully covered by all insurance required to be maintained under § 10 and Annex D hereof, and (ii) such storage or grounding is effected and maintained in accordance with the Maintenance Program, and with Airframe Manufacturer’s or Engine Manufacturer’s recommended storage guidelines, as the case may be, and with all applicable Laws, including, without limitation, all rules, regulations and directives of the FAA.

 

7.2                                                                               Possession

 

Lessee will not, without the prior written consent of Lessor, sublease or otherwise in any manner deliver, transfer, or relinquish possession of the Aircraft, the Airframe, or any Engine, or install any Engine, or permit any Engine to be installed, on any airframe other than the Airframe; provided, that, (i) subject to the provisions of § 7.3, and (ii) if, but only for so long as, all approvals, consents, or authorizations required to be obtained from the Aviation Authority or any other Government Entity, in connection with any sublease, delivery, transfer, or relinquishment of possession described below, have been obtained and remain in full force and effect, then Lessee may, without such prior written consent, do any of the following:

 

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7.2.1                                                                     Interchange and Pooling

 

Subject or permit any Permitted Sublessee to subject any Engine to normal interchange agreements or pooling agreements or arrangements, in each case customary in the commercial airline industry and entered into in writing by Lessee, or such Permitted Sublessee, in the ordinary course of business of Lessee or such Permitted Sublessee; provided, no such agreement or arrangement contemplates or requires the transfer of title to such Engine, but if Lessor’s title to any such Engine is divested under any such agreement or arrangement, then such Engine shall be deemed to have suffered an Event of Loss as of the date of such divestiture, and consequently Lessee shall be required to replace such Engine with a Replacement Engine meeting the requirements of, and in accordance with, § 9.

 

7.2.2                                                                     Testing and Service

 

Deliver or permit any Permitted Sublessee to deliver possession of the Aircraft, Airframe or any Engine to the manufacturer thereof or to any third-party maintenance provider, for testing, service, repair, maintenance, or overhaul work on the Aircraft, Airframe or any Engine, or, to the extent required or permitted by the terms of § D of Annex C, for alterations or modifications in or additions to the Aircraft, the Airframe or any Engine (and delivery of Engines may be accomplished by transport on licensed or bonded common carriers qualified in the shipping and transport of such items).

 

7.2.3                                                                     Transfer to U.S. Government

 

Transfer, or permit any Permitted Sublessee to transfer, possession of the Aircraft, the Airframe, or any Engine to the U.S. Government pursuant to CRAF or otherwise, in which event Lessee shall immediately notify Lessor and Owner Participant in writing of any such transfer of possession and in such notification shall identify by name, address, and telephone numbers the Contracting Office Representative(s) for the Military Airlift Command of the United States Air Force to whom notices must be given and to whom requests or claims must be made; and if such transfer continues beyond the end of the Term, then the Aircraft, Airframe, or Engine(s), as the case may be, shall be deemed to have suffered an Event of Loss with the effect that Lessee would be required to pay, in accordance with § 9.6, the amounts specified in § 9.1.2.

 

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7.2.4                                                                     Installation of Engines on Owned Airframes

 

Install or permit any Permitted Sublessee to install an Engine on an airframe owned by Lessee or such Permitted Sublessee, free and clear of all Liens except (a) Permitted Liens, (b) Liens that do not (at any time) apply to the Engines, and (c) the rights of third parties under normal interchange or pooling agreements and arrangements of the type permitted under § 7.2.1.

 

7.2.5                                                                     Installation of Engines on Other Airframes

 

Install or permit any Permitted Sublessee to install an Engine on an airframe leased to Lessee or such Permitted Sublessee, or purchased or owned by Lessee or such Permitted Sublessee subject to a security agreement, conditional sale, or other secured financing arrangement, but only if (a) such airframe is free and clear of all Liens except (1) the rights of the parties to such lease or secured financing arrangement, covering such airframe, and (2) Liens of the type permitted by clauses (a) and (b) of § 7.2.4, and (b) Lessee or such Permitted Sublessee has received from the lessor, secured party, or conditional seller, in respect of such airframe, a written agreement (which may be a copy of the lease, security agreement, conditional sale agreement, or other agreement covering such airframe), whereby such Person agrees, for the effective and enforceable benefit of Lessor and Owner Participant, that neither it nor its successors or assigns will acquire or claim any right, title, or interest in, or Lien on, such Engine by reason of the installation of such Engine on such airframe at any time while such Engine is subject to this Lease or is owned by Lessor.

 

7.2.6                                                                     Installation of Engines on Financed Airframes

 

Install or permit any Permitted Sublessee to install an Engine on an airframe owned by Lessee or such Permitted Sublessee, leased to Lessee or such Permitted Sublessee, or purchased or owned by Lessee or such Permitted Sublessee subject to a conditional sale or other security agreement under circumstances where neither § 7.2.4 nor § 7.2.5 applies; provided, that any such installation shall be deemed an Event of Loss with respect to such Engine as of the date of such installation, with the effect that Lessee shall be required to replace such Engine with a Replacement Engine meeting the requirements of, and in accordance with, § 9. Until § 9 has been fully complied with, Lessor’s interest in any such Engine shall continue in full force and effect.

 

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7.2.7                                                                     Subleasing

 

With respect to the Aircraft, the Airframe, or any Engine, if no Special Default exists, enter into a sublease with any Permitted Air Carrier, or (if neither Airframe Manufacturer nor any of its Affiliates is the Owner Participant) any Permitted Manufacturer, but only if:

 

(a)                                  Lessee provides written notice to Lessor at least 15 days (30 days, if the Sublessee is not a U.S. Air Carrier) before the sublease term begins;

 

(b)                                 at the time that Lessee enters into such sublease, such Permitted Air Carrier or Permitted Manufacturer shall not be subject to any bankruptcy, insolvency, liquidation, reorganization, dissolution, or similar proceeding, and shall not have substantially all of its property in the possession of any liquidator, trustee, receiver, or similar Person;

 

(c)                                  any such sublease shall provide for payment of rent, or any amount in lieu of rent, no less frequently than monthly and all such rent shall be payable in advance;

 

(d)                                 any such sublease

 

(1) shall end before the date that is three months prior to the expiration of the Term;

 

(2) shall include provisions for the registration, maintenance, operation, possession, inspection, and insurance of the Aircraft that are the same in all substantive respects as the applicable provisions of this Lease;

 

 (3) shall be expressly subject and subordinate to all the terms of this Lease and to Lessor’s rights, powers, and remedies hereunder, including Lessor’s rights under § 14 to repossess the Aircraft, Airframe, Engines, and Returnable Records, and to terminate such sublease if an Event of Default exists; and

 

(4) shall include no purchase option respecting the Aircraft;

 

(e)                                  in connection with a sublease to a Permitted Foreign Air Carrier, all necessary governmental approvals (if any) required for the Aircraft, Airframe, or Engine(s) to be imported to the applicable jurisdiction shall have been obtained prior to commencement of any such sublease, and any foreign exchange permits necessary to allow all rent and other payments provided for under such sublease shall be in full

 

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force and effect; and Lessee shall have provided to Lessor (if the same is reasonably obtainable in such jurisdiction) a power-of-attorney, reasonably satisfactory in form and substance to Lessor, permitting Lessor to exercise all rights of Lessee under such sublease in such jurisdiction, upon the occurrence and continuation of an Event of Default;

 

(f)                                    in connection with a sublease to a Permitted Foreign Air Carrier or non-U.S. Permitted Manufacturer, Lessee furnishes to Lessor a favorable opinion, in form and substance reasonably satisfactory to Lessor, of counsel, selected by Lessee and reasonably satisfactory to Lessor, located in the country of domicile of such Permitted Foreign Air Carrier or non-U.S. Permitted Manufacturer, that

 

(1) the terms of such sublease are legal, valid, and binding obligations of the parties thereto, enforceable under the laws of such jurisdiction, subject to applicable bankruptcy, reorganization, or similar laws affecting creditors’ rights generally (provided that any such qualification, as applied to this part of the opinion, or to the opinion as a whole, shall not qualify, condition or otherwise limit the scope or application of that part of the opinion required under subparagraph (6) of this paragraph (f);

 

(2) it is not necessary for Owner Participant or Lessor to register or qualify to do business in such jurisdiction, if not already so registered or qualified, as a result of the proposed sublease;

 

(3) Lessor’s title to the Aircraft, Airframe, and Engines will be recognized and enforceable in such jurisdiction;

 

(4) such jurisdiction maintains normal diplomatic relations with the United States, and the Laws of such jurisdiction of domicile require fair compensation by the government of such jurisdiction, payable in a currency freely convertible into Dollars, for the loss of use of or title to the Aircraft, Airframe, or Engines in the event of the requisition by such government of such use or title (unless Lessee provides insurance in the amounts required with respect to hull insurance under § 10 covering the requisition of use of or title to the Aircraft, Airframe, or Engines by the government of such jurisdiction so long as the Aircraft, Airframe, or Engines are subject to such sublease);

 

(5) such Permitted Air Carrier’s or Permitted Manufacturer’s agreement that its rights under the sublease are subject and subordinate to all the terms of this Lease is enforceable against such Permitted Air Carrier or Permitted Manufacturer under applicable law;

 

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(6) the Laws and the courts of such jurisdiction (aa) will recognize the rights and interests of Lessor (including Lessor’s title to the Aircraft), and of Owner Participant, as such rights and interests are described in, and are intended to be created under, the Operative Agreements, and (bb) will provide that there are no possessory rights in favor of Lessee, any Permitted Sublessee, or any third party (including any Government Entity) which would, upon bankruptcy or other default by Lessee or any Permitted Sublessee, prevent or delay the return of the Aircraft, Airframe, Engines, Parts or Returnable Documents to Lessor in accordance with and when required or permitted by the terms of this Lease, or, if such possessory rights exist, they are not materially greater than those available to lessees of newly manufactured large passenger aircraft (assuming such lessees to be U.S. Air Carriers) under then current United States Law (including Section 1110), and there are no procedural or other impediments to the return of the Aircraft to Lessor materially greater than under United States Law (including Section 1110), and there is no material impediment under the Laws of such jurisdiction to the enforceability (other than immaterial differences in procedures of enforcement) of the rights and remedies of Lessor provided for in and under the Operative Agreements;

 

(7) there is no tort liability imposed on lenders or lessors having no operational interest in the Aircraft, Airframe, or Engine(s), except liabilities that Lessee or a Permitted Sublessee has agreed to insure against at its expense to the reasonable satisfaction of Owner Participant; and

 

(8) neither Lessor nor Owner Participant shall be subjected to any adverse tax consequences as a result of such sublease, unless Lessee is required to indemnify such Person, under § 9.2 of the Participation Agreement (or otherwise agrees to indemnify such Person pursuant to a separate indemnity agreement reasonably satisfactory to such Person) against all such adverse tax consequences;

 

(g)                                 in connection with any sublease to any U.S. Air Carrier for a term of more than three months (including any permitted renewals or “back-to-back” or “replacement” lease arrangements), Lessee shall provide Lessor and Owner Participant an opinion of counsel (which may

 

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be from counsel to the subject sublessee, and may be the same opinion to be given to Lessee, with the addition of Lessor and Owner Participant as addressees of such opinion) in form and substance reasonably satisfactory to Lessor and Owner Participant as to, among other things, the due authorization, execution and delivery of such sublease (and as to such other matters, including, without limitation, the legality, validity, binding effect and enforceability of such sublease, as Lessee may, in using its commercially reasonable efforts, obtain for its benefit and the benefit of Lessor and Owner Participant); provided that any such opinion, as provided to Lessor and Owner Participant, shall be no less favorable in form or substance than any opinion given to Lessee or to any other party in connection with such sublease transaction;

 

(h)                                 Lessee furnishes to Lessor and Owner Participant evidence reasonably satisfactory to Lessor that the insurance required by § 10 remains in effect;

 

(i)                                     all necessary documents are duly filed, registered, or recorded in such public offices as are required fully to establish, protect, and preserve the title of Lessor in the Aircraft, Airframe, and Engines;

 

(j)                                     no Sublessee may sub-sublease or otherwise Transfer the Aircraft, the Airframe, or any Engine, except that a Permitted Manufacturer may sub-sublease to any Permitted Sublessee to whom a sublease would be permitted under this § 7.2; provided, that (i) such sub-sublease shall not permit any sub-sub-subleasing of the Aircraft, the Airframe, or any Engine (and Lessee shall ensure that the same does not occur), (ii) Lessee shall comply, and shall cause such sub-sublease to comply, with all requirements of this § 7.2 as if such sub-sublease were a direct sublease from Lessee to the sub-sublessee, and (iii) such sub-sublease meets the requirement of a Permitted Sublease;

 

(k)                                  the Permitted Sublessee shall not be eligible to assert, or shall have effectively waived, any right to sovereign immunity;

 

(l)                                     Lessee shall reimburse Lessor and Owner Participant for all of their reasonable out-of-pocket fees and expenses (including reasonable fees and disbursements of counsel) incurred in connection with any such sublease; and

 

(m)                               [RESERVED].

 

In addition to the foregoing requirements, Lessee shall deliver to Lessor and Owner Participant: (i) on or before the date specified in § 7.2.7(a), a notice stating the identity of the sublessee and a copy of the proposed sublease

 

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agreement, (ii) on or before the date specified in § 7.2.7(a), an officer’s certificate of a Responsible Officer of Lessee stating that no Special Default exists and that such sublease complies with this § 7.2, (iii) on or before the commencement of the Permitted Sublease, the registration of the International Interests of Lessee constituted under such Permitted Sublease (if, in Lessor’s reasonable judgment, such registrations are appropriate or desirable), (iv) on or before the commencement of the Permitted Sublease, the sublease assignment referred to in § 7.4 and (x) financing statements or similar documents under the applicable Laws of the country of the Permitted Sublessee confirming the perfected first-priority security interest of Lessor in such Permitted Sublease, duly executed and delivered, in form and substance reasonably satisfactory to Lessor and Owner Participant, and duly filed or recorded in all appropriate places, and (y) such filings and registrations on the International Registry as may, in Lessor’s reasonable judgment, be appropriate or desirable with respect to Lessee’s assignment to Lessor of all Associated Rights relating to Lessee’s International Interests constituted under such Permitted Sublease, and (z) such evidence as may be reasonably satisfactory to Lessor that no other filing or registration has been made on the International Registry that would have priority over Lessor’s interests as assignee of such Associated Rights, and (iv) on or before the commencement of the Permitted Sublease, the consent of the Permitted Sublessee to (x) the registration of the International Interests of Lessee constituted under such Permitted Sublease (if, in Lessor’s reasonable judgment, such registrations are appropriate or desirable, and (y) the assignment of its Permitted Sublease pursuant to § 7.4, and the registration on the International Registry of such assignment (as described above in clause (iv)(y)), in each case in a form reasonably satisfactory to Lessor.  Lessee shall pay all reasonable out-of-pocket costs and expenses (including reasonable counsel fees and disbursements) of Lessor and Owner Participant in connection with any sublease or other transfer pursuant to this § 7.2.  No sublease or other transfer of any Airframe, Engine, or Part shall in any way discharge or diminish any of Lessee’s obligations or liabilities under this Lease or under any other Lessee Operative Agreement.

 

7.3                                                                               Certain Limitations on Subleasing or Other Relinquishment of Possession

 

Notwithstanding anything to the contrary in § 7.2:

 

(a)                                  The rights of any Person who receives possession of the Aircraft in accordance with § 7.2 shall be subject and subordinate to all the terms of this Lease, and to Lessor’s rights, powers, and remedies hereunder, including (1) Lessor’s right to repossess the Aircraft pursuant to § 14, (2) Lessor’s right to terminate and avoid such sublease, delivery, transfer, or relinquishment of possession if an Event of Default has occurred and is continuing, and (3) the right to require such Person to deliver the Aircraft, the Airframe, and Engines subject to such transfer forthwith if an Event of Default has occurred and is continuing.

 

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(b)                                 Lessee shall remain primarily liable hereunder for the performance of all the terms of this Lease to the same extent as if such transfer had not occurred, and no transfer of possession of the Aircraft, the Airframe, any Engine, any Part, or any Aircraft Document shall in any way discharge or diminish any of Lessee’s obligations to Lessor hereunder or under any other Operative Agreement.

 

(c)                                  Lessee shall ensure that no sublease, delivery, transfer, or relinquishment permitted under § 7.2 shall affect the United States registration of the Aircraft.

 

(d)                                 Any event that constitutes, or would with the passage of time constitute, an Event of Loss under clauses (3), (4), (5), and (6) of the definition of Event of Loss set forth in Annex A hereto shall not be deemed to violate the provisions of § 7.2 hereof.

 

(e)                                  No Wet Lease shall constitute a delivery, transfer, or relinquishment of possession for purposes of § 7.2, nor shall it be prohibited by the terms hereof.

 

7.4                                                                               Security Assignment of Subleases

 

As security for Lessee’s due and punctual payment of all Rent and performance of all of its other covenants and obligations in the Operative Agreements, Lessee hereby grants to Lessor a first-priority security interest in all of Lessee’s right, title, and interest in and to each Permitted Sublease of any Aircraft, Airframe, or Engine, and all payments, including payments of rent, insurance proceeds (other than public liability insurance proceeds), and other amounts due or to become due thereunder.  Lessee shall enter into a “Sublease Assignment”, in form and substance reasonably satisfactory to Lessor, with respect to each Sublease.  In furtherance of the provisions of this § 7.4; Lessee agrees that each Permitted Sublease shall be accompanied by such Uniform Commercial Code financing statements, FAA filings, filings and registrations on the International Registry and other filings and documents as shall, in Lessor’s reasonable opinion, be required to perfect and protect the security interest of Lessor in such Permitted Sublease.

 

7.5                                                                               Lessor’s Interest in Certain Engines

 

If Lessee or a Permitted Sublessee shall have received from the lessor, conditional seller, or secured party, in respect of any airframe leased to, or

 

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owned by, Lessee or any Permitted Sublessee and subject to a lease, conditional sale, or other security agreement, a written agreement complying with clause (b) of § 7.2.5, then Lessor agrees, for the benefit of each lessor, conditional seller, or secured party of any engine leased to, purchased by, or owned by Lessee or such Permitted Sublessee and subject to a lease, conditional sale, or other security agreement, that Lessor will not acquire or claim, as against such lessor, conditional seller, or secured party, any right, title, or interest in such engine as the result of the installation of such engine on the Airframe at any time while such engine is subject to such lease, conditional sale, or other security agreement and owned by such lessor or conditional seller or subject to a security interest in favor of such secured party.

 

8.                                      MAINTENANCE; REPLACEMENT AND POOLING OF PARTS; ALTERATIONS, MODIFICATIONS, AND ADDITIONS; OTHER LESSEE COVENANTS

 

8.1                                                                               Maintenance; Replacement and Pooling of Parts; Alterations, Modifications, and Additions

 

At all times during the Term, Lessee shall comply with (or cause to be complied with) each of the provisions of Annex C, which provisions are hereby incorporated by this reference as if set forth in full herein.

 

8.2                                                                               Information, Certificates, Notices, and Reports

 

8.2.1                                                                     Financial Information

 

To the extent not otherwise publicly available, Lessee will furnish to Lessor and Owner Participant:

 

(a)                                  within 60 days after the end of each of the first three fiscal quarters in each fiscal year of Holdings, a consolidated balance sheet of Holdings as of the end of such quarter, and related statements of income and cash flows for the period commencing at the end of the previous fiscal year and ending with the end of such quarter, setting forth in each case in comparative form the corresponding figures for the corresponding period in the preceding fiscal year, prepared in accordance with GAAP; provided, that while Holdings is subject to the reporting requirements of the Exchange Act, a copy of Holdings’s report on Form 10-Q for such fiscal quarter (together with all documents not available on EDGAR (or its successor) containing such financial information incorporated by reference therein, if not previously delivered to Lessor and Owner Participant) will satisfy this clause (a).

 

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(b)                                 within 120 days after the end of each fiscal year of Holdings, a consolidated balance sheet of Holdings as of the end of such fiscal year and related statements of income and cash flows of Holdings for such fiscal year, in comparative form with the preceding fiscal year, prepared in accordance with GAAP, together with a report of Holdings’s independent certified public accountants with respect to their audit of such financial statements; provided, that while Holdings is subject to the reporting requirements of the Exchange Act, a copy of Holdings’s report on Form 10-K for such fiscal year (together with all documents not available on EDGAR (or its successor) containing such financial information incorporated by reference therein, if not previously delivered to Lessor and Owner Participant) will satisfy this clause (b).

 

8.2.2                                                                     Annual Certificate

 

Within 120 days after the close of each fiscal year of Lessee, Lessee shall deliver to Lessor and Owner Participant an Officer’s Certificate of Lessee to the effect that such officer is familiar with or has reviewed or caused to be reviewed the relevant terms of this Lease and the other Operative Agreements, and has made, or caused to be made under his or her supervision, a review of the transactions and condition of Lessee during the preceding fiscal year, and that following such review such officer does not have knowledge of the existence as at the date of such certificate of any Default (or, if to such officer’s knowledge any Default existed or exists, specifying the nature and period of existence thereof and the action Lessee has taken or is taking or proposes to take with respect thereto).

 

8.2.3                                                                     SEC Reports

 

To the extent not otherwise publicly available, Lessee will furnish to Lessor and Owner Participant:

 

(a)                                  promptly after filing with the SEC, copies of Holdings’s annual reports on Form 10-K (including all corresponding publicly-available annual reports to stockholders, if not previously furnished), if any, and quarterly reports on Form 10-Q, if any (in each case, excluding exhibits unless any such recipient requests otherwise); and

 

(b)                                 if provided by Lessee from time to time to aircraft lessors and other aircraft creditors generally, then (1) promptly after filing with the SEC, copies of current reports of Holdings on Form 8-K, or any similar reports filed with the SEC (in each case, excluding exhibits unless any such recipient requests otherwise), and (2) promptly upon distribution thereof, copies of all periodic reports furnished by Holdings to its respective stockholders generally.

 

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8.2.4                                                                     Notice of Default

 

Lessee will furnish to each of Lessor and Owner Participant, immediately upon acquiring Actual Knowledge that a Default has occurred, a certificate of Lessee, signed by any such officer of Lessee, describing such Default in reasonable detail, with a statement describing the action Lessee has taken or is taking or proposes to take with respect thereto.

 

8.2.5                                                                     Information for Filings

 

Upon the reasonable request of Lessor or Owner Participant, Lessee shall promptly furnish to Owner Participant and Lessor such information (other than with respect to the citizenship of Owner Participant and Lessor) within Lessee’s or any Permitted Sublessee’s possession, or reasonably available to or obtainable by Lessee or such Permitted Sublessee, as may be required to enable Lessor to file in a timely manner any reports required to be filed by it as lessor under the Lease or to enable Owner Participant to file in a timely manner any reports required to be filed by it as the beneficiary of the Trust Estate, in either case, with any Government Entity because of, or in connection with, the interest of Owner Participant or Lessor in the Aircraft, the Airframe, the Engines, this Lease, or any other part of the Trust Estate; provided, that, with respect to any such information which Lessee reasonably deems commercially sensitive or confidential, Owner Participant or Lessor (as applicable) shall afford Lessee a reasonable opportunity to seek from any such Government Entity a waiver of the obligation of Owner Participant or Lessor to file any such information, or shall consent to the filing of such information directly by Lessee in lieu of filing by Owner Participant or Lessor, and if any such waiver or consent is evidenced to the reasonable satisfaction of Owner Participant or Lessor (as applicable), then Lessee shall not be required to furnish such information to Owner Participant or Lessor.

 

8.2.6                                                                     Other Information

 

Lessee shall promptly furnish to Lessor and Owner Participant from time to time such information with respect to Lessee, the Aircraft, the Airframe, the Engines, the Aircraft Documents, or Lessee’s financial condition, or otherwise relating to the transactions or matters contemplated herein and in the other Operative Agreements, in each case if and to the extent within Lessee’s or any Permitted Sublessee’s possession, or reasonably available to or obtainable by Lessee or such Permitted Sublessee, as Lessor or Owner Participant reasonably requests.

 

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8.3                                                                               Lessee Undertakings in Other Documents

 

Lessee hereby agrees with Lessor that it shall perform the agreements, covenants, and indemnities set forth in the Participation Agreement and the other Operative Agreements, and hereby restates Lessee’s representations and warranties set forth in such documents, in each case as fully and to the same extent and with the same force and effect as if such agreements, covenants, indemnities, representations and warranties were set forth in full in this § 8.3.  Lessee will provide to Lessor (i) an annual technical status report and (ii) a monthly report of the number of flight hours and cycles which have been accumulated on the Airframe, each Engine and the APU, respectively, during the preceding calendar month and including any calendar month that Lessee shall not required to pay Maintenance Reserves in accordance with the provisions of the third paragraph of Section F.2. of Annex C hereof.

 

9.                                      LOSS, DESTRUCTION, REQUISITION, ETC.

 

9.1                                                                               Event of Loss to the Aircraft

 

9.1.1                                                                     Notice and Election

 

(a)                                  If an Event of Loss to the Airframe (and any Engine(s) installed thereon) occurs, Lessee shall promptly (and in any event within 15 days after such occurrence, or, if later, within 15 days after the determination that an Event of Loss has occurred) notify Lessor and Owner Participant of such Event of Loss. Within 45 days after such occurrence or determination, Lessee shall give to Lessor and Owner Participant written notice of Lessee’s election to make payment in respect of such Event of Loss, as provided in § 9.1.2, or to replace the Airframe and any such Engine(s) as provided in § 9.1.3.

 

(b)                                 Lessee’s failure to give the notice of election described in § 9.1.1(a) shall be deemed to be an election of the option set forth in § 9.1.2. In addition, Lessee shall not be entitled to elect the option set forth in § 9.1.3 if, at the time Lessor or Owner Participant receives such notice from Lessee, a Special Default exists.

 

(c)                                  For purposes of § 9.1.2, an Event of Loss to the Airframe shall be deemed to constitute an Event of Loss to the Aircraft. For purposes of § 9.1.3, any Engine not actually suffering an Event of Loss shall not be required to be replaced.

 

(d)                                 If insurance proceeds are received, with respect to any Event of Loss, at any time prior to (1) the date of Lessee’s election, pursuant to

 

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paragraph (a) of this § 9.1, under § 9.1.2 or § 9.1.3, or (2) the date upon which any amounts are required to be paid by Lessee under § 9.1.2(a) or § 9.1.3(c), then such proceeds shall immediately be paid to Lessor to be held as security for Lessee’s obligations under this § 9.1.  Any amounts paid to Lessor pursuant to this paragraph shall be credited against any amounts subsequently payable to Lessor under § 9.1.2(a) or § 9.1.3(c), whichever is applicable.

 

9.1.2                                                                     Payment of Loss and Termination of Lease

 

(a)                                  If Lessee elects, in accordance with § 9.1.1, to make payment in respect of any such Event of Loss, then Lessee shall pay, in the manner and in funds of the type specified in § 3.3, on the SLV Date next following the earlier of (x) the 150th day following the date of the occurrence of such Event of Loss, and (y) the second Business Day following the receipt of the insurance proceeds with respect to such occurrence (but in any event not earlier than the date of Lessee’s election under § 9.1.1 to make payment under this § 9.1.2)(such SLV Date, referred to herein as the “SLV Payment Date”), Lessee shall pay to Lessor:

 

(1)                                              all unpaid Basic Rent payable at any time before the SLV Payment Date (it being understood and agreed that if such SLV Payment Date is also a Payment Date, no Basic Rent shall be payable on and as of such Date); plus

 

(2)                                              the Stipulated Loss Value of the Aircraft computed as of the SLV Payment Date; plus

 

(3)                                              all Transaction Expenses (excluding brokerage commissions and similar expenses payable to any Person not retained by Lessee) incurred by Lessor and Owner Participant in connection with such Event of Loss and the related termination of the Lease; plus

 

(4)                                              to the extent not taken into account in the foregoing clauses (2) and (3), all Supplemental Rent due by Lessee to Lessor, Owner Participant or any other Person entitled thereto, and remaining unpaid under the Lease or any other Operative Agreement; plus

 

(5)                                              as provided in § 3.2.2 of the Lease, interest on the amounts specified in the foregoing clauses (1) through (4) at the Past-Due Rate from and including the date on which any such amount was due to the date of payment of such amount in full;

 

provided, that, (x) if a Payment Date shall occur at any time before the SLV Payment Date, then Lessee shall pay the Basic Rent due on such Payment Date, and (y) if a Payment Date shall occur on the SLV Payment Date, or on a date occurring after the SLV Payment Date but before the date of payment of the amounts specified above in this clause (a), then Lessee shall pay the Basic Rent due on such Payment Date, and thereupon such amounts payable under this clause (a) shall be reduced by the amount of such payment of Basic Rent.

 

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(b)                                 Upon payment in full of all amounts described in the foregoing § 9.1.2(a), the Term for the Aircraft shall end, and Lessor will transfer the Aircraft to Lessee, as-is and where-is, and subject to any insurer’s salvage rights, but otherwise in the manner described in § 4.5 and return any amounts of the Security Deposit being held by Lessor pursuant to § 3.2.3 hereof, together with the cash balance of any Maintenance Reserves held by Lessor pursuant to Section F of Annex C hereof.

 

9.1.3                                                                     Replacement of Airframe and Engines

 

(a)                                  If Lessee elects, in accordance with § 9.1.1, to replace the Airframe and any Engine(s) suffering the Event of Loss, then Lessee shall, as promptly as possible and in any event within 180 days after the occurrence of such Event of Loss, convey or cause to be conveyed to Lessor, in compliance with § 9.3 and as replacement for the Airframe and any such Engine(s), title to a Replacement Airframe (which shall comply with § 9.1.3(b)), and for each such Engine a Replacement Engine, in each case free and clear of all Liens other than Permitted Liens not of record. If Lessee makes such election, but for any reason does not effect such replacement within such time period and in compliance with the requirements set forth in § 9.3, then Lessee shall be deemed to have initially made the election set forth in § 9.1.2 with the effect that Lessee shall pay, in the manner and in funds of the type specified in § 3.3, the amounts required under, and in accordance with, § 9.1.2.

 

(b)                                 Any such Replacement Airframe shall be an airframe that is the same model as the Airframe to be replaced thereby, or an improved model, and that has a value, utility, and remaining useful life (without regard to hours or cycles remaining to the next regular maintenance check) at least equal to, and is in at least as good operating condition as, the Airframe to be replaced thereby (assuming that such Airframe was of the value and utility and in the condition and repair required by the terms hereof immediately prior to the occurrence of the Event of Loss). Any such Replacement Engine shall meet the requirements of, and be conveyed by Lessee to Lessor in accordance with, § 9.2 (other than the notice requirement set forth in § 9.2.1).

 

(c)                                  If Lessee elects, in accordance with § 9.1.1, to replace the Airframe and any Engine(s) suffering the Event of Loss, and has not effected such replacement within 60 days after the Event of Loss occurred, then Lessee shall immediately pay to Lessor the amounts required pursuant to § 9.1.2(a), to be held as security for Lessee’s obligations under this § 9.1. If Lessee elects, under

 

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§ 9.1.1, the replacement option in § 9.1.3, and pays the deposit required by the preceding sentence, and has not effected such replacement within 180 days, then Lessee shall be deemed to have originally elected the option set forth in § 9.1.2 and such deposit shall be applied to Lessee’s obligations under § 9.1.2, and Lessee shall pay any remaining amounts due under § 9.1.2.

 

9.2                                                                               Event of Loss to an Engine; Engine Exchanges

 

9.2.1                                                                     Notice

 

If an Event of Loss to an Engine occurs under circumstances in which no Event of Loss to the Airframe occurs, Lessee shall promptly (and in any event within 15 days after acquiring Actual Knowledge of such occurrence) notify Lessor and Owner Participant of such Event of Loss.

 

9.2.2                                                                     Replacement of Engine

 

Upon the occurrence of any such Event of Loss, Lessee shall, within the time period set forth below, convey or cause to be conveyed to Lessor, in compliance with § 9.3 and as replacement for the Engine with respect to which such Event of Loss occurred, title to a Replacement Engine, free and clear of all Liens other than Permitted Liens not of record. Such Replacement Engine shall be an engine manufactured by Engine Manufacturer that is the same model as the Engine to be replaced thereby, or an improved model (but, in either event, the same model as the other Engine then subject to this Lease), and that has the same or better modification status as the Engine to be replaced thereby, and that is suitable for installation and use on the Airframe.

 

Any such Replacement Engine shall also be required to have performance and durability characteristics, and a value and utility at least equal to, and a remaining useful life (without regard to hours or cycles remaining to the next regular maintenance check) substantially comparable to, and to be in at least as good operating condition as, the Engine to be replaced thereby (assuming that such Engine was of the value and utility and in the condition and repair required by the terms hereof immediately prior to the occurrence of the Event of Loss).  Any such replacement shall be effected promptly after the occurrence of such Event of Loss but in any event within 60 days thereafter, or within such longer period (not to exceed 120 days thereafter) if such longer period is reasonably necessary in order to obtain a Replacement Engine on commercially reasonable terms.

 

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9.3                          Conditions to any Replacement

 

9.3.1                       Documents

 

Before or at the time of conveyance of title to any Replacement Airframe or Replacement Engine to Lessor, Lessee shall promptly take each of the following actions, and shall promptly furnish the following agreements, instruments, certificates, and documents to (and in each case reasonably satisfactory in form and substance to) Owner Participant:

 

(a)           furnish Lessor with an FAA bill of sale (in the case of a Replacement Airframe) and a full warranty (as to title) bill of sale duly conveying to Lessor such Replacement Airframe or Replacement Engine, in form and substance reasonably satisfactory to Lessor (together with such evidence of title as Lessor may reasonably request), and cause such Replacement Airframe to be duly registered in the name of Lessor pursuant to the Transportation Code, and further cause such filings to be made on the International Registry as shall, in Lessor’s reasonable judgment, be necessary and sufficient to register such full warranty bill of sale as a contract of sale on the International Registry and otherwise reflect such transfer of title, in such Replacement Airframe or Replacement Engine, as the case may be, to Lessor;

 

(b)           cause (1) a supplement to this Lease, in form and substance reasonably satisfactory to Lessor, subjecting such Replacement Airframe or Replacement Engine to this Lease, duly executed by Lessee, to be delivered to Lessor for execution, and, upon such execution, to be filed for recordation with the FAA pursuant to the Transportation Code (or such other applicable law referred to in clause (a)), and (2) cause such filings to be made on the International Registry as shall, in Lessor’s reasonable judgment, be necessary and sufficient to register the interests of Lessor, in such Replacement Airframe or Replacement Engine, as the case may be, under this Lease as an International Interest, and (3) such Financing Statements and other filings, as Lessor reasonably requests, in form and substance reasonably satisfactory to Lessor, duly executed by Lessee and (to the extent applicable) Lessor (and Lessor shall execute and deliver the same), to be filed in such location(s) as any such party reasonably requests;

 

(c)           furnish such evidence of compliance with the insurance provisions of § 10 with respect to such Replacement Airframe or Replacement Engine as Owner Participant reasonably requests;

 

(d)           furnish an opinion or opinions of Lessee’s counsel (which may be Lessee’s internal legal department) reasonably satisfactory to Owner Participant and addressed to Lessor and Owner Participant to the effect that (1) such full warranty bill of sale referred to in § 9.3.1(a) constitutes an effective

 

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instrument for the conveyance of title to the Replacement Airframe or Replacement Engine, (2) in the case of a Replacement Airframe, Lessor will be entitled to the benefits of Section 1110 (or any successor provision of federal bankruptcy Law) with respect to such Replacement Airframe, (3) in the case of a Replacement Engine, Lessor will be entitled to the benefits of Section 1110 (or any successor provision of federal bankruptcy Law) with respect to such Replacement Engine, provided, that the opinion referred to in this clause (3) need not be delivered with respect to a Replacement Engine replaced as a result of an Event of Loss to the extent that, immediately before such replacement, (i) the benefits of Section 1110 (or any successor provision of federal bankruptcy Law) were not, solely by reason of a change in law, available to Lessor, and (ii) no engine that would qualify as a Replacement Engine, and that would afford to Lessor the benefits of Section 1110 (or any successor provision of federal bankruptcy Law), is available to Lessee on commercially reasonable terms, and (4) to such further effect as Lessor or Owner Participant may reasonably request;

 

(e)           furnish an opinion of Lessee’s aviation law counsel reasonably satisfactory to Owner Participant and addressed to Lessor and Owner Participant as to (1) the due registration of any such Replacement Airframe, the absence of Liens of record at the FAA and on the International Registry as to any such Replacement Airframe and Replacement Engine(s), and (2) the due filing for recordation of each supplement to this Lease with respect to such Replacement Airframe or Replacement Engine under the Transportation Code, and (iii) with respect to the full warranty bill of sale conveying to Lessor title in such Replacement Airframe or Replacement Engine, as the case may be, the registration on the International Registry of such bill of sale as a contract of sale and such other documents as may be necessary to reflect such transfer of title, and (iv) the registration on the International Registry of the interests of Lessor, in such Replacement Airframe or Replacement Engine, as the case may be, under this Lease as an International Interest, and (v) the due filing of any Financing Statements or other filings reasonably requested by Lessor with respect to such Replacement Airframe or Replacement Engine under applicable Law and as to such other matters as Owner Participant may reasonably request;

 

(f)            with respect to any Replacement Airframe, furnish an opinion of tax counsel, selected by Owner Participant and reasonably satisfactory to Lessee, as to the tax consequences to Owner Participant of any such replacement;

 

(g)           with respect to the replacement of any Engine, furnish a certificate of a qualified aircraft engineer (who may be an employee of Lessee) certifying that such Replacement Engine is an engine manufactured by Engine

 

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Manufacturer that is the same model as the Engine to be replaced thereby, or an improved model (but, in either event, the same model as the other Engine then subject to this Lease), and that has the same or better modification status as the Engine to be replaced thereby, and that is suitable for installation and use on the Airframe, and that has performance and durability characteristics, and a value and utility at least equal to, and a remaining useful life (determined without regard to hours or cycles remaining to the next regular maintenance check) substantially comparable to, the Engine so replaced (assuming that such Engine was of the value and utility and in the condition and repair required by the terms hereof immediately prior to the occurrence of the Event of Loss);

 

(h)           with respect to the replacement of the Airframe, furnish a certified report of a qualified independent aircraft Appraiser, reasonably satisfactory to Owner Participant, setting forth such Appraiser’s opinion as to the fair market value, as of the date of conveyance hereunder, of such Replacement Airframe, and certifying that such Replacement Airframe has performance and durability characteristics, and a value and utility (including equivalent current value and estimated residual value at the end of the Term at least equal to, and a remaining useful life substantially comparable to,  the Airframe so replaced (assuming that the Airframe was of the value and utility and in the condition and repair required by the terms hereof immediately prior to the occurrence of the Event of Loss);

 

(i)            assign to Lessor the benefit of all assignable manufacturers, and vendors, warranties with respect to such Replacement Airframe and such Replacement Engine(s), provided that Lessor shall, on the terms set forth in § 4.2, reassign to Lessee the benefits of such warranties during the Term;

 

(j)            furnish Lessor and Owner Participant with an Officer’s Certificate of Lessee certifying compliance with this § 9 and, with respect to the replacement of the Airframe, to the effect that, upon consummation of such replacement, no Special Default will exist; and

 

(k)           take such other action and furnish such other certificates and documents as Lessor or Owner Participant reasonably requests in order that such Replacement Airframe and any such Replacement Engine(s) be properly titled in Lessor free and clear of all Liens (except Permitted Liens not of record), and leased hereunder, to the same extent as initially required under the Operative Agreements with respect to the Airframe and any Engine(s) so replaced.

 

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Lessee shall cause an airworthiness certificate, with respect to such Replacement Airframe, to be duly issued under the Transportation Code promptly after such substitution.

 

9.3.2                       Other Conditions

 

Lessee shall not be entitled to replace the Airframe under § 9.1.3 and this § 9.3, and shall be deemed to have initially made the election set forth in § 9.1.2, if at the time of such replacement

 

(a)           any Special Default exists; or

 

(b)           under applicable Law and notwithstanding any actions by Lessor and Lessee under § 9.3.3(a), Lessor shall for any reason not be entitled to the benefits of Section 1110 with respect to such Replacement Airframe or with respect to any Replacement Engine which replaces an Engine installed on the Airframe at the time of such Event of Loss.

 

9.3.3                       Other Obligations

 

(a)           Lessor and Lessee agree that, when and after any Replacement Airframe becomes the Airframe hereunder, and when and after any Replacement Engine becomes an Engine hereunder, this Lease shall continue to be, and shall be treated as, a lease for U.S. federal income tax purposes of such Replacement Airframe and such Replacement Engine. Without limiting the foregoing, Lessee and Lessor intend that Lessor shall, in all events, be entitled to the rights and benefits of Section 1110 (or any successor provision of federal bankruptcy Law) with respect to any Replacement Airframe or Replacement Engine (unless, with respect to a Replacement Engine replaced as a result of an Event of Loss, immediately before such replacement, (i) the benefits of Section 1110 (or any successor provision of federal bankruptcy Law) shall not, solely by reason of a change in law, be available to Lessor, and (ii) no engine that would qualify as a Replacement Engine, and that would afford to Lessor the benefits of Section 1110 (or any successor provision of federal bankruptcy Law), is available to Lessee on commercially reasonable terms), and Lessee and Lessor shall cooperate and take such action as the other may reasonably request so as to ensure that Lessor shall be entitled to such rights and benefits.

 

(b)           No Event of Loss to an Engine, or to an Airframe, shall result in, or otherwise allow or permit (other than as provided in § 9.1.2(b)), any reduction, deferral, discharge, or other change in the timing or amount of any Rent payable by Lessee hereunder or any other amount payable by Lessee under any other Operative Agreement, and (subject to such § 9.1.2(b)) Lessee shall pay all such Rent and other amounts as though such Event of Loss had not occurred.

 

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9.4                          Conveyance to Lessee

 

Upon full compliance by Lessee with the applicable terms of §§ 9.1.3, 9.2, and 9.3, Lessor will transfer to Lessee the Airframe or Engine(s), as applicable, with respect to which such Event of Loss occurred, in accordance with § 4.5.

 

9.5                          Application of Payments

 

Any amounts received at any time by Lessor, Lessee, or any Permitted Sublessee, in respect of any Event of Loss (it being understood that amounts received in respect of property damage or loss not constituting an Event of Loss are provided for in § 10), from or on behalf of (i) any Government Entity providing any insurance or indemnity required to be maintained by Lessee pursuant to § 10.3, or (ii) any insurer providing any insurance required to be maintained by Lessee pursuant to § 10, shall in each such case be paid over to and held by Lessor, to the extent provided in § B of Annex D, and shall be applied as follows:

 

9.5.1                       Replacement of Airframe and Engines

 

If such amounts are received with respect to the Airframe or any Engine(s) installed thereon at the time of such Event of Loss, upon Lessee’s compliance with the applicable terms of § 9 with respect to the Event of Loss for which such amounts are received, such amounts shall, subject to § 9.9, be paid over to, or (if received by Lessee after such compliance) retained by, Lessee.

 

9.5.2                       Loss of Engine

 

If such amounts are received with respect to an Engine (other than an Engine installed on the Airframe when the Airframe suffers an Event of Loss), upon Lessee’s compliance with the applicable terms of § 9 with respect to the Event of Loss for which such amounts are received, such amounts shall, subject to § 9.9, be paid over to, or (if received by Lessee after such compliance) retained by, Lessee.

 

9.5.3                       Payment of Loss

 

If such amounts are received, in whole or in part, with respect to the Airframe, and Lessee makes, has made or is deemed to have made the election set forth in § 9.1.2, such amounts shall be applied as follows:

 

(a)           first, if the sum described in § 9.1.2 has not then been paid in full by Lessee, such amounts shall be applied by to the extent necessary to pay in full such sum; and

 

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(b)           second, the remainder, if any, shall, subject to § 9.9, be paid to Lessee.

 

9.6                          Requisition of Aircraft for Use

 

If any Government Entity requisitions the use of the Airframe and the Engines or engines installed thereon, and if the requisition does not constitute an Event of Loss, Lessee shall promptly notify Lessor and Owner Participant of such requisition, and all of Lessee’s obligations under this Lease shall continue to the same extent as if such requisition had not occurred; provided, that, if the Airframe and Engines or engines installed thereon are not returned to Lessor by Lessee at the end of the Term, then the Aircraft shall be deemed to have suffered an Event of Loss and Lessee shall be deemed to have made the election set forth in § 9.1.2 with the effect that Lessee shall be obligated to pay the Stipulated Loss Value and all other amounts payable pursuant to § 9.1.2 with respect to the Aircraft on the last day of the Term.

 

9.7                          Requisition of an Engine for Use

 

If any Government Entity requisitions for use any Engine but not the Airframe, Lessee will replace such Engine by complying with § 9.2 and § 9.3 to the same extent as if an Event of Loss with respect to that Engine had occurred, and any payments received by Lessor or Lessee from such Government Entity with respect to such requisition shall be paid or retained in accordance with § 9.5.2.

 

9.8                          Application of Requisition Payments

 

All payments received by Lessor or Lessee, or any Permitted Sublessee, from any Government Entity for the use of the Airframe and Engine(s) or engine(s) installed thereon during the Term shall be paid over to, or retained by, Lessee, and all payments received by Lessor or Lessee from any Government Entity for the use of the Airframe and Engine(s) or engine(s) installed thereon after the Term shall be paid over to, or retained by, Lessor; provided, that, if such requisition constitutes an Event of Loss, then all such payments shall be paid over to Lessor, and held and applied as provided in § 9.5.

 

9.9                          Application of Payments During Default

 

Any amount described in this § 9 that is payable or creditable to, or retainable by, Lessee shall not be paid or credited to, or retained by, Lessee if a Special Default exists when such payment, credit, or retention would otherwise

 

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occur, but shall instead be held by or paid over to Lessor as security for Lessee’s obligations under the Operative Agreements, and shall be invested pursuant to § 4.4 hereof, unless and until such amount is applied, at the option of Lessor, from time to time during the existence of a Special Default, to Lessee’s obligations under the Operative Agreements as and when due (any such application shall be made to such Lessee obligations as Lessor determines in its sole discretion).  If and when no Special Default exists, such amount shall be paid to Lessee to the extent not previously applied in accordance with this § 9.9.

 

10.          INSURANCE

 

10.1                        Lessee’s Obligation to Insure

 

Lessee shall comply with, or cause to be complied with, each of the provisions of Annex D, which provisions are hereby incorporated by this reference as if set forth in full herein.

 

10.2                        Insurance for Own Account

 

Nothing in this § 10 shall limit or prohibit (a) Lessee from maintaining the policies of insurance required under Annex D with higher limits than those specified in Annex D, or (b) Lessor or Owner Participant from obtaining insurance for its own account (and notwithstanding § 10.5 hereof, any proceeds payable under such separate insurance noted in the foregoing clauses (a) and (b) shall be payable as provided in the policy relating thereto); provided, that no insurance may be obtained or maintained under the foregoing clause (b) that would limit or otherwise adversely affect the coverage of or increase the cost of any insurance required to be obtained or maintained by Lessee pursuant to this § 10 and Annex D.

 

10.3                        Indemnification by Government in Lieu of Insurance

 

During any period that the Aircraft, the Airframe, or any Engine shall have been requisitioned for use by, or possession of the Aircraft, the Airframe, or any Engine shall have been transferred to, the U.S. Government or any other Government Entity, Lessor and Owner Participant shall (subject to the terms of this § 10.3) accept, in lieu of insurance against any risk with respect to the Aircraft described in § B and § C (but, with respect to § C, as to hull coverage only) of Annex D, indemnification from, or insurance provided by, the U.S. Government (or upon Owner Participant’s prior written consent, other Government Entity), against such risk in an amount that, when added to the amount of insurance (including self-insurance otherwise permitted under the

 

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terms of Annex D), if any, against such risk that Lessee (or any Permitted Sublessee) may continue to maintain, in accordance with this § 10, during the period of such requisition or transfer, shall be at least equal to the amount of insurance against such risk otherwise required by this § 10 (assuming in all cases that the insurance so continued to be maintained would fully cover the noted increment notwithstanding the existence of the indemnification or insurance provided by the U.S. Government or other Government Entity). Any such indemnification or insurance provided by the U.S. Government shall provide protection no less favorable to the Indemnitees, after taking into account any insurance the Lessee or any Permitted Sublessee may continue to maintain, than the insurance coverage that would comply with the terms of this § 10. Lessee shall provide Lessor and Owner Participant with (1) evidence of such indemnification or insurance no later than two Business Days before the date such indemnification or insurance takes effect, or, if later, promptly after such information becomes available to Lessee, (2) a certificate of a Responsible Officer of Lessee stating that such indemnification or insurance complies with the preceding sentence, and (3) any other information, documentation or certificates relating to such indemnity or insurance as Owner Participant shall reasonably request.

 

10.4                        Application of Insurance Proceeds

 

All proceeds of insurance or indemnities required to be maintained by Lessee, in accordance with this § 10 and § B of Annex D, in respect of any property damage or loss constituting an Event of Loss shall be paid, held and applied in accordance with § 9.5. All proceeds of insurance or indemnities required to be maintained by Lessee, in accordance with this § 10 and § B of Annex D, in respect of any property damage or loss not constituting an Event of Loss shall be paid over to and held by Lessor or Lessee, in the circumstances and to the extent provided in § B of Annex D, and shall be applied to pay (or to reimburse Lessee) for repairs or for replacement property, effected or obtained in accordance with the terms of § 8.1 and Annex C, as provided in said § B of Annex D; and any balance remaining after such repairs or replacement with respect to such damage or loss shall be paid over to, or retained by, Lessee.

 

10.5                        Application of Payments During Special Default

 

Any amount described in § 9.5.3 or this § 10 that is payable or creditable to, or retainable by, Lessee shall not be paid or credited to, or retained by, Lessee if a Special Default exists when such payment, credit, or retention would otherwise occur, but shall instead be held by or paid over to Lessor as security for Lessee’s

 

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obligations under this Lease, and shall be invested pursuant to § 4.4 unless and until such amount is applied, at Lessor’s option, from time to time during the existence of a Special Default, to Lessee’s obligations under this Lease and the other Lessee Operative Agreements as and when due (any such application to be made to such obligations of Lessee as Lessor determines in its sole discretion). If and when no Special Default exists, such amount shall be paid to Lessee to the extent not previously applied in accordance with this § 10.5.

 

10.6                        Lessor’s Right to Maintain Insurance

 

In the event that Lessee shall fail to maintain, or cause to be maintained, insurance as herein provided, Lessor or Owner Participant may at its option (but shall not be obligated to) provide such insurance and, in such event, Lessee shall, upon demand, reimburse such person, as Supplemental Rent, for the cost thereof; provided, that no such action by Lessor or Owner Participant shall be deemed to cure any Default resulting from such failure by Lessee.

 

11.          INSPECTION

 

(a)           Lessor, Owner Participant, or their authorized representatives (the “Inspecting Parties”) may, at the times set forth below in this paragraph (a), inspect the Aircraft, Airframe, and Engines and the Aircraft Documents, and Lessee shall cooperate, and shall cause any Permitted Sublessee to cooperate, with the Inspecting Parties in connection with any such inspection, and any such Inspecting Party may make copies of the Aircraft Documents not reasonably deemed confidential by Lessee or a Permitted Sublessee. Lessee shall make any Permitted Sublease expressly subject to inspection rights consistent with this § 11.  The Inspecting Parties shall have the right to conduct such an inspection (i) at any reasonable time, as may be mutually agreed by Lessor, Owner Participant and Lessee (such agreement not to be unreasonably withheld by any such Person), it being understood and agreed, however, that an inspection shall be permitted at least once every 180 days, and (ii) at any reasonable time if and for so long as a Special Default shall have occurred and be continuing.

 

(b)           Any inspection of the Aircraft hereunder shall be a visual, walk-around inspection that may include going on board the Aircraft and examining the contents of any open panels, bays, or other components of the Aircraft, Airframe, and Engines, but shall not include the opening of any unopened panels, bays, or other components of the Aircraft, and no such inspection shall unreasonably interfere with Lessee’s or any Permitted Sublessee’s maintenance or operation of the Aircraft, the Airframe, or any Engine.

 

(c)           Neither Lessor nor Owner Participant shall have any duty or liability to make any such visit, inspection, or survey, or any duty or (except to the extent arising directly out of its own acts) liability arising out of any such visit, inspection, or survey or failure to make any such visit, inspection, or survey.

 

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(d)           Each Inspecting Party shall bear its own expenses in connection with any such visit, inspection, or survey (including the cost of any copies made in accordance with § 11(a)), unless a Special Default exists or such Party is making such visit, inspection, or survey to verify the correction of any material failure by Lessee or any Permitted Sublessee to comply with the terms and provisions of this Lease discovered in connection with the prior visit, inspection, or survey, then any such inspection (including the cost of such copies) shall be at Lessee’s expense.

 

(e)           If requested by Lessor, Lessee shall give, or shall cause any Permitted Sublessee to give, reasonable prior notice (but in any event of not less than 5 days) to Lessor of the date upon which the Aircraft, the Airframe, or any Engine undergoes its next major check, and with respect to any Engine the next off-the-wing maintenance, and shall notify Lessor of the name and location of the relevant maintenance performer and shall, upon Lessor’s request at least 3 days prior to commencement of such major check or maintenance, make available for inspection by Lessor all relevant Aircraft Documents at Lessee’s records facility in the United States, or at such Permitted Sublessee’s records facility, or at the premises of the maintenance performer.

 

12.          ASSIGNMENT; SUCCESSOR LESSOR

 

12.1                        In General

 

This Lease and the other Lessee Operative Agreements shall bind and benefit Lessor and Lessee and their successors and permitted assigns. Except as otherwise expressly permitted in § 7.2 or § 7.3, or as required in the case of any requisition by the U.S. Government referred to in § 7.1.4, or as permitted by § 7.1.9 of the Participation Agreement, Lessee will not, without the prior written consent of Owner Participant, assign any of its rights under this Lease (and any such unpermitted assignment shall be void ab  initio). Except as otherwise provided herein (including under the provisions of § 14), Lessor shall not assign or convey any of its right, title, and interest in and to this Lease or the Aircraft without Lessee’s prior written consent, such consent not to be unreasonably withheld.

 

12.2                        Successor Lessor

 

If any successor is appointed to serve as Owner Trustee pursuant to the terms of the Participation Agreement and the Trust Agreement, such successor shall, upon written notice by such successor to Lessee, succeed to all the

 

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rights, powers, and title of Lessor hereunder, and shall be deemed to be “Lessor” and the owner of the Aircraft and the other assets of the Trust Estate for all purposes hereof, without the need for any consent or approval by Lessee (and Lessee shall consent, and shall be deemed to have consented, to any filings or registrations on the International Registry that Lessor, in its reasonable judgment, determines to be necessary of desirable to fully effectuate such succession) and without in any way altering the terms of this Lease or Lessee’s obligations under the Operative Agreements. An appointment and designation of a successor as Owner Trustee shall not exhaust the right to appoint and designate further successors or additional trustees as Owner Trustees pursuant to the Participation Agreement and the Trust Agreement, and such right may be exercised repeatedly as long as this Lease shall be in effect.

 

13.          LEASE EVENTS OF DEFAULT

 

The existence of any one or more of the following circumstances, conditions, acts, or events, for any reason whatsoever and whether any such circumstance, condition, act, or event is voluntary or involuntary or comes about or is effected by operation of Law or pursuant to or in compliance with any judgment, decree, order, rule, or regulation of any Government Entity, shall constitute an Event of Default so long as it shall not have been remedied:

 

13.1                        Payments

 

(a)           Lessee fails to pay any amount of Basic Rent, Stipulated Loss Value or Make-Whole Amount within 5 Business Days after it becomes due; or

 

(b)           Lessee fails to pay any Supplemental Rent (other than Stipulated Loss Value or Make-Whole Amount) when due and such failure continues for a period in excess of 10 Business Days from and after the date of any written notice to Lessee of the failure to make such payment when due.

 

13.2                        Insurance

 

Lessee fails to carry and maintain, or cause to be carried and maintained, insurance on and in respect of the Aircraft, Airframe, and Engines in accordance with the provisions of § 10, or Lessee shall operate the Aircraft, Airframe, or Engines, or permit or suffer the Aircraft, Airframe, or Engines to be operated, at any time when such insurance shall not be in effect.

 

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13.3                        Corporate Existence and Commercial Airlines Operations

 

(a)           Lessee shall fail to maintain at all times its legal existence, as required pursuant to § 7.1.1 of the Participation Agreement, or Lessee shall otherwise wind-up, liquidate, or dissolve, or Lessee shall take or fail to take any action that would have the effect of any of the foregoing; or

 

(b)           Lessee shall cease to be a U.S. Air Carrier, as required pursuant to § 7.1.1 of the Participation Agreement, or Lessee shall discontinue all or substantially all of its commercial airline operations; provided, that (i) if such cessation or discontinuance is capable of being corrected and Lessee is diligently proceeding to effect such correction, and (ii) such cessation or discontinuance creates no material risk of the sale, forfeiture, or loss (including loss of use) of, or damage to, the Aircraft, the Airframe, or any Engine, then such cessation or discontinuance shall not be an Event of Default unless and until such condition shall have continued unremedied for a period of (x) 30 days, or (y) if such cessation or discontinuance is not capable of being corrected within 30 days due to reasons beyond Lessee’s control (but Lessee is, nonetheless, diligently proceeding to effect such correction), 120 days.

 

13.4                        Certain Covenants

 

Lessee shall not observe, perform or comply with, or shall otherwise breach, any of its obligations under § 7.1 (other than § 7.1.2 and § 7.1.3, which shall be subject to § 13.5), or § 7.2.7 (in respect of a sublease of the Aircraft or Airframe), or § 1 of Annex E, or under § 7.1.5 or § 7.1.9 of the Participation Agreement.

 

13.5                        Other Covenants

 

Lessee fails to observe or perform (or cause to be observed and performed) in any material respect any other covenant, agreement, or obligation of Lessee in any Operative Agreement, and such failure continues unremedied for a period of 30 days from and after the date of written notice thereof to Lessee from Lessor or Owner Participant unless such failure is capable of being corrected and creates no material risk of the sale, forfeiture, or loss (including loss of use) of, or damage to, the Aircraft, the Airframe, or any Engine, or any discernible risk of criminal liability or any material risk of civil penalty against Lessor or any Participant, and Lessee is diligently proceeding to correct such failure, in which case there shall be no Event of Default unless and until such failure continues unremedied for a period of 180 days after receipt of such notice.

 

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13.6                        Representations and Warranties

 

Any representation or warranty made by Lessee in any Operative Agreement (a) proves to have been untrue or inaccurate in any material respect as of the date made, (b) is material at the time in question, and (c) if the effect of such incorrectness is curable (incorrectness of a representation as to financial condition being incurable), remains uncured for a period in excess of 30 days from and after the date of written notice thereof from Lessor or Owner Participant to Lessee or (if earlier) the date that a Responsible Officer of Lessee is aware of the incorrectness.

 

13.7                        Bankruptcy and Insolvency

 

(a)           Lessee consents to the appointment of or the taking of possession by a receiver, trustee, or liquidator of itself or of all or substantially all of its property, or Lessee admits in writing its inability to pay its debts generally as they come due, or does not pay its debts generally as they become due or makes a general assignment for the benefit of creditors, or Lessee files a voluntary petition in bankruptcy or a voluntary petition or an answer seeking reorganization, liquidation or other relief in a case under any bankruptcy Laws or other insolvency Laws (as in effect at such time) or an answer admitting the material allegations of a petition filed against Lessee in any such case, or Lessee seeks relief by voluntary petition, answer, or consent under the provisions of any other bankruptcy or other similar Law providing for the reorganization or winding-up of corporations (as in effect at such time); or

 

(b)           an order, judgment, or decree is entered by any court of competent jurisdiction appointing, without Lessee’s consent, a receiver, trustee, or liquidator of Lessee or of all or substantially all of its property, or all or substantially all of Lessee’s property is sequestered, or granting any other relief in respect of Lessee as a debtor under any bankruptcy Laws or other insolvency Laws (as in effect at such time), and any such order, judgment, or decree of appointment or sequestration remains in force undismissed, unstayed, and unvacated for a period of 60 days after the date of entry thereof; or

 

(c)           a petition against Lessee in a case under any bankruptcy Laws or other insolvency Laws (as in effect at such time) is filed and not withdrawn or dismissed within 60 days thereafter, or if, under the provisions of any Law providing for reorganization or winding-up of corporations that applies to Lessee, any court of competent jurisdiction assumes jurisdiction, custody, or control of Lessee or of all or substantially all of the property of Lessee, and such jurisdiction, custody or control remains in force unrelinquished, unstayed, and unterminated for a period of 60 days.

 

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13.8                        Other Obligations

 

(a)           An “Event of Default” exists under a Related Lease; or

 

(b)           Lessee (or any of its Affiliates) fails to pay, when due, any Debt and/or any lease obligations, involving (whether individually or in the aggregate) obligations in excess of $5 million, and the holder or holders of such Debt or such lease obligations (or a trustee on behalf of such holder or holders) accelerates such Debt or such lease obligations, or takes any action to cancel or terminate the associated lease arrangement, or otherwise initiates collection or foreclosure remedies or proceedings to collect such Debt or such lease obligations.

 

13.9                        Judgments

 

Judgment for the payment of money in excess of $5 million (excluding any amount insured by a solvent insurer who has admitted coverage for the underlying claim) is rendered against Lessee (or any of its Affiliates), and the same shall remain undischarged for a period of 30 days during which execution of such judgment shall not be effectively stayed.

 

14.          REMEDIES AND WAIVERS

 

14.1                        Remedies

 

If any Event of Default exists, Lessor may, at its option and at any time and from time to time, exercise any one or more of the following remedies as Lessor in its sole discretion shall elect:

 

14.1.1                     Return and Repossession

 

Lessor may cause Lessee, upon giving written notice to Lessee, to return promptly, and Lessee shall return promptly, all or any part of the Aircraft, Airframe, or Engines, and any of the Returnable Records, as Lessor shall so demand, to Lessor or its order in the manner and condition required by, and otherwise in accordance with, all the provisions of § 5, as if the Aircraft, Airframe, Engines, or Part, or the Returnable Records, were being returned at the end of the Term, or Lessor, at its option, may enter upon the premises where the Aircraft, the Airframe, any Engine, or any Part thereof, or any of the Returnable Records, is located and take immediate possession of and remove the same by summary proceedings or otherwise, all without liability accruing to Lessor for or by reason of such entry or taking of possession, whether for the restoration of damage to property caused by such taking or otherwise, and Lessee expressly waives any right it may have under applicable Law to a hearing prior to repossession of the Aircraft, Airframe, any Engine, or any Part thereof, or any of the Returnable Records.

 

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14.1.2                     Sale and Use

 

Lessor may sell all or any part of the Aircraft, the Airframe, or any Engine, or any of the Returnable Records, at public or private sale, at such time(s) and place(s), and to such Person(s) (including Owner Participant), as Lessor determines and, without limiting the generality of the provisions of this § 14, Lessor may hold Lessee liable for the payment of any Basic Rent remaining unpaid at the time of such sale and relating to any period prior to the date of such sale; or Lessor may otherwise dispose of, hold, use, operate, lease to others, or keep idle the Aircraft, the Airframe, or any Engine, or any Part thereof, as Lessor, in its sole discretion, shall determine, all free and clear of any rights of Lessee and without any duty to account to Lessee with respect to such action or inaction or for any proceeds with respect thereto, except as hereinafter set forth in § 14.1.3(b) or as otherwise provided by applicable Law, and except to the extent that such proceeds would constitute, under applicable Law, a mitigation of Lessor’s damages suffered or incurred as a result of the subject Event of Default.  Lessor shall give to Lessee at least 15 days’ prior written notice of the date fixed for any public sale of the Aircraft, the Airframe, or any Engine, or any Part thereof, or any of the Returnable Records, or of the date on or after which will occur the execution of any contract providing for any private sale, and Lessee acknowledges and agrees that such notice shall for all purposes be deemed to be commercially reasonable.

 

14.1.3                     Certain Liquidated Damages

 

Whether or not Lessor shall have exercised, or shall thereafter at any time exercise, any of its rights under § 14.1.1 or § 14.1.2 with respect to the Aircraft, the Airframe, any Engine or any of the Returnable Records, Lessor, by written notice to Lessee specifying a payment date (which shall be the first SLV Date occurring not less than 10 days after the date of such notice), may demand that Lessee pay to Lessor, and Lessee shall pay to Lessor, on the payment date so specified and in the manner and in funds of the type specified in § 3.3, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent (as applicable) for the Aircraft in respect of all periods commencing on or after the date specified for payment in such notice), the following amounts:

 

(a)           all unpaid Basic Rent due at any time before the SLV Date specified in such notice; plus

 

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(b)           whichever of the following amounts Lessor, in its sole discretion specifies in such notice:

 

(1)           an amount equal to the excess (if any) of the present value, computed as of the SLV Date specified in such notice, discounted to such date at a rate per annum equal to 180-day LIBOR, compounded semiannually, of all unpaid Basic Rent payable during the then-remaining portion of the Term over the Fair Market Rental Value of the Aircraft for the remainder of the Term, after discounting such Fair Market Rental Value to present value (at a rate per annum equal to 180-day LIBOR, compounded semiannually) as of the SLV Date specified in such notice, or

 

(2)           an amount equal to the excess (if any) of the Stipulated Loss Value for the Aircraft, computed as of the SLV Date specified in such notice, over the Fair Market Sales Value of the Aircraft, as of the SLV Date specified in such notice; plus

 

(c)           interest on the amounts specified in the foregoing clause (a) at the Past-Due Rate from and including the date on which any such amount was due to the date of payment of such amount; plus

 

(d)           interest on the amount specified in the foregoing clause (b)(1) or (b)(2), according to Lessor’s election, at the Past-Due Rate from and including the SLV Date specified in such notice to the date of payment of such amount; plus

 

(e)           any Make-Whole Amount; plus

 

(f)            all other amounts due pursuant to § 14.1.6.

 

14.1.4                     Liquidated Damages Upon Sale

 

If, pursuant to § 14.1.2 or applicable Law, Lessor has sold the Aircraft, the Airframe or any Engine, then, in lieu of exercising its rights under § 14.1.3 with respect to the Aircraft, the Airframe or any Engine, Lessor may, if Lessor so elects, upon giving written notice to Lessee, demand that Lessee to pay to Lessor, and Lessee shall pay to Lessor, on the date of such sale and in the manner and in funds of the type specified in § 3.3, as liquidated damages for loss of a bargain and not as a penalty (in lieu of the Basic Rent payable for the Aircraft in respect of all periods commencing on or after the date of such sale), the following amounts:

 

(a)           all unpaid Basic Rent due and payable at any time before the SLV Date that occurs on or immediately preceding the date of such sale; plus

 

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(b)           an amount equal to the excess, if any, of (1) the Stipulated Loss Value of the Aircraft, the Airframe or the Engine, as the case may be, computed as of the SLV Date used in the foregoing clause (a) for the computation of unpaid Rent, over (2) the net proceeds of such sale (minus all reasonable costs actually incurred by Lessor and Owner Participant in connection with the sale) or if such sale is a private sale and is made to Owner Participant or any Affiliate thereof, the Fair Market Sales Value of the Aircraft, Airframe or Engine, as the case may be, determined as of the date of such sale; plus

 

(c)           interest on the amounts specified in the foregoing clause (a) at the Past-Due Rate from and including the date on which any such amount was due to the date of payment of such amount; plus

 

(d)           interest on the sum of the amounts specified in the foregoing clause (b) at the Past-Due Rate from and including the date of such sale to the date of payment of such amounts; plus

 

(e)           any Make-Whole Amount; plus

 

(f)            all other amounts due pursuant to § 14.1.6.

 

14.1.5                     Rescission

 

Lessor may (a) at its option, rescind or terminate this Lease as to the Aircraft, the Airframe, or any Engine, or any Part thereof, or (b) exercise any other right or remedy that may be available to it under applicable Law or proceed by appropriate court action to enforce the terms hereof or to recover damages for the breach hereof, including Lessee’s agreement to lease the Aircraft for the Term and to pay Rent.

 

14.1.6                     Other Remedies

 

In addition to the foregoing remedies (but without duplication of amounts otherwise paid under this § 14), Lessee shall be liable for any and all unpaid Rent due hereunder before, during, or after (except as otherwise provided herein) the exercise of any of the foregoing remedies and for all reasonable attorneys’ fees and other costs and expenses of Lessor and Owner Participant, including interest on overdue Rent at the rate as herein provided, incurred by reason of the existence of any Event of Default or the exercise of Lessor’s remedies with respect thereto, including all costs and expenses incurred in connection with the return of the Aircraft, the Airframe, any Engine, or any Part thereof, in accordance with the terms of § 5, or in placing the Aircraft, Airframe, Engine, or Part in the condition and airworthiness required by § 5.  Without limiting, and notwithstanding, any other provision of this Lease or any other Operative Agreement, Lessor shall be entitled to use and apply all or any portion of the Security Deposit for the purposes, and in the manner, set forth in Section 3.2.3(b) hereof.

 

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14.2                        Limitations Under CRAF

 

Notwithstanding the provisions of § 14.1, during any period that the Aircraft, the Airframe, or any Engine is subject to CRAF in accordance with the provisions of § 7.2.3 and in the possession of the U.S. Government, Lessor shall not, as a result of any Event of Default, exercise its remedies hereunder in such manner as to limit Lessee’s control under this Lease (or any Permitted Sublessee’s control under any Permitted Sublease) of the Aircraft, the Airframe, or such Engine, unless Lessor gives at least 30 days’ (or such other period as may then apply under CRAF) written notice of default hereunder by registered or certified mail to Lessee (and any Permitted Sublessee) with a copy to the Contracting Officer Representative or Representatives for the Military Airlift Command of the United States Air Force, most-recently identified by notice from Lessee to Lessor pursuant § 7.2.3, to whom notices must be given under the contract governing Lessee’s (or any Permitted Sublessee’s) participation in CRAF with respect to the Aircraft, the Airframe, or any Engine.

 

14.3                        Right to Perform for Lessee

 

If Lessee (a) fails to make any payment of Rent required to be made by it hereunder or (b) fails to perform or comply with any of its agreements contained herein, then, after giving reasonable advance notice (if reasonably practicable (and Lessee agrees that no more than two day’s advance notice shall be required in any event)) to Lessee of its intent to do so (with the understanding that, in certain circumstances, the absence of any advance notice may be reasonable), Lessor or Owner Participant may (but shall not be obligated to) make such payment or perform or comply with such agreement, and the amount of such payment and the amount of the expenses of Lessor or Owner Participant incurred in connection with such payment or the performance of or compliance with such agreement (as applicable), together with interest thereon at the Past-Due Rate, shall be deemed Supplemental Rent, payable by Lessee upon demand by Lessor or Owner Participant, whichever is entitled thereto.  No such payment, performance or compliance shall be deemed to waive any Default or otherwise relieve Lessee of its obligations with respect thereto.

 

14.4                        Determination of Fair Market Rental Value and Fair Market Sales Value

 

For the purpose of this § 14, the Fair Market Rental Value or the Fair Market Sales Value of the Aircraft, the Airframe, or any Engine shall be determined on an “as is, where is” basis and shall take into account customary

 

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brokerage and other out-of-pocket fees and expenses which typically would be incurred in connection with a re-lease or sale of such an aircraft, airframe, or engine.  Any such determination shall be made by an Appraiser selected by Lessor, and the costs and expenses associated therewith shall be borne by Lessee; provided, that, if Lessor does not obtain possession of the Aircraft pursuant to this § 14 within a commercially reasonable period, an Appraiser shall not be appointed, and Fair Market Rental Value and Fair Market Sales Value for purposes of this § 14 shall be zero.

 

14.5                        Lessor Appointed Attorney-in-Fact

 

Lessee hereby appoints Lessor as the attorney-in-fact of Lessee, with full authority in the place and stead of Lessee and in the name of Lessee or otherwise, for the purpose of carrying out the provisions of this and any other Operative Agreement and taking any action and executing any instrument that Lessor may deem necessary or advisable to accomplish the purposes hereof; provided, that Lessor may only take action or execute instruments under this § 14.5 after this Lease has been cancelled or terminated because of an Event of Default.  Lessee hereby declares that the foregoing powers are granted for valuable consideration, constitute powers granted as security for the performance of the obligations of Lessee hereunder, are coupled with an interest, and shall be irrevocable.  Without limiting the generality of the foregoing or any other rights of Lessor under the Operative Agreements, Lessor shall (if this Lease has been cancelled or terminated because of an Event of Default) have the sole and exclusive right and power to (i) settle, compromise, compound, adjust or defend any actions, suits or proceedings relating to or pertaining to the Aircraft, the Airframe, or any Engine, or this Lease and (ii) make proof of loss, appear in and prosecute any action arising from any policy or policies of insurance maintained pursuant to this Lease, and settle, adjust, or compromise any claims for loss, damage, or destruction under, or take any other action in respect of, any such policy or policies.

 

14.6                        Remedies Cumulative

 

Nothing contained in this Lease shall be construed to limit in any way any right, power, remedy, or privilege of Lessor hereunder or under any other Operative Agreement or now or hereafter existing at law or in equity.  Each and every right, power, remedy, and privilege hereby given to, or retained by, Lessor in this Lease shall be in addition to and not in limitation of every other right, power, remedy, and privilege given under the Operative Agreements or now or hereafter existing at law or in equity.  Each and every right, power, remedy, and privilege of Lessor under this Lease and any other Operative Agreement may be exercised from time to time or simultaneously and as often and in such order as may be deemed expedient by Lessor.  All such rights, powers,

 

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remedies, and privileges shall be cumulative and not mutually exclusive, and the exercise of one shall not be deemed a waiver of the right to exercise any other. Lessee hereby waives to the extent permitted by applicable Law any right which it may have to require Lessor to choose or elect remedies.

 

15.          LESSEE’S OBLIGATIONS; NO SETOFF, COUNTERCLAIM, ETC.

 

(a)           This Lease is a net lease, and (except as otherwise provided in the Operative Agreements) it is intended that Lessee shall pay all costs and expenses of every character, whether foreseen or unforeseen, ordinary or extraordinary or structural or nonstructural, in connection with the use, operation, maintenance, repair, and reconstruction of the Airframe and each Engine.  Lessee’s obligation to pay all Rent payable hereunder and to perform all its other obligations hereunder shall be absolute and unconditional, and shall be construed as covenants separate and independent from the agreements or undertakings of any other Person, including Lessor or Owner Participant, and shall not be affected by any event or circumstance, including: (1) any setoff, counterclaim, recoupment, defense, or other right that Lessee may have against Lessor, Owner Participant, Airframe Manufacturer, Engine Manufacturer, any Indemnitee, or any other Person for any reason whatsoever; (2) any defect in the title, airworthiness, condition, design, operation, or fitness for use of, or any damage to or loss or destruction of, the Aircraft, the Airframe, or any Engine, or any interruption or cessation in the use or possession thereof by Lessee for any reason whatsoever; (3) any insolvency, bankruptcy, reorganization, or similar proceedings by or against Lessee or any other Person; (4) any restriction, prevention or curtailment of or interference with any use of the Aircraft, the Airframe, any Engine, or any part thereof; (5) any claim that Lessee has or might have against any Person; (6) any failure on the part of Lessor or Owner Participant to perform or comply with any of the terms of this Lease or any other Operative Agreement, or any breach of any representation or warranty by Lessor or Owner Participant; (7) any invalidity or unenforceability or disaffirmance of this Lease or any provision hereof or any of the other Operative Agreements or any provision thereof, in each case whether against or by Lessee or otherwise; or (8) any other circumstance, happening, or event whatsoever, whether or not similar to any of the foregoing.

 

(b)           If for any reason whatsoever this Lease shall be terminated in whole or in part by operation of law or otherwise except as specifically provided herein, Lessee nonetheless agrees to pay an amount equal to each Rent payment at the time such payment would have become due and payable in accordance with the terms hereof had this Lease not been terminated in whole or in part.  All Rent payable by Lessee shall be paid without notice or demand

 

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(except as otherwise expressly provided) and without abatement, suspension, deferment, deduction, diminution, or proration by reason of any circumstance or occurrence whatsoever.  Lessee hereby waives, to the extent permitted by applicable law, any and all rights that it may now have or that at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, cancel, quit, or surrender this Lease or any part hereof, or to any abatement, suppression, deferment, diminution, reduction or proration of Rent, except in accordance with the express terms hereof.  Each payment of Rent made by Lessee shall be final as to Lessor, Owner Participant and Lessee and, except for any computational error, Lessee will not seek to recover all or any part of any such payment of Rent for any reason whatsoever.

 

(c)           All obligations, liabilities, covenants, and undertakings of Lessee in this Agreement or in any other Operative Agreement shall be performed, observed, and complied with at Lessee’s sole cost and expense, whether or not so expressed, unless otherwise expressly provided.

 

(d)           Nothing set forth in this § 15 shall be construed to prohibit Lessee from separately pursuing any claim that it may have from time to time against Lessor, Owner Participant or any other Person with respect to any matter (other than the absolute and unconditional nature of Lessee’s obligations hereunder to pay Rent, and other than the matters specified in paragraphs (a) and (b) above).

 

(e)           Nothing set forth in this § 15 shall be construed to require Lessee to pay for or reimburse any costs or expenses incurred with respect to the deregistration of the Aircraft prior to or on the Delivery Date.

 

16.          ADDITIONAL RIGHTS AND OBLIGATIONS

 

In addition to the other terms and provisions of this Lease, Lessee and Lessor shall have the rights and obligations set forth in Annex E (both Parts 1 and 2 thereof), the provisions of which are hereby incorporated by this reference as if set forth in full herein.

 

17.          MISCELLANEOUS

 

17.1                        Amendments

 

No provision of this Lease may be amended, supplemented, waived, modified, discharged, terminated, or otherwise varied orally, but only by an

 

49

 

instrument in writing that specifically identifies the provision of this Lease that it purports to amend, supplement, waive, modify, discharge, terminate, or otherwise vary and is signed by Lessor and Lessee.  Each such amendment, supplement, waiver, modification, discharge, termination, or variance shall be effective only in the specific instance and for the specific purpose for which it is given.  No provision of this Lease shall be varied or contradicted by oral communication, course of dealing or performance, or other manner not set forth in an agreement, document, or instrument in writing and signed by Lessor and Lessee.

 

17.2                        Severability

 

If any provision hereof shall be held invalid, illegal, or unenforceable in any respect in any jurisdiction, then, to the extent permitted by Law, (a) all other provisions hereof shall remain in full force and effect in such jurisdiction, and (b) such invalidity, illegality, or unenforceability shall not affect the validity, legality, or enforceability of such provision in any other jurisdiction.  If, however, any Law pursuant to which such provisions are held invalid, illegal, or unenforceable may be waived, Lessor and Lessee hereby waive such Law to the full extent permitted, to the end that this Lease shall be deemed to be a valid and binding agreement in all respects, enforceable in accordance with its terms.

 

17.3                        Third-Party Beneficiary

 

This Lease is not intended to provide, and shall not provide, any Person not a party hereto (other than the Benefitted Persons) with any rights of any nature whatsoever against either of the parties hereto, and, except as expressly provided in the Participation Agreement or any other Operative Agreement, no Person not a party hereto (other than the Benefitted Persons) shall have any right, power, or privilege in respect of this Lease, or have any benefit or interest arising out of this Lease. For purposes of this § 17.3, the term “Benefitted Persons” shall mean Owner Participant, any Permitted Sublessee (but only to the extent provided in § 4.3), the Persons referred to in § 7.5, and any Indemnitee or Tax Indemnitee under § 9 of the Participation Agreement.

 

17.4                        Reproduction of Documents

 

This Lease (including all annexes, schedules, and exhibits hereto) and all agreements, instruments, and documents relating hereto, including (a) consents, waivers, and modifications that may hereafter be executed, and (b) financial statements, certificates, and other information previously or hereafter furnished to any party hereto, may be reproduced by such party by any photographic, photostatic, microfilm, micro-card, miniature photographic, or other similar process, and such party may destroy any original documents

 

50

 

so reproduced. Any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such party in the regular course of business), and any enlargement, facsimile, or further reproduction of such reproduction likewise is admissible in evidence.

 

17.5                        Counterparts

 

This Lease and any amendments, waivers, consents, or supplements hereto may be executed in any number of counterparts (or upon separate signature pages bound together into one or more counterparts), each fully-executed set of which when so executed shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument. The single fully-executed original of this Lease marked “Original” on the signature page hereof is the original for chattel paper purposes, and all other counterparts are duplicates for chattel paper purposes and are marked “duplicate” on the signature page hereof. No security interest in this Lease may be perfected by the possession of any counterpart other than the “Original”.

 

17.6                        Notices

 

Unless otherwise expressly permitted by the terms hereof, all notices, requests, demands, authorizations, directions, consents, waivers, and other communications required or permitted to be made, given, furnished, or filed hereunder shall be made, given, furnished, or filed, and shall become effective, in the manner prescribed in § 14.7 of the Participation Agreement.

 

17.7                        Governing Law; Jurisdiction and Venue; No Jury Trial

 

(a)          This Lease shall in all respects be governed by the laws of the State of New York, including all matters of construction, validity, and performance, without reference to any rules relating to conflicts of laws (other than Sections 5-1401 and 5-1402 of the New York General Obligations Law); provided that, all matters in any way relating to, or arising in connection with, the CTC, the CTC Registrations, or the International Interests of Lessor relating to the Airframe and the Engines and constituted under and pursuant to this Lease, shall be construed and interpreted in conformity with the “Official Commentary on the Convention on International Interests in Mobile Equipment and the Protocol thereto on Matters Specific to Aircraft Equipment”, Revised Edition 2008, written by Professor Sir Roy Goode and published by the International Institute for the Unification of Private Law (Unidroit).

 

(b)           Each party hereto hereby irrevocably agrees, accepts, and submits itself to the non-exclusive jurisdiction of the courts of the State of New York in the City and County of New York and of the United States for the Southern District of New York, in connection with any legal action, suit, or proceeding with respect to any matter relating to or arising out of or in connection with the Operative Agreements.

 

51

 

(c)           Each party hereto hereby irrevocably consents and agrees to the service of any and all legal process, summons, notices, and documents of any of the aforementioned courts in any such suit, action, or proceeding may be made by delivering copies thereof by registered or certified mail, postage prepaid, at the address set forth pursuant to § 17.6.  Each party hereto hereby agrees that service upon it, or any of its agents, in each case in accordance with this § 17.7(c), shall constitute valid and effective personal service upon such party, and each party hereto hereby agrees that the failure of any of its agents to give any notice of such service to any such party shall not impair or affect in any way the validity of such service on such party or any judgment rendered in any action or proceeding based thereon.

 

(d)           Each party hereto hereby irrevocably waives, to the extent permitted by applicable law, and agrees not to assert, by way of motion, as a defense, or otherwise, in any legal action or proceeding brought hereunder in any of the above-named courts, that such action or proceeding is brought in an inconvenient forum, that venue for the action or proceeding is improper, or that any Operative Agreement may not be enforced in or by such courts.

 

(e)           Each party hereto hereby waives its right to a jury trial of any claim or cause of action in any court in any jurisdiction based upon or arising out of or relating to the Operative Agreements.

 

(f)            Each party hereto irrevocably and unconditionally agrees that final judgment against it in any of the aforesaid actions, suits, or proceedings shall be conclusive (subject to permitted appeals) and may be enforced in any other jurisdiction, within or outside the United States of America, by suit on the judgment, a certified or exemplified copy of which shall be conclusive evidence of the fact and amount of its obligations and liabilities.

 

(g)           Each party hereto represents and warrants that it has reviewed this § 17.7 with its legal counsel, and that it knowingly and voluntarily accepts and agrees to this § 17.7 following consultation with such legal counsel.  This § 17.7 is irrevocable and unconditional, and shall apply to all amendments, supplements, and modifications to the Operative Agreements.

 

52

 

17.8                        No Waiver

 

No failure on the part of Lessor to exercise, and no delay by Lessor in exercising, any of its rights, powers, remedies, or privileges under this Lease or provided at Law, in equity or otherwise shall impair, prejudice, or constitute a waiver of any such right, power, remedy, or privilege or be construed as a waiver of any breach hereof or default hereunder or as an acquiescence therein, nor shall any single or partial exercise of any such right, power, remedy, or privilege preclude any other or further exercise thereof by Lessor or the exercise of any other right, power, remedy, or privilege by Lessor. No notice to or demand on Lessee in any case shall, unless otherwise required under this Lease, entitle Lessee to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of Lessor to any other or further action in any circumstances without notice or demand.

 

17.9                        Survival

 

The representations, warranties, indemnities, and covenants set forth herein shall, as to events occurring and circumstances arising or existing at or before the end of the Term, survive the delivery or return of the Aircraft, the Transfer of any interest of Owner Participant in this Agreement, the other Operative Agreements, the Trust Estate, and the Trust Agreement, and the expiration or other termination of this Lease or any other Operative Agreement, except to the extent otherwise expressly provided herein or therein.

 

17.10                      Further Assurances

 

(a)           Each party hereto shall execute, acknowledge, and deliver (or cause to be executed, acknowledged, and delivered) all such further agreements, instruments, certificates, or other documents, and shall do and cause to be done such further things, as the other party hereto reasonably requests in connection with the administration of, or to carry out more effectively the purposes of this Lease.

 

(b)           Without limiting the foregoing, Lessee shall do or cause to be done any and all further acts and things which may, in the reasonable judgment of Lessor, be required under the terms of the CTC (or any other agreement, treaty, convention, pact or by any practice, custom, or understanding recognized as having wide application or control involving any jurisdiction in which Lessee or any Permitted Sublessee may operate the Aircraft or any Engine) to perfect and preserve Lessor’s interests in and to the Airframe, each Engine and this Lease, and to establish and protect the rights and remedies created or intended to be created or provided for in favor of Lessor hereunder and under the other Operative Documents, including without limitation, promptly and duly executing and delivering to Lessor such further documents, assurances and consents, and taking such further action as Lessor may from time to time reasonably request.

 

53

 

17.11                      Entire Agreement

 

This Lease, together with the other Operative Agreements, on and as of the date hereof constitutes the entire agreement of the parties hereto with respect to the subject matter hereof and thereof, and all prior understandings or agreements, whether written or oral, between the parties hereto with respect to such subject matter are hereby superseded in their entirety.

 

[The rest of this page is intentionally left blank.]

 

54

 

IN WITNESS WHEREOF, Lessor and Lessee have executed this Lease Agreement N491HA.

 

 

	
 
    	
 
    	
WELLS   FARGO BANK NORTHWEST,
   NATIONAL ASSOCIATION,
    
	
 
    	
 
    	
not in its individual capacity, except as expressly provided herein,   but solely as trustee under the Trust Agreement, as Lessor
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
HAWAIIAN   AIRLINES, INC., as Lessee
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    

 

 

[This is the Original executed counterpart of the Lease for chattel paper purposes.]

 

[or]

 

[This is a duplicate executed counterpart, and is not the original counterpart, of the Lease, for chattel paper purposes.]

 

55

 

EXHIBIT A — LEASE SUPPLEMENT

 

LEASE SUPPLEMENT N0.     

 

LEASE N   HA SUPPLEMENT NO.   , dated              , 20   (this “Lease Supplement”), between WELLS FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity, but solely as Owner Trustee under the Trust Agreement N   HA, dated as of               , 20  , with Owner Participant named therein (such Owner Trustee, in its capacity as such Owner Trustee being herein called “Lessor”), and HAWAIIAN AIRLINES, INC., a Delaware corporation, as Lessee (“Lessee”).

 

Lessor and Lessee have heretofore entered into that certain Lease Agreement N   HA, dated as of             , 20  , relating to one Boeing Model 717-200 aircraft (herein called the “Lease” and the defined terms therein being hereinafter used with the same meanings).  The Lease provides for the execution and delivery of this Lease Supplement for the purpose of leasing the Airframe and Engines under the Lease as and when delivered by Lessor to Lessee in accordance with the terms thereof.

 

The Lease relates to the Airframe and Engines described below, and a counterpart of the Lease to which this Lease Supplement is attached and of which this Lease Supplement is a part is being filed for recordation on the date hereof with the FAA as one document.

 

NOW, THEREFORE, in consideration of the premises and other good and sufficient consideration, Lessor and Lessee hereby agree as follows:

 

1.             [RESERVED]

 

2.             Lessor hereby delivers and leases to Lessee under the Lease and Lessee hereby accepts and leases from Lessor under the Lease the following described Boeing Model 717-200 aircraft (the “Aircraft”), which Aircraft as of the date hereof consists of the following components:

 

(i)            Airframe: One used 717-200 Model (Generic Model 717-200) airframe bearing U.S. Registration Mark N   HA and manufacturer’s serial no.      , and that is type-certified by the Aviation Authority to transport (1) at least eight (8) persons (including crew) or (2) goods in excess of 2750 kilograms (6050 pounds); and

 

(ii)           Engines:  two Rolls-Royce Deutschland Ltd & Co KG Model BR715 A1-30 engines bearing, respectively, manufacturer’s serial nos.       and       (each of which engines is turbine-powered and has 550 or more rated takeoff horsepower or the equivalent of such horsepower).

 

1

 

3.             The Delivery Date of the Aircraft is the date of this Lease Supplement set forth in the opening paragraph hereof, and the location of such delivery is                      .

 

4.             Lessee hereby confirms its agreement to pay Lessor Rent for the Aircraft in accordance with Section 3, and the other provisions, of the Lease.

 

5.             Lessee hereby confirms to Lessor that Lessee has duly and irrevocably accepted the Aircraft under and for all purposes hereof, of the Lease and of the other Lessee Operative Agreements.

 

6.             All the terms and provisions of this Lease Supplement are hereby incorporated by reference in the Lease to the same extent as if fully set forth therein.

 

7.             This Lease Supplement may be executed in any number of counterparts (or upon separate signature pages bound together into one or more counterparts), each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

 

8.             To the extent, if any, that this Lease Supplement constitutes chattel paper (as such term is defined in the Uniform Commercial Code as in effect in any applicable jurisdiction), no security interest in this Lease Supplement may be created through the transfer or possession of any counterpart other than the original executed counterpart, which shall be identified as the counterpart indicating it to be the original counterpart of this Lease Supplement for chattel paper purposes, on the signature page thereof.

 

[Intentionally left blank.  Signature page follows.]

 

2

 

IN WITNESS WHEREOF, Lessor and Lessee have each caused this Lease Supplement to be duly executed as of the day and year first above written.

 

	
 
    	
 
    	
WELLS   FARGO BANK NORTHWEST, NATIONAL ASSOCIATION,
    
	
 
    	
 
    	
not in its individual capacity, except as expressly provided herein,   but solely as trustee under the Trust Agreement, as Lessor
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
HAWAIIAN   AIRLINES, INC.,
    
	
 
    	
 
    	
Lessee
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    

 

[This is the Original executed counterpart of the Lease Supplement for chattel paper purposes.]

 

[or]

 

[This is a duplicate executed counterpart, and is not the original counterpart, of the Lease Supplement, for chattel paper purposes.]

 

 

EXHIBIT B - AIRCRAFT DESCRIPTION

 

AIRCRAFT DESCRIPTION

 

The Aircraft is a Boeing model 717-200 aircraft, consisting of (1) an airframe bearing FAA registration no. N912ME (to be N491HA) and manufacturer’s serial no. 55175, (2) two Rolls-Royce Deutschland Ltd & Co KG Model BR715 A1-30 engines (each of which is turbine-powered and has 550 or more rated takeoff horsepower or its equivalent), bearing manufacturer’s serial nos. 13454 and 13411 and (3) all appliances, parts, instruments, appurtenances, accessories, furnishings, and other equipment or property incorporated in such airframe and engines.

 

B-1

 

EXHIBIT C - RETURN ACCEPTANCE SUPPLEMENT

 

RETURN ACCEPTANCE SUPPLEMENT N491HA

 

This Supplement, dated           , 20  , is entered into between Wells Fargo Bank Northwest, National Association, a national banking association, not in its individual capacity but solely as Owner Trustee under Trust Agreement N912ME, dated as of June 28, 2011, with BCC Equipment Leasing Corporation (such Owner Trustee, in its capacity as trustee, being referred to as “Lessor”), and Hawaiian Airlines, Inc. (“Lessee”), a Delaware corporation.

 

Lessor and Lessee have entered into Lease Agreement N491HA (the “Lease”), dated as of June 28, 2011, relating to the Boeing model 717-200  aircraft described below. Terms defined in the Lease have the same meanings when used in this Supplement.

 

Lessor and Lessee hereby agree as follows:

 

1.             Lessor and Lessee are executing this Return Acceptance Supplement to confirm that, on the date hereof, Lessee returned the following Airframe and Engines to Lessor:

 

Airframe:  U.S. registration no. N491HA; manufacturer’s serial no. 55175; and

 

Engines:  two Rolls-Royce Deutschland Ltd & Co KG engines, bearing manufacturer’s serial nos. 13454 and 13411.

 

2.             This Return Acceptance Supplement is being delivered in                      .

 

3.             Lessor and Lessee agree that the return of the Aircraft complies with § 5 and Annex B of the Lease, except as set forth below:

 

4.             Lessor and Lessee agree that the Lease is terminated, except for the provisions thereof that expressly survive termination.

 

 

IN WITNESS WHEREOF, Lessor and Lessee have executed this Return Acceptance Supplement N491HA.

 

 

	
 
    	
 
    	
WELLS   FARGO BANK NORTHWEST, NATIONAL ASSOCIATION, not in its   individual capacity, except as expressly provided herein, but solely as   trustee under the Trust Agreement, as Lessor
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
HAWAIIAN   AIRLINES, INC., as Lessee
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
 
    	
Title:
    

 

C-2

 

SCHEDULE 1-PART A

 

[**]

 

 

SCHEDULE 1-PART B

 

CTC REGISTRATIONS

 

1.             International Interest in respect of the lease of the Airframe from Lessor to Lessee under the Lease.

 

2.             International Interest in respect of the lease of the Engine bearing manufacturer’s serial number 13454 from Lessor to Lessee under the Lease.

 

3.             International Interest in respect of the lease of the Engine bearing manufacturer’s serial number 13411 from Lessor to Lessee under the Lease.

 

 

SCHEDULE 2

 

[**]

 

 

SCHEDULE 3

 

[**]

 

 

SCHEDULE 4-PART A

 

[RESERVED]

 

 

SCHEDULE 4-PART B

 

[RESERVED]

 

 

SCHEDULE 5

 

[**]

 

 

SCHEDULE 6

 

[**]

 

 

SCHEDULE 7

 

PLACARDS

 

Owned by and Leased from
 Wells Fargo Bank Northwest, National Association,
 as trustee

 

 

SCHEDULE 8

 

[**]

 

 

ANNEX A

 

PART 1

 

DEFINITIONS

 

GENERAL PROVISIONS

 

(a)           In each Operative Agreement, unless otherwise expressly provided, a reference to:

 

(1)           each of “Lessee”, “Lessor”, “Owner Trustee”, “Owner Participant”, and any other Person includes any successor in interest to it and any permitted transferee, permitted purchaser, or permitted assignee of it;

 

(2)           any agreement or other document (including any annex, schedule, or exhibit thereto, or any other part thereof) includes that agreement or other document as amended, supplemented, or otherwise modified from time to time in accordance with its terms and in accordance with the Operative Agreements, and any agreement or other document entered into in substitution or replacement therefor;

 

(3)           any provision of any Law includes any such provision as amended, modified, supplemented, substituted, reissued, or reenacted before the Delivery Date, and thereafter from time to time;

 

(4)           “Agreement”, “this Agreement”, “hereby”, “herein”, “hereto”, “hereof”, “hereunder”, and words of similar import, when used in any Operative Agreement, refer to such Operative Agreement as a whole and not to any particular provision of such Operative Agreement;

 

(5)           “including”, “include”, and terms or phrases of similar import means “including etc., without limitation”; and

 

(6)           a reference to a “section” or “§”, an “Exhibit”, an “Annex”, or a “Schedule” in any Operative Agreement, or in any annex thereto, is a reference to a section of, or an exhibit, an annex, or a schedule to, such Operative Agreement or such annex, respectively.

 

(b)           Each exhibit, annex, and schedule to each Operative Agreement is incorporated in, and is a part of, such Operative Agreement.

 

 

(c)           Unless otherwise defined or specified in any Operative Agreement, all accounting terms therein shall be construed and all accounting determinations thereunder shall be made in accordance with GAAP.

 

(d)           Headings used in any Operative Agreement are for convenience only, and shall not in any way affect the construction of, or be taken into consideration in interpreting, such Operative Agreement.

 

(e)           Unless otherwise indicated, references in this Lease to Articles, Chapters and the Preamble of the CTC are references to the English language version of the Consolidated Text and any reference herein to a provision of the Consolidated Text is a reference to the English language version of the provision of the Convention or the Aircraft Protocol from which it is derived, the Convention and the Aircraft Protocol being read and interpreted together as a single instrument as required by Article 6(1) of the Convention.

 

(f)            CTC-related provisions of any Operative Agreement will prevail in the case of a conflict with non-CTC-related provisions.

 

DEFINED TERMS

 

Actual Knowledge: (a) as it applies to Owner Trustee, actual knowledge of a Responsible Officer in the Corporate Trust Department, and (b) as it applies to Owner Participant or Lessee, actual knowledge of a Vice President or more-senior officer of Owner Participant or Lessee (respectively), or any Responsible Officer of Owner Participant or Lessee (respectively); provided, that each of Lessee, Owner Participant, and Owner Trustee shall be deemed to have “Actual Knowledge” of any matter as to which it has received notice from Lessee, Owner Participant, or Owner Trustee, given pursuant to § 14.7 of the Participation Agreement.

 

Additional Insured: defined in § D of Annex D to the Lease.

 

Affiliate of any Person: any other Person directly or indirectly controlling, controlled by, or under common control with such Person.  For purposes of this definition, “control” means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract, or otherwise, and “controlling”, “controlled by”, and “under common control with” have correlative meanings.

 

After-Tax Basis: a basis such that any payment to be received or receivable by any Person is supplemented by a further payment to that Person so that the sum of the two payments, after deducting all Taxes (taking into account any related deduction, credit, reduction in income or other Tax benefit recognized and actually utilized by such Person or any of its Affiliates in reducing its Taxes), is equal to the payment due to such Person.

 

2

 

Aircraft: the Airframe and the two Engines.

 

Aircraft Description Exhibit: Exhibit B to the Lease.

 

Aircraft Documents: all technical data, manuals, and log books, and all inspection, modification, and overhaul records and other service, repair, maintenance, and technical records that are required by the FAA, the Lease or the Maintenance Program to be maintained with respect to the Aircraft, Airframe, Engines, or Parts, or that are of a type required to be delivered by Lessee upon return of the Aircraft, Airframe, or Engines under § 5 of the Lease; and such term shall include all additions, renewals, revisions, and replacements of any such materials from time to time made, or required to be made, in accordance with the Lease, the Maintenance Program, or such FAA regulations, in each case in whatever form and by whatever means or medium (including microfiche, microfilm, paper, or computer disk or other electronic medium) such materials are maintained or retained by or on behalf of Lessee (provided,  that all such materials shall be maintained in the English language), and shall include all Returnable Documents.

 

Aircraft Protocol: the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment which was adopted on November 16, 2001 at a diplomatic conference held in Cape Town, South Africa (as amended, supplemented or modified from time to time) and from and after the effective date of the Convention in the relevant Contracting State shall mean when referring to the Aircraft Protocol with respect to such Contracting State, the Aircraft Protocol, as in effect in such Contracting State unless otherwise indicated.

 

Airframe: (1) the aircraft (excluding Engines or engines from time to time installed thereon) manufactured by Airframe Manufacturer and identified by Airframe Manufacturer’s model number, United States registration number, and Airframe Manufacturer’s serial number set forth in the Aircraft Description Exhibit, or (2) any Replacement Airframe, including in either case any and all Parts incorporated or installed in or attached or appurtenant to such airframe, and any and all Parts removed from such airframe, unless title to such Parts does not vest in Lessor in accordance with § 8.1 and Annex C of the Lease.  Upon substitution of a Replacement Airframe under and in accordance with the Lease, such Replacement Airframe shall become subject to the Lease and shall be the “Airframe” for all purposes of the Operative Agreements, and the replaced Airframe shall cease to be subject to the Lease and shall cease to be the “Airframe”.

 

3

 

Airframe Manufacturer: the Boeing Company.

 

Applicable Hawaii Tax Law: Act 105, Session Laws of Hawaii 2011, Relating to Taxation.

 

Appraiser: a firm of independent aircraft appraisers internationally recognized as having experience and expertise in appraising large commercial jet passenger aircraft.

 

APU: the auxiliary power unit installed on the Aircraft on the Delivery Date, whether or not installed on the Aircraft from time to time thereafter, unless title to such auxiliary power unit shall not be vested in Lessor in accordance with § 8.1 of the Lease, and any replacement or substituted auxiliary power unit installed on the Aircraft in accordance with the Lease as to which title is required to be vested in Lessor in accordance with § 8.1 of the Lease.

 

APUHSA: any applicable fleet hour, fleet support, or related agreement of the Lessee in connection with the APU, or any successor agreement, each as approved by the Lessor.

 

Associated Rights: is defined in the CTC.

 

Aviation Authority: the FAA.

 

Bankruptcy Code: the United States Bankruptcy Code, 11 U.S.C. § 101 et seq.

 

Basic Rent: the rent payable for the Aircraft pursuant to § 3.2.1 of the Lease.

 

Business Day: any day other than a Saturday, Sunday, or other day on which commercial banks are authorized or required by law to close in New York, NY, Honolulu, Hawaii, Salt Lake City, UT, or Seattle, WA  (solely with respect to a payment by Owner Participant).

 

Cash Equivalents: the following securities (which shall mature within 90 days of the date of purchase thereof): (1) direct obligations of the U.S. Government; (2) obligations fully guaranteed by the U.S. Government; (3) certificates of deposit issued by, or bankers’ acceptances of, or time deposits or a deposit account with, WFB or any bank, trust company, or national banking association incorporated or doing business under the laws of the United States or any state thereof having a combined capital and surplus and retained earnings of at least $1 billion and having a rating of “A” or better from Fitch Ratings, Ltd.; or (4) commercial paper of any issuer doing business under

 

4

 

the laws of the United States or one of the states thereof and in each case having a rating assigned to such commercial paper by Standard & Poor’s or Moody’s equal to or higher than A1 or P1, respectively.

 

Citizen of the United States: defined in § 40102(a)(15) of the Transportation Code and in the FARs.

 

Closing: the closing of the transactions contemplated by the Participation Agreement on the Delivery Date.

 

Code: the Internal Revenue Code of 1986.

 

Consolidated Text: the Consolidated Text of the CTC which was adopted on November 16, 2001 at a diplomatic conference held in Cape Town, South Africa (as amended, supplemented or modified from time to time).

 

Convention: the Convention on International Interests in Mobile Equipment which was adopted on November 16, 2001 at a diplomatic conference held in Cape Town, South Africa (as amended, supplemented or modified from time to time) and from and after the effective date of the Convention in the relevant Contracting State shall mean when referring to the Convention with respect to such Contracting State, the Convention, as in effect in such Contracting State unless otherwise indicate.

 

Contracting State: a country that has ratified, accepted, approved or acceded to the CTC in accordance with its terms and any denunciation by such Contracting State of the CTC which in accordance with the terms of the CTC has not yet taken effect.

 

CTC: the Convention and the Aircraft Protocol together and, from and after the effective date of the CTC in the relevant Contracting State, shall mean when referring to the CTC with respect to such Contracting State, the CTC, as in effect in such Contracting State unless otherwise indicated.

 

CTC Registrations: the registrations set forth in Schedule 1 - Part B to the Lease.

 

Corporate Trust Department or Trust Office: Owner Trustee’s principal corporate trust office, located from time to time at Owner Trustee’s address for notices under the Participation Agreement, or such other office at which Owner Trustee’s corporate trust business shall be administered and which Owner Trustee specifies by notice in writing to Lessee and Owner Participant.

 

CRAF: the Civil Reserve Air Fleet Program established pursuant to 10 U.S.C. § 9511 - 13, or any similar substitute program.

 

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Debt: any liability for borrowed money, or any liability for the payment of money in connection with any letter of credit transaction, or any other liabilities evidenced or to be evidenced by bonds, debentures, notes, or other similar instruments.

 

Default: any condition, circumstance, act, or event that, with the giving of notice or the lapse of time, or both, would constitute an Event of Default.

 

Delivery Date: defined in Schedule 1 — Part A to the Lease, such date being the date, which shall be a Business Day, when the Aircraft is delivered to and accepted by Lessee under the Lease and when the Closing occurs.

 

Delivery Deadline: 5:00 p.m., local time at the Delivery Location, on the date that is the last day of the second month following the month of the Scheduled Delivery Date.

 

Delivery Location: defined in Schedule 1 — Part A to the Lease.

 

Document Date: defined in Schedule 1 — Part A to the Lease.

 

Dollars, United States Dollars, or $: the lawful currency of the United States.

 

Engine: (1) each of the engines manufactured by Engine Manufacturer and identified by Engine Manufacturer’s model number and Engine Manufacturer’s serial number in the Aircraft Description Exhibit and originally installed on the Airframe on delivery thereof pursuant to the Lease, or (2) any Replacement Engine, in any case whether or not from time to time installed on the Airframe or installed on any other airframe or aircraft, including (for both clauses (1) and (2)) any and all Parts incorporated or installed in or attached or appurtenant to such engine, and any and all Parts removed from such engine, unless title to such Parts does not vest in Lessor in accordance with § 8.1 and Annex C of the Lease.  Upon substitution of a Replacement Engine under and in accordance with the Lease, such Replacement Engine shall become subject to the Lease and shall be an “Engine” for all purposes of the Operative Agreements, and the replaced Engine shall cease to be subject to the Lease and shall cease to be an “Engine”.

 

Engine Manufacturer: Rolls-Royce Deutschland Ltd. and Co. KG.

 

ERISA: the Employee Retirement Income Security Act of 1974.

 

Event of Default: any one or more of the conditions, circumstances, acts, or events set forth in § 13 of the Lease.

 

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Event of Loss with respect to the Aircraft, the Airframe, or any Engine: any of the following circumstances, conditions, or events with respect to such property, for any reason whatsoever:

 

(1)           the destruction of such property, damage to such property beyond practical or economic repair, or rendition of such property permanently unfit for normal use by Lessee;

 

(2)           the actual or constructive total loss of such property, or any damage to such property, or requisition of title or use of such property, which results in an insurance settlement with respect to such property on the basis of a total loss or constructive or compromised total loss;

 

(3)           any loss of such property or loss of use of such property that continues until the earlier of (aa) the last day of the Term, and (bb) the date that is 90 days after the commencement of such loss, as a consequence of any theft, hijacking, or disappearance of such property;

 

(4)           any taking of title to such property by any Government Entity or purported Government Entity (whether by seizure, condemnation, confiscation, requisition, or otherwise);

 

(5)           any seizure, condemnation, confiscation, taking, or requisition of use of such property that continues until the earliest of (aa) the last day of the Term, (bb) the date upon which the Aircraft is modified, altered, or adapted in such a manner as would render conversion of such property for use in normal commercial passenger service impractical or uneconomical, (cc) the date on which the restrictions set forth in § 7.1.5 are violated (because such property is operated or located in any area excluded from coverage by any insurance policy or indemnity required to be maintained in respect of such property), or (dd) the date that is 90 days following the commencement of such loss of use (unless such loss of use results from action by the U.S. Government, in which case this clause (dd) shall not apply to such loss of use;

 

(6)           as a result of any law, rule, regulation, order, or other action by the Aviation Authority or by any Government Entity otherwise having jurisdiction over the operation or use of the Aircraft, the use of such property in the normal course of Lessee’s business of passenger air transportation is prohibited for a period expiring on the earlier to occur of (aa) the last day of the Term, and (bb) the date that is 180 days following commencement of such prohibition, unless, before the expiration of such 180-day period, Lessee undertakes and is diligently

 

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carrying forward such steps as are necessary or desirable to permit the normal use of such property by Lessee, then the date that is 360 days following commencement of such prohibition; and

 

(7)          the basing of the Aircraft, while under requisition for use by any Government Entity, in any area excluded from coverage by any required insurance policy (unless the required U.S. governmental indemnity in lieu of such insurance, provided for in § 10.3 of the Lease, is in place).

 

The date of such Event of Loss shall be the date of such loss, damage, insurance settlement, seizure, condemnation, confiscation, taking or requisition of title or use, or prohibition, except that for purposes of clauses (3), (5), and (6) above, no Event of Loss shall be deemed to have occurred until the date of expiration of the applicable period referred to therein.

 

Exchange Act:  the Securities Exchange Act of 1934, as amended and supplemented from time to time.

 

Expenses: any and all liabilities, obligations, losses, damages, settlements, penalties, claims (including claims or liabilities based or asserted upon (a) negligence, (b) strict or absolute liability, (c) liability in tort, (d) infringement of patent, trademark, or other property or other right, and (e) liabilities arising out of violation of any Law), actions, suits, costs, expenses, and disbursements (including reasonable fees and disbursements of legal counsel, accountants, appraisers, inspectors, or other professionals, and costs of investigation), including all such costs, expenses, and disbursements incurred by any person in asserting, or in defending any claims arising out of its assertion of, any rights it may have under, or its cooperation in connection with any Expenses indemnified pursuant to, § 9 of the Participation Agreement; provided, however, that Expenses shall not include any costs or expenses with respect to the deregistration of the Aircraft incurred on or prior to the Delivery Date.

 

FAA: the Federal Aviation Administration of the United States, or any Government Entity succeeding to the functions of such Federal Aviation Administration.

 

FAA Counsel: McAfee & Taft. P.C.

 

FAA-Filed Documents: the Lease, the Lease Supplement No. 1, the Trust Agreement, an application for registration of the Aircraft with the FAA in Owner Trustee’s name, and the related affidavits of U.S. citizenship.

 

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FARs: the Federal Aviation Regulations issued or promulgated pursuant to the Transportation Code from time to time.

 

Fair Market Rental Value: the fair market rental value in Dollars for the Aircraft that would apply in an arm’s-length transaction between an informed and willing lessee under no compulsion to lease, and an informed and willing lessor under no compulsion to lease, for the applicable period, assuming that (1) rent would be paid monthly, in advance, and (2) the Aircraft would be leased during any such applicable period on the same terms and conditions (except for Basic Rent amount) as during the Term.

 

Fair Market Sales Value: the fair market sales value in Dollars for the Aircraft that would apply in an arm’s-length all cash transaction between an informed and willing buyer under no compulsion to buy, and an informed and willing seller under no compulsion to sell, in a transaction that would close on or about the relevant time of determination.

 

Financing Statements: UCC-1 financing statements covering the Aircraft, as a precautionary matter, by Lessee, as lessee, showing Owner Trustee as lessor, for filing in Delaware, and each other jurisdiction where (in Owner Trustee’s opinion) filing is reasonably desirable.

 

First Installment: defined in Section 3.2.3 of the Lease.

 

Force Majeure:  any delay or nonperformance due to or arising out of acts of God or public enemy, civil war, insurrection or riot, fire, flood, explosion, earthquake, accident, epidemic, quarantine restriction, any act of government, governmental priority, allocation, regulation or order affecting, directly or indirectly, the Aircraft, Lessor, Owner Participant or any other Person, or any materials or facilities, strike or labor dispute causing cessation, slowdown or interruption of work, inability after due and timely diligence to procure equipment, data or materials from suppliers in a timely manner, or any other cause to the extent that such cause is beyond the control of Lessor or Owner Participant whether above mentioned or not and whether or not similar to the foregoing

 

GAAP: generally accepted accounting principles as set forth in the statements of financial accounting standards issued by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants, as varied by any applicable financial accounting rules or regulations issued by the SEC, and applied on a basis consistent with prior periods except as disclosed in the pertinent Person’s financial statements.

 

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Government Entity: (1) any federal, state, provincial, or similar government, and any body, board, department, commission, court, tribunal, authority, agency, or other instrumentality of any such government or otherwise exercising any executive, legislative, judicial, administrative, or regulatory functions of such government, or (2) any other government entity (including, without limitation, the Supervisory Authority and the Registrar, as defined in Article 1(yy) and Article 1(qq), respectively, of the CTC) having jurisdiction over any matter contemplated by the Operative Agreements or relating to the observance or performance of the obligations of any of the parties to the Operative Agreements.

 

Holdings: Hawaiian Holdings, Inc.

 

Indemnitee: (1) WFB  and Owner Trustee; (2) each separate or additional trustee appointed pursuant to the Trust Agreement; (3) Owner Participant; (4) the Trust Estate; (5) each Affiliate of the Persons described in clauses (1), (2), and (3), (6) the directors, officers, employees, and agents of each of the Persons described in clauses (1) through (3) and in clause (5); and (7) the successors and permitted assigns of the Persons described in clauses (1) through (3), and in clauses (5) and (6).  If any Indemnitee is Airframe Manufacturer or Engine Manufacturer, such Person shall be an Indemnitee only in its capacity as Owner Participant.

 

Inspection Location:  any place as the parties shall agree.

 

International Interest: is defined in the Convention.

 

International Registry: the international registration facilities established for the purposes of and pursuant to the CTC by Aviareto in Dublin, Ireland.

 

International Registry Regulations: the regulations issued pursuant to Article 17(2) of the Convention and Article XVIII of the Aircraft Protocol.

 

Law: (1) any constitution, statute, law, decree, regulation, order, rule, or directive of any Government Entity, (2) any multinational or international treaties, conventions or accords to which any Government Entity is signatory or party (including, without limitation, the CTC and all International Registry Regulations), and (3) any judicial or administrative interpretation or application of, or decision under, any of the foregoing.

 

Lease or Lease Agreement: Lease Agreement N491HA, dated as of the Document Date, between Owner Trustee and Lessee.

 

Lease Supplement:  a supplement to the Lease, in the form of Exhibit A to the Lease.

 

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Lease Supplement No. 1:  the initial Lease Supplement, dated the Delivery Date.

 

Lessee: Hawaiian Airlines, Inc., a Delaware corporation.

 

Lessee Operative Agreements: the Participation Agreement, the Lease, the Lease Supplement No. 1, and each other agreement between Lessee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date or otherwise designated by Lessee and such other party as a “Lessee Operative Agreement”.

 

Lessor: Owner Trustee in its capacity as lessor under the Lease.

 

Lessor Lien: with respect to any Person, on any property (including the Trust Estate, the Aircraft, Airframe, Engines, Parts, or Aircraft Documents) or any payments, any Lien on such property or payments that results from (1) claims against such Person (if such Person is a trustee, whether in its individual capacity or in its capacity as a trustee) not related to any of the Transactions, (2) acts or omissions of such Person (if such Person is a trustee, whether in its individual capacity or in its capacity as a trustee) in violation of its obligations under any of the terms of the Operative Agreements, or not related to the Transactions, (3) Taxes against such Person (if such Person is a trustee, whether in its individual capacity or in its capacity as a trustee) or any of its Affiliates that Lessee is not required to indemnify under the Participation Agreement or any other Operative Agreement, or (4) from claims against such Person arising out of its transfer of all or part of its interest in the Aircraft, the Trust Estate, or the Operative Agreements, other than a Transfer required by the terms of the Operative Agreements or occurring pursuant to the exercise of remedies set forth in § 14 of the Lease.

 

LIBOR: a rate per annum (calculated on the basis of a 360-day year and actual days elapsed) equal to the offered rate quoted for Dollars on Telerate Page 3750 as of 11:00 a.m. (London time), on the day two London Business Days prior to the determination date, for a 180-day period.

 

Lien: any mortgage, pledge, lien, charge, claim, encumbrance, lease, or security interest affecting the title to or any interest in property, including without limitation any International Interest or Associated Right.

 

Maintenance Program: defined in Annex C to the Lease.

 

Maintenance Reserves:  defined in Section F of Annex C to the Lease.

 

Make-Whole Amount: an amount equal to the greater of (a) zero and (b) (1) the present value, discounted on a semiannually compounded basis

 

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utilizing an interest factor equal to the Reinvestment Yield, of the principal payments (including the payment at final maturity), and the interest payments, shown in the notional debt amortization set forth on Schedule 5 to the Lease, from the respective dates on which, but for the occurrence of the event or circumstance (as provided for in the Lease) giving rise to the requirement to calculate a Make-Whole Amount, such notional principal payments and interest payments would have been payable pursuant to such Schedule 5 to the Lease, minus (2) the notional debt balance (as shown on such Schedule 5 to the Lease and determined as of the date specified in the applicable provisions of the Lease, and in any event determined as of the same date as the amount described in the foregoing clause (1)) plus accrued but unpaid interest thereon.  For purposes of this definition, “Reinvestment Yield” shall mean the sum of one-half of one percent (.50%) plus the arithmetic mean of the two most recent weekly average yields to maturity for actively traded marketable U.S. Treasury fixed interest rate securities (adjusted to constant maturities equal to the remaining weighted average life to maturity of such notional debt, and determined as of the same date as the amounts described in the foregoing clauses (1) and (2)), as published by the Federal Reserve Board in its Statistical Release H.15(519) or any successor publication for the two calendar weeks ending on the Saturday next preceding such date or, if such average is not published for such period, of such reasonably comparable index as may be designated in good faith by Lessor.  If no possible maturity exactly corresponds to such weighted average life to maturity, yields for the two most closely corresponding published maturities shall be calculated pursuant to the immediately preceding sentence and the Reinvestment Yield shall be interpolated from such yields on a straight-line basis, rounding each of such relevant periods to the nearest month.

 

Materially Adverse Change with respect to any Person: any event, condition, or circumstance that materially adversely affects (i) such Person’s business, business prospects or consolidated financial condition, or (ii) such Person’s ability to observe and perform its obligations, liabilities, and agreements under the Operative Agreements; provided that, with respect to Lessee, and solely for purposes of any determination under § 5.1.10 of the Participation Agreement, (x) the elements described in the preceding clause (i) shall not be considered applicable, and (y) there shall be excluded from the operation and effect of the preceding clause (ii) any material adverse change in the national regulatory regime covering the operations of U.S. Air Carriers, generally, and any material adverse change in the financial condition or business prospects of the United States airline industry generally.

 

Minimum Liability Insurance Amount: defined in Schedule 1 — Part A to the Lease.

 

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Moody’s: Moody’s Investors Service, Inc. and its successors and assigns, and, if Moody’s Investors Service, Inc. and its successors and assigns no longer issues securities ratings, the term “Moody’s” shall include at the option of the Lessee, any other Person that issues internationally accepted securities ratings designated by the Lessee in a written notice to the Owner Participant and reasonably acceptable to the Owner Participant, and, upon the inclusion in this definition of such other Person, each reference in the Operative Documents to a rating issued by Moody’s shall be deemed automatically replaced with a reference to the comparable rating issued by such Person.

 

MPD: the Airframe Manufacturer’s Maintenance Planning Document for the Aircraft.

 

Net Worth for any Person: the excess of its total tangible assets over its total liabilities.

 

Non-U.S. Person: any Person, other than a United States person as defined in Code § 7701(a)(30).

 

Officer’s Certificate of any party to the Participation Agreement: a certificate signed by the Chairman, the President, any Vice President (including those with varying ranks such as Executive, Senior, Assistant, or Staff Vice President), the Treasurer, or the Secretary of such party.

 

Operative Agreements: the Participation Agreement, the Trust Agreement, the Lease, the Lease Supplement No. 1 and each other Lessee Operative Agreement.

 

Owner Participant: BCC Equipment Leasing Corporation and its permitted transferees; except that, after an Owner Participant Transfers its interest to a successor Owner Participant, such transferor shall not be an “Owner Participant”.

 

Owner Participant Agreements: the Participation Agreement, the Trust Agreement, and each other agreement between Owner Participant and any other party to the Participation Agreement relating to the Transactions, delivered on the Delivery Date or otherwise designated by Owner Participant and such other party as an “Owner Participant Agreement”.

 

Owner Trustee: Wells Fargo Bank Northwest, National Association, a national banking association, not in its individual capacity, except as expressly provided in any Operative Agreement, but solely as Owner Trustee under the Trust Agreement.

 

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Owner Trustee Agreements: the Participation Agreement, the Lease, the Lease Supplement No. 1, the Trust Agreement, and each other agreement between Owner Trustee and any other party to the Participation Agreement, relating to the Transactions, delivered on the Delivery Date or otherwise designated by Owner Trustee and such other party as an “Owner Trustee Agreement”.

 

Participation Agreement: Participation Agreement N491HA, dated as of the Document Date, among Lessee, Owner Participant, Owner Trustee.

 

Parts: all appliances, parts, components, instruments, appurtenances, accessories, furnishings, seats, and other equipment of whatever nature (including avionics and the APU, but excluding Engines or engines) from time to time installed or incorporated in or attached or appurtenant to the Airframe or any Engine, and as such term may be further defined in Annex C to the Lease.

 

Past-Due Rate: defined in Schedule 1 — Part A to the Lease.

 

Payment Date: defined in Schedule 1 — Part A to the Lease.

 

Payment Period: each of the periods during any two consecutive Payment Dates, in each case beginning on a Payment Date, the first such period commencing on and including the Delivery Date.

 

Permitted Air Carrier: any Permitted Foreign Air Carrier or U.S. Air Carrier.

 

Permitted Country: any country listed on Schedule 6 to the Lease or otherwise agreed to in writing by Lessor, Owner Participant and Lessee, as provided for on such Schedule 6, except any such country that, when the pertinent sublease or other transfer begins, (1) does not maintain normal diplomatic relations with the United States, or (2) is involved in civil or internal war or military conflict, or (3) is involved in external war or military conflict that involves, or materially threatens, domestic military operations or such country’s civil order, or (4) is a country with which it would constitute a breach of Law for Lessor or Owner Participant to engage directly or indirectly in business.

 

Permitted Foreign Air Carrier: any air carrier that (1) is domiciled and has its principal executive offices in, and a substantial part of its commercial operations in, a Permitted Country, (2) possesses all licenses, approvals, and other authorizations necessary to conduct commercial airline operations and to operate the Aircraft under the applicable Laws of such Permitted Country and each other country or territory having any jurisdiction over or with respect to

 

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its business or operations and in which the Aircraft will be operated, and (3) at the time that the sublease or other pertinent Transfer is entered into, has not declared or effected, or announced its intention to declare or effect, any suspension or moratorium of payments or the performance of other material obligations, or otherwise materially delayed or failed to make or perform any payment or other material obligation, in the conduct of its business, and is not subject (as debtor) to any bankruptcy, insolvency, liquidation, reorganization, dissolution, or similar proceeding, and does not have substantially all of its property in the possession of any liquidator, trustee, receiver, or similar Person.

 

Permitted Institution: (a) any bank, trust company, insurance company, financial institution, or any other corporation, limited liability company or other legally cognizable entity, in each case with a combined capital and surplus or Net Worth of at least $50,000,000, or (b) any Affiliate of any Person described in clause (a) in respect of which such person has provided a written guarantee of the obligations assumed by such Affiliate under the Owner Participant Agreements in form and substance reasonably satisfactory to Lessee and Lessor, or (c) any trustee or other disclosed agent acting on behalf of any Person described in clause (a) or (b); provided that “Permitted Institution” shall not, without Lessee’s consent, include any person who, at the time of the subject such transaction, is (1) a commercial air carrier with flight operations that directly compete with the then-existing commercial air carrier flight operations of Lessee, or (2) is an Affiliate of a person described in the foregoing clause (1), or (3) a party then adverse to Lessee or an Affiliate of Lessee in any material litigation, arbitration or other similar proceeding, or (4) is an Affiliate of a person described in the foregoing clause (3) if, but only if, the Net Worth of such adverse party constitutes more than half of the aggregate Net Worth of all Persons within such adverse party’s group of Affiliates.

 

Permitted Lien: any Lien described in clauses (a) through (h) of § 6 of the Lease.

 

Permitted Manufacturer: Airframe Manufacturer, Engine Manufacturer, or any wholly-owned subsidiary of any of the foregoing; provided, that such Person, at the time that the sublease or other pertinent Transfer is entered into, has not declared or effected, or announced its intention to declare or effect, any suspension or moratorium of payments or the performance of other material obligations, or otherwise materially delayed or failed to make or perform any payment or other material obligation, in the conduct of its business, and is not subject (as debtor) to any bankruptcy, insolvency, liquidation, reorganization, dissolution, or similar proceeding, and does not have substantially all of its property in the possession of any liquidator, trustee, receiver, or similar Person.

 

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Permitted Sublease: a sublease or sub-sublease permitted under § 7.2.7 of the Lease.

 

Permitted Sublessee: any Permitted Air Carrier or Permitted Manufacturer eligible to be the sublessee under a Permitted Sublease, as determined in accordance with § 7.2.7 of the Lease.

 

Person or person: an individual, firm, partnership, joint venture, trust, trustee, Government Entity, organization, association, corporation, limited liability company, government agency, committee, department, authority, and other body, corporate or incorporate, whether having distinct legal status or not, or any member of any of the same.

 

Plan: any employee benefit plan within the meaning of ERISA § 3(3), or any plan within the meaning of Code § 4975(e)(1).

 

Prime Rate: the prime, base, or equivalent rate as from time to time announced by JPMorgan Chase, National Association (or its successor).

 

Prospective International Interest: is defined in the Convention.

 

PUE: a “professional user entity” as defined in the International Registry Regulations.

 

Related Lease: each other lease agreement (if any) between the Lessee and Owner Participant (or an Affiliate thereof), or a trustee acting on its or its Affiliate’s behalf, and each covering a Boeing 717-200 aircraft, if but only if, at the time that the Event of Default first existed that made the existence of this term relevant, the lessor or owner participant under that lease agreement is the Owner Participant (or an Affiliate thereof).

 

Removable Parts: defined in § D of Annex C to the Lease.

 

Rent: Basic Rent and Supplemental Rent.

 

Reorganization: defined in § 7.1.9 of the Participation Agreement.

 

Replacement Airframe: an airframe substituted for the Airframe pursuant to § 9 of the Lease.

 

Replacement Engine: an engine substituted for an Engine pursuant to § 5.3, § 7.2, § 9, or Annex B of the Lease.

 

Responsible Officer of a Person: (1) the President or Chief Financial Officer of such Person, (2) any other officer of such Person customarily bearing responsibility for matters relating to the transactions contemplated by the

 

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Operative Agreements, or (3) any officer of such Person specifically authorized to take responsibility for any matter relating to the transactions contemplated by the Operative Agreements.

 

Return Acceptance Supplement: a Return Acceptance Supplement, dated as of the date the Aircraft is returned to Lessor pursuant to § 5 of the Lease, entered into by Lessor and Lessee, substantially in the form of Exhibit C  to the Lease.

 

Returnable Records: defined in § 3 of Annex B to the Lease.

 

RRFHSA: collectively, the Fleet Support Agreement, reference H025.01.00, dated as of March 30, 2000, as amended, between the Lessee and the Engine Manufacturer, the Fleet Hour Agreement, reference H025.01.02, dated as of March 30, 2000, as amended, between the Lessee and the Engine Manufacturer or any successor agreement approved by the Lessor.

 

RRTCA: (a) with respect to the Lessor, the Rolls Royce Total Care Agreement, reference B080.002.000, dated as of September 16, 2005, between Lessor and Engine Manufacturer together with the Rolls Royce Total Care Agreement, reference B080.008.000, dated as of September 22, 2008, between Lessor and Engine Manufacturer and (b) with respect to any subsequent operator of the Aircraft, a total care agreement between Engine Manufacturer and such operator.

 

Scheduled Delivery Date: defined in Schedule 1 — Part A to the Lease.

 

Scheduled Expiration Date: defined in Schedule 1 — Part A to the Lease.

 

SEC: the Securities and Exchange Commission of the United States, or any Government Entity succeeding to the functions of the Securities and Exchange Commission.

 

Second Installment: defined in Section 3.2.3 of the Lease.

 

Section 1110: 11 U.S.C. § 1110 of the Bankruptcy Code, or any successor section of the federal bankruptcy Law in effect from time to time.

 

Securities Act: the Securities Act of 1933.

 

Security: a “security” as defined in § 2(1) of the Securities Act.

 

Security Deposit:  defined in Section 3.2.3 of the Lease.

 

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Side Letter Agreement No. 1: that certain Side Letter Agreement No. 1 dated the date hereof between Lessor and Lessee in respect of Lessor’s and Lessee’s contribution for certain maintenance events.

 

SLV Date: each or any of the dates specified in Schedule 3 to the Lease.

 

SLV Payment Date: defined in § 9.1.2(a) of the Lease.

 

Special Default: (1) Lessee’s failure to pay any amount of Rent, or any amount of rent under a Related Lease, in each such case when due, (2) any Default referred to in § 13.7 of the Lease, or any similar default set forth in any Related Lease, or (3) any Event of Default.

 

Standard & Poor’s or S&P: Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc., and its successor and assigns and, if Standard & Poor’s Ratings Group and its successors and assigns no longer issues securities ratings, the term “Standard & Poor’s” shall include, at the option of the Lessee, any other Person that issues internationally accepted securities ratings designated by the Lessee in a written notice to the Owner Participant and reasonably acceptable to the Owner Participant and, upon the inclusion in this definition of such other Person, each reference in the Operative Documents to a rating issued by Standard & Poor’s shall be deemed automatically replaced with a reference to the comparable rating issued by such Person.

 

Stipulated Loss Value for the Aircraft: during the Term, the amount set forth in the column for SLV in Schedule 3 to the Lease for the pertinent SLV Date.

 

Successor: defined in § 7.1.9 of the Participation Agreement.

 

Supplemental Rent: without duplication, all amounts, liabilities, indemnities, and obligations (other than Basic Rent) that Lessee assumes or becomes obligated to pay or agrees to pay under any Operative Agreement to or on behalf of Lessor or any other Person, including the Security Deposit and the Maintenance Reserves, and any Stipulated Loss Value, and, if applicable, Make-Whole Amount, and any indemnity payments under § 9 of the Participation Agreement.

 

Tax Indemnitee: (1) WFB and Owner Trustee, (2) each separate or additional trustee appointed pursuant to the Trust Agreement, (3) Owner Participant, (4) the Trust Estate, and (5) the successors, assigns, and agents of the foregoing.  For purposes of this definition, the term “Owner Participant” shall include any member of an affiliated group (within the meaning of Code § 1504) of which Owner Participant is a member at the pertinent time, if 

 

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consolidated, joint, or combined returns are filed for such affiliated group for federal, state, or local income tax purposes.  If any Tax Indemnitee is Airframe Manufacturer or Engine Manufacturer, such Person shall be a Tax Indemnitee only in its capacity as Owner Participant.

 

Taxes: all taxes, levies, imposts, duties, fees, charges, assessments, or withholdings of any nature whatsoever imposed by any Taxing Authority, and any penalties, additions to tax, fines, or interest thereon or additions thereto.

 

Taxing Authority: any federal, state, or local government or other taxing authority in the United States, any foreign government or political subdivision or taxing authority thereof, any international taxing authority, or any territory or possession of the United States or taxing authority thereof.

 

Term: the period for which the Aircraft is leased pursuant to § 3 of the Lease, commencing on and including the Delivery Date and ending on the Scheduled Expiration Date, or such earlier date on which the Term terminates in accordance with the provisions of the Lease.

 

Threshold Amount: defined in Schedule 1 — Part A to the Lease.

 

Transaction Expenses: all costs and expenses, and all fees and other charges, payable or incurred by Lessor, Owner Trustee or WFB, or by Owner Participant or Lessee, in connection with (a) the negotiation, preparation, execution, and delivery of the Operative Agreements, the Owner Trustee Agreements, and the Owner Participant Agreements, including the reasonable fees and disbursements of (1) Ray, Quinney & Nebeker (special counsel for Owner Trustee and WFB), (2) FAA Counsel, (3) Akin Gump Strauss Hauer & Feld LLP (special counsel to Lessee), and (4) Vedder Price (special counsel to Owner Participant), (b) the recording or filing of any documents, certificates, or instruments in connection with any of the Transactions or in accordance with any Operative Agreement, Owner Trustee Agreement, or any Owner Participant Agreement, including the FAA Filed Documents, the CTC Registrations, the Financing Statements and any documents, certificates or instruments filed in connection with any deregistration (other than any deregistration occurring on or prior to the Delivery Date) or reregistration of the Aircraft, or any termination of the Lease or any sublease, (c) any proposed or consummated sublease or other Transfer of the Aircraft, Airframe or any Engine, or any proposed or consummated termination or cancellation of the Lease or any sublease (including the cost of any appraisal conducted in connection with any such sublease, Transfer or termination), or any Event of Loss with respect to the Aircraft, Airframe or any Engine or Part, or any payment of Stipulated Loss Value or Make-Whole Amount, and any replacement of the Airframe or any Engine or Part pursuant to the Lease, (d) all consents, waivers, amendments or 

 

19

 

other agreements in connection with the Operative Agreements, the Owner Trustee Agreements or the Owner Participant Agreements or the Transactions contemplated thereby, in each case (except during the continuation of a Default) only to the extent requested by Lessee or required by or made pursuant to the terms of the Operative Agreements, the Owner Trustee Agreements or the Owner Participant Agreements (unless such requirement results from the actions of the party incurring such costs or expenses not required by or made pursuant to the Operative Agreements, the Owner Trustee Agreements or the Owner Participant Agreements), whether or not any of the same are also indemnified against by any other Person, and (e) with respect to Owner Trustee, all initial and ongoing fees, disbursements and expenses of Owner Trustee or otherwise in connection with the Trust Estate or the administration of the transactions contemplated by the Operative Agreements, the Owner Trustee Agreements and the Owner Participant Agreements, including, without limitation, the reasonable fees and disbursements of counsel for Owner Trustee.

 

Transactions: the transactions contemplated by the Operative Agreements, the Owner Trustee Agreements, and the Owner Participant Agreements.

 

Transfer: the transfer, sale, assignment, or other conveyance of all or any interest in any property, right, or interest.

 

Transferee: a Person to whom Owner Participant or Owner Trustee, purports or intends to Transfer any or all of its right, title, or interest in the Trust Estate, as described in § 10.1 of the Participation Agreement.

 

Transportation Code: subtitle VII of title 49, United States Code, as amended and supplemented from time to time.

 

Trust: the trust created by the Trust Agreement.

 

Trust Agreement: Trust Agreement N491HA, dated as of the Document Date, between Owner Participant and WFB.

 

Trust Estate: all Owner Trustee’s estate, right, title, and interest in and to the Aircraft and the Lease, including all Basic Rent and Supplemental Rent (including insurance proceeds and requisition, indemnity, or other payments of any kind for of with respect to the Aircraft).

 

TUE: a “transaction user entity” as defined in the International Registry Regulations.

 

20

 

UCC: the Uniform Commercial Code as in effect in any applicable jurisdiction.

 

United States or U.S.: the United States of America; provided, that for geographic purposes, “United States” means the 50 states and the District of Columbia of the United States of America.

 

U.S. Air Carrier: any United States air carrier who is a Citizen of the United States holding an air carrier operating certificate issued by the Secretary of Transportation pursuant to chapter 447 of the Transportation Code for aircraft capable of carrying 10 or more individuals or 6000 pounds or more of cargo, and as to whom there is in force an air carrier operating certificate issued pursuant to Section 41101 of the Federal Aviation Act, or who may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof, and, at the time that the sublease or other pertinent Transfer is entered into, has not declared or effected, or announced its intention to declare or effect, any suspension or moratorium of payments or the performance of other material obligations, or otherwise materially delayed or failed to make or perform any payment or other material obligation, in the conduct of its business, and is not subject (as debtor) to any bankruptcy, insolvency, liquidation, reorganization, dissolution, or similar proceeding, and does not have substantially all of its property in the possession of any liquidator, trustee, receiver, or similar Person.

 

U.S. Government: the federal government of the United States, or any instrumentality or agency thereof the obligations of which are guaranteed by the full faith and credit of the federal government of the United States.

 

U.S. Person: any Person described in Code § 7701(a)(30).

 

Wet Lease: any arrangement whereby Lessee or a Permitted Sublessee agrees to furnish an aircraft to a third party under arrangements pursuant to which the aircraft (a) shall at all times be in the sole possession and control of Lessee or such Permitted Sublessee, (b) shall be operated in all respects solely by regular employees of Lessee or such Permitted Sublessee, and (c) shall in all events be maintained, insured, and otherwise used and operated in compliance with the terms and provisions of the Lease and, to the extent not inconsistent with the Lease, the subject Permitted Sublease; provided, that (i) Lessee’s obligations under this Lease (and such Permitted Sublessee’s under the subject Permitted Sublease) shall continue in full force and effect notwithstanding any such arrangement, (ii) such third party shall not have any possessory interest whatsoever in or with respect to the Aircraft, Airframe and Engines, and the rights of such third party with respect to the Aircraft, Airframe and Engines are subject and subordinate in all respects to the rights, title and interests of 

 

21

 

Lessor and Owner Participant under and in connection with the Operative Agreements, and of Lessee under and in connection with the Lease, and (iii) the term of such Wet Lease shall not extend beyond the Term of the Lease.

 

WFB: Wells Fargo Bank Northwest, National Association, a national banking association, not in its capacity as trustee under the Trust Agreement, but in its individual capacity.

 

[**]

 

22Exhibit 10.6

 

EXECUTION COPY

 

	
 
    

 

FACILITY AGREEMENT

[Hawaiian A330 [1259]]

 

Dated as of

 

June 29, 2011

 

among

 

HAWAIIAN AIRLINES, INC.,
 Borrower,

 

EACH LOAN PARTICIPANT
 IDENTIFIED ON SCHEDULE I HERETO,
 Loan Participants,

 

and

 

BANK OF UTAH,
  Security Trustee

 

 

Norddeutsche Landesbank Girozentrale

BNP Paribas

Underwriters

	
 
    

 

Re: Financing of One Airbus A330-200 Aircraft

 

 

TABLE OF CONTENTS

 

	
 
    	
 
    	
Page
    
	
 
    	
 
    	
 
    
	
SECTION 1
    	
CERTAIN   DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
SECTION 2
    	
THE   LOAN; BORROWER’S NOTICE OF DELIVERY DATES; CLOSING PROCEDURE
    	
2
    
	
 
    	
 
    	
 
    
	
SECTION 3
    	
LOAN   ECONOMICS
    	
5
    
	
 
    	
 
    	
 
    
	
SECTION 4
    	
CONDITIONS
    	
15
    
	
 
    	
 
    	
 
    
	
SECTION 5
    	
CLOSING   PROCEDURE
    	
21
    
	
 
    	
 
    	
 
    
	
SECTION 6
    	
EXTENT   OF INTEREST OF HOLDERS
    	
22
    
	
 
    	
 
    	
 
    
	
SECTION 7
    	
REPRESENTATION   AND WARRANTIES
    	
22
    
	
 
    	
 
    	
 
    
	
SECTION 8
    	
INDEMNITIES;   ETC.
    	
27
    
	
 
    	
 
    	
 
    
	
SECTION 9
    	
COVENANTS   OF THE BORROWER
    	
35
    
	
 
    	
 
    	
 
    
	
SECTION 10
    	
NOTICES
    	
38
    
	
 
    	
 
    	
 
    
	
SECTION 11
    	
GOVERNING   LAW; CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL
    	
38
    
	
 
    	
 
    	
 
    
	
SECTION 12
    	
INVOICES   AND PAYMENT OF EXPENSES
    	
39
    
	
 
    	
 
    	
 
    
	
SECTION 13
    	
SECTION 1110   COMPLIANCE
    	
40
    
	
 
    	
 
    	
 
    
	
SECTION 14
    	
CONFIDENTIALITY
    	
40
    
	
 
    	
 
    	
 
    
	
SECTION 15
    	
NONDISTURBANCE
    	
41
    
	
 
    	
 
    	
 
    
	
SECTION 16
    	
MISCELLANEOUS
    	
41
    
	
 
    	
 
    	
 
    
	
SECTION 17
    	
PATRIOT   ACT; MONEY LAUNDERING
    	
43
    
	
 
    	
 
    	
 
    
	
SECTION 18
    	
REGISTRATIONS   WITH THE INTERNATIONAL REGISTRY
    	
43
    

 

	
Schedules:
    	
 
    
	
I.
    	
Notice   and Account Information
    
	
II.
    	
Commitments
    
	
III.
    	
Tax   Provisions
    
	
3(a)(i)
    	
Amortization   Schedule (Tranche 1 Loans)
    
	
3(a)(ii)
    	
Amortization   Schedule (Tranche 2 Loans)
    
	
 
    	
 
    
	
Exhibit A    -
    	
Form of   Borrowing Notice
    
	
Exhibit B    -
    	
Form of   Assignment Agreement
    
	
Exhibit C    -
    	
Form of   Loan Certificates
    
	
Exhibit D    -
    	
Form of   Mortgage
    
	
 
    	
 
    
	
Appendix X -
    	
Definitions   and Rules of Usage
    

 

i

 

FACILITY AGREEMENT [Hawaiian A330 [1259]]

 

THIS FACILITY AGREEMENT [Hawaiian A330 [1259]] (this “Agreement”) dated as of June 29, 2011 among (i) Hawaiian Airlines, Inc., a Delaware corporation (the “Borrower”), (ii) each Loan Participant identified on Schedule I hereto (collectively, together with their successors and permitted assigns, the “Loan Participants”) and (iii) Bank of Utah, as Security Trustee hereunder (together with its successors hereunder in such capacity, the “Security Trustee”).

 

W I T N E S S E T H:

 

WHEREAS, certain terms are used herein as defined in Section 1 hereof; and

 

WHEREAS, the Borrower will be acquiring a certain Airbus A330-200 aircraft from the manufacturer thereof and intends to finance the payment of the purchase price therefor with, among other things, the proceeds of the loans to be made by the Loan Participants hereunder; and

 

WHEREAS, the Loan Participants are willing to make such loans on the terms and conditions provided here, including the granting to the Security Trustee of a mortgage lien on the Designated Aircraft contemporaneously with the acquisition thereof pursuant to the Mortgage and Security Agreement in substantially the form of Exhibit D hereto (prior to its execution and delivery, in the form of such Exhibit and, thereafter as executed and delivered (and thereafter supplemented), the “Mortgage”).

 

NOW THEREFORE, in consideration of the mutual agreements herein contained, the parties hereto agree as follows:

 

SECTION 1           Certain Definitions.

 

Except as otherwise defined in this Agreement, including its annexes, schedules and exhibits, terms used herein in capitalized form shall have the meanings attributed thereto in Appendix X to the Mortgage, and the rules of usage specified therein shall be applicable to this Agreement.  In addition, the following terms shall have the following meanings:

 

“Adjusted Applicable Margin” means, [**].

 

“Applicable Margin” shall be [**].

 

“Commitment Termination Date” shall be [**].

 

“Designated Aircraft” means the Airbus A330-200 aircraft bearing manufacturer’s serial number 1259 and FAA registration No. N384HA, being delivered to the Borrower under the Aircraft Purchase Agreement.  From and after the Delivery Date of such aircraft, the term “Designated Aircraft” shall mean the “Aircraft” as defined in the Mortgage.

 

“Obsolete Part Amount” means [**].

 

 

“Participation Percentage” means, for any Loan Participant, and for the Designated Aircraft, the percentage set forth next to the name of such Loan Participant for the Designated Aircraft on Schedule II hereto, which percentage shall be applicable to each Tranche.

 

SECTION 2           The Loan; Borrower’s Notice of Delivery Dates; Closing Procedure.

 

(a)          Commitment; Loan Certificates; Special Funding Elections.

 

(i)            Subject to the terms and conditions of this Agreement, the Loan Participants severally agree to make secured loans (the “Loans”) to the Borrower in respect of the Designated Aircraft on a date to be designated pursuant to Section 2(b)(i) hereof, but in no event later than the Commitment Termination Date, in two tranches (each, a “Tranche”): (i) one tranche in an aggregate principal amount of $[**] (the “Tranche 1 Loan”) and (ii) one tranche in an aggregate principal amount of $[**] (the “Tranche 2 Loan”). The aggregate original principal amount of the Loans shall be $67,000,000.  Each Loan Participant’s funding obligation in respect of any Tranche shall be its Participation Percentage of the amount thereof (respectively, its “Tranche 1 Commitment” and its “Tranche 2 Commitment”). Each Loan Participant shall receive, as evidence of the Tranche 1 Loan and Tranche 2 Loan made by it, a Loan Certificate(s) of the applicable Type and Tranche in the amount of such Loan.

 

(ii)           The Loan Certificates shall be issued by reference to a particular “Type” and “Tranche”.  The “Type” of any Loan Certificate, designated as “Type A” or “Type B”, shall indicate whether such Loan Certificate is held by a Type A Loan Participant or a Type B Loan Participant.  The “Tranche” of any Loan Certificate, designated as “Tranche 1” or “Tranche 2”, shall indicate whether such Loan Certificate is issued in respect of a Tranche 1 Loan or a Tranche 2 Loan.  The Type and Tranche of a Loan Certificate shall be indicated on the face of such Loan Certificate.  Each Loan and the related Commitment may be designated as being of the Type and Tranche of its related Loan Certificates.

 

(iii)          Schedule I hereto sets out the Type of Loan Certificates that each Loan Participant has irrevocably elected to receive on behalf of itself and its successors and permitted assigns.  Any Loan Certificate initially issued to a Type A Loan Participant shall be and remain a Type A Loan Certificate, and any Loan Certificate initially issued to a Type B Loan Participant shall be and remain a Type B Loan Certificate, in each case, regardless of the Holder thereof.  A Loan Certificate, once issued as a particular Type, shall only be transferred, assigned and/or reissued as such Type, entitling its Holder to the rights, and subjecting such Holder to the obligations, applicable to such Type only, as further set forth herein.

 

(b)           Funding Procedures.

 

(i)            In connection with the financing of the Designated Aircraft hereunder, the Borrower agrees (subject to Section 2(b)(viii) hereof) to give the Loan Participants at least three Business Days’ prior written notice (which notice, to be effective on any Business Day, must be received no later than 11:00 a.m. New York time)

 

2

 

of the anticipated Delivery Date for the Designated Aircraft (the “Funding Date”), which date shall be a Business Day not later than the Commitment Termination Date, and which notice shall be in substantially the form of the Notice of Borrowing attached hereto as Exhibit A (the “Notice of Borrowing”).  The Notice of Borrowing shall if desired by the Borrower, identify whether the Borrower elects a Fixed Rate to be applicable to the related Loan.

 

(ii)           In order to facilitate the timely closing of the transactions contemplated hereby, the Borrower, by delivery of the Notice of Borrowing to the Loan Participants, irrevocably instructs the Loan Participants to: (A) wire transfer (for receipt by no later than 10:00 a.m. New York City time) on the Funding Date its Commitment for the Designated Aircraft by the wiring of immediately available funds (reference: Hawaiian Airlines A330-200 MSN 1259) to the account of the Security Trustee specified on Schedule I (the “Account”); (B) in the case of any Type A Loan Participant, enter into arrangements to establish its Liquidity Margin for the related Loan (if it has not already done so) and notify the Borrower thereof no later than one Business Day prior to the Funding Date; and (C) if the Borrower shall have elected a Fixed Rate, enter into a Hedge Transaction on the terms set forth herein for its portion of the Loan (if it has not already done so).

 

(iii)          The funds so paid by each such Loan Participant (the “Deposit”) into the Account are to be held by the Security Trustee for account of such Loan Participant.  Subject to paragraph (vi) below, upon the satisfaction (as determined by each Loan Participant) of the conditions precedent set forth in Section 4 hereof, such Loan Participant (or its special counsel acting on its behalf) shall instruct the Security Trustee to disburse the Deposit for application of its Commitment for the Designated Aircraft in the financing as contemplated by Section 2(c) hereof.

 

(iv)          If, for any reason, the Designated Aircraft to be financed hereunder on its Funding Date shall not be so financed, the Deposit and earnings thereon, will be invested and reinvested by the Security Trustee at the sole direction, for the account, and at the risk of the Borrower in an overnight investment selected by the Borrower and reasonably acceptable to the Loan Participants and the Security Trustee.  Upon the Borrower’s oral (to be confirmed in writing) instructions, earnings on any such investments shall be applied to the Borrower’s payment obligations to each Loan Participant under this Section 2(b) to the extent of such earnings.

 

(v)           If the actual Delivery Date for the Designated Aircraft is a date falling after the Funding Date, the Borrower shall pay interest hereunder to each Loan Participant on the amount of its Deposit for the period from and including the Funding Date to but excluding the earlier of (A) the Delivery Date for the Designated Aircraft or (B) the Cutoff Date (as defined below).  For each Loan Participant, such interest shall accrue on the amount of such Loan Participant’s Commitment at the Applicable Rate established for the Loan.  Interest on the Commitments accrued pursuant to the preceding sentence shall (I) if accrued to the Delivery Date for the Designated Aircraft, be paid on the first Interest Payment Date and (II) if accrued to the Cutoff Date, be due and payable to each Loan Participant on such date.

 

3

 

(vi)          If for any reason, other than the failure of any Loan Participant to comply with the terms hereof, the Delivery Date for the Designated Aircraft shall not have occurred on or prior to [**] after the Funding Date (the “Cutoff Date”), the Borrower hereby irrevocably agrees that such Loan Participant may (and upon the written instruction of the Borrower, given any time during the period from the Funding Date to the Cutoff Date, shall) cancel, terminate or otherwise unwind its funding arrangements made in the London interbank market or otherwise to fund its Commitment on the Funding Date (including, for any Type A Loan Participant, its related liquidity arrangements) and, if applicable, such Loan Participant may cancel, terminate or otherwise unwind the related Hedge Transaction, and such Loan Participant may notify the Security Trustee thereof, and the Security Trustee shall return its Commitment for the Designated Aircraft to it, subject, however, to such Loan Participant’s continuing commitment to fund its Commitment as provided herein.

 

(vii)         In the event of the occurrence of the events described in paragraph (vi) above, the Borrower agrees to pay promptly (but in any event within [**] after the relevant Cutoff Date) any Break Amount incurred by the relevant Loan Participant (for which purpose such Loan Participant shall be deemed to have the amount of its Commitment prepaid as a funded Loan).

 

(viii)        If funds have been returned to the Loan Participants pursuant to this Section 2(b), the Borrower may schedule a new Funding Date on any date prior to the Commitment Termination Date by giving a new Notice of Borrowing pursuant to Section 2(b)(i), and the provisions of this Section 2(b) shall be applicable to such new Funding Date, including, without limitation, the right to fix the interest rate in accordance with Section 3(b)(ii).  If any Loan Participant shall fail to fund its Commitment, the Borrower shall be under no obligation to borrow any portion of the Loan (though the Borrower shall, for the avoidance of doubt, have the right to borrow any portion of the Loan funded, subject to fulfillment of the conditions precedent set forth in Section 4 or the waiver thereof by the Loan Participants who have funded their Commitments) but shall be obligated to pay Break Amount and interest with respect to any amounts so funded by the Loan Participants but not borrowed by the Borrower hereunder.

 

(c)           Subject to the terms and conditions of this Agreement, and immediately prior to the transfer of title to the Designated Aircraft to the Borrower, the Borrower shall authorize the delivery and filing for record at the FAA of the Mortgage and/or the Mortgage Supplement for the Designated Aircraft once title to the Designated Aircraft shall have transferred to the Borrower.  On the Delivery Date for the Designated Aircraft specified in the Borrower’s notice referred to in Section 2(b)(i), subject to the terms and conditions of this Agreement, each Loan Participant agrees, and hereby directs the Security Trustee, to pay the amount of its Commitment for the Aircraft to the Borrower by wire transferring such amounts to the Aircraft Manufacturer’s account identified by the Borrower in the Notice of Borrowing, or to such other account as the Borrower shall direct the Security Trustee in writing, immediately prior to the transfer of title to the Designated Aircraft to the Borrower.

 

(d)           On or prior to the Funding Date, if an Event of Default shall have occurred and be continuing (i) in the case of an Event of Default described in Section 8.06 or 8.07 of the

 

4

 

Mortgage, the Commitments shall automatically terminate (without any notice or other act by the Security Trustee or any Loan Participant) and (ii) in the case of any other Event of Default (and following the expiration of any applicable grace period therefor), the Security Trustee, acting on instruction of the Majority in Interest of Holders, may terminate the Commitments by notifying the Borrower thereof, whereupon, in the case of a Type A Loan Participant, Liquidity Break Amount, if any, shall be payable as provided in Section 3(c)(ii).

 

(e)           The closing with respect to the financing of the Designated Aircraft shall take place at the offices of Vedder Price P.C., 1633 Broadway, New York, New York 10019.

 

SECTION 3           Loan Economics.

 

(a)          Principal Amortization.

 

(i)            Tranche 1 Loans.  The Tranche 1 Loans shall amortize, and Annex A for the Loan Certificates for the Tranche 1 Loans (and the related Schedule 1 of the Mortgage Supplement for the Designated Aircraft) shall be calculated, based on a mortgage-style (level payments of principal and interest) methodology utilizing an assumed interest rate of [**] per annum (the “Benchmark Rate”) for the Loan Certificates, with the original principal amount thereof amortizing [**] on a quarterly basis in arrears on each Interest Payment Date (the first such amortizing payment to be made on the first Interest Payment Date next following the Funding Date (or Projected Funding Date, if applicable in accordance with this Section 3(a)) and the final such installment falling due on the [**]) following the Funding Date (or Projected Funding Date, if applicable in accordance with this Section 3(a)).  The Loan Participants and the Borrower agree that the aggregate principal amount of each such installment shall be as set forth on the amortization schedule attached as Schedule 3(a)(i) hereto.

 

(ii)           Tranche 2 Loans.  The Tranche 2 Loans shall amortize, and Annex A for the Loan Certificates for the Tranche 2 Loans (and the related Schedule 2 of the Mortgage Supplement for the Designated Aircraft) shall be calculated, based on a mortgage-style (level payments of principal and interest) methodology utilizing the Benchmark Rate for the Loan Certificates, with the original principal amount thereof amortizing [**] on a quarterly basis in arrears on each Interest Payment Date (the first such amortizing payment to be made on the first Interest Payment Date next following the Funding Date (or Projected Funding Date, if applicable in accordance with this Section 3(a)) and the final such installment (i.e., the balloon) falling due on the [**] following the Funding Date (or Projected Funding Date, if applicable in accordance with this Section 3(a)).  The Loan Participants and the Borrower agree that the aggregate principal amount of each such installment shall be as set forth on the amortization schedule attached as Schedule 3(a)(ii) hereto.

 

The Loan Participants shall determine the Annex A for the Loan Certificates of each Tranche (and the related Schedules 1 and 2 of the Mortgage Supplement for the Designated Aircraft) on the basis specified in this Section 3(a) and shall confirm such proposed schedules with the Borrower.

 

5

 

For the avoidance of doubt, if the Funding Date occurs after the Projected Funding Date such that amortization will be calculated from the Projected Funding Date, all payments of principal and interest shall be made solely in respect of periods commencing on the Funding Date and no interest shall accrue on the Loans until from and after the Funding Date.

 

(b)           Interest.  The Borrower shall, subject to the terms and conditions of this Section 3(b), have the right to elect that the Loan bear interest either at a Floating Rate or a Fixed Rate.

 

(i)            Floating Rate.  If the Borrower shall not have notified the Loan Participants of its request, pursuant to (A) the Notice of Borrowing or (B) the Fixed Rate Notice in accordance with paragraph (ii) below, to have the Loan bear interest at a fixed rate, then the Applicable Rate for the Loan and related Loan Certificates shall be, for each Interest Period, the Floating Rate for such Interest Period.  Interest on each Loan payable by reference to the Floating Rate shall be payable quarterly in arrears on each Interest Payment Date and shall be calculated on the basis of a year of 360 days and actual number of days elapsed.

 

(ii)           Fixed Rate Setting.  The Borrower may notify the Loan Participants of its request, pursuant to the Notice of Borrowing or at any time before the date that is six months after the Funding Date, for the Loan in respect of the Designated Aircraft to bear interest at a fixed rate (a “Fixed Rate Notice”), which Fixed Rate (as defined below) shall be fixed two Business Days prior to its effective date (the “Hedge Effective Date”).  Upon delivery by the Borrower of a Fixed Rate Notice to the Loan Participants, the following procedures shall apply to determine the “Fixed Rate”:

 

(1)           In the case of a Fixed Rate Notice delivered pursuant to the Notice of Borrowing, no later than 10:00 a.m. (but no earlier than 9:00 a.m.) New York time on the second Business Day prior to the Funding Date, the Loan Participants and the Borrower shall convene a conference call during which the Loan Participants will notify the Borrower of a single fixed rate of interest (without giving effect to the Applicable Margin) to be used as the basis for the calculation of the Fixed Rate for the Loan; such rate, and any other such interest rate quoted by the Loan Participants pursuant to this Section 3(b)(ii)(1) being referred to as a “Rate Quote”.  Each Rate Quote shall be agreed to by each Loan Participant and shall be quoted on a market basis as the fixed rate equivalent (calculated on a bond basis) of the Loan had the Loan been priced on the basis of the LIBOR Rate (flat) (giving effect to the anticipated amortization, maturity and Hedge Effective Date of such Loan).  The Borrower may accept or reject any such Rate Quote.  If the Borrower rejects the Rate Quote, the Loan will initially bear interest at the Floating Rate.  If the Borrower accepts such Rate Quote, the Loan Participants will advise as whether such Rate Quote is still available.  If the Loan Parties advise that it is still available, then such Rate Quote shall serve as the basis for establishing the Fixed Rate.  If such Rate Quote is not available any longer, at the request of the Borrower, the Loan Participants will furnish another Rate Quote and the above procedures will be utilized until a Rate Quote has been rejected or an accepted Rate Quote is determined by the Loan Participants to be available;

 

6

 

provided that the Loan Participants shall not be obligated to quote more than five Rate Quotes in respect of any Fixed Rate Notice.  If the Borrower accepts any Rate Quote (by providing oral confirmation during the applicable telephone call) during such time period and such Rate Quote is advised by the Loan Participants as remaining available, such acceptance shall be binding on the Borrower, and shall be reflected on the Mortgage Supplement as provided therein.  In the event any such Rate Quote is so accepted by the Borrower, such Rate Quote plus the Adjusted Applicable Margin applicable to any Type and Tranche of the Loan shall be the “Fixed Rate” for such Type and Tranche of the Loan (subject to adjustment for the Liquidity Margin in the case of Type A Loans), effective on the Hedge Effective Date. If the Borrower does not accept any Rate Quote in accordance with the terms of this Section 3(b)(ii)(1), the Loan shall be initially funded as a Floating Rate Loan.

 

(2)           If the Loan is initially funded as a Floating Rate Loan, regardless of whether the Borrower requested a Rate Quote in the Notice of Borrowing, at any time within six months of the Funding Date, the Borrower may request that the Loan be converted into a Fixed Rate Loan so as to bear interest at a fixed rate effective on any Interest Payment Date or the fifth Business Day after the Borrower’s delivery of the Fixed Rate Notice (the “Fixed Rate Conversion Date”), in each case, as the Borrower may designate in the Fixed Rate Notice and so long as the Fixed Rate Conversion Date occurs on or before the last day of such six month period (the “Fixed Rate Conversion Option”).  In order to exercise the Fixed Rate Conversion Option, subject to the other terms of this subparagraph (2), the Borrower shall furnish to the Loan Participants a Fixed Rate Notice of such exercise no later than five Business Days prior to the intended Fixed Rate Conversion Date.  No later than 10:00 a.m. (but no earlier than 9:00 a.m.) New York time on the third Business Day prior to the Fixed Rate Conversion Date, the Loan Participants and the Borrower shall convene a conference call during which the Loan Participants will notify the Borrower of a single fixed rate of interest (without giving effect to the Applicable Margin) to be used as the basis for the calculation of the Fixed Rate for the Loan; such rate, and any other such interest rate quoted by the Loan Participants pursuant to this Section 3(b)(ii)(2) being referred to as a “Conversion Rate Quote”.  Each Conversion Rate Quote shall be agreed to by each Loan Participant and shall be quoted on a market basis as the fixed rate equivalent (calculated on a bond basis) of the Loan had the Loan been priced on the basis of the LIBOR Rate (flat) (giving effect to the amortization, maturity and Fixed Rate Conversion Date of such Loan).  The Borrower may accept or reject any such Conversion Rate Quote.  If the Borrower rejects the Conversion Rate Quote, the Loan will continue to bear interest at the Floating Rate.  If the Borrower accepts such Conversion Rate Quote, the Loan Participants will advise as whether such Conversion Rate Quote is still available.  If the Loan Parties advise that it is still available, then such Conversion Rate Quote shall serve as the basis for establishing the Fixed Rate.  If such Conversion Rate Quote is not available any longer, at the request of the Borrower, the Loan Participants will furnish another Conversion Rate Quote and the above procedures will be utilized until a Conversion Rate Quote has been rejected or an accepted

 

7

 

Conversion Rate Quote is determined by the Loan Participants to be available; provided that the Loan Participants shall not be obligated to quote more than five Conversion Rate Quotes in respect of any Fixed Rate Notice.  If the Borrower accepts any Conversion Rate Quote (by providing oral confirmation during the applicable telephone call) during such time period and such Conversion Rate Quote is advised by the Loan Participants as remaining available, such acceptance shall be binding on the Borrower and such Conversion Rate Quote shall be promptly confirmed to the Borrower in writing by the Loan Participants.  In the event any such Conversion Rate Quote is so accepted by the Borrower, such Conversion Rate Quote plus the Adjusted Applicable Margin applicable to any Type and Tranche of the Loan shall be the “Fixed Rate” for such Type and Tranche of the Loan (subject to adjustment for the Liquidity Margin in the case of Type A Loans), effective on the Fixed Rate Conversion Date, and the Borrower and the Security Trustee shall execute and deliver a supplement to the Mortgage specifying the Fixed Rate applicable to each Tranche and Type of Loan Certificates; provided that if the Fixed Rate Conversion Date is not an Interest Payment Date, the Borrower shall compensate each Loan Participant for any LIBOR Break Amount.  If the Borrower does not accept any Conversion Rate Quote in accordance with the terms of this Section 3(b)(ii)(2), the Loan shall remain a Floating Rate Loan. No Fixed Rate Notice may be furnished if a Special Default shall have occurred and be continuing.

 

(3)           For the avoidance of doubt, the Fixed Rate applicable to the Type A Loans and the Type B Loans will vary as a consequence of the different Applicable Margin applicable to each Type.  In addition, insofar as the Liquidity Margin will be different for each Tranche of Type A Loans, the Fixed Rate for the different Tranches of Type A Loan will vary.

 

(4)           The Borrower understands and acknowledges that in order to provide any Fixed Rate the Loan Participants may be entering into one or more interest rate swaps or other hedging transactions (which may be effected internally or externally), and that it has assessed the risks (including but not limited to risks in relation to any Hedge Breakage Loss), benefits and consequences of obtaining a fixed interest so as to procure a fixed rate funding. The Borrower confirms that it is solely responsible for any decision to select a Fixed Rate, having relied on its own independent business judgment and advisers in connection with the Agreement.

 

(iii)          Fixed Rate.  If the Applicable Rate for the Loan Certificates and the Loan is a Fixed Rate:

 

(1)           Interest on the Loan shall be payable quarterly in arrears on each Interest Payment Date and shall be calculated on the basis of a year of 360 days consisting of 12 30-day months.

 

(2)           The Fixed Rate on a Fixed Rate Loan shall be subject to adjustment as provided in clause (v) below.

 

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(3)           On the date of (i) any prepayment of Loan Certificates pursuant to the Mortgage or (ii) any acceleration of Loan Certificates pursuant to the Mortgage, the Borrower will request that each Loan Participant advise the Security Trustee and the Borrower by 11:00 a.m., New York time, on such date of the Hedge Break Amount applicable to such event.

 

(4)           Each Loan Participant agrees that, so long as no Event of Default shall have occurred and be continuing, it shall promptly pay to the Borrower at such account as the Borrower may specify any Hedge Breakage Gain in respect of the Loan Certificates (or its related Commitment), except that it may first deduct therefrom any amounts then due and owing to it or the other Loan Participants under the Operative Documents and apply any amount so retained to the satisfaction thereof.  Each Holder may retain any Hedge Breakage Gain that arises after the occurrence of an Event of Default as security for the obligations of the Borrower until the earlier of (i) the date that such Event of Default is cured by the Borrower, promptly following which date such amount shall be paid over to the Borrower, or (ii) the date that Section 9.07 of the Mortgage shall be applicable, promptly following which date such amounts shall be remitted to the Security Trustee for application as provided in such Section 9.07.  For the avoidance of doubt, Hedge Breakage Gains, if any, shall be due and payable to the Borrower on the date that at any Break Amount is otherwise due and payable to the Loan Participants.

 

(5)           Upon the request of the Borrower, each Loan Participant shall provide a good faith written estimate of the Hedge Breakage Loss or Hedge Breakage Gain, as the case may be, in connection with the occurrence, or anticipated occurrence, of any event contemplated by the Operative Documents that might give rise to an obligation to pay Hedge Breakage Loss or to receive Hedge Breakage Gain.

 

(6)           Upon determination by a Loan Participant of any Hedge Breakage Loss or Hedge Breakage Gain payable to or by it, as the case may be, such Loan Participant will provide to the Borrower a certificate, certifying such Hedge Breakage Loss or Hedge Breakage Gain, which certified amount shall be determined in accordance with the procedures set out in the definition of “Hedge Break Amount”.

 

(iv)          Margin Adjustment.

 

(1)           The Applicable Margin is subject to adjustment for each Loan Participant to preserve such Loan Participant’s net return on capital based on its internal risk models if and to the extent the Aircraft is reregistered outside of an Approved Country (as defined below) and the resulting security package fails to provide (i) to the Security Trustee the same degree and quality of security as available under the law of an Approved Country and (ii) to such Loan Participant the Basel II treatment and the Basel III treatment (each as internally determined in good faith by such Loan Participant) required to support the

 

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internal risk “score” or “risk-model” pricing allowance afforded by such resulting security package.  Any determination of a need for such an adjustment shall be communicated to the Security Trustee and the Borrower promptly following notice by the Borrower of any such reregistration (either proposed or actual) and shall be effective immediately upon such reregistration.  The determination of any such adjustment by a Loan Participant (including as to its internal modeling and Basel II and/or Basel III application) shall be conclusive absent manifest error.  Any such adjustment may be to increase or to decrease the Applicable Margin, and the Loan Participants agree to recalculate any applicable adjustment at the time of any reregistration; provided that the Applicable Margin shall automatically revert to the original “Applicable Margin” hereunder in the event the Designated Aircraft is reregistered in an Approved Country.  “Approved Country” means the United States.

 

(2)           A Loan Participant intending to make a claim for an Applicable Margin adjustment pursuant to Section 3(b)(iv)(1) shall, within 30 days after receipt of written notice of any proposed or actual reregistration, provide written notice to the Security Trustee and the Borrower in writing of the event by reason of which it is entitled to do so (the “Adjustment Notice”); provided, that: (x) the Adjustment Notice shall describe the events giving rise to such adjustment, the basis for determining such adjustment and the amount thereof, together with a statement that the determinations made in respect of such adjustment comply with the provisions of this Section 3(b)(iv); and (y) such Loan Participant shall not be required to disclose any confidential information relating to the organization of its affairs, or its capital structure or return on capital.

 

(v)           Fixed Rate Adjustment.  If the Loan Certificates and the Loan shall bear interest at a Fixed Rate, such rate shall be as provided in the definition of Fixed Rate, adjusted automatically by the amount of any increase or decrease of the Applicable Margin as determined pursuant to clause (iv) above (adjusted for bond basis).  Any adjustment effected by the preceding sentence shall be calculated by the Loan Participants, shall be notified promptly to the Security Trustee and the Borrower, and such calculation shall be conclusive absent manifest error.

 

(vi)          Past Due Interest.  Overdue payments of principal of any Tranche and Type of Loan (and to the extent permitted by applicable law, past due payments of interest and other amounts due under the Operative Documents) shall bear interest at the Past Due Rate, payable on demand.

 

(c)           Liquidity Costs.

 

(i)            [**].

 

(ii)           [**].

 

(d)           Structuring Fees.  The Borrower agrees to pay to, or for account of, the Underwriters the structuring fee as specified in the Structuring Fee Letter.

 

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(e)           Commitment Fees.  The Borrower agrees to pay a commitment fee to the Underwriters and their permitted transferees in the amounts, on the dates and subject to the conditions as set forth in the Fee Letter.

 

(f)            Security Trustee Fee.  The Borrower agrees to pay to the Security Trustee the up-front and annual fee of the Security Trustee as separately agreed between the Borrower and the Security Trustee.

 

(g)           LIBOR Break Amounts.  The Borrower shall compensate each Loan Participant, upon written request by that Loan Participant (which written request shall set forth in reasonable detail the basis for requesting such amount), for all LIBOR Break Amount (as defined below) incurred or deemed incurred by such Loan Participant as a result of:

 

(i)            funding, or making arrangements to fund, its participation in the Loan requested by the Borrower in the Notice of Borrowing but not made for any reason (other than by reason of default by that Loan Participant alone);

 

(ii)           the Loan (or part of the Loan) being repaid on a date other than an Interest Payment Date; or

 

(iii)          the Loan (or part of the Loan) not being prepaid in accordance with a notice of prepayment given by the Borrower.

 

For the purpose of this Agreement, “LIBOR Break Amount” hereunder shall be equal to the excess, if any, of (i) the amount of interest that otherwise would have accrued on the principal amount so paid, prepaid or not borrowed for the period from the date of such payment, prepayment or failure to borrow to the last day of the then current Interest Period for such Loan Participant’s Loan in respect of the Designated Aircraft (or, in the case of a failure to borrow, the Interest Period for the Loan that would have commenced on the date specified for such borrowing) at the applicable LIBOR rate over (ii) the amount of interest that otherwise would have accrued on such principal amount at a rate per annum equal to the interest component of the amount the applicable Loan Participant would have bid in the London interbank market for Dollar deposits of leading banks in amounts comparable to such principal amount and with maturities comparable to such period (as reasonably determined by such Loan Participant).  For the avoidance of doubt, the calculation of LIBOR Break Amount shall not include any compensation for lost margin or profit.

 

(h)           Liquidity Break Amount.

 

(i)            Subject to Section 3(i) below, the Borrower shall compensate each [**].  For the purpose of this Agreement, [**] hereunder shall be equal to the cumulative amount of the present values of the interest amount for each (whole or partial) Interest Period relating to such Tranche as to which a Liquidity Margin applies and which succeeds the date of such Liquidity Event, calculated at a per annum rate equal to the Liquidity Reserve Differential that would have accrued and been payable on the last day of such Interest Period on the amount so prepaid or Commitment cancelled in respect of such Tranche through the Maturity Date for such Tranche (taking into account (A) in the case of prepayment in full of the Loan, the scheduled amortization of the Loan in

 

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accordance with Section 3(a) hereof, and (B) in the case of a partial prepayment of the Loan, the application of such partial prepayments of the Loan in the inverse order of maturity).  The present value factor used in the making of the calculation required in the immediately preceding sentence shall be the interest rate customarily utilized by the Treasury (or comparable) desk of the applicable [**] for such purpose.  Any calculation by an affected [**] of Liquidity Break Amount, including the Liquidity Reserve Differential, shall be conclusive (and without the necessity for such [**] to disclose the manner or inputs for its determining the same); provided, that each affected [**] will furnish to the Borrower a certificate stating that Liquidity Break Amount has been incurred and listing the Liquidity Break Amount.  The delivery of such certificate shall be deemed a certification by such [**] that the determinants for calculating the Liquidity Reserve Differential were based on its Treasury (or comparable) desk’s assessed liquidity costs as at the applicable dates and that the calculation thereof was made on a non-discriminatory basis and in accordance with this provision and the definition of Liquidity Reserve Differential; there will be no further calculation or disclosure of refinancing practice in order to evidence or verify the actual liquidity breakage losses.  If the Liquidity Reserve Differential is a negative number, then neither the [**] nor the Borrower shall have any obligation under this Section 3(h).  Interest calculated as aforesaid shall be computed on the basis of a year of 360 days and actual number of days elapsed.  As amongst the [**], insofar as the Liquidity Break Amount is calculated on the weighted average of their individual Liquidity Margins, the Liquidity Break Amount payable to each [**] shall be paid to them on the basis of their individual Liquidity Margins, and the Security Trustee agrees to make payments on account of the Liquidity Break Amount to each [**] accordingly.

 

(ii)           On the date of (A) any prepayment of Loan Certificates pursuant to the Mortgage or (B) any acceleration of Loan Certificates pursuant to the Mortgage, the Borrower will request that each [**] advise the Security Trustee and the Borrower by 11:00 a.m., New York time, on such date of the Liquidity Break Amount applicable to such event.

 

(i)            Right of Repayment and Cancellation in Relation to a Single Loan Participant. If:

 

(1)           any sum payable to any Loan Participant by the Borrower is required to be increased under paragraph (d) of Schedule III hereto (other than in respect of Excluded Taxes subject to paragraph (d)(iii) of Schedule III); or

 

(2)           any Loan Participant claims indemnification from the Borrower under Section 8(c) hereof or the Borrower is required to repay or prepay the Loans of an Impaired Loan Participant in accordance with Section 8(d), or

 

(3)           any Type B Loan Participant seeks payment of the Market Disruption Floating Interest Rate or the Market Disruption Fixed Interest Rate after the occurrence of a Market Disruption Event;

 

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then the Borrower may, while the circumstance giving rise to the requirement or indemnification continues, upon not less than five Business Days’ irrevocable prior notice to the Security Trustee and such Loan Participant either (1) cancel the commitment of that Loan Participant and repay that Loan Participant’s Loans together with accrued Commitment Fee, if any, accrued interest thereon, Break Amount, if any, and such Loan Participant’s allocable share of all other amounts due and owing by the Borrower under the Operative Documents or (2) cause that Loan Participant to transfer its Loans, Commitments and other rights and obligations hereunder to a transferee designated by the Borrower and permitted under Section 16(c) for a purchase price equal to the outstanding amount of principal owed to such Loan Participant as of the relevant date of transfer together with any accrued and unpaid Commitment Fee, accrued interest and Break Amount thereon.  In the case of any prepayment effected pursuant to clause (1) or (2) of this Section 3(i) in respect of the Break Amount payable to any [**] in association therewith, [**] of the component thereof constituting Liquidity Break Amount shall be payable to such [**].

 

(j)            Yield Protection.

 

(i)            If with respect to any Interest Period relating to any Tranche of any [**]:

 

(1)           the [**], each acting reasonably and in good faith, determine (which determination shall be binding and conclusive on all parties) that, by reason of circumstances affecting the London interbank market, adequate and reasonable means do not exist for ascertaining the LIBOR rate for such period; or

 

(2)           any [**], acting reasonably and in good faith, advises the Borrower and the Security Trustee that LIBOR as determined in accordance with the definition thereof will not adequately and fairly reflect the cost to such [**] of maintaining or funding its [**] in line with prudent banking practice for such Interest Period; provided, that such inadequacy is the result of circumstances affecting the relevant interbank market generally and is not directly and solely the result of a deterioration in the financial condition of such [**],

 

(each, a “Market Disruption Event”), then so long as such circumstances shall continue, the portion of the Loan that relates to such [**] shall bear interest, for each Interest Period of the related Tranche 1 and Tranche 2 (A) in the case of a Floating Rate Loan, at the Market Disruption Cost of Funds applicable to the Type B Loan Participants, plus the Applicable Margin (applicable to [**] of each Tranche) (the “Market Disruption Floating Interest Rate”) and (B) in the case of a Fixed Rate Loan, at the Fixed Rate applicable to each Tranche of the [**] plus an amount equal to the difference of (I) the Market Disruption Cost of Funds, minus (II) LIBOR for such Interest Period (the “Market Disruption Fixed Interest Rate”).

 

(ii)           If the provisions of this Section 3(j) are applicable, then each affected [**] shall report, as provided in paragraph (iv) below, to the Security Trustee and the Borrower its cost of funding its share of the [**] for such Interest Period ), expressed as a percentage rate per annum, and, based on the report of each such [**] as to such cost

 

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of funds, the Security Trustee shall calculate the weighted average thereof.  Promptly following the calculation of such weighted average, the Security Trustee shall advise the Borrower and the each of the affected Type B Loan Participants thereof (which weighted average shall be the “Market Disruption Cost of Funds”) and the Market Disruption Cost of Funds shall be applicable to each of the affected Type B Loan Participants.

 

(iii)          The report by any Type B Loan Participant to the Security Trustee and the Borrower of its cost of funds for any Interest Period shall be conclusive, absent manifest error, and shall constitute a certification by such Type B Loan Participant that the interest rate so provided is an accurate, fair and non-discriminatory calculation of its Treasury (or comparable) desk’s assessed funding costs for such period and that such Type B Loan Participant is, to the extent it is entitled to do so, generally charging its borrowers similarly situated with the Borrower such market disruption costs.

 

(iv)          If the provisions of this Section 3(j) are applicable, each affected Type B Loan Participant shall report to the Security Trustee and the Borrower its cost of funds for each affected Interest Period as soon as practicable and, in any event, prior to the first day of such Interest Period (or promptly thereafter under circumstances where such costs of funds are generally not available to lenders similarly situated to any affected Type B Loan Participant); provided that if any affected Type B Loan Participant is not able to obtain deposits in the London interbank (or other relevant) market matching such Interest Period, notice of its cost of funds rate shall be provided as follows:  (i) prior to the first day of such Interest Period (or promptly thereafter under circumstances where such costs of funds are generally not available to lenders similarly situated to any affected Type B Loan Participant), such Type B Loan Participant shall provide to the Security Trustee and the Borrower an approximation of the cost to such Type B Loan Participant of such funding for such Interest Period; and (ii) prior to the last day of such Interest Period (or earlier, to the extent practicable if deposits of a duration longer than one day are obtained), such Type B Loan Participant shall provide to the Security Trustee and the Borrower the actual cost to such Type B Loan Participant of such funding for such Interest Period.

 

(v)           Notwithstanding Section 2.04 of the Mortgage (or any other provision in the Operative Documents requiring that interest be paid on a pro rata basis), in respect of each Interest Period of the related Tranche with respect to which a Market Disruption Event shall be applicable, the Security Trustee shall pay to each affected Type B Loan Participant of such Tranche from the funds provided by the Borrower pursuant to the preceding clause (ii) interest on the portion of the Loan that relates to the Type B Loan Certificate of such Tranche held by such Type B Loan Participant at the Market Disruption Floating Interest Rate applicable to such Type B Loan Participant or the Market Disruption Fixed Interest Rate applicable to such Type B Loan Participant, as the case may be, provided in clause (i) above for such Type B Loan Participant.

 

(vi)          All amounts payable under this Section 3(j) shall be calculated on the basis of a year of 360 days and actual number of days elapsed.

 

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(vii)         Upon any Type B Loan Participant affected by a Market Disruption Event confirming to the Security Trustee and the Borrower that the event(s) giving rise to such Market Disruption Event have ceased, the rate of interest applicable to such Type B Loan Participant’s Type B Loans will revert to such rate of interest immediately in effect prior to the occurrence of such Market Disruption Event.

 

(k)           Alternative Basis.  If a Market Disruption Event occurs and the Type B Loan Participants or the Borrower so requires, the Type B Loan Participants and the Borrower shall enter into negotiations (for a period of not more than 30 days) with a view to agreeing on a substitute basis for determining the rate of interest payable in respect of Type B Loan Certificates, provided that any alternative basis agreed shall, with the prior consent of each affected Type B Loan Participant and the Borrower, be binding on all parties.  If within such 30 day period each of the affected Type B Loan Participants and the Borrower  agree upon a substitute basis for determining the rate of interest payable in respect of Type B Loan Certificates, such alternative basis shall be retroactive to and effective from the first day of the applicable Interest Period until and including the last day of such Interest Period.  For the avoidance of doubt, during any such period of negotiation, the Borrower shall be required to perform its obligations under the preceding Section 3(j).  Upon any Type B Loan Participant affected by a Market Disruption Event confirming to the Security Trustee and the Borrower that the event(s) giving rise to such Market Disruption Event have ceased, the alternative rate of interest applicable to such Type B Loan Participant’s Type B Loans will revert to such rate of interest immediately in effect prior to the occurrence of such Market Disruption Event.

 

(l)            Manner of Payment.  All amounts payable by the Borrower under this Agreement shall be payable without setoff or counterclaim in immediately available funds to the Person entitled thereto, and to such Person’s account specified on Schedule I or as otherwise directed.

 

SECTION 4           Conditions.

 

(a)          Conditions Precedent to the Effectiveness of the Commitments.  It is agreed that the respective Commitments of each Loan Participant in respect of the Designated Aircraft and the effectiveness of this Agreement is subject to the satisfaction of the following conditions precedent:

 

(i)            The following documents shall have been duly authorized, executed and delivered by the respective party or parties thereto, shall each be satisfactory in form and substance to each Loan Participant and shall be in full force and effect and executed counterparts shall have been delivered to each Loan Participant and its counsel:

 

(1)           this Agreement;

 

(2)           the Mortgage;

 

(3)           the Fee Letter; and

 

(4)           the Structuring Fee Letter.

 

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(ii)           Each Loan Participant shall have received the following, in each case in form and substance satisfactory to it:

 

(1)           a certified copy of the Certificate of Incorporation and Bylaws of the Borrower and a copy of resolutions (or minutes of a meeting containing such resolutions) of the board of directors of the Borrower or the executive committee thereof, certified by the Secretary or an Assistant Secretary of the Borrower, duly authorizing the execution, delivery and performance by the Borrower of this Agreement, the Mortgage and each other document required to be executed and delivered by the Borrower on the Delivery Date in accordance with the provisions hereof and thereof;

 

(2)           a certificate of the Borrower as to the person or persons authorized to execute and deliver this Agreement, the other Operative Documents, and any other documents to be executed on behalf of the Borrower in connection with the transactions contemplated hereby and as to the signature of such person or persons;

 

(3)           an incumbency certificate of the Security Trustee as to the person or persons authorized to execute and deliver this Agreement, the Mortgage, and any other documents to be executed on behalf of the Security Trustee in connection with the transactions contemplated hereby and the signatures of such person or persons;

 

(4)           a copy of the resolutions of the board of directors of the Security Trustee, certified by the Secretary or an Assistant Secretary of the Security Trustee, duly authorizing the transactions contemplated hereby and the execution and delivery of each of the documents required to be executed and delivered on behalf of the Security Trustee in connection with the transactions contemplated hereby; and

 

(5)           a copy of the articles of association of the Security Trustee, each certified by the Secretary or an Assistant Secretary of the Security Trustee.

 

(iii)          Such Loan Participant shall have received such further “KYC” requirements from the Borrower as it shall require to comply with its internal procedures.

 

(iv)          The Borrower shall have paid, or made arrangements with such Loan Participant to pay, all fees, costs and expenses of such Loan Participant and the Security Trustee that are then due and payable in accordance with Section 12, the Fee Letter and the Structuring Fee Letter.

 

(v)           On the date hereof, no event shall have occurred and be continuing which constitutes (or would, with the passage of time or the giving of notice or both, constitute) an Event of Default.

 

(vi)          As of the date hereof, no Material Adverse Change has occurred since December 31, 2010 and is continuing.

 

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By their execution hereof, each Loan Participant certifies that all of the conditions precedent set forth in this Section 4(a) have been satisfied and that such Loan Participant’s Commitment and this Agreement have become effective as of the date hereof.

 

(b)           Conditions Precedent to such Loan Participants’ Participation in the Designated Aircraft.  It is agreed that the respective obligations of each Loan Participant to lend its Commitment to the Borrower in respect of the Designated Aircraft and Tranche is subject to the effectiveness of this Agreement under Section 4(a) and the satisfaction prior to or on the Delivery Date for the Designated Aircraft of the following conditions precedent:

 

(i)            Such Loan Participant shall have received the Notice of Borrowing (or shall have waived such notice either in writing or as provided in Section 2).

 

(ii)           No change shall have occurred after the date of the execution and delivery of this Agreement in applicable law or regulations thereunder or interpretations thereof by appropriate regulatory authorities which, in the reasonable opinion of such Loan Participant would make it a violation of law or regulations for such Loan Participant to make its Commitment for the Designated Aircraft available to acquire its Loan Certificate(s) or to realize the benefits of the security afforded by the Mortgage.

 

(iii)          On the Delivery Date of the Designated Aircraft, (A) (x) unless the Type A Loan Participants have previously established the Liquidity Margin pursuant to Section 3(c)(ii), the Type A Loan Participants are able to access U.S. dollars in the LIBOR or other applicable financial markets so as to fund (and to finance) their respective Loan to be made on such date to the Maturity Date and (y) the Type B Loan Participants are able to access U.S. dollars in the LIBOR or other applicable financial markets so as to fund (and to finance) their respective Loan to be made on such date to the succeeding Interest Payment Date and (B) no Material Adverse Change has occurred since December 31, 2010 that is continuing.

 

(iv)          (x) each Underwriter shall have received its installment of the structuring fee specified in Section 3(d) in accordance with the terms of the Structuring Fee Letter, (y) the Security Trustee shall have received its fee specified in Section 3(f) in accordance with the terms of the agreement between the Security Trustee and the Borrower and (z) the Borrower shall have paid, or made arrangements with such Loan Participant to pay, all other fees, costs and expenses of such Loan Participant and the Security Trustee that are then due and payable in accordance with Section 12, if any.

 

(v)           The following documents shall have been duly authorized, executed and delivered by the respective party or parties thereto, shall each be satisfactory in form and substance to such Loan Participant and shall be in full force and effect and executed counterparts shall have been delivered to such Loan Participant and its counsel, provided that only such Loan Participant shall receive an executed original of its Loan Certificate(s) to be issued to it:

 

(1)           the Mortgage Supplement covering the Designated Aircraft and dated the Delivery Date for the Designated Aircraft;

 

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(2)           the Loan Certificates for such Tranche, with Annex A for each Loan Certificate (and the related Schedule 1 of the Mortgage Supplement for the Designated Aircraft) duly completed (which Annex A and related Schedule 1 shall be prepared by the Loan Participants) as provided in Section 3(a) hereof;

 

(3)           the Consent and Agreement in respect of the Designated Aircraft;

 

(4)           the Engine Consent and Agreement in respect of the Engines installed on the Designated Aircraft at Delivery thereof;

 

(5)           copies of the Warranty Bill of Sale and FAA Bill of Sale for the Designated Aircraft; and

 

(6)           a copy of that portion of the Aircraft Purchase Agreement certified by a Responsible Officer of the Borrower as being a true and accurate copy of the same that relates to the Assigned Warranties and the related obligations of the Borrower or a successor in interest to the Borrower which has the right to exercise any such warranty.

 

(vi)          A Uniform Commercial Code financing statement or statements covering all the security interests created by or pursuant to the granting clause of the Mortgage that are not covered by the recording system established by the Federal Aviation Act shall have been authorized by the Borrower, and such financing statement or statements shall have been duly filed in all places deemed necessary or advisable in the opinion of counsel for the Loan Participants, and any additional Uniform Commercial Code financing statements deemed advisable by such Loan Participant shall have been authorized by the Borrower and duly filed and all other action shall have been taken as is deemed necessary or advisable, in the opinion of counsel for the Loan Participants, to establish and perfect the Security Trustee’s security interest in the Designated Aircraft.

 

(vii)         All appropriate action required to have been taken by the Federal Aviation Administration, or any governmental or political agency, subdivision or instrumentality of the United States, on or prior to the Delivery Date for the Designated Aircraft in connection with the transaction 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 transaction 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.

 

(viii)        On the Delivery Date for the Designated Aircraft, after giving effect to the filing with the FAA of the documents to be filed with the FAA and the Uniform Commercial Code financings statements referred to in paragraph (v) above and the registration of the international interests of the Security Trustee in the Airframe and each Engine with the International Registry, the following statements shall be true, and such Loan Participant shall have received evidence satisfactory to it (including a printout

 

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of the “priority search certificates” (as defined in the Regulations for the International Registry) from the International Registry relating to the Designated Aircraft (and the constituent Airframe and Engines), provided that such “priority search certificates” shall be provided promptly after the delivery of the Aircraft by Aircraft Manufacturer to the Borrower) to the effect that:

 

(1)           the Borrower has good title to the Designated Aircraft, free and clear of Liens other than (subject to filing and recording of the FAA Bill of Sale with the FAA if the Borrower does not already own the Designated Aircraft) the mortgage and security and international interests created by the Mortgage and the Mortgage Supplement for the Designated Aircraft;

 

(2)           the FAA Bill of Sale, the Mortgage and the Mortgage Supplement for the Designated Aircraft have been duly filed with the FAA for recordation (or are in form suitable for recordation and are in the process of being so filed for recordation) and there exist no Liens of record on the Designated Aircraft prior to the Lien of the Mortgage;

 

(3)           the international interest of the Mortgage Supplement with respect to the Airframe and Engines associated with the Designated Aircraft shall have been registered with the International Registry (or arrangements satisfactory to the Security Trustee for such registration immediately upon delivery shall have been made), and there exists no registered international interest on the International Registry prior to such international interest;

 

(4)           the Designated Aircraft has an export certificate of airworthiness issued by the DGAC (and such Loan Participant shall have received copies thereof);

 

(5)           the Security Trustee is entitled to the protection of Section 1110 of the United States Bankruptcy Code in connection with its right to take possession of the Designated Aircraft in the event of a case under Chapter 11 of the United States Bankruptcy Code in which the Borrower is a debtor; and

 

(6)           any Liens in respect of the Designated Aircraft associated with any pre-delivery payment facility have been discharged.

 

(ix)           On the Delivery Date of the Designated Aircraft, (A) the representations and warranties of the Borrower contained in Section 7 of this Agreement shall be true and accurate 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 case such representations and warranties shall be true and accurate on and as of such earlier date), and (B) no event shall have occurred and be continuing which constitutes (or would, with the passage of time or the giving of notice or both, constitute) an Event of Default.

 

(x)            Such Loan Participant shall have received an opinions addressed to such Loan Participant and the Security Trustee from (A) Akin Gump Strauss Hauer & Feld LLP, special New York counsel to the Borrower, which opinion shall include

 

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matters relating to Section 1110 of the United States Bankruptcy Code, (B) in-house counsel to the Borrower and (C) an opinion of the Borrower’s regulatory counsel, each dated the Delivery Date of the Designated Aircraft, in form and substance reasonably satisfactory to the addressees thereof.

 

(xi)           Such Loan Participant shall have received from Vedder Price P.C., special New York counsel for the Loan Participants, an opinion satisfactory in substance and form to such Loan Participant, dated the Delivery Date of the Designated Aircraft, as to such matters incident to the transactions contemplated hereby as such Loan Participant may reasonably request.

 

(xii)          Such Loan Participant shall have received a certificate signed by a Responsible Officer of the Borrower, dated the Delivery Date of the Designated Aircraft, addressed to such Loan Participant and certifying as to the matters stated in paragraphs (ix), (xiv) and (xv) of this Section 4(b).

 

(xiii)         Such Loan Participant shall have received (A) an independent insurance brokers’ report and certificate(s) of insurance, in form and substance reasonably satisfactory to such Loan Participant, dated the Delivery Date of the Designated Aircraft, as to the due compliance with the terms of Schedule 1 to the Mortgage relating to insurance with respect to the Designated Aircraft, (B) confirmation from such broker (or, if not available from such broker, from Willis Insurance Advisory or another insurance broker reasonably acceptable to the Loan Participants, the cost of which shall be for the Borrower’s account, provided that any costs exceeding $3,000 shall be for the account of the Loan Participants) that the type, scope and amount of the insurances evidenced by such insurance certificates and maintained by the Borrower in respect of the Designated Aircraft are largely consistent with those normally provided to international commercial passenger airlines flying comparable equipment as the Borrower (it being understood that such broker’s opinion may express no opinion as to other airlines’ limits of liability) and (C) a copy of the Fleet Schedule Change Report from the FAA evidencing the addition of the Designated Aircraft to the Borrower’s fleet for purposes of the insurance coverage under the policy referenced in Section C of Schedule 1 of the Mortgage.

 

(xiv)        On the Delivery Date of the Designated Aircraft, 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 Designated Aircraft (or constituent Airframe) or any Engine has occurred.

 

(xv)         No action or proceeding shall have been instituted nor shall governmental action be threatened before any court or governmental agency, nor shall any order, judgment or decree have been issued or proposed to be issued by any court or governmental agency at the time of the Delivery Date of the Designated Aircraft to set aside, restrain, enjoin or prevent the completion and consummation of this Agreement or the transaction contemplated hereby.

 

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(xvi)        On the Delivery Date of the Designated Aircraft, the Aircraft Manufacturer shall have received the entire purchase price of the Designated Aircraft due to it, such purchase price to have been funded by (i) the Loan made in respect thereof and (ii) equity provided by the Borrower.

 

(xvii)       Such Loan Participant shall have received copies of the Borrower’s (x) air carrier certificate (as defined in 49 U.S.C. Sec. 41101 and issued pursuant to Part 119 of the Federal Aviation Regulations) and (y) operations specifications certificate issued under Part 121 of the Federal Aviation Regulations.

 

Promptly upon the recording of the Mortgage and the Mortgage Supplement at the FAA covering the Designated Aircraft pursuant to the Federal Aviation Act, the Borrower will cause McAfee & Taft, special FAA counsel in Oklahoma City, Oklahoma, to deliver to each Loan Participant and the Borrower an opinion as to the due and valid registration of the Designated Aircraft in the name of the Borrower, the due recording of the related FAA Bill of Sale, Mortgage and Mortgage Supplement and the lack of filing of any intervening documents with respect to the Designated Aircraft.  Following the Delivery Date, the Loan Participants may cause a huissier to serve a copy of a notice delivered on the Delivery Date to the Aircraft Manufacturer in accordance with Article 1690 of the French Civil Code.

 

(c)           Conditions Subsequent.  No later than three Business Days after the Delivery Date, the Borrower shall cause the Loan Participants and the Security Trustee to have received a copy of a current, valid Standard Certificate of Airworthiness for the Aircraft duly issued by the FAA.

 

SECTION 5                                 Closing Procedure.

 

(a)                                  Concurrently with the filings of the FAA Bill of Sale, registration application, Mortgage and Mortgage Supplement for the Designated Aircraft, the Borrower will obtain an authorization code from the FAA for the international interest of the Security Trustee with respect to the Airframe and each Engine associated with the Designated Aircraft by filing with the FAA an FAA Entry Point Filing Form — AC Form 8050-135 and the parties will pre-position the Mortgage and/or Mortgage Supplement with FAA counsel in Oklahoma City, Oklahoma, together with the FAA Bill of Sale for the Designated Aircraft and the application for registration of the Designated Aircraft in the name of the Borrower.  On the Delivery Date of the Designated Aircraft and in sufficient time to permit the closing to occur during business hours of the FAA in Oklahoma City, Oklahoma, each Loan Participant will wire transfer its Commitment prior to 9:00 a.m. New York time for the Designated Aircraft to the Security Trustee in accordance with Section 2(b)(ii) of this Agreement.  On the Delivery Date of the Designated Aircraft, by conference telephone call among the Aircraft Manufacturer, the Borrower (and its counsel), the Loan Participants (and/or their counsel acting on their behalf), the Security Trustee and FAA counsel, the Aircraft Manufacturer will authorize the filing of the FAA Bill of Sale for the Designated Aircraft to be delivered on the Delivery Date and the Borrower will (a) cause the registration application for the for the Designated Aircraft in the name of the Borrower to be filed with the FAA, (b) cause the ownership interest of the Airframe and each Engine associated with the Designated Aircraft to be duly registered with the International Registry as a contract of sale, (c) authorize the filing of the Mortgage and/or the Mortgage Supplement for the Designated

 

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Aircraft upon receipt by the Aircraft Manufacturer of the purchase price for the Designated Aircraft and receipt by the Borrower (or its order) of the Loan for the Designated Aircraft and (d) cause an international interest in the Airframe and each Engine associated with the Designated Aircraft listing the Security Trustee as creditor to be registered with the International Registry with respect to the Mortgage and the Mortgage Supplement for the Designated Aircraft. The irrevocable authorization to FAA counsel to date the FAA Bill of Sale for the Designated Aircraft and file the FAA Bill of Sale and the Mortgage and/or Mortgage Supplement for the Designated Aircraft will occur prior to the transfer of the Loan for the Designated Aircraft to or for account of the Borrower, but the filing will not occur until the earlier of the Aircraft Manufacturer’s receipt of the purchase price for the Designated Aircraft and of the Borrower’s (or its order) receipt of the funds at the designated account.  The Loan Certificate(s) for the Designated Aircraft will be delivered to the applicable Loan Participants and legal opinions delivered to all parties immediately following the transfer of the related Loan as provided in Section 2(c).

 

(b)                                 The Borrower irrevocably authorizes FAA counsel to file with the FAA the Mortgage and/or Mortgage Supplement for the Designated Aircraft and register the appropriate international interests with the International Registry for the Designated Aircraft following the closing of the financing for the Designated Aircraft.  FAA counsel may rely, without any further investigation, on any statement or certification by the Security Trustee that the closing of the financing for the Designated Aircraft has occurred.

 

SECTION 6                                 Extent of Interest of Holders.

 

Subject to Section 14.01 of the Mortgage, a Holder shall not, as such, have any further interest in, or other right with respect to, the Mortgage Estate when and if the principal amount of and Break Amount (if any) and interest on and other amounts due under all Loan Certificates of the related Tranche held by such Holder and all other sums due to such Holder hereunder and under the other Operative Documents shall have been paid in full, provided, however, to the extent, for any reason, any such sums paid to a Holder is rescinded or must otherwise be restored by such Holder, the obligations of the Borrower and the security interests created by the Mortgage shall be automatically reinstated with respect to such Holder and the Security Trustee, as applicable.

 

SECTION 7                                 Representation and Warranties.

 

(a)                                  Borrower’s Representations and Warranties.  The Borrower makes the following representations and warranties set out in this Section 7 to each Loan Participant on the date hereof and on the Delivery Date of the Designated Aircraft (except to the extent such representation or warranty relates to an earlier date, in which case such representation or warranty shall only be made as to the date on which it is expressed to be made):

 

(i)                                     the Borrower is a corporation duly organized and validly existing in good standing pursuant to the laws of the State of Delaware; is duly qualified to do business as a foreign corporation in each jurisdiction in which its operations or the nature of its business requires, except where the failure to be so qualified would give rise to a Material Adverse Change; is a U.S. Air Carrier; and has the corporate power and

 

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authority to, and holds all licenses, permits and franchises from the appropriate Governmental Body necessary to authorize the Borrower to, engage in air transport and to carry on scheduled commercial passenger service as presently conducted, to own the Designated Aircraft and to enter into and perform its obligations under the Operative Documents, except where the failure to hold such license, permit or franchise would not give rise to a Material Adverse Change;

 

(ii)                                  the Borrower has duly authorized, executed and delivered this Agreement and each of the Operative Documents to which it is (or will be) a party, and each of the Operative Documents to which it is (or will be) a party constitutes, or when entered into will constitute, a legal, valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms, except as the same may be limited by applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or similar laws affecting the rights of creditors generally and by general principles of equity;

 

(iii)                               neither the execution and delivery by the Borrower of the Operative Documents to which it is or will be a party, nor the consummation by the Borrower of any of the transactions contemplated hereby or thereby, nor the compliance by the Borrower with any of the terms and provisions hereof and thereof, (A) requires or will require any approval of its stockholders, or approval or consent of any trustees or holders of any indebtedness or obligations of the Borrower except such as have been (or will be) duly obtained, (B) violates or will violate its certificate of incorporation or by-laws, (C) contravenes or will contravene any provision of, or constitutes or will constitute a default under, or results or will result in any breach of, any indenture, mortgage, lease, chattel mortgage, deed of trust, conditional sale contract, bank loan or credit agreement, material license, or other agreement, instrument or contractual restriction to which it is a party or by which it is bound, provided, however, that the grant by the Borrower to the Security Trustee of a Lien in certain after-acquired property of the type described in clause (4) of the Granting Clause of the Mortgage may require the consent of lenders under third-party loan agreements to which the Borrower is a party, which consent shall be obtained by the Borrower prior to the Borrower having any rights in such after-acquired property, or (D) contravenes or will contravene any law binding on it;

 

(iv)                              no authorization of, giving of notice to, or registration with, or taking of any other action in respect of, any Governmental Body is required for the execution and delivery of, or the carrying out by, the Borrower of any of the transactions contemplated hereby or by any other of the Operative Documents to which the Borrower is or will be a party, except for (A) the orders, permits, waivers, exemptions, authorizations and approvals of the regulatory authorities having jurisdiction over the operation of the Designated Aircraft by the Borrower, which orders, permits, waivers, exemptions, authorizations and approvals have been duly obtained or will on or prior to the Delivery Date of the Designated Aircraft be duly obtained, and will on the Delivery Date be in full force and effect, (B) any normal periodic and other reporting requirements under the Federal Aviation Act and the regulations promulgated thereunder and the applicable rules, and regulations of the FAA, in each case to the extent required to be given or obtained only after the Delivery Date of the Designated Aircraft and (C) any filings, registrations or applications specifically described in this Agreement or any of the other Operative Documents;

 

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(v)                                 there are no pending or, to the Borrower’s actual knowledge, threatened actions or proceedings against the Borrower before any court or administrative agency that would reasonably be expected to materially adversely affect Borrower’s ability to perform its obligations under the Operative Documents;

 

(vi)                              except for (A) the filing with the FAA of an FAA Entry Point Filing Form — AC Form 8050-135 and the procurement of unique authorization codes for the registration of the ownership interest of the Borrower in the Airframe and each Engine associated with the Designated Aircraft represented by the contract of sale constituting the FAA Bill of Sale and/or the Warranty Bill of Sale and the registration of the Borrower’s ownership interest with respect to each contract of sale in respect of the Airframe and each Engine associated with the Designated Aircraft, (B) the filing with the FAA of an FAA Entry Point Filing Form – AC Form 8050-135 as to the international interest of the Security Trustee with respect to the Airframe and each Engine associated with the Designated Aircraft and the procurement of unique authorization codes for each thereof and the registration of the Security Trustee’s international interest in the Airframe and each Engine associated with the Designated Aircraft with the International Registry,  (C) the filing for recording pursuant to the Federal Aviation Act of the FAA Bill of Sale for the Designated Aircraft (and the application for registration of the Designated Aircraft in the name of the Borrower) and the Mortgage with the Mortgage Supplement for the Designated Aircraft, (C) the filing of financing statements (and continuation statements at periodic intervals) with respect to the interests created by such documents under the Uniform Commercial Code of Delaware and such other states as may be specified in the opinion furnished pursuant to Section 4(b)(x)(A) hereof and (D) the affixation of the nameplates referred to in Section 3.04 of the Mortgage for the Designated Aircraft, 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 in order to establish and perfect the Lien on the Designated Aircraft on a first priority basis in favor of the Security Trustee pursuant to the Mortgage for the Designated Aircraft or to establish as against third parties the international interest under such Mortgage in any applicable jurisdiction in the United States;

 

(vii)                           there has not occurred any event which constitutes a Default or an Event of Default under the Mortgage for the Designated Aircraft which is presently continuing;

 

(viii)                        (x) The Original Financial Statements were prepared in accordance with GAAP consistently applied (except as may be indicated in the notes thereto or as permitted by Form 10-Q in the case of interim unaudited consolidated financial statements);

 

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(y)                                 The Original Financial Statements fairly represent in all material respects the consolidated financial condition and operations of Holdings as at the respective dates thereof and the consolidated results of its operations and cash flows for the periods indicated therein; and

 

(z)                                   There has been no Material Adverse Change since December 31, 2010 except as disclosed by the Borrower to the Loan Participants in writing prior to the date hereof;

 

(ix)                                on the Delivery Date of the Designated Aircraft and after the consummation of the transactions contemplated hereby, the Borrower will have good title to the Designated Aircraft delivered on the Delivery Date free and clear of all Liens, except the Lien of the Mortgage for the Designated Aircraft and Inchoate Liens;

 

(x)                                   neither the Borrower nor anyone acting on behalf of the Borrower has directly or indirectly offered any interest in the Loan Certificates for the Designated Aircraft for sale to, or solicited any offer to acquire any of the same from, anyone other than the related Loan Participants and not more than 35 other institutions believed capable of evaluating and bearing the risks of investment in the transactions contemplated hereby;

 

(xi)                                on the Delivery Date for the Designated Aircraft, the Designated Aircraft will have been insured by the Borrower in accordance with the terms of the Mortgage, will have suffered no Event of Loss and will be in the condition and state of repair required under the terms of the Mortgage, and, within three Business Days of the Delivery Date for the Designated Aircraft, the Designated Aircraft will have been duly certified by the FAA as to type and airworthiness;

 

(xii)                             the Borrower is not an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940;

 

(xiii)                          none of the reports, financial statements, certificates or other information furnished by or on behalf of the Borrower to the Security Trustee or any Loan Participant in connection with the negotiation of this Agreement or delivered hereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading;

 

(xiv)                         no part of the proceeds of the Loan hereunder in respect of the Designated Aircraft will be used, whether directly or indirectly, for any purpose that entails a violation of Regulations U or X of the Board of Governors of the Federal Reserve;

 

(xv)                            (A) the Borrower is a “transacting user entity” (as such term is defined in the Regulations of the International Registry); is “situated”, for the purposes of the Cape Town Convention, in the United States; and has the power to “dispose” (as such term is used in the Cape Town Convention) of the Airframe and related Engines financed

 

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on the Delivery Date of the Designated Aircraft; (B) the Airframe and related Engines financed on the Delivery Date of the Designated Aircraft are “aircraft objects” (as defined in the Cape Town Convention); (C) the United States is a Contracting State under the Cape Town Convention; (D) the FAA Bill of Sale for the Airframe associated with the Designated Aircraft and/or the Warranty Bill of Sale for the Designated Aircraft constitutes a “contract of sale” (as defined in the Cape Town Convention), and the Mortgage and the Mortgage Supplement for the Designated Aircraft conveys an international interest in the Designated Aircraft; and (E) the payment of principal of and interest on the Loan Certificates in respect of the Designated Aircraft, and the performance by the Borrower of its other obligations under the Operative Documents, are “associated rights” (as defined in the Cape Town Convention); and

 

(xvi)                         In respect of the Designated Aircraft, there are no registrations on the International Registry in relation to the Airframe and each Engine associated with the Designated Aircraft other than those referred to in clause (vi)(A) above.

 

(b)                                 Representations and Warranties of the Security Trustee and Loan Participants.  Each Finance Party hereby represents and warrants to each of the other Parties, as of the date hereof, that:

 

(i)                                     it is a duly organized, validly existing and (if applicable) in good standing under the applicable laws of its jurisdiction of organization;

 

(ii)                                  it has the full requisite power and authority, including trust power (if applicable), to execute, deliver and enter into the Operative Documents to which it is or is contemplated to become a party, to comply with the terms hereof and thereof, and to perform its obligations hereunder and thereunder;

 

(iii)                               it has duly authorized, executed and delivered the Operative Documents to which it is or is contemplated to become a party and, assuming due execution and delivery by each of the parties thereto, each such Operative Document constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as the enforceability thereof may be limited by applicable bankruptcy, insolvency, receivership, reorganization, arrangement, moratorium or other similar laws affecting creditors’ rights generally and to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law);

 

(iv)                              without making any inquiries (legal, factual or otherwise) it does not have any knowledge of any circumstances that will give rise to a claim pursuant to Section 8(b) or 8(c) hereof; and

 

(v)                                 in the case of the Security Trustee, it is a “transacting user entity” (as such term is defined in the Regulations of the International Registry).

 

(c)                                  Loan Certificates. Each Loan Participant severally represents and warrants that it is acquiring its interest in its Loan Certificates either (A) in the ordinary course of its general banking business or (B) for investment and not with a view to any distribution thereof

 

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that would require registration under the Securities Act, subject, however, to the disposition of its property being at all times within its control.

 

SECTION 8                                 Indemnities; Etc.

 

(a)                                  General Indemnity.

 

(i)                                     Subject to the exclusions stated in (b) below and the other limitations in this Section 8, the Borrower hereby agrees to indemnify each Indemnitee against, and agrees to protect, save and keep harmless each of them, on an After-Tax Basis, from any and all Expenses imposed on, incurred by or asserted against any Indemnitee arising out of or directly resulting from (A) the operation, possession, use, maintenance, overhaul, testing, registration, reregistration, delivery, non-delivery, lease, nonuse, modification, alteration, or sale of the Designated Aircraft, Airframe or any Engine, or any engine used in connection with any associated Airframe or any part of any of the foregoing by the Borrower, any lessee or any other Person whatsoever, whether or not such operation, possession, use, maintenance, overhaul, testing, registration, reregistration, delivery, non-delivery, lease, nonuse, modification, alteration, or sale is in compliance with the terms of the Mortgage, including, without limitation, claims for death, personal injury or property damage or other loss or harm to any person whatsoever and claims relating to any laws, rules or regulations pertaining to such operation, possession, use, maintenance, overhaul, testing, registration, reregistration, delivery, non-delivery, lease, non-use, modification, alteration, sale or return including environmental control, noise and pollution laws, rules or regulations; (B) the manufacture, design, purchase, acceptance, rejection, delivery, or condition of the Designated Aircraft, Airframe or any Engine, any engine used in connection with any Airframe, or any part of any of the foregoing including, without limitation, latent and other defects, whether or not discoverable, or trademark or copyright infringement to the extent the Borrower has claims against the Aircraft Manufacturer or Engine Manufacturer for such amounts; (C) any breach of or failure to perform or observe, or any other noncompliance with, any covenant or agreement to be performed, or other obligation of the Borrower under any of the Operative Documents, or the falsity of any representation or warranty of the Borrower in any of the Operative Documents; (D) the offer, sale and delivery by the Borrower or anyone acting on behalf of the Borrower of any Loan Certificates or successor debt obligations issued in connection with the refunding or refinancing thereof (including, without limitation, any claim arising out of the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, or any other Federal or state statute, law or regulation, or at common law or otherwise relating to securities) (the indemnity provided in this clause (D) to extend also to any Person who controls an Indemnitee, its successors, assigns, employees, directors, officers, servants and agents within the meaning of Section 15 of the Securities Act of 1933, as amended); and (E) the transactions contemplated by the Operative Documents or any Lease under the Mortgage for the Designated Aircraft, any Event of Default under the Mortgage for the Designated Aircraft or the enforcement against the Borrower of any of the terms thereof (including, without limitation, Article IX of such Mortgage).

 

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(ii)                                  Claims Excluded.  The foregoing indemnity shall not extend to any Expense of any Indemnitee to the extent attributable to one or more of the following:

 

(1)                                  acts or omissions involving the willful misconduct, bad faith, fraud or gross negligence of such Indemnitee or any Person acting on behalf of such Indemnitee (other than gross negligence imputed to such Indemnitee solely by reason of its interest in the Designated Aircraft);

 

(2)                                  the failure by such Indemnitee to perform or observe any agreement, covenant or condition in any of the Operative Documents applicable to it (except to the extent such failure was caused directly by the failure of the Borrower to perform any of its obligations under the Operative Documents);

 

(3)                                  any representation or warranty by such Indemnitee in the Operative Documents or in connection therewith being incorrect;

 

(4)                                  with respect to any Indemnitee, a disposition, assignment or other transfer (voluntary or involuntary) by such Indemnitee of all or any part of such Indemnitee’s interest in any Loan Certificate other than during the continuance of an Event of Default;

 

(5)                                  other than in the case of amounts necessary to make payments on an After-Tax Basis, any Tax, or increase in tax liability under any Tax law [**];

 

(6)                                  to violations of applicable securities laws, including, without limitation, any federal, state or foreign securities laws, attributable to the Underwriters or any Loan Participant’s own actions, or the actions of anyone acting on behalf of the Underwriters or such Loan Participant, in connection with any offer, sale, assignment or other disposition of its interest in the Aircraft, the Loans or any Loan Certificate by such Loan Participant;

 

(7)                                  the authorization or giving or withholding of any future amendments, supplements, waivers, or consents with respect to any of the Operative Documents other than such as have been consented to, approved, authorized or requested by the Borrower;

 

(8)                                  any Expense which (a) is specified to be for account of an Indemnitee pursuant to the Operative Documents without express right of reimbursement under any Operative Document or (b) any Indemnitee agrees in writing to pay or such Indemnitee expressly agrees in writing shall not be paid or reimbursed by the Borrower;

 

(9)                                  any claim to the extent it is an ordinary and usual internal operating or overhead expense of such Indemnitee other than such expenses caused by an Event of Default;

 

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(10)         any acts or events (other than acts or events related to the performance or failure to perform by Borrower of its obligations pursuant to the terms of the Operative Documents) that occur after the Security Trustee is required to release all Mortgage Estate from the Lien of the Mortgage for the Designated Aircraft, except to the extent attributable to acts or events occurring prior thereto;

 

(11)         if another provision of a Operative Document specifies the extent of the Borrower’s responsibility or obligation with respect to such Expense, to the extent of such Expense (in which case such other provision shall govern); and

 

(12)         the failure of the Security Trustee to distribute funds received and distributable by it in accordance with the Operative Documents.

 

(iii)          Claims Procedure.  If a claim is made against an Indemnitee involving one or more Expenses and such Indemnitee has notice thereof, such Indemnitee shall promptly after receiving such notice give notice of such claim to the Borrower; provided that the failure to provide such notice shall not release the Borrower from any of its obligations to indemnify hereunder except to the extent that the Borrower is prejudiced as a result of the failure to give such notice in a timely fashion, and no payment by the Borrower to an Indemnitee pursuant to this Section 8(a) shall be deemed to constitute a waiver or release of any right or remedy which the Borrower may have against such Indemnitee for any actual damages as a result of the failure by such Indemnitee to give the Borrower such notice.  The Borrower (or its insurer(s)) shall be entitled, at its sole cost and expense, acting through counsel reasonably acceptable to the respective Indemnitee, so long as the Borrower (or its insurer(s)) has acknowledged in writing its responsibility for such Expense hereunder (except that the Borrower (and its insurer(s)) will not be bound by such acknowledgment if the decision of a court or arbitrator provides that the Borrower is not liable hereunder), (A) in any judicial or administrative proceeding that involves solely a claim for one or more Expenses, to assume responsibility for and control thereof, (B) in any judicial or administrative proceeding involving a claim for one or more Expenses and other claims related or unrelated to the transactions contemplated by the Operative Documents, to assume responsibility for and control of such claim for Expenses to the extent that the same may be and is severed from such other claims (and such Indemnitee shall use its reasonable efforts to obtain such severance), and (C) in any other case, to be consulted by such Indemnitee with respect to judicial proceedings subject to the control of such Indemnitee and to be allowed, at the Borrower’s sole expense, to participate therein.  The Indemnitee may participate at its own expense and with its own counsel in any judicial proceeding controlled by the Borrower pursuant to the preceding provisions.  Notwithstanding any of the foregoing, the Borrower shall not be entitled to assume responsibility for and control of any such judicial or administrative proceedings if any Event of Default shall have occurred and be continuing, if such proceedings will involve a material risk of the sale, forfeiture or loss of the Designated Aircraft unless (I) fully covered by insurance and the applicable insurers have confirmed responsibility therefor in writing, or (II) the Borrower shall have posted a bond or other security reasonably satisfactory to the relevant

 

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Indemnitee with respect to such risk or if such proceedings could entail any risk of criminal liability being imposed on such Indemnitee.

 

The Indemnitee shall supply the Borrower with such information not within the control of the Borrower, as is in such Indemnitee’s control or is reasonably available to such Indemnitee, which the Borrower may reasonably request and as is necessary or advisable for the Borrower to control or participate in any proceeding to the extent permitted by this Section 8(a)(iii).  Such Indemnitee shall not enter into a settlement or other compromise with respect to any Expense without the prior written consent of the Borrower unless such Indemnitee waives its right to be indemnified with respect to such Expense under this Section 8(a) and repays to the Borrower all Expenses previously paid by the Borrower to such Indemnitee in connection therewith.

 

The Borrower shall supply the relevant Indemnitee with such information not within the control of such Indemnitee, as is in the Borrower’s control or is reasonably available to the Borrower, which such Indemnitee may reasonably requested and as is necessary or advisable for the Indemnitee to control or participate in any proceeding to the extent permitted by this Section 8(a).

 

In the case of any Expense indemnified by the Borrower hereunder which is covered by a policy of insurance maintained by the Borrower (or any Lessee) pursuant to Article VI of the Mortgage for the Designated Aircraft or otherwise, it shall be a condition of such indemnity with respect to any particular Indemnitee that such Indemnitee shall cooperate with the insurers in the exercise of their rights to investigate, defend or compromise such Expense as may be required to retain the benefits of such insurance with respect to such Expense.  Notwithstanding any of the foregoing to the contrary, with respect to any Expense which is covered under policies of insurance maintained by the Borrower (or any Lessee) pursuant to Article VI of the Mortgage for the Designated Aircraft or otherwise, the rights of an Indemnitee to control or participate in any proceedings shall be modified to the extent necessary to comply with the requirements of such policies and the rights of the insurers thereunder.

 

To the extent of any payment of any Expense pursuant to this Section 8(a), the Borrower (or its insurer(s), if applicable), without any further action, shall be subrogated to any claims the Indemnitee may have relating thereto.  The Indemnitee agrees to give such further assurances or agreements and to cooperate with the Borrower (or its insurer(s), if applicable) to permit the Borrower (or its insurer(s), if applicable) to pursue such claims, if any, to the extent reasonably requested by the Borrower (or its insurer(s), if applicable).

 

In the event that the Borrower (or its insurer(s)) shall have paid an amount to an Indemnitee pursuant to this Section 8(a), and such Indemnitee subsequently shall be reimbursed in respect of such indemnified amount from any other Person, such Indemnitee shall promptly pay the Borrower the amount of such reimbursement, including interest received attributable thereto, unless a Special Default or Event of Default has occurred and is continuing, in which case such amount shall be paid over to the Security Trustee to hold as security for the Borrower’s obligations under the Operative Documents or, if requested by the Borrower, applied to satisfy such obligations.

 

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If an Indemnitee is not party to this Agreement, the Borrower may require such Indemnitee to agree in writing to the terms of this Section 8(a) prior to making any payment to such Indemnitee under this Section 8(a).

 

(b)           Tax Indemnities.  The [**] withholding Tax indemnities are specified in Schedule III hereto, which provisions are incorporated herein by reference.

 

(c)           Increased Costs.

 

(i)            If, by reason of any Change in Law occurring after the date hereof:

 

(x)            a Loan Participant or any Holding Company of such Loan Participant has a reduction on its rate of return on its capital as relates to the class of assets and liabilities that includes its commitments and Loans (taking into account any Hedge Transaction) made under this Agreement below that which such Loan Participant or Holding Company would have achieved but for such Change in Law (taking into account the capital adequacy policies developed by such Loan Participant in connection with the adoption and/or implementation of the Basel II and Basel III accords);

 

(y)           a Loan Participant or any Holding Company of such Loan Participant incurs a cost as a result of such Loan Participant entering into or assuming or maintaining a commitment or performing its obligations (including its obligation to participate in the making of the Loan or enter into any Hedge Transaction) under this Agreement; or

 

(z)            there is any increase in the cost to a Loan Participant or any Holding Company of such Loan Participant of funding or maintaining all or any of the Loans (including any Hedge Transaction) comprised in a class of loans formed by or including such Loan Participant’s share of the Loans made or to be made by such Loan Participant, including any reserve, special deposit or similar requirement assessed against assets of, deposits with or for account of, or credit extended by, such Loan Participant;

 

then, subject to the provisions of this Section 8(c), the Borrower shall, from time to time on demand of the Security Trustee (on behalf of any Loan Participant), promptly pay to the Security Trustee for the account of that Loan Participant, amounts sufficient to hold harmless and indemnify such Loan Participant on an After-Tax Basis, from and against, as the case may be, (x) the reasonably allocable portion of any such reduction in the rate of return on capital, (y) any such actual cost, (z) any such increased cost (or such proportion of such increased cost as is reasonably attributable to its participating in the funding or maintaining of the Loans or any Hedge Transaction) (together, “Increased Costs”); provided, that:

 

(1)           the Borrower shall have no liability under this Section 8(c) in respect of any Taxes (other than amounts necessary to make payments on an After-Tax Basis);

 

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(2)           the Borrower shall have no liability under this Section 8(c) if (i) the Borrower elects to direct the transfer or to repay the affected Loans and cancels the affected Commitments pursuant to Section 3(i) hereof (provided that the Borrower shall nevertheless be liable under this Section 8(c) for increased costs relating to the period prior to such prepayment and cancellation), (ii) such Loan Participant is not also seeking indemnification against similar increased costs, to the extent it is entitled to do so, in transactions with similarly situated borrowers (it being agreed that an officer’s certificate to the contrary from any such Loan Participant shall constitute sufficient evidence of such fact) or (iii) the claim for Increased Costs arises out of a voluntary relocation by such Loan Participant of its Facility Office;

 

(3)           such Loan Participant shall only be entitled to receive compensation for such Increased Costs from and after the time that is 150 days prior to the date the Increased Cost Notice referred to below is received by the Borrower; and

 

(4)           such Loan Participant will (at Borrower’s expense) use commercially reasonable efforts to mitigate the amount of the Increased Costs associated with such event, including designating a different Facility Office to hold the Loans if such designation will avoid or reduce such Increased Costs and will not, in the sole opinion of such Loan Participant, result in any economic, legal or regulatory disadvantage to such Loan Participant (other than economic disadvantages for which the Borrower has provided an indemnity acceptable to such Loan Participant).

 

(ii)           A Loan Participant intending to make a claim for Increased Costs pursuant to Section 8(c)(i) shall, within 60 days after becoming aware of the same, provide written notice to the Security Trustee and the Borrower of the event by reason of which it is entitled to do so (the “Increased Cost Notice”); provided, that:

 

(x)            the Increased Cost Notice shall describe, in reasonable detail, the events giving rise to such Increased Costs, the basis for determining and allocating such Increased Costs and the amount of each request by such Loan Participant for compensation under this Section 8(c), together with a statement that the determinations and allocations made in respect of the Increased Costs comply with the provisions of this Section 8(c); and

 

(y)           such Loan Participant shall not be required to disclose any confidential information relating to the organization of its affairs, or its capital structure or return on capital.

 

(iii)          Certificate of Loan Participants.  A certificate of a Loan Participant as to (i) any amount payable to it under this Agreement or (ii) the amount of any indemnity payable to it, or for its account, under this Section 8(c) shall, in either case and in the absence of manifest error, be prima facie evidence of the existence and amount of such obligation of the Borrower so long the underlying determinations and allocations are made on a reasonable basis.

 

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(iv)          No Greater Obligation.  Notwithstanding any other provision of this Agreement, if a Loan Participant changes its Facility Office or a Loan Participant assigns or transfers the whole or any part of the Loan or its rights, benefits or obligations under this Agreement and such change, assignment or transfer would at the date of such change, assignment or transfer subject the Borrower to any greater obligation or liability under this Agreement or any other Operative Documents than it would have been under on such date if no such change, assignment or transfer had then taken place, then unless such change, assignment or transfer was made at the request of the Borrower in order to mitigate or avoid the requirement for payment of additional amounts or increased costs or after the occurrence and continuation of an Event of Default, the Borrower shall not be obliged to pay any amounts in excess of the amount that it would have been obliged to pay had no change, assignment or transfer then taken place.

 

(d)           Illegality.

 

(i)            Notwithstanding any other provision in this Agreement, if any Change in Law or Illegality Event shall make it unlawful for any Loan Participant to maintain its Commitment or its portion of the Loans in respect of the Designated Aircraft, then the affected Loan Participant shall deliver to Borrower and the Security Trustee a written certification describing in reasonable detail the events giving rise to such unlawfulness.  Upon receipt by Borrower of such notice, the Borrower and such Loan Participant shall negotiate for a period of 60 days in an effort to mitigate such illegality.  During such mitigation period the affected Loan Participant shall not be required to advance any Loans to the Borrower hereunder.  If after such mitigation period, such unlawfulness cannot be resolved, then the provisions of clause (ii) below shall apply.

 

(ii)           If there shall have occurred and be continuing an event with respect to a Loan Participant of the type described in clause (i) above (an “Impaired Loan Participant”), then such Impaired Loan Participant may and, if so instructed by the Borrower shall:

 

(x)            notify the Borrower and each other Loan Participant that such unlawfulness has occurred and give notice that (a) if no Loan shall then have been made by such Impaired Loan Participant, no Loan shall be made to the Borrower by such Impaired Loan Participant or (b) if a Loan shall then have been made by such Impaired Loan Participant and remain outstanding, no further Loans shall be made to the Borrower by such Impaired Loan Participant, and request each other Loan Participant to take up the relevant portion of such Impaired Loan Participant’s unfunded Commitments, if any, in which case each such other Loan Participant may (but shall not be obligated to) in its sole discretion assume its pro rata share of such Impaired Loan Participant’s Commitment by providing written notice of such assumption to such Impaired Loan Participant, the Security Trustee and the Borrower within five Business Days, and if such other Loan Participant does not so elect in writing to assume its

 

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pro rata share of the Impaired Loan Participant’s commitments, such Impaired Loan Participant shall send a further notice to each remaining Loan Participant, which in turn may (but shall not be obligated to) in its sole discretion assume the remaining available commitments of such Impaired Loan Participant on a pro rata basis by providing written notice of such assumption to such Impaired Loan Participant, the Security Trustee and the Borrower within five Business Days; and

 

(y)           notify the Borrower and each other Loan Participant that such unlawfulness has occurred and, to the extent that applicable laws do not require the immediate repayment of all or a portion of such Impaired Loan Participant’s Loans, request each other Loan Participant to assume the relevant portion of such Impaired Loan Participant’s Loans, in which case each such other Loan Participant may (but shall not be obligated to) in its sole discretion assume its pro rata share of such Impaired Loan Participant’s Loans by providing written notice of such assumption to such Impaired Loan Participant, the Security Trustee and the Borrower within five Business Days and otherwise complying with the procedure set out in Section 16(c) hereof, and if any other Loan Participant does not so elect in writing to assume its pro rata share of the Impaired Loan Participant’s Loans, such Impaired Loan Participant shall send a further notice to each remaining Loan Participant and the Borrower, and (A) each remaining Loan Participant in turn may (but shall not be obligated to) in its sole discretion assume the remaining available Loans of such Impaired Loan Participant on a pro rata basis by providing written notice of such assumption to such Impaired Loan Participant, the Security Trustee and the Borrower within five Business Days and otherwise complying with the procedure set out in Section 16(c) hereof or (B) the Borrower may elect to require the Impaired Loan Participant to transfer its Loans, Commitments and other rights and obligations hereunder (and, if such Loan is a Fixed Rate Loan, cancel, terminate or otherwise unwind the related Hedge Transaction) in accordance with Section 3(i) hereof; and

 

(z)            to the extent that any of such Impaired Loan Participant’s Loans are not assumed by one or more of the other Loan Participants or a third party as contemplated in clause (x) or (y) above, or that applicable laws require the immediate repayment of all or a portion of such Impaired Loan Participant’s Loans, require the Borrower to repay the Loans advanced by such Impaired Loan Participant in full together with accrued interest and Break Amount, if any, and all other amounts accrued and owing to such Impaired Loan Participant under the Operative Documents, whereupon the Borrower shall on the date specified in such notice (which shall be the earlier of the date on which applicable laws require the immediate repayment of all or a portion of such Impaired Loan Participant’s Loans and the Interest Payment Date first occurring not earlier than ten Business Days from the date of such notice), repay in full all such amounts.  In the case of any prepayment effected pursuant to this clause (z), in respect of the Break Amount payable to any Type A Loan Participant in association therewith, [**] of the component thereof constituting Liquidity Break Amount shall be payable.

 

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For the avoidance of doubt, the failure by any Loan Participant to provide written notice of assumption of an Impaired Loan Participant’s Commitments or Loans within the relevant time frame contemplated by clause (x) or (y) above, as applicable, shall be conclusive evidence that such Loan Participant has elected not to assume any such additional Commitments or Loans.  To the extent that any of such Impaired Loan Participant’s Commitments or Loans are not assumed by one or more of the other Loan Participants as contemplated in clause (x) or (y) above, as applicable, the unassumed portion will be cancelled and the Commitments will be reduced accordingly.  Nothing in this Section (d) shall affect the obligation of any Loan Participant other than an Impaired Loan Participant to make or maintain its Loan in accordance with the terms of this Agreement.

 

SECTION 9                                 Covenants of the Borrower.

 

(a)           Borrower Merger.  The Borrower may not enter into any transaction (whether by way of reconstruction, reorganization, consolidation, amalgamation, merger, transfer, sale, lease or otherwise, a “Merger”) whereby all or substantially all of its liabilities, property and assets would become the property of any other Person or, in the case of any such Merger, of the continuing corporation or limited liability company resulting therefrom (collectively, the “Successor”) unless: (i) no Event of Default has occurred and is continuing or would result therefrom; (ii) the Successor will be liable for the obligations of the Borrower under the Operative Documents to which it is a party, and each Loan Participant shall have received evidence reasonably satisfactory to it of such liability; (iii) the Successor is a corporation or limited liability company formed under the laws of the United States or one of its States (and, if not a Delaware corporation or limited liability company, all UCC filings shall have been effected in order to ensure that the Security Trustee continues to have a first priority and perfected lien against the Mortgage Estate in respect of the Designated Aircraft) and is a certified air carrier; (iv) all registrations, recordings and filings, and such other actions with respect to the Operative Documents, shall have been effected as shall be necessary or advisable in the reasonable opinion of the Loan Participants to protect their security interest in the Designated Aircraft; and (v) such Person or the Successor  has a Tangible Net Worth after giving effect to such Merger no less than the Tangible Net Worth of the Borrower immediately prior to such Merger (and the Loan Participants shall have received evidence reasonably satisfactory to them to such effect).  As used herein,

 

“Tangible Net Worth” means, as at any date for any Person, the sum for such Person and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP), of the following:

 

(a)           the amount of capital stock, plus

 

(b)           the amount of surplus and retained earnings (or, in the case of a surplus or retained earnings deficit, minus the amount of such deficit), minus

 

(c)           the sum of the following: cost of treasury shares and the book value of all assets which should be classified as intangibles, including goodwill, minority interests, research and development costs, trademarks, trade names, copyrights, patents and franchises, and unamortized debt discount and expense.

 

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(b)           U.S. Air Carrier.  The Borrower covenants and agrees that at all times until the Lien of the Mortgage for the Designated Aircraft shall be discharged pursuant to Section 14.01 thereof, it will be an “air carrier” within the meaning of the Federal Aviation Act operating under certificates issued pursuant to Section 41102(a) of such Act and shall otherwise meet the standards of the definition of U.S. Air Carrier.

 

(c)           Further Assurances.  The Borrower covenants and agrees with each party hereto as follows:

 

(i)            The Borrower will cause to be done, executed, acknowledged and delivered all and every such further acts, conveyances and assurances as any Holder shall reasonably require for accomplishing the purposes of this Agreement and the other Operative Documents; provided that any instrument or other document so executed by the Borrower will not expand any obligations or limit any rights of the Borrower in respect of the transactions contemplated by any Operative Documents.  The Borrower shall cause the Designated Aircraft to remain duly registered, in the name of the Borrower, except as otherwise required or permitted hereunder or under the Mortgage, under the Federal Aviation Act.

 

(ii)           The Borrower, at its expense, will cause (A) the Mortgage, all Mortgage Supplements and all amendments to the Mortgage, in each case, for the Designated Aircraft, to be promptly filed and recorded, or filed for recording, to the extent permitted under the Federal Aviation Act, or required under any other applicable law, (B) subject only to the consent of the Security Trustee (or the Aircraft Manufacturer, in the case of the FAA Bill of Sale for the Designated Aircraft), the registration with the International Registry of the contract of sale and the international interests with respect to each FAA Bill of Sale and/or Warranty Bill of Sale, the Mortgage and Mortgage Supplement, in each case, for the Designated Aircraft, and (C) the Lien of the Mortgage for the Designated Aircraft to at all times be and remain a first priority and perfected Lien on the Mortgage Estate thereunder (subject to Permitted Liens ranking junior in priority to such Lien).  The Borrower agrees to furnish the Security Trustee and the Loan Participants with copies of the foregoing documents with recording and registration data as promptly as practicable following the issuance of same by the FAA and the International Registry.

 

The Borrower shall pay all reasonable costs and expenses (including reasonable costs and disbursements of outside counsel, provided that the Borrower shall no obligation to reimburse the reasonable costs and disbursements of more than one counsel to the Security Trustee and one counsel to the Holders) incurred by the Security Trustee and the Holders after the date hereof in connection with (x) any supplements or amendments of the Operative Documents (including, without limitation, any related recording and registration costs) requested by Borrower or otherwise reasonably required to effectuate the intent of the Operative Documents, (y) any Event of Default and any enforcement or collection proceedings resulting therefrom or in connection with the negotiation of any restructuring or “work-out” (whether or not consummated), or (z) the enforcement of this Section 9(c).

 

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(d)           Financial Information.  The Borrower shall supply or procure the supply to the Loan Participants, to the extent such materials are not made available on the Borrower’s or Holdings’ website or the EDGAR system:

 

(i)            as soon as practicable and in any event within 120 days after the end of each fiscal year of Holdings and the Borrower, consolidated statements of income and cash flows and a consolidated statement of stockholders’ equity of each such Person and its Subsidiaries (including, in the case of Holdings, the Borrower) for such year, and a consolidated balance sheet of such Person and its Subsidiaries (including, in the case of Holdings, the Borrower) as at the end of such year, setting forth in each case in comparative form corresponding consolidated figures from the preceding annual audit (or, in the case of the Borrower, the preceding annual unaudited financial statements), all in reasonable detail and (A) in the case of Holdings, reported on by independent public accountants of recognized national standing selected by Holdings (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of Holdings and its Subsidiaries (including the Borrower) on a consolidated basis in accordance with GAAP consistently applied (except for inconsistencies required by changes to GAAP and changes approved by such accountants in accordance with GAAP) and (B) in the case of the Borrower, certified by the Borrower’s chief executive officer or chief financial officer as having been prepared on a consolidated basis in accordance with GAAP consistently applied (except for inconsistencies required by changes to GAAP and changes approved by the accountants referred to in clause (A) above in accordance with GAAP), subject to the absence of footnotes;

 

(ii)           as soon as practicable and in any event within 90 days after the end of each quarterly period (other than the last quarterly period) in each fiscal year of Holdings and the Borrower beginning after March 31, 2011, consolidated statements of income, stockholders’ equity and cash flows of each such Person and its Subsidiaries (including, in the case of Holdings, the Borrower) for the period from the beginning of the current fiscal year to the end of such quarterly period, and a consolidated balance sheet of such Person and its Subsidiaries (including, in the case of Holdings, the Borrower) as at the end of such quarterly period, setting forth in each case in comparative form figures for the corresponding period in the preceding fiscal year, all in reasonable detail and presenting fairly in all material respects the financial condition and results of operations of such Person and its Subsidiaries (including, in the case of Holdings, the Borrower), certified by the Borrower’s chief executive officer or chief financial officer as having been prepared on a consolidated basis in accordance with GAAP consistently applied (except for inconsistencies required by changes to GAAP and changes approved by the accountants referred to in clause (i) above in accordance with GAAP), subject to normal year-end audit adjustments and the absence of footnotes; and

 

(iii)          promptly, any documents or information that Holdings files with the Securities and Exchange Commission and that is disclosable to Holdings’ shareholders; and

 

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(iv)          promptly following any reasonable request therefor by a Finance Party, such further non-confidential information that is of the kind that would generally be made available by the Borrower upon request by a secured lender regarding the Mortgage Estate in respect of the Designated Aircraft, financial condition, business and operations of the Borrower.

 

SECTION 10                           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 facsimile, or by prepaid courier service, and shall be effective upon receipt.

 

Unless otherwise specified in a notice sent or delivered in accordance with the foregoing provisions of this Section 10, 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 facsimile numbers) as follows:  (a) if to the Borrower or the Security Trustee, to the respective addresses set forth in Section 14.06 of the Mortgage in respect of the Designated Aircraft, (b) if to a Loan Participant, to the address set forth on Schedule I hereto, or (c) if to any subsequent Holder, addressed to such Holder at its address set forth in the Certificate Register maintained pursuant to the Mortgage in respect of the Designated Aircraft.

 

A notice sent by facsimile will be deemed received on the date set forth on the confirmation of receipt produced by the sender’s fax machine immediately after the fax is sent.  A notice sent by registered or certified mail will be deemed received upon actual receipt.

 

SECTION 11                           Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.

 

(a)           This Agreement shall in all respects be governed by, and construed in accordance with, the law of the State of New York, including all matters of construction, validity and performance.

 

(b)           Each party hereby irrevocably and unconditionally submits, for itself and its property, to the nonexclusive jurisdiction of the Supreme Court of the State of New York sitting in New York County and of the United States District Court of the Southern District of New York, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or any other Operative Document, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New York State or, to the extent permitted by law, in such Federal court.  Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this Agreement or any other Operative Document shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any other Operative Document against another party or its properties in the courts of any jurisdiction.

 

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(c)           Each party hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any court referred to in paragraph (b) of this Section.  Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

 

(d)           Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 10.  Nothing in this Agreement or any other Operative Document will affect the right of any party to this Agreement or any other Operative Document to serve process in any other manner permitted by law.

 

(e)           EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

SECTION 12                           Invoices and Payment of Expenses.

 

The Security Trustee and the Loan Participants shall promptly submit to the Borrower for its prompt approval copies of invoices of the Transaction Expenses (as defined below) as they are received.  The Borrower agrees to pay Transaction Expenses promptly upon receipt of invoices of such Transaction Expenses.  For the purposes hereof, “Transaction Expenses” means (i) with respect to the preparation, negotiation, execution and delivery of this Agreement (and the term sheet relating hereto) and the closing or anticipated closing of the Designated Aircraft on the Delivery Date, the reasonable fees, and out-of-pocket expenses and disbursements of McAfee & Taft, special counsel in Oklahoma City, Oklahoma and Vedder Price P.C., special counsel to the Loan Participants (subject to any fee arrangements as separately agreed), (ii) all fees, taxes and other charges payable in connection with the recording or filing of instruments and financing statements, or registration of any international interest with the International Registry, (iii) each Loan Participant’s reasonable and documented out-of-pocket costs and expenses relating to the negotiation and closing of this transaction (but excluding any syndication costs), provided that if any Loan Participant shall not disburse its portion of the Loan despite all conditions precedent having been satisfied or waived, each such Loan Participant shall pay its own fees and expenses (including, without limitation, the fees and expenses of Vedder Price P.C.), and (iv) the structuring fee of the Underwriters as separately agreed and the Security Trustee fee as separately agreed; provided the Transaction Expenses of a Loan Participant (including the fees and expenses of its special counsel) which fails to fund its Loan for the Designated Aircraft notwithstanding the satisfaction of the applicable conditions precedent shall not be subject to

 

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reimbursement. All costs associated with an assignment by a Holder of its Commitment and/or Loan Certificate pursuant to Section 16(c)(iii) of this Agreement (including reasonable fees and expenses of outside counsel to the Borrower) shall be for account of such assigning Holder so long as no Event of Default is continuing.

 

SECTION 13                           Section 1110 Compliance.  Notwithstanding any provision herein or elsewhere contained to the contrary, it is understood and agreed among the parties hereto that the transactions contemplated by this Agreement, and the other Operative Documents are expressly 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, as amended from time to time, and any successor provision thereto.

 

SECTION 14                           Confidentiality.  Each party hereto shall, and shall use all reasonable efforts to ensure that its respective officers, directors, employees and agents, maintain as confidential and shall not, without the prior written consent of the Borrower and the Loan Participants, disclose to any third party the terms of any Operative Document, or any of the information, reports, invoices or documents (except to the extent that it is available on the Borrower’s website) supplied by or on behalf of any of the Parties, save that such party shall be entitled to disclose any such terms, information, reports, invoices or documents:

 

(a)           in connection with any proceedings arising out of or in connection with any of the Operative Documents to the extent that such party is advised by legal counsel that it is necessary to protect its interests or is legally required to do so; or if required to do so by an order of a court of competent jurisdiction whether in pursuance of any procedure for discovering documents or otherwise; or

 

(b)           pursuant to any law or regulation having the force of law (including rules and regulations of the SEC); or

 

(c)           to any fiscal, monetary, Tax, governmental or other competent authority or supervisory boards and bodies; or

 

(d)           to any transferee or potential transferee of a Loan Certificate or interest therein (which agrees to be bound by confidentiality provisions similar to those set forth herein); or

 

(e)           to its auditors, bankers, legal or other professional advisers (or those of any person covered by the preceding paragraph (d)) (which are under an ethical obligation to or agree to hold such information confidential); or

 

(f)            in any manner contemplated by any of the Operative Documents; or

 

(g)           for due diligence purposes in connection with significant transactions or dealings involving any party, and which are outside the ordinary course of that party’s business, including investments, acquisitions or financings, to other potential parties to such dealings or transactions or their professional advisors, provided that such other parties (i) shall not be permitted to retain any copies of any of the Operative Documents or to disclose same to any third party; and (ii) shall enter into a confidentiality agreement on terms substantially similar to those contained in this Section 14, except that such confidentiality agreement shall not provide for any disclosure of the terms of the Operative Documents or any non-public information, including pursuant to this due diligence exemption; or

 

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(h)           if the information contained therein shall have emanated in conditions free from confidentiality restrictions from some person other than such party and such party would, but for the preceding provisions of this Section 14, have been free to disclose or use the same.

 

SECTION 15                           Nondisturbance.

 

The Security Trustee and each Loan Participant each agrees that neither it nor anyone acting on its behalf will interfere in the Borrower’s or any permitted Lessee’s quiet enjoyment of the Designated Aircraft so long as no Event of Default under the Mortgage shall have occurred and be continuing.

 

SECTION 16                           Miscellaneous.

 

(a)           The representations, warranties, indemnities and agreements of the Borrower, the Security Trustee and each Loan Participant provided for in this Agreement and each party’s obligations under any and all thereof, shall survive the expiration or other termination of this Agreement or any other Operative Document to the extent expressly provided herein or therein.

 

(b)           This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.  Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified, except by an instrument in writing signed by the Borrower, the Security Trustee and the Majority in Interest of Holders (or all Holders, as the case may be).

 

(c)           (i)            This Agreement shall be binding upon and shall inure to the benefit of, and shall be enforceable by, the parties hereto and their respective successors and permitted assigns including each successive holder of any Loan Certificate(s) issued and delivered pursuant to this Agreement or the Mortgage for the Designated Aircraft whether or not an express assignment to any such holder of rights under the Agreement has been made (but only to the extent such express assignment would otherwise be permitted by the terms hereof).

 

(ii)           The Borrower may not assign any of its rights or obligations under this Agreement or the other Operative Documents except to the extent expressly provided hereby or thereby.

 

(iii)          Each Holder may assign its Commitments and/or Loan Certificates, in whole or in part, to any Person as provided in Section 2.06 of the Mortgage, which assignment shall be effected pursuant to an agreement substantially in the form of Exhibit B hereto.  Notwithstanding anything to the contrary contained herein, without the consent of the Borrower, no Holder may assign its Loan Certificates, in whole or in part, (i) in any manner which would result in a violation of the Securities Act or any other applicable law, (ii) so long as no Event of Default shall have occurred and be continuing, to any Person other than (A) another financial institution, (B) an insurance

 

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company, (C) a trust company, (D) a single purpose company, which is guaranteed by a Loan Participant or (E) any European central bank or Federal Reserve Bank and (iii) if the effect of such assignment were to in any way diminish as at the date of such assignment Borrower’s rights or increase the Borrower’s liability or obligations or amounts owing in respect thereof (including, without limitation, with respect to withholding Taxes, increased costs, interest rate adjustments (including, without limitation, those arising from differences in Liquidity Margin or Liquidity Reserve Differentials) or Hedge Breakage Loss) above that which would result or would have been incurred as at the date of such assignment had such assignment or participation not occurred.  For the avoidance of doubt, in the event that a Holder assigns or transfers a Loan Certificate in accordance with the foregoing (other than upon request by the Borrower or after the occurrence and continuation of an Event of Default) and, as a result of circumstances existing at the date the assignment or transfer occurs the Borrower’s rights or obligations are so diminished or increased, as applicable, then the Borrower shall have no liability or obligations or owe any amounts in respect thereof (including, without limitation, with respect to withholding taxes, increased costs, interest rate adjustments (including, without limitation, those arising from differences in Liquidity Margin or Liquidity Reserve Differentials) or Hedge Breakage Loss) above that which would result or would have been incurred had such assignment or participation not occurred as at such date.  Subject to Section 2(a), effective upon the assignment of any Commitment, the assigning Loan Participant shall be relieved of its obligations in respect of such Commitment to the extent the assignee thereof shall have become obligated in respect thereof.  The Borrower shall not be liable for any costs, fees or expenses in connection with any assignment of Commitments or transfer of Loan Certificates.

 

(d)           No Loan Participant shall have any obligation or duty to the Borrower, or to other Persons with respect to the transactions contemplated hereby except those obligations or duties of such Loan Participant expressly set forth in this Agreement and the other Operative Documents and no Loan 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 shall any Loan Participant be liable to the Borrower for any action or inaction on the part of the Security Trustee in connection with the transactions contemplated herein, whether or not such action or inaction is caused by willful misconduct or gross negligence of the Security Trustee.

 

(e)           Any reference herein to an approval, consent or waiver to be given by such Loan Participants shall be deemed hereunder to be an approval, consent or waiver, as the case may be, if a Majority in Interest of Holders approve, consent or waive, as the case may be.

 

(f)            Anything herein to the contrary notwithstanding, any Loan Participant may pledge its Loans and related Loan Certificate to a Federal Reserve Bank, any European central bank or any other bank or other financial institution or authority in connection with a programmatic financing by such Loan Participant of certain of its assets.

 

(g)           The Operative Documents constitute the entire understanding of the parties relating to the subject matter thereof and supersedes all previous agreements, whether written or oral, concerning such subject matter.

 

42

 

(h)           If, at any time, any provision of the Operative Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.

 

(i)            In no event shall any Party be liable on any theory of liability for any special, indirect, incidental, consequential or punitive damages, and each Party hereby waives, releases and agrees not to sue upon any such claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

 

(j)            The Borrower has not relied on and will not rely on the Loan Participants for any explicit or implicit advice in relation to the fixing of the interest rate or any of the other transactions contemplated by the Facility Agreement, including the structuring thereof or any accounting, tax, legal or regulatory or other consequences of such transactions.

 

SECTION 17                           Patriot Act; Money Laundering.

 

(a)           Each of the Security Trustee and the Loan Participants hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow each of the Security Trustee and the Loan Participants (as the case may be) to identify the Borrower in accordance with the Act.

 

(b)           For the purpose of the German Money Laundering Act (Geldwäschegesetz), the Borrower hereby confirms that it is acting for its own account.

 

SECTION 18                           Registrations with the International Registry.

 

Each of the parties hereto consents to the registration with the International Registry of the international interests with respect to the Mortgage and each Mortgage Supplement, and each party hereto covenants and agrees that it will take all such action reasonably requested by the Borrower or the Security Trustee in order to make any registrations with the International Registry, including becoming a registry user entity with the International Registry and providing consents to any registration as may be contemplated by the Operative Documents.

 

*              *              *

 

43

 

IN WITNESS WHEREOF, the parties hereto have caused this Facility Agreement to be duly executed by their respective officers thereunto duly authorized as of the day and year first above written.

 

	
 
    	
HAWAIIAN   AIRLINES, INC., as Borrower
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Its:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
BANK   OF UTAH, as Security Trustee
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Its:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
NORDDEUTSCHE   LANDESBANK GIROZENTRALE, as a Loan Participant
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Its:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
BNP   PARIBAS, as a Loan Participant
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Its:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Its:
    	
 
    

 

44

 

Schedule I

 

Loan Participants

 

	
LOAN PARTICIPANTS
    	
 
    	
LOAN CERTIFICATE TYPE
    
	
Norddeutsche   Landesbank Girozentrale
    	
 
    	
Type A
    
	
BNP   Paribas
    	
 
    	
Type B
    

 

Notice & Account Information

 

Security Trustee and Payment Office:

 

Bank of Utah, as Security Trustee

 

Bank of Utah

200 E. South Temple, Suite 210

Salt Lake City, UT 84111

Fax: (801) 746-3519

Attention: Corporate Trust Services

 

Payment Details:

ABA # [**]

Acct # [**]

Acct Name: Bank of Utah Trust

RE:  Hawaiian Airlines A330-200 MSN 1259

 

Loan Participants

 

Norddeutsche Landesbank Girozentrale

 

Address:

Ship and Aircraft Finance Department / New York Branch

1114 Avenue of the Americas-20th Floor

New York, N.Y. 10036

Phone +1 (212) 812-6826

Fax +1 (212) 812-6920

E-mail: Claudia.ziemer@nordlb.de

Attention: Aviation Group (0990/6826)

 

1

 

Copy:

Ship and Aircraft Finance Department

Friedrichswall 10

30159 Hannover

Telephone No: +49 511 361 8965

Facsimile No.: + 49 511 361 4785

 

Payment Details:

Bank: JPMorgan Chase Bank, New York

SWIFT: [**]

City: New York, USA

ABA: [**]

Account No: [**]

Beneficiary: Norddeutsche Landesbank Girozentrale NY Branch

Ref: Hawaiian Airlines A330-200 MSN 1259

 

BNP Paribas

 

Address:

520 Madison Avenue

New York, NY 10022

Attention:  Robert Papas, Aviation Finance Group / Stephanie Klein, Aviation Finance Group

Telephone No.:  917-472-4879 / 212-841-8083

Facsimile No.:  212-841-2748

E-mail:  robert.papas@us.bnpparibas.com / stephanie.klein@americas.bnpparibas.com

 

Payment Details:

NAME OF BANK:  BNP Paribas

CITY, STATE, ZIP:  New York, NY

SWIFT:  [**]

ABA NUMBER:  [**]

ACCOUNT NAME:  BNP Paribas, Loan Servicing Clearing Account

ACCOUNT NUMBER:  [**]

REF:  Hawaiian Airlines, Inc.

 

Borrower

 

Hawaiian Airlines, Inc.

 

3375 Koapaka Street

Suite G350

Honolulu, Hawaii 96819

USA

 

2

 

Telephone No.: 808-835-3700

Fax:  808-835-3699

E-mail: Peter.Ingram@hawaiianair.com / Hoyt.Zia@hawaiianair.com

Attention:  Executive Vice President and Chief Financial Officer;

Executive Vice President and General Counsel

 

3

 

Schedule II

 

Commitments

 

	
Aircraft
    	
 
    	
Participation
   Percentage –
   Nord/LB(1)
    	
 
    	
Participation
   Percentage -
   BNP(2)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
Designated Aircraft
    	
 
    	
50
    	
%
    	
50
    	
%
    

 

(1)  Norddeutsche Landesbank Girozentrale

 

(2)  BNP Paribas

 

1

 

Schedule III

 

Tax Provisions

 

[**]

 

(a)           Withholding on Payments.

 

(i)            All amounts payable by or on behalf of the Borrower pursuant to the Operative Documents and all amounts payable to any Loan Participant under a Hedge Transaction shall be free of withholding on account of any Taxes, unless such withholding is required by applicable law.  If any Tax is required to be withheld from any such amount payable by the Borrower to or for the benefit of a Tax Indemnitee under any Operative Document, or payable by a Hedge Transaction Counterparty to or for the benefit of a Loan Participant under a Hedge Transaction, the Borrower (A) shall, subject to the exceptions set forth below in paragraphs (d)(ii), (v) and (ix), pay an additional amount such that the net amount actually or constructively received by such Tax Indemnitee will, after such withholding (including withholding from any additional amount payable pursuant to this sentence), equal the full amount of the payment then due, (B) shall pay, or cause to be paid, to the relevant Tax authority the full amount required to be withheld (including the full amount required to be withheld from any additional amount paid pursuant to this sentence) in accordance with applicable law, and (C) shall furnish to the affected Tax Indemnitee and the Security Trustee as soon as practicable an official receipt (or a certified copy thereof) if reasonably obtainable or such other documentation as is reasonably obtainable and reasonably acceptable to such Tax Indemnitee evidencing payment of the withheld Tax.

 

(ii)           Notwithstanding anything to the contrary in this Agreement, the Borrower shall not be required to pay any additional amounts to a Tax Indemnitee under paragraph (d)(i) of this Schedule III in respect of its Excluded Taxes.

 

(iii)          Each Non-U.S. Loan Participant shall deliver to the Borrower and the Security Trustee on the date of the Facility Agreement (or, if such Non-U.S. Loan Participant becomes a Loan Participant after the date of the Facility Agreement, on the date on which such Non-U.S. Loan Participant becomes a Loan Participant) a properly completed and duly signed Internal Revenue Service Form W-8BEN, W-8ECI or W-8EXP (or applicable successor form) evidencing such Loan Participant’s entitlement to a complete exemption from or to a reduced rate of United States withholding Taxes on interest and all other amounts payable to such Loan Participant pursuant to the Operative Documents.  Each Loan Participant that is a “United States person” (as defined in Section 7701(a)(30) of the Code), but is not a Person described in Section 6049(b)(4) of the Code, shall deliver to the Borrower and the Security Trustee on the date of this Agreement (or, if such Loan Participant becomes a Loan Participant after the date of this Agreement, on the date on which such Loan Participant becomes a Loan Participant) and the Security Trustee shall deliver to the Borrower on the date of this Agreement a properly completed and duly signed Internal Revenue Service Form W-9 (or applicable

 

1

 

successor form), evidencing such Loan Participant’s or the Security Trustee’s, as the case may be, entitlement to a complete exemption from United States back-up withholding Taxes on interest and all other amounts payable to such Loan Participant or the Security Trustee, as the case may be, pursuant to the Operative Documents.  If a Non-U.S. Loan Participant shall be effecting a Hedge Transaction with a U.S. Hedge Transaction Counterparty, such Non-U.S. Loan Participant shall deliver to such Hedge Transaction Counterparty on the date of the relevant Hedge Transaction a properly completed and duly signed Internal Revenue Service Form W-8BEN, W-8ECI or W-8EXP (or applicable successor form) evidencing such Non-U.S. Loan Participant’s entitlement to a complete exemption from or to a reduced rate of United States withholding Taxes on interest and all other amounts payable to such Loan Participant pursuant to the Hedge Transaction.  If a Loan Participant that is a “United States person” (as defined in Section 7701(a)(30) of the Code), but is not a Person described in Section 6049(b)(4) of the Code, shall be effecting a Hedge Transaction with a U.S. Hedge Transaction Counterparty, such Loan Participant shall deliver to such Hedge Transaction Counterparty on the date of the relevant Hedge Transaction a properly completed and duly signed Internal Revenue Service Form W-9 (or applicable successor form), evidencing such Loan Participant’s entitlement to a complete exemption from United States withholding Taxes on interest and all other amounts payable to such Loan Participant pursuant to the Hedge Transaction.  In addition, and without limiting the foregoing, the Security Trustee shall be responsible for preparing and filing Internal Revenue Service Forms 1042 and 1042S (or any similar or successor forms), as well as any governmental filings and information requirements in connection therewith.

 

(iv)          If any Internal Revenue Service form delivered by the Security Trustee or any Loan Participant pursuant to this paragraph (d) expires or becomes inaccurate or obsolete, the Security Trustee or such Loan Participant (as the case may be) shall deliver to the Borrower and the Security Trustee a replacement Internal Revenue Service form (or applicable successor form).

 

(v)           For the avoidance of doubt, the Borrower shall not be required to pay any additional amounts to a Tax Indemnitee under paragraph (d)(i) of this Schedule III if such Tax Indemnitee shall have failed to satisfy the requirements of paragraph (d)(iii) or (d)(iv) of this Schedule III, as the case may be; provided that if a Non-U.S. Loan Participant shall have satisfied the requirements of paragraph (d)(iii) of this Schedule III on the date such Non-U.S. Loan Participant becomes party to this Agreement, nothing in this paragraph (d)(v) shall relieve the Borrower of its obligation to pay any additional amounts pursuant to paragraph (d)(i) in the event that, as a result of a Change in Law, such Non-U.S. Loan Participant is no longer properly entitled to deliver forms, certificates or other evidence at a subsequent date establishing the fact that such Loan Participant is not subject to withholding.

 

(vi)          The Security Trustee and each Loan Participant agrees (and each other Loan Participant, by its execution hereof and by acceptance of the assignment of the Loan, shall be deemed to agree) to indemnify and hold harmless on an After-Tax Basis each of the Loan Participants, the Security Trustee and the Borrower, within 30 days after receipt of written demand therefor, for all liabilities, losses, costs and

 

2

 

expenses paid or incurred by the Loan Participants, the Security Trustee or the Borrower (as the case may be) as a result of its failure to comply with the provisions of this paragraph (d) or the inaccuracy of any Internal Revenue Service form delivered by it pursuant to this paragraph (d).

 

(vii)         If the Borrower or the Security Trustee fails to withhold from any payment to a Loan Participant pursuant to this Agreement or any Operative Document any Tax which such Person is required by applicable law to withhold from such payment, but for which it is not responsible under this paragraph (d), the Security Trustee or such Loan Participant (as the case may be) shall repay to such Person, within ten Business Days after receipt of such Person’s written demand therefor, the amount which such Person was required to withhold.

 

(viii)        If any party hereto determines that any withholding Tax is required by applicable law to be withheld from any amount payable to the Security Trustee or any Loan Participant pursuant to any Operative Document for which the Borrower is responsible under paragraph (d)(i) of this Schedule III, the party making such determination shall give written notice thereof to the other parties hereto and to the affected Tax Indemnitees, and if requested by the Borrower in writing, each other party hereto and the affected Tax Indemnitees, at the cost and expense of the Borrower, shall use commercially reasonable efforts to take appropriate action to eliminate or minimize the Borrower’s indemnity liability or gross-up obligation under this Schedule III for such withholding Taxes, provided that no such Person shall be obligated to accept any amendment of any Operative Document or to take any other action if such amendment or other action might in such Person’s sole discretion be adverse to it.  In addition, without limiting the foregoing, if a Loan Participant determines that any withholding Tax is required by applicable law to be withheld from any amount payable pursuant to a Hedge Transaction for which the Borrower is responsible under paragraph (d)(i) of this Schedule III, such Loan Participant shall give written notice thereof to the Borrower, the counterparty to the Hedge Transaction and any other Loan Participant (if any), and (if permitted by applicable law) the Borrower shall have the right to replace the party to the Hedge Transaction that is not eligible for an exemption from withholding Tax (if doing so would eliminate or reduce such withholding Tax) with a bank or financial institution that is acceptable to the remaining counterparty to the Hedge Transaction (on terms and conditions reasonably acceptable to the remaining party and without recourse to the party that is replaced); provided, further, that if the Borrower determines to so replace such a party to a Hedge Transaction, the Borrower shall provide written notice to the counterparty to the Hedge Transaction, all of the Loan Participants and the Security Trustee and shall be responsible for the costs and expenses in connection with the same (including, without limitation, any Hedge Breakage Loss).

 

(ix)           Notwithstanding anything to the contrary in this Agreement, the Borrower shall have no obligation to make a payment to any Tax Indemnitee under paragraph (d)(i) above with respect to any Taxes imposed on amounts payable to such Tax Indemnitee at the time such Tax Indemnitee becomes a party to this Agreement, except to the extent that the Borrower was required to make a payment under

 

3

 

paragraph (d)(i) above in respect of such Taxes to or for the benefit of such Tax Indemnitee’s transferor or assignor (if any) at the time of assignment.

 

(b)           Survival.  The indemnities and other obligations of the Borrower, and the obligations of each Tax Indemnitee, under this Schedule III shall survive the Loan Participants’ making their respective Commitments available in respect of the Designated Aircraft, the Maturity Date of all of the Loans in respect of the Designated Aircraft and the expiration or other termination of the Operative Documents.

 

(c)           Non-Parties.  In the case of any Tax Indemnitee that is not a party to this Agreement, the Borrower may require such Tax Indemnitee to agree in writing, in form and substance reasonably acceptable to the Borrower, to perform its obligations under the provisions of this Schedule III before making any payment to such Tax Indemnitee under this Schedule III.

 

*              *              *

 

4

 

Schedule 3(a)(i)

 

[**]

 

1

 

Schedule 3(a)(ii)

 

[**]

 

1

 

EXHIBIT A

 

NOTICE OF BORROWING [HAWAIIAN A330 [1259]]

 

NOTICE OF BORROWING dated                            , 2011 (this “Notice”) by Hawaiian Airlines, Inc. (“Hawaiian”).

 

Reference is made to the Facility Agreement [Hawaiian A330 [1259]] dated as of June 29, 2011 among Hawaiian, such Loan Participants party thereto (collectively, the “Loan Participants”) and Bank of Utah, as Security Trustee (as executed and delivered and as in effect from time to time, the “Facility Agreement”) relating to the proposed financing of the Designated Aircraft identified as:  one Airbus Model A330-200 aircraft bearing manufacturer’s serial number [1259] together with the two Rolls Royce Trent Model 772B-60 engines originally installed thereon (the “Aircraft”).  For convenience of reference, unless specified herein, capitalized terms used herein have the same meanings attributed thereto in the Facility Agreement (or the Mortgage referred to therein).

 

We hereby give you notice requesting a Loan Pursuant to Section 2(b)(i) of the Facility Agreement, and in connection therewith we set forth below the required information relating to such Loan.

 

Hawaiian hereby irrevocably notifies each Loan Participant that (a) the scheduled Delivery Date is                      , 2011 (the “Funding Date”), (b) the aggregate principal amount of the Loan is $[                    ], [and] (c) the related Loan will amortize in the manner specified in an amortization schedule separately exchanged by parties hereto [and (d) Hawaiian elects to have the related Loan be a Fixed Rate Loan].  Proceeds of the Participation Amount are to be wired by no later than 10:00 a.m. (New York city time) on the Funding Date in immediately available funds to the Security Trustee to the following account:                          .

 

Aircraft Manufacturer’s account is [                    ].

 

[Please contact [                    ] at phone number [                  ] with the Rate Quote.]

 

Section 2(b) of the Facility Agreement is incorporated herein by reference, mutatis mutandis.

 

1

 

IN WITNESS WHEREOF, Hawaiian has caused this Notice of Borrowing to be duly executed by its officer thereunto duly authorized on the day and year first above written.

 

	
 
    	
HAWAIIAN   AIRLINES, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

2

 

EXHIBIT B

 

ASSIGNMENT AGREEMENT

 

ASSIGNMENT AGREEMENT [Hawaiian A330 [1259]] dated as of                          ,          between                                                                     (the “Assignee”) and                                                            (the “Assignor”).

 

RECITALS

 

WHEREAS, the Assignor is the holder of the Loan Certificate No.          dated                          ,          (the “Assignor’s Loan Certificate”) issued under the Facility Agreement [Hawaiian A330 [1259]], dated as of June 29, 2011 (the “Facility Agreement”) among Hawaiian Airlines, Inc. (“Hawaiian”), the Loan Participants party thereto and Bank of Utah, as Security Trustee (the “Security Trustee”);

 

WHEREAS, the Assignor proposes to assign to the Assignee $                         of the $                           Assignor’s Loan Certificate and a pro rata portion of all of the rights and obligations of the Assignor under the Facility Agreement and the other Operative Documents (as defined below) in respect thereof, on the terms and subject to the conditions set forth herein, and the Assignee proposes to accept the assignment of such rights and obligations from the Assignor on such terms and subject to such conditions;

 

NOW, THEREFORE, in consideration of the foregoing and the mutual agreements contained herein, the parties hereto agree as follows:

 

Section 1.  Definitions.  Unless otherwise defined herein, terms defined in the Facility Agreement are used herein as therein defined.

 

Section 2.  Assignment.  The Assignor hereby sells, assigns and transfers to the Assignee effective on                                    (the “Effective Date”), and on the terms and subject to the conditions set forth herein, without recourse to or representation, express or implied, by the Assignor (except as expressly set forth in Section 5 hereof), a $                       portion of the Assignor’s Loan Certificate No.                    (the “Assignor’s Loan Certificate”) and a pro rata portion of the rights and obligations of the Assignor under the Facility Agreement and the other Operative Documents in respect thereof (but not with respect to any indemnity or other claim, interest thereon at the Past Due Rate and breakage amounts, if any, accrued and unpaid as of the Effective Date or thereafter payable to the Assignor in respect of the period prior to the Effective Date), and the Assignee accepts such assignment from the Assignor and assumes all of the obligations of the Assignor accruing from and after the Effective Date under the Facility Agreement and the other Operative Documents relating to the Assignor’s Loan Certificate on such terms and subject to such conditions.  Upon the satisfaction of the conditions set forth in Section 4 hereof, (A) the Assignee shall, on the Effective Date, succeed to the rights and be obligated to perform the obligations of a Loan Participant and Holder under the Facility Agreement and the other Operative Documents, and (B) the Assignor shall be released from its obligations under the Facility Agreement and the other Operative Documents accrued from and after the Effective Date, in each case to the extent such obligations have been assumed by the Assignee.

 

1

 

Section 3.  Payments.  As consideration for the sale, assignment and transfer contemplated in Section 2 hereof, the Assignee shall pay to the Assignor, on the Effective Date, in lawful currency of the United States and in immediately available funds, to the account specified below its signature on the signature pages hereof, an amount equal to $                              .

 

Section 4.  Conditions.  This Assignment Agreement shall be effective upon the due execution and delivery of this Assignment Agreement by the Assignor and the Assignee and the effectiveness of the assignment contemplated by Section 2 hereof is subject to (a) the receipt by the Assignor of the payment provided for in Section 3 hereof, (b) the delivery to the Security Trustee of the Assignor’s Loan Certificate, duly endorsed for [partial] transfer to the Assignee, together with a request in the form attached hereto as Exhibit A that a new Loan Certificate as the Assignor’s Loan Certificate be issued to the Assignee [and Assignor] and (c) satisfaction of the conditions to such transfer set out in Section 16(c) of the Facility Agreement.

 

Section 5.  Representations and Warranties of the Assignor.  The Assignor represents and warrants as follows:  (a) the Assignor has full power and authority, and has taken all action necessary to execute and deliver this Assignment Agreement and any other documents required or permitted to be executed or delivered by it in connection with this Assignment Agreement and to fulfill its obligations under, and to consummate the transactions contemplated by, this Assignment Agreement, and no governmental authorizations or other authorizations are required in connection therewith, (b) the Assignor’s interest in the Assignor’s Loan Certificate is free and clear of any and all Liens created by or through the Assignor, (c) this Assignment Agreement constitutes the legal, valid and binding obligation of the Assignor, enforceable against the Assignor in accordance with its terms, (d) the Assignor has received no written notice of any Default having occurred and continuing on the date of execution hereof, and (e) the Assignor makes no representations and warranties other than those in (a)-(d) above and consequently assumes no liability or responsibility for the legality, validity, effectiveness, adequacy or enforceability of the Operative Documents or any other documents; the financial condition of the Borrower; the performance and observance by the Borrower of its obligations under the Operative Document or any other documents; or the accuracy of any statements made in or in connection with the Operative Documents or any other documents.

 

Section 6.  Representations and Warranties of the Assignee.  The Assignee hereby represents and warrants to the Assignor that (a) the Assignee has full power and authority, and has taken all action necessary to execute and deliver this Assignment Agreement and any and all other documents required or permitted to be executed or delivered by it in connection with this Assignment Agreement and to fulfill its obligations under, and to consummate the transactions contemplated by, this Assignment Agreement, and no governmental authorizations or other authorizations are required in connection therewith, (b) this Assignment Agreement constitutes the legal, valid and binding obligation of the Assignee, enforceable against the Assignee in accordance with its terms, (c) the Assignee has fully reviewed the terms of the Operative Documents and has independently and without reliance upon the Assignor and based on such information as the Assignee has deemed appropriate, made its own credit analysis and decision to enter into this Assignment Agreement and (d) the Assignee irrevocably declares to follow the same refinancing approach as the Type [A/B] Loan Participant which is the Assignor from which it is taking an assignment hereunder.

 

2

 

Section 7.  Further Assurances.  The Assignor and the Assignee hereby agree to execute and deliver such other instruments, and take such other action, as either party may reasonably request in connection with the transactions contemplated by this Assignment Agreement.

 

Section 8.  Governing Law.  This Assignment Agreement shall be governed by, and construed in accordance with, the law of the State of New York.

 

Section 9.  Notices.  All communications between the parties or notices in connection herewith shall be in writing, hand-delivered or sent by ordinary mail or facsimile transmitter, addressed as set forth on the signature pages hereof.  All such communications and notices shall be effective upon receipt.

 

Section 10.  Binding Effect.  This Assignment Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

Section 11.  Interpretation.  The headings of the various sections hereof are for convenience of reference only and shall not affect the meaning or construction of any provision hereof.

 

Section 12.  Integration of Terms.  This Assignment Agreement contains the entire agreement between the parties relating to the subject matter hereof and supersedes all oral statements and other writings with respect to the subject matter hereof.

 

Section 13.  Counterparts.  This Assignment Agreement may be executed in one or more counterparts, each of which shall be an original but all of which, taken together, shall constitute one and the same instrument.

 

3

 

IN WITNESS WHEREOF, the parties have caused this Assignment Agreement to be executed and delivered by their duly authorized officers as of the date first above written.

 

	
 
    	
[ASSIGNEE]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
Address   for Notices:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Wire   Instructions:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
[ASSIGNOR]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
Address   for Notices:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Wire   Instructions:
    

 

4

 

Exhibit A
 to Assignment Agreement

 

Request for Loan Certificate and Registration

 

,

 

To:          Bank of Utah, as Security Trustee

 

Ladies and Gentlemen:

 

We refer to the assignment by                                                          (the “Assignor”), of certain of its rights and obligations with respect to Type [A/B] Loan Certificate No.              in the principal amount of $                         (the “Assignor’s Loan Certificate”) to                                                        (the “Assignee”), pursuant to an Assignment Agreement [Hawaiian A330 [1259]] dated as of                    ,          between the Assignor and the Assignee. Capitalized terms not otherwise defined herein shall have the meanings assigned thereto in such Assignment Agreement.  The Assignor hereby delivers the Assignor’s Loan Certificate to Bank of Utah, in its capacity as Security Trustee.  The Assignor requests Hawaiian to issue to (i) the Assignee a new Type [A/B] Loan Certificate (the “New Loan Certificate”) in the principal amount of $                         and (ii) to the Assignor a new Type [A/B] Loan Certificate (the “Assignor’s New Loan Certificate”) in the principal amount of $                            , each with a [Delivery Date] issue date.

 

The Security Trustee is hereby instructed to pay all interest on the portion of the Assignor’s Loan Certificate being assigned hereunder accrued through the date hereof directly to Assignor on the Interest Payment Date such interest is payable and paid.

 

The Assignor requests the Security Trustee to deliver the New Loan Certificate to the Assignee at its address set forth below and to deliver the Assignor’s New Loan Certificate to the undersigned.

 

	
 
    	
Very   truly yours,
    
	
 
    	
 
    
	
 
    	
[ASSIGNOR]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    

 

1

 

 

	
 
    	
[ASSIGNEE]
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    	
 
    
	
 
    	
Address   for Notices:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Wire   Instructions
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Accepted   and Agreed
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
BANK   OF UTAH
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
as   Security Trustee
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
By:
    	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
 
    	
 
    

 

2

 

EXHIBIT C

 

[Form of Loan Certificates]

 

LOAN CERTIFICATE
 HAWAIIAN AIRLINES, INC.
 CERTIFICATE DUE 2023
 ISSUED IN CONNECTION WITH ONE AIRBUS MODEL A330-200 AIRCRAFT
 WITH MANUFACTURER’S SERIAL NUMBER 1259 AND INITIALLY BEARING
 UNITED STATES FEDERAL AVIATION ADMINISTRATION REGISTRATION NO. N384HA AND TWO ROLLS ROYCE TRENT MODEL 772B-60 ENGINES

 

New York, New York

 

Type:  [A/B]

 

Tranche:  [1/2]

 

No.:  XX

 

	
$
    	
[Delivery Date]
    

 

Hawaiian Airlines, Inc. (the “Borrower”) hereby promises to pay to                                     , or registered transferees, the principal sum of                                              Dollars, in [[**]] installments, equal to the amount, and payable on the dates, set forth in Annex A hereto, together with interest on the unpaid principal amount hereof from time to time outstanding from and including the date hereof until such principal amount is paid in full.  Interest shall accrue with respect to each Interest Period at the Applicable Rate in effect for such Interest Period and shall be payable in arrears on each Interest Payment Date and on the date this Loan Certificate is paid in full.  This Loan Certificate shall bear interest at the applicable Past Due Rate on any principal hereof, and, to the extent permitted by applicable law, interest and other amounts due hereunder, not paid when due (whether at stated maturity, by acceleration or otherwise), for any period during which the same shall be overdue, payable on demand by the Holder hereof given through the Security Trustee.

 

Interest shall be payable with respect to the first but not the last day of each Interest Period.  Interest shall be calculated on the basis of (i) if the related Loan is a Floating Rate Loan, a year of 360 days and actual number of days elapsed or (ii) if the related Loan is a Fixed Rate Loan, a year of 360 days consisting of 12 30-day months.  If any sum payable hereunder falls due on a day which is not a Business Day, then such sum shall be payable on the next succeeding Business Day; provided that, in the case of principal of and interest hereon payable on an Interest Payment Date, if by virtue of such extension such payment would fall in the next succeeding month, such sum shall be payable on the next preceding Business Day.

 

All payments of principal, Break Amount (if any), interest and other amounts to be made to the Holder hereof or under the Mortgage and Security Agreement [Hawaiian A330 [1259]] dated as of June 29, 2011 (as amended or supplemented from time to time, herein called the

 

1

 

“Mortgage”, the terms defined therein and not otherwise defined herein being used herein with the same meanings) between the Borrower and Bank of Utah, as Security Trustee thereunder, shall be made in accordance with the terms of the Facility Agreement and the Mortgage.

 

Principal and interest and other amounts due hereon shall be payable in Dollars in immediately available funds prior to 11:00 a.m., New York City time, on the due date thereof, to the Security Trustee at the Payment Office.  All such payments by the Borrower shall be made free and clear of and without reduction for or on account of all wire or other like charges.

 

The Holder hereof, by its acceptance of this Loan Certificate, agrees that, except as otherwise expressly provided in the Mortgage, each payment received by it in respect hereof shall be applied, first, to the payment of any amount (other than the principal of or interest on this Loan Certificate) due in respect of this Loan Certificate, second, to the payment of interest hereon (as well as any interest on overdue principal and, to the extent permitted by law, interest and other amounts payable hereunder) due and payable hereunder, third, to the payment of the principal of this Loan Certificate then due and fourth, the balance, if any, remaining thereafter, to the payment of the principal of this Loan Certificate remaining unpaid, in the manner set forth in the last sentence of Section 2.04 of the Mortgage.

 

This Loan Certificate is one of the Type [A/B] Loan Certificates referred to in the Mortgage which have been or are to be issued by the Borrower pursuant to the terms of the Mortgage.  The Mortgage Estate is held by the Security Trustee as security, in part, for the Loan Certificates.  Reference is hereby made to the Mortgage and the Facility Agreement referred to therein for a statement of the rights and obligations of the Holder hereof, and the nature and extent of the security for this Loan Certificate and of the rights and obligations of the other Holders, and the nature and extent of the security for the other Loan Certificates, as well as for a statement of the terms and conditions of the trusts created by the Mortgage, to all of which terms and conditions in the Mortgage and such Facility Agreement each Holder hereof agrees by its acceptance of this Loan Certificate.

 

There shall be maintained a Certificate Register for the purpose of registering transfers and exchanges of Loan Certificates at the Payment Office of the Security Trustee or at the office of any successor security trustee in the manner provided in Section 2.06 of the Mortgage.  As provided in the Mortgage and subject to certain limitations set forth therein and in the Facility Agreement, this Loan Certificate or any interest herein may, subject to the next following paragraph, be assigned or transferred, and the Loan Certificates are exchangeable for a like aggregate original principal amount of Loan Certificates of any authorized denomination, as requested by the Holder surrendering the same.

 

Prior to the due presentment for registration of transfer of this Loan Certificate, the Borrower and the Security Trustee shall deem and treat the person in whose name this Loan Certificate is registered on the Certificate Register as the absolute owner of this Loan Certificate and the Holder for the purpose of receiving payment of all amounts payable with respect to this Loan Certificate and for all other purposes whether or not this Loan Certificate is overdue, and neither the Borrower nor the Security Trustee shall be affected by notice to the contrary.

 

2

 

This Loan Certificate is subject to prepayment as permitted by Sections 2.09 and 2.10 of the Mortgage and to acceleration by the Security Trustee as provided in Section 9.01 of the Mortgage, and the Holder hereof, by its acceptance of this Loan Certificate, agrees to be bound by said provisions.

 

This Loan Certificate shall be governed by and construed in accordance with the law of the State of New York.

 

*   *   *

 

3

 

IN WITNESS WHEREOF, the Borrower has caused this Loan Certificate to be executed in its corporate name by its officer thereunto duly authorized, as of the date hereof.

 

	
 
    	
HAWAIIAN AIRLINES, INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Its:
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Its:
    

 

4

 

ANNEX A
 TO
 LOAN CERTIFICATE
 SCHEDULE OF PRINCIPAL PAYMENTS

 

	
Interest Payment
   Date
   (falling on or
   closest to)
    	
 
    	
Outstanding Principal
   Balance (Beginning of
   Period)
    	
 
    	
Principal Amount to be
   paid(3)
    	
 
    	
Outstanding Principal
   Balance (After
   Repayment)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    

 

(3)   The amounts in this column for any Loan Certificate shall be equal, for any Interest Payment Date, to the product of (a) the “Principal Amount to be Paid” for such Interest Payment Date as set forth in the Schedule of Principal Payments in Schedule 3(a)(i) (if such Loan Certificate is issued in respect of a Tranche 1 Loan) or Schedule 3(a)(ii) (if such Loan Certificate is issued in respect of a Tranche 2 Loan) to the Facility Agreement for the Aircraft and (b) a fraction, the numerator of which is the original principal amount of such Loan Certificate and the denominator of which is aggregate original principal amount of all Loan Certificates issued in respect of the applicable Tranche.

 

5

 

EXHIBIT D

 

[Form of Mortgage]

 

1

 

APPENDIX X

 

DEFINITIONS AND RULES OF USAGE

 

(a)                                  Unless a contrary indication appears, a reference in this Agreement to:

 

(i)                                     the “agreed form” of any Operative Document means the form of such Operative Document which on the date hereof has been agreed by the Borrower and the Security Trustee (acting on the instructions of the Loan Participants);

 

(ii)                                  any “applicable law” means (a) applicable laws, statutes, decrees, decree laws, acts, codes, regulations, legislation, treaties, conventions and similar instruments and, in respect of any of the foregoing, unless the context otherwise requires, any instrument passed in substitution therefor or for the purposes of consolidation thereof with any other instrument or instruments, in each case, unless the context otherwise requires, as amended, modified, varied or supplemented from time to time, (b) applicable final judgments, orders, determinations or awards of any court from which there is no right of appeal or if there is a right of appeal such appeal is not prosecuted within the allowable time and (c) applicable orders, guidelines, notices, guidance, rules and regulations of any state or government or any government entity, in each case having the force of law;

 

(iii)                               any person includes its and any subsequent successors in title, permitted assigns and permitted transferees;

 

(iv)                              “assets” includes present and future properties, revenues and rights of every description;

 

(v)                                 “indebtedness” includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

 

(vi)                              an “Operative Document” or any other agreement or instrument is a reference to that Operative Document or other agreement or instrument as amended, supplemented or novated in accordance with the terms thereof and of this Agreement or any other Operative Document, together with all exhibits, schedules and other attachments thereto;

 

(vii)                           a “regulation” includes any regulation, rule, official directive, request or guideline (whether or not having the force of law) of any governmental, intergovernmental or supranational body, agency, department or regulatory, self regulatory or other authority or organization;

 

(viii)                        a reference to a “third party” is a reference to any person other than a Party;

 

(ix)                                a reference to a “Schedule” is a reference to such Schedule as it may be amended from time to time in accordance herewith;

 

 

(x)                                   unless the context shall otherwise require, a provision of law is a reference to that provision as amended or re enacted; and

 

(xi)                                a time of day is, unless stated otherwise, a reference to New York time.

 

(b)                                 Section and Schedule headings are for ease of reference only.

 

(c)                                  Unless a contrary indication appears, a term used in any other Operative Document or in any notice given under or in connection with any Operative Document has the same meaning in that Operative Document or notice as in this Agreement.

 

(d)                                 “$” and “dollars” denote the lawful currency of the United States of America.

 

DEFINED TERMS

 

“Additional Parts” has the meaning set forth in Section 4.03 of the Mortgage.

 

“Additional Insured(s)” is defined in Paragraph D(i) of Schedule 1 to the Mortgage.

 

“Affiliate” means, with respect to any Person, any other Person which directly or indirectly controls, is controlled by, or under common control with, such Person.  The term “control” means the possession, directly or indirectly of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

 

“After-Tax Basis” means, with respect to any payment to be received (actually or constructively) by a Person, the amount of such payment plus a further payment or payments so that the net amount received (actually or constructively) by such Person, after deducting from such payments the amount of all Taxes imposed on such Person by any government or taxing authority with respect to such payments (net of any current credits, deductions or other Tax benefits arising from the actual or constructive payment by such Person of any amount, including Taxes, with respect to the payment received or arising by reason of the receipt or accrual (computed at the highest marginal rate then applicable to such Person) by such Person of the payment received) is equal to the original payment required to be received.

 

“Aircraft” means the Airframe together with the two Engines referenced in the Mortgage Supplement relating to the Airframe (or any Replacement Engine substituted therefor) and including buyer furnished equipment, whether or not such Engines are installed on the Airframe or any other airframe, and, where the context permits, all logs, manuals and data and inspection, modification and overhaul records required to be maintained with respect to the foregoing property.

 

“Aircraft Manufacturer” means Airbus S.A.S., in its capacity as manufacturer of the Aircraft.

 

 

“Aircraft Purchase Agreement” means the Airbus A330/A350 XWB Purchase Agreement, dated as of January 31, 2008, entered into between the Aircraft Manufacturer and the Borrower, including for the avoidance of doubt all the attachments, exhibits and schedules thereto.

 

“Airframe” means:  (i) the Airbus A330-200 aircraft (excluding Engines or engines from time-to-time installed thereon) specified by United States Registration Number and Manufacturer’s Serial Number in a particular Mortgage Supplement relating to this Mortgage; (ii) any and all related Parts; and (iii) any Replacement Airframe which may from time to time be substituted for the Airframe then subject to this Mortgage pursuant to Section 5.01(b) hereof.

 

“Applicable Margin” has the meaning set forth in Section 1 of the Facility Agreement.

 

“Applicable Rate” means, for any Interest Period, a rate per annum equal to (i) in the case of a Floating Rate Loan, the Floating Rate for such Interest Period and (ii) in the case of a Fixed Rate Loan, the Fixed Rate for such Interest Period, in each case, subject to Section 3(j) of the Facility Agreement for Type B Loan Certificates.

 

“Assigned Warranties” means all right, title and interest of the Borrower in, to and under (i) the relevant parts and exhibits of the Aircraft Purchase Agreement relating to the Aircraft and referred to in the Consent and Agreement as subject to collateral assignment, and (ii) the relevant parts and exhibits of the General Terms Agreement referred to in the Engine Consent and Agreement as subject to collateral assignment.

 

“Aviation Authority”  means the FAA or, if the Aircraft is permitted to be, and is, registered with any other Governmental Body under and in accordance with Section 3.01(b), such other Governmental Body.

 

“Aviation Law” means the Federal Aviation Act, or such other applicable law of any jurisdiction in which the Aircraft is registered.

 

“Bills of Sale” means the FAA Bill of Sale and a Warranty Bill of Sale in favor of Borrower in respect of the Aircraft.

 

“Break Amount” means, as at any date of determination and for the Loan Certificates of any Tranche, the amount, if any, equal to the sum of (i) LIBOR Break Amount, (ii) in the case of a Type A Loan Certificate, Liquidity Break Amount and (iii) in the case of a Fixed Rate Loan, Hedge Breakage Loss.

 

“Business Day” means (i) a day (other than a Saturday or Sunday) on which banks are open for general business in New York, New York, Honolulu, Hawaii, and Salt Lake City, Utah and (ii) as relates to any Interest Payment Date, any payment or prepayment of a Loan, any Quotation Date, LIBOR or any notice in relation to the foregoing, a day on which banks are open for dealings in dollar deposits in the London interbank market.

 

“Cape Town Convention” means the Convention on International Interests in Mobile Equipment and the Protocol to the Convention on International Interests in Mobile Equipment on Matters Specific to Aircraft Equipment that were signed in Cape Town, South Africa on

 

 

November 16, 2001, together with all regulations and procedures issued in connection therewith, and all other rules, amendments, supplements, modifications and revisions thereto, as in effect under the laws of the United States of America as a contracting state.

 

“Certificate Register” has the meaning specified in Section 2.06 of the Mortgage.

 

“Change in Law” means the occurrence, after the date of the Facility Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation or application thereof by any Governmental Body or (c) the making or issuance of any request, rule, guideline or directive (whether or not having the force of law) by any Governmental Body; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel II, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 

“Civil Reserve Air Fleet Program” or “CRAF” means the Civil Reserve Air Fleet Program administered by the U.S. Government or any substantially similar program.

 

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute.

 

“Commitment” means, as to each Loan Participant, its Tranche 1 Commitment and its Tranche 2 Commitment.

 

“Commitment Termination Date” has the meaning specified in Section 1 of the Facility Agreement.

 

“Consent and Agreement” means the Consent and Agreement [Hawaiian A330 [1259]], dated as of the Delivery Date for the Aircraft, of the Aircraft Manufacturer in respect of the Aircraft, in form and substance reasonably satisfactory to the Borrower and the Security Trustee.

 

“Cutoff Date” is defined in Section 2(b)(vi) of the Facility Agreement.

 

“Default” means any event which with the giving of notice or the lapse of time or both if not timely cured or remedied would become an Event of Default pursuant to Article VIII of the Mortgage.

 

“Delivery Date” means the date of the initial Mortgage Supplement for the Aircraft, which date shall be the date the Loan Participants deliver the Loan in respect of the Aircraft to or for account of the Borrower.

 

“DERA” means a deregistration power of attorney in respect of the Aircraft by the Borrower in favor of the Security Trustee (if applicable).

 

 

“Dollars”, “Dollar” and “$” means the lawful currency of the United States of America.

 

“Engine” means (i) each of the two Rolls Royce Trent model 772B-60 engines listed by Manufacturer’s Serial Numbers in the initial Mortgage Supplement for the Aircraft, whether or not from time to time installed on the Airframe or any other airframe; (ii) any Replacement Engine which may from time to time be substituted for any Engine pursuant to the terms hereof; and (iii) in each case, any and all related Parts.  The term “Engines” means, as of any date of determination and in respect of the Airframe or Aircraft, both Engines then subject to the lien hereof and relating to the Aircraft or Airframe.  An Engine is “related” to the Airframe/Aircraft in respect of which it shares a common Mortgage Supplement.  Except as otherwise set forth herein, at such time as a Replacement Engine shall be substituted for an Engine pursuant to the terms hereof, such replaced Engine shall cease to be an Engine hereunder.

 

“Engine Consent and Agreement” means the Engine Manufacturer Consent and Agreement [Hawaiian A330 [1259]], dated as of the Delivery Date for the Aircraft, of the Engine Manufacturer in respect of the Engines, in form and substance reasonably satisfactory to the Borrower and the Security Trustee.

 

“Engine Manufacturer” means Rolls Royce plc.

 

“Event of Default” has the meaning specified in Article VIII of the Mortgage.

 

“Event of Loss” with respect to the Aircraft, the Airframe or any Engine means any of the following events with respect to such property:  (i) the loss of such property, or of the use thereof, due to the destruction of or damage to such property which renders repair uneconomical or which renders such property permanently unfit for normal use by the Borrower for any reason whatsoever; (ii) any damage to such property which results in the receipt of insurance proceeds with respect to such property on the basis of an actual, constructive or compromised total loss; (iii) theft, hijacking or disappearance of such property for a period in excess of 180 days (or, if earlier, the date on which the Borrower has confirmed to the Security Trustee in writing that it cannot recover such property); (iv) the confiscation, condemnation, or seizure of, or requisition of (x) title to such property by any governmental or purported governmental authority or (y) use by any governmental or purported governmental authority for a period in excess of 90 consecutive days (other than a requisition of use by the government of the United States of America or any agency or instrumentality thereof which bears the full faith and credit of the government of the United States of America and such requisition for use is for a period in excess of 180 consecutive days); (v) as a result of any law, rule, regulation, order or other action by the FAA or other similar governmental body of the government of registry of the Aircraft having jurisdiction, use of such type of property in the normal course of the business of air transportation shall have been prohibited for a period of twelve consecutive months; and (vi) any event treated as an Event of Loss pursuant to Section 3.03(d).

 

An Event of Loss with respect to the Aircraft shall be deemed to have occurred if an Event of Loss occurs with respect to the related Airframe.

 

 

“Excluded Parts” means any audio-visual, entertainment, telephonic or other passenger convenience equipment owned by third parties (or owned jointly by the Borrower and others) and leased or otherwise furnished to the Borrower in the ordinary course of business.

 

“Excluded Taxes” means, with respect to a Tax Indemnitee or any other recipient of any payment to be made by or on account of any obligation of the Borrower hereunder, (a) Taxes imposed on or measured by its overall net income or capital (however denominated), franchise Taxes imposed on it (in lieu of net income Taxes) and branch profits Taxes imposed on it, by a jurisdiction (or any political subdivision thereof) as a result of the recipient being organized or having its principal office or, in the case of a Loan Participant, its Facility Office in such jurisdiction and (b) in the case of a Non-U.S. Loan Participant, (i) any U.S. federal withholding Tax that is imposed on amounts payable to such Non-U.S. Loan Participant at the time such Non-U.S. Loan Participant becomes a party to the Facility Agreement (or designates a new Facility Office), except (x) to the extent that such Non-U.S. Loan Participant (or its assignor, if any) was entitled, immediately prior to the time of designation of a new Facility Office (or assignment), to receive additional amounts from the Borrower with respect to such withholding Tax pursuant to paragraph (d) of Schedule III to the Facility Agreement or (y) if such Non-U.S. Loan Participant is an assignee pursuant to a request by the Borrower under paragraph (d)(ix) of Schedule III to the Facility Agreement or pursuant to any other request of the Borrower, or pursuant to any other provision in any Operative Document, or (ii) is attributable to such Non-U.S. Loan Participant’s failure to comply with paragraph (d)(iii) or (d)(v) of Schedule III to the Facility Agreement and (c) in the case of any Tax Indemnitee, any U.S. federal withholding Tax that is imposed on amounts payable to such Tax Indemnitee under Section 1471 of the Code or under Section 1472 of the Code attributable to such Tax Indemnitee’s failure to comply with the requirements of Section 1472 of the Code.

 

“Expense” or “Expenses” means any and all liabilities, losses, damages, penalties, claims, actions, suits, out of pocket costs, expenses and disbursements (including reasonable legal fees and expenses) of whatever kind and nature but excluding internal costs and expenses such as salaries, any amounts that would be included in Break Amount, and overhead of whatsoever kind and nature.

 

“FAA Bill of Sale” means, for the Aircraft (if FAA-registered), a bill of sale on AC Form 8050-2 or such other form as may be approved by the FAA in favor of the Borrower from the Aircraft Manufacturer in respect of the Aircraft.

 

“FAA War Risk Policy” is defined in Section 6.03 of the Mortgage.

 

“Facility Agreement” means that certain Facility Agreement [Hawaiian A330 [1259]], dated as of June 29, 2011, among the Borrower, the Loan Participants, and the Security Trustee as such Facility Agreement may be amended or supplemented from time to time pursuant to the applicable provisions thereof.

 

“Facility Office” means the office or offices notified by a Loan Participant to the Security Trustee and the Borrower in writing on or before the date it becomes a Loan Participant (or, following that date, by not less than five Business Days’ written notice) as the office or offices through which it will perform its obligations under this Agreement.

 

 

“Federal Aviation Act” means part A of subtitle VII of Title 49 of the United States Code, or any successor provision.

 

“Federal Aviation Administration” and “FAA” mean the United States Federal Aviation Administration and any successor agency or agencies thereto.

 

“Federal Reserve Bank” means any Federal Reserve Bank of the United States.

 

“FedWire” means the funds transfer system used to transfer reserve balances for immediately available credit among the member banks of the United States Federal Reserve System.

 

“Fee Letter” means that certain letter agreement, dated as of April 29, 2011, between the Borrower and the Underwriters, pursuant to which the Borrower has agreed to pay certain Fees.

 

“Fees” means any commitment fee, structuring fee or other fee payable by the Borrower to any Finance Party pursuant to or in relation to the transactions contemplated by the Operative Documents.

 

“Finance Parties” means, together, the Loan Participants and the Security Trustee (each, a “Finance Party”).

 

“Fixed Rate” means, if the Loan Certificates are to bear interest at a fixed rate, for the applicable Type of Loan Certificate, the Fixed Rate determined in accordance with Section 3(b)(ii) of the Facility Agreement.  The Fixed Rate for each Type of Loan Certificate for (i) any Tranche 1 Loan shall be the rate specified on Schedule 1 to the Mortgage Supplement and (ii) any Tranche 2 Loan shall be the rate specified on Schedule 2 to the Mortgage Supplement; provided that in the case of a Fixed Rate established pursuant to a Conversion Notice after the Funding Date, such rates shall be as specified in a supplement to the Mortgage as required by Section 3(b)(ii)(2) of the Facility Agreement.

 

“Fixed Rate Loan” means the Loan if evidenced by Loan Certificates which bear interest at the Fixed Rate.

 

“Fixed Rate Conversion Option” has the meaning specified in Section 3(b)(ii)(2) of the Facility Agreement.

 

“Floating Rate” means, for any Interest Period and Type and Tranche of Loan Certificate, the sum of (1) LIBOR for such Interest Period, plus (2) the Applicable Margin applicable to such Type and Tranche of Loan Certificate (calculated on a basis of actual number of days elapsed in a year of 360 days).

 

“Floating Rate Loan” means the Loan if evidenced by Loan Certificates which bear interest at the Floating Rate.  The Loan shall be a Floating Rate Loan unless the Borrower shall have made an election to have the Loan bear interest at a Fixed Rate in accordance with Section 3(b)(ii) of the Facility Agreement.

 

 

“Foreign Air Carrier” means any air carrier which is not a U.S. Air Carrier and which performs maintenance, preventative maintenance and inspections for the Aircraft, the Airframe and/or any Engine to standards which are approved by, or which are substantially equivalent to those required by, the FAA, the Civil Aviation Authority of the United Kingdom, the Direction Generale de l’Aviation Civile of the French Republic, the Luftfahrt-Bundesamt of the Federal Republic of Germany, the Nederlandse Luchtvaart Authoriteit of the Kingdom of the Netherlands, the Ministry of Transportation of Japan, the Federal Ministry of Transport of Canada, the Office Federal de l’Aviation Civile of the Swiss Confederation, the Civil Aviation Safety Authority of Australia, the Federal Ministry of Transport, Innovation and Technology of Austria, the Service Public Fédéral Mobilité et Transports of Belgium, the Civil Aviation Authority of Denmark, the Irish Aviation Authority, Ente Nazionale per l’Aviazione Civile (Italy), the Civil Aviation Authority of New Zealand, the Civil Aviation Authority of Norway or the Swedish Transport Agency (and any agency or instrumentality of the applicable government succeeding to the functions of any of the foregoing entities).

 

“Forward Fix Unwind” means [**].

 

“Funding Date” has the meaning specified in Section 2(b) of the Facility Agreement.

 

“GAAP” means (a) generally accepted accounting principles applicable in the United States of America  as in effect from time to time or (b) International Financial Reporting Standards and International Accounting Standards (and interpretations thereof) published by the International Accounting Standards Board, as in effect at the relevant time, and, in each case as applied by the Borrower in the preparation of its public financial statements.

 

“Governmental Body” means (a) any federal, state or similar government, and any body, board, department, commission, court, tribunal, authority, agency or other instrumentality of any such government or otherwise exercising any executive, legislative, judicial, administrative or regulatory functions of such government or (b) any other government entity having jurisdiction over any matter contemplated by the Operative Documents or relating to the observance or performance of the obligations of any of the parties to the Operative Documents.

 

“Hedge Break Amount” means, as of any date on which Break Amount may be payable under the Operative Documents in respect of a Fixed Rate Loan and for any Holder’s related Hedge Transaction, the amount a floating rate payor would require in accordance with the “Close-out Amount” (as defined in the Swap Form) to have paid to it on such date by such Holder (such amount to be expressed as a positive number), or the amount the such floating rate payor would be willing to pay in accordance with market practice on the basis of “Close-out Amount” to such Holder on such date (such amount to be expressed as a negative number), in either case, to terminate such Hedge Transaction on such date with respect to, and to the extent of, the then outstanding principal amount of all of the Loan Certificates relating to Fixed Rate Loans that are subject to prepayment or purchase (or the entire Commitment), provided that where a Holder has not entered into a Hedge Transaction, such amount shall be calculated on the basis of a deemed fixed-for-floating interest rate swap on market terms that meets the definition of Hedge Transaction below for a notional amount equal to the outstanding principal amount of the Fixed Rate Loans of such Holder (taking into account any required amortization of such Fixed Rate Loans) and where “Close-out Amount” is calculated based on clauses (i) and (ii) but not clause (iii) of the definition thereof set forth in the Swap Form.

 

 

“Hedge Breakage Gain” means, as to any Holder, the absolute value of the Hedge Break Amount for such Holder received by it if the Hedge Break Amount is a negative number.

 

“Hedge Breakage Loss” means, as to any Holder, the value of the Hedge Break Amount for such Holder if the Hedge Break Amount is a positive number.

 

“Hedge Transaction” means, for any Holder and in respect of the Loan Certificates of any Tranche, an interest rate Hedge Transaction entered into by such Holder in connection with a Fixed Rate Loan (documented (or deemed documented)) by the Swap Form and a hedge confirmation incorporating the terms of this definition) where such Holder will (i) pay to a floating rate payor under such Hedge Transaction on each Interest Payment Date for such Tranche following the Hedge Effective Date or Fixed Rate Conversion Date (as such terms are defined in Section 3(b)(ii) of the Facility Agreement), as the case may be, an amount equal to the interest scheduled to be paid to such Holder on such Loan Certificates calculated at the Fixed Rate and (ii) receive from such floating rate payor on each such Interest Payment Date an amount equal to the amount of interest that would have accrued on such Loan Certificates during the Interest Period for such Tranche ending on such Interest Payment Date at the Floating Rate for such Interest Period whether or not such terms are the same terms of any actual hedge entered into by such Holder.

 

“Holder” means, at any time, any holder of one or more Loan Certificates.

 

“Holding Company” means, in relation to a company or corporation, any other company or corporation in respect of which it is a Subsidiary.

 

“Holdings” means Hawaiian Holdings, Inc., a Delaware corporation.

 

“Illegality Event” means the occurrence of any of the following events or circumstances:

 

(a)                                  it becomes unlawful or contrary to any applicable law for any party to any of the Operative Documents to perform any of its material obligations under the Operative Documents and/or to continue as a party to any of the Operative Documents; or

 

(b)                                 all or any material part of any Operative Document becomes void, illegal, invalid, unenforceable or of limited force and effect.

 

“Inchoate Liens” mean any Permitted Lien of the type described in clauses (i), (ii), (iii), (v) or (vi) of Section 7.01, except that “Inchoate Liens” shall not include any such Lien that is a Lien of record, whether filed with the FAA or any other applicable aviation authority, filed pursuant to the Uniform Commercial Code in any applicable jurisdiction or registered with the International Registry.

 

“Indemnitee” or “Indemnitees” means the Loan Participants, the Security Trustee and each of their respective successors, permitted assigns, directors, officers and employees.

 

 

“Interest Payment Date” means, each of the four quarterly anniversary dates of the Funding Date (or Projected Funding Date, if applicable) (or if there is no comparable day in any applicable month, the last day of such month); provided that, if any such date shall not be a Business Day, then the relevant Interest Payment Date shall be the next succeeding Business Day unless by virtue of such extension such date would fall in the next succeeding calendar month, in which case the relevant Interest Payment Date shall be the next preceding Business Day.  The Interest Payment Dates shall be the dates specified in the amortization schedule relating thereto attached to the Mortgage Supplement (subject to modification by the above proviso).

 

“Interest Period” means (a) initially, the period commencing on the Funding Date for the Aircraft and ending on the first Interest Payment Date thereafter and (b) thereafter, each successive three-month (or other applicable) period commencing on the final day of the preceding Interest Period and ending on the next succeeding Interest Payment Date; provided that, for interest accrual purposes only, in the case of a Fixed Rate Loan, there shall be no adjustment for period end dates as provided in the definition of Interest Payment Date.

 

“international interest” is defined in the Cape Town Convention.

 

“International Registry” is defined in the Cape Town Convention.

 

“Lease” means any lease agreement permitted by the terms of Section 3.03 hereof.

 

“Lease Assignment” means, for any Lease with a term exceeding 12 months (including mandatory renewals and extensions), an instrument evidencing the collateral assignment thereof in favor of the Security Trustee, which shall be (together with any associated Lessee consent) in for and substance reasonably satisfactory to the Loan Participants.

 

“Lessee” means any lessee under a Lease.

 

“LIBOR” means, for any Interest Period, the rate per annum equal to:

 

(a)                                  the Screen Rate for such Interest Period; or

 

(b)                                 if no Screen Rate is available for dollars or for such Interest Period, the arithmetic mean of the rates (rounded up to the nearest 1/100th of one per cent) as supplied to the Borrower at its request quoted by the Loan Participants to leading banks in the London interbank market,

 

in each case, as of 11.00 a.m. (London time) on the Quotation Date for the offering of deposits in dollars in an amount comparable to the aggregate outstanding principal amount of the Loan Certificates for such Interest Period.

 

“LIBOR Break Amount” has the meaning set forth in Section 3(g) of the Facility Agreement.

 

“Lien” means any mortgage, pledge, lien, claim, encumbrance, lease, security interest or other lien of any kind on property.  “Lien” shall include any interest registered on the International Registry other than the Borrower’s ownership interest registered on the International Registry as a contract of sale with respect to the Aircraft.

 

 

“Liquidity Break Amount” has the meaning set forth in Section 3(h)(i) of the Facility Agreement.

 

“Liquidity Event” means, [**].

 

“Liquidity Margin” means, [**].

 

“Liquidity Reserve Differential” means, [**].

 

“Loans” means the loan(s) made by the Loan Participants to the Borrower pursuant to Section 2 of the Facility Agreement.

 

“Loan Certificate” means a loan certificate issued pursuant to Section 2.02 of this Mortgage and any such certificates issued in exchange or replacement therefor pursuant to Section 2.06 or 2.07 of this Mortgage.

 

“Loan Participant” means each Holder initially a party to the Facility Agreement, and its successors and permitted assigns.

 

“Loan Participant Lien” means any Lien which arises from acts or claims against a Loan Participant.

 

“Maintenance Program” means the maintenance program for the Aircraft of the Borrower (or any applicable Lessee) which is approved by the aviation authority in the country of registry of the Aircraft.

 

“Majority in Interest of Holders” means, as of any date of the determination thereof, (i) if no amount in respect of any Loan is then outstanding, a Loan Participant or Loan Participants whose Commitments aggregate more than fifty per cent (50%) of the aggregate Commitments of all Loan Participants, or (ii) otherwise, the Holders of more than 50% in aggregate outstanding principal amount of all Loan Certificates.  For all purposes of the foregoing definition, in determining as of any date the then aggregate outstanding principal amount of any Loan Certificates, there shall be excluded all Loan Certificates, if any, held by the Borrower or any Affiliate thereof.

 

“Market Disruption Event” has the meaning specified in Section 3(j) of the Facility Agreement.

 

“Market Disruption Fixed Interest Rate” has the meaning specified in Section 3(j) of the Facility Agreement.

 

“Market Disruption Floating Interest Rate” has the meaning specified in Section 3(j) of the Facility Agreement.

 

 

“Material Adverse Change” means a material adverse change in the Borrower’s financial condition that, in the opinion of the Majority in Interest of Holders, materially adversely affects the Borrower’s ability to perform its obligations under the Operative Documents.

 

“Maturity Date” means, for the Loan Certificates of any Tranche and its related Loan, the final Interest Payment Date set forth on Schedule 1 or Schedule 2 to the initial Mortgage Supplement relating to, and on the Loan Certificates for, such Tranche.

 

“Mortgage” and “this Mortgage” mean this Mortgage and Security Agreement [Hawaiian A330 [1259]], including any Mortgage Supplement and each other supplement from time to time entered into pursuant hereto.

 

“Mortgage Documents” means, collectively, this Mortgage, and the Mortgage Supplement.

 

“Mortgage Estate” means the “Mortgage Estate” as defined in the Granting Clause hereof.

 

“Mortgage Supplement” means a supplement to this Mortgage substantially in the form of Exhibit A, which shall particularly describe the Airframe and associated Engines, or any Replacement Airframe or Replacement Engine, included in the property of the Borrower covered by this Mortgage, or any other supplement hereto.

 

“Non-U.S. Person” means any Person other than (i) a citizen or resident of the United States of America (for purposes of this definition, the “United States”), (ii) a corporation, partnership, limited liability company or other entity created or organized under the laws of the United States or any political subdivision thereof or therein or (iii) an estate or trust that is subject to United States federal income taxation regardless of the source of its income.

 

“Non-U.S. Loan Participant” means a Loan Participant that is not a “United States person” as such term is defined in Section 7701(a)(30) of the Code.

 

“Obsolete Part Amount” has the meaning specified in Section 1 of the Facility Agreement.

 

“OECD” means the Organization of Economic Cooperation and Development.

 

“Operative Documents” means the Facility Agreement, the Mortgage, the Mortgage Supplement, the Loan Certificates, the Fee Letter, the DERA (if applicable) and the Consent and Agreement, and any amendments or supplements of any of the foregoing.

 

“Original Amount” with respect to a Loan Certificate, means the stated original principal amount of such Loan Certificate, and, with respect to all the Loan Certificates of any Tranche, means the aggregate stated original principal amounts of the Loan Certificates of such Tranche.

 

 

“Original Financial Statements” means the audited consolidated financial statements of Holdings for the fiscal year ended December 31, 2010 and the unaudited consolidated financial statements of Holdings for the fiscal quarter ended March 31, 2011.

 

“Parts” means all appliances, parts, instruments, appurtenances, accessories, furnishings and other equipment of whatever nature (other than Engines or engines and Excluded Parts), which are from time to time incorporated or installed in or attached to the Airframe or any Engine and all such items which are subsequently removed therefrom so long as the Lien of this Mortgage shall cover the same pursuant to the terms hereof.

 

“Past Due Rate” means, in respect of any amount owing to any Holder of any Tranche and Type of Loan Certificates or any amount owing under any Operative Document, a per annum rate equal to (A) in the case of a Floating Rate Loan for any Tranche, the Floating Rate for such Tranche and Type of Loan Certificates for the applicable Interest Period plus 2.0% and (B) in the case of a Fixed Rate Loan for any Tranche, 2.0% plus the higher of (x) the Fixed Rate for such Tranche and Type of Loan Certificates plus and (y) the Floating Rate for such Tranche and Type of Loan Certificates for the applicable Interest Period, in each case calculated by the Loan Participants on the basis of a year of 360 days and actual number of days elapsed; provided, that if a Market Disruption Event shall be continuing, “Past Due Rate” means, in respect of any amount owing to any Holder of any Type B Loan Certificate of any Tranche or any amount owing under any Operative Document to a Type B Loan Participant, a per annum rate equal to, in the case of a Floating Rate Loan for any Tranche, the Market Disruption Floating Interest Rate for such Tranche for the applicable Interest Period, and, in the case of a Fixed Rate Loan, the Market Disruption Fixed Interest Rate for such Tranche for the applicable Interest Period, in each case plus 2.0%; provided that in each case such rate shall not exceed the maximum interest rate permitted by law.

 

“Payment Office” means the bank and account number referred to in Schedule I to the Facility Agreement.

 

“Permitted Investment” means each of (i) obligations of, or guaranteed by the U.S. Government or agencies of either thereof entitled to the full faith and credit of the U.S. Government, (ii) open market commercial paper of any corporation incorporated under the laws of the United States of America or any member of the European Union rated at least P-1 or its equivalent by Moody’s Investors Service Inc. (“Moody’s”) or at least A-1 or its equivalent by Standard & Poor’s (“S&P”), (iii) certificates of deposit issued by commercial banks organized under the laws of the United States or any member of the European Union or of any political subdivision thereof having a combined capital and surplus in excess of $250,000,000.00 which banks or their holding companies have a rating of A or its equivalent by Moody’s or S&P; provided, however, that the aggregate amount at any one time so invested in certificates of deposit issued by any one bank shall not exceed 5% of such bank’s capital and surplus, (iv) repurchase agreements with any financial institution meeting the standards set forth in clause (iii) above with any of the obligations described in clauses (i) through (iii) as collateral, (v) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any instrumentality thereof, in each case having, at the time of the acquisition thereof, the highest rating obtainable from either S&P or Moody’s, and (vi) shares of any money market mutual fund that (A) has at least 95% of its assets invested

 

 

continuously in the types of investments referred to in clauses (i) and (vi) above, (B) has net assets of not less than $500,000,000, and (C) has the highest rating obtainable from either S&P or Moody’s; provided that any such investment shall be denominated in Dollars and shall mature within 30 days from the date of making such investment.

 

“Permitted Lessee” means [**].

 

“Permitted Lien” means any Lien permitted under Section 7.01.

 

“Person” means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

 

“Projected Funding Date” has the meaning specified in Section 3(c)(ii) of the Facility Agreement.

 

“Quotation Date” means, in relation to any Interest Period, two London business days before the first day of such Interest Period.

 

“Related Aircraft” means the Airbus A330-200 aircraft (with manufacturer’s serial number expected to be 1302), which is subject to the security interest of the Related Mortgage.

 

“Related Event of Default” means an “Event of Default” under and as defined in the Related Mortgage.

 

“Related Mortgage” means [**].

 

“Related Secured Obligations” means the “Secured Obligations” under and as defined in the Related Mortgage.

 

“Replacement Aircraft” means any aircraft substituted for the Aircraft pursuant to Section 10.01.

 

“Replacement Airframe” means any airframe substituted for the Airframe pursuant to Section 10.01.

 

“Replacement Engine” means any engine substituted for an Engine pursuant to Section 10.01.

 

“Responsible Officer” means, with respect to the Borrower, any corporate officer who, in the normal performance of his or her responsibilities, with respect to the subject matter of any covenant, agreement or obligation of the Borrower pursuant to any Operative Document, would have responsibility for and knowledge of such matter and the requirements of any Operative Document with respect thereto.

 

“Screen Rate” means, for any Interest Period, the rate displayed on the LIBOR01 page of the Bloomberg Page BBAM 1 (or any successor or substitute page of such service, or any successor to or substitute for such service providing rate quotations comparable to those

 

 

currently provided on such page of such service).  If the agreed page is replaced or service ceases to be available, the Security Trustee may specify another page or service displaying the appropriate rate after consultation with the Loan Participants and with the agreement of the Borrower (not to be unreasonably withheld or delayed).

 

“Secured Obligations” has the meaning set forth in the Granting Clause of this Mortgage.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Security Trustee” means Bank of Utah in its capacity as Security Trustee hereunder, and any successor thereto in such capacity.

 

“Special Default” means an Event of Default or a Default under any of Section 8.01, 8.02, 8.06 or 8.07.

 

“Stipulated Insured Amount” means, as of any date of determination, an amount equal to 110% (or 115% if the Loans are Fixed Rate Loans) of the aggregate principal amount then outstanding on the Loan Certificates.

 

“Structuring  Fee Letter” means the letter agreement between the Borrower and the Underwriters, pursuant to which the Borrower has agreed to pay certain Fees.

 

“Subsidiary” means, as to any Person, any other Person of which at least a majority of the voting stock (or equivalent equity interests) is owned or controlled by such first Person and/or by one or more other Subsidiaries.

 

“Swap Form” means a 2002 Master Agreement of the International Swaps and Derivatives Association in the form published in 2002 (or any comparable form) and supplemented by the 2006 ISDA Definitions (as amended).

 

“Tax” means all present and future fees (including, without limitation, license, documentation and registration fees), taxes, levies, imposts, withholdings, deductions, duties or charges of any nature whatsoever, and wheresoever imposed or withheld, including (without limitation) value added tax or any other tax in respect of added value (including, without limitation, goods and services, sales and harmonized sales taxes) and any franchise, transfer, sales, use, business, occupation, excise, income, gross receipt, personal property, real property, stamp or other tax, in each case imposed by any taxing or governmental authority or agency, together with any penalties, additions to tax, fines or interest thereon (and “Taxes” and “Taxation” shall be construed accordingly).

 

“Tax Credit” means a credit against, relief or remission for, or repayment of any Tax.

 

“Tax Indemnitee” means the Security Trustee, the Loan Participants, and the respective successors and permitted assigns of each of the foregoing Persons and shall also include any combined, consolidated or affiliated tax group of which any such person is or shall become a member and any member of such group.

 

 

“Tranche” has the meaning specified in Section 2(a)(iii) of the Facility Agreement.

 

“Tranche 1 Commitment” has the meaning specified in Section 2(a)(i) of the Facility Agreement.

 

“Tranche 1 Loan” has the meaning specified in Section 2(a)(i) of the Facility Agreement.

 

“Tranche 2 Commitment” has the meaning specified in Section 2(a)(ii) of the Facility Agreement.

 

“Tranche 2 Loan” has the meaning specified in Section 2(a)(ii) of the Facility Agreement.

 

“transacting user entity” is defined in the Regulations for the International Registry.

 

“Type” has the meaning specified in Section 2(a)(ii) of the Facility Agreement.

 

“Type A Loan Certificate” as to any Loan Certificate of any Tranche, means its designation as being “Type A” as provided in Section 2(a)(ii) of the Facility Agreement.

 

“Type A Loan Participant” means a Loan Participant that designated itself as “Type A” as provided in Section 2(a)(ii) of the Facility Agreement.

 

“Type B Loan Certificate” as to any Loan Certificate of any Tranche, means its designation as being “Type B” as provided in Section 2(a)(ii) of the Facility Agreement.

 

“Type B Loan Participant” means a Loan Participant that designated itself (or was deemed designated) as a “Type B” as provided in Section 2(a)(ii) of the Facility Agreement.

 

“U.S. Air Carrier” means any United States air carrier which is a “citizen of the United States” (as defined in 49 U.S.C. § 40102(a)(15)) holding an air carrier operating certificate issued pursuant to chapter 447 of title 49 (or the equivalent authority issued by the Civil Aeronautics Board under the predecessor regulatory laws, rules and regulations) for aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of cargo, and as to which there is in force an air carrier operating certificate issued pursuant to Part 121 of the FAA Regulations, or which may operate as an air carrier by certification or otherwise under any successor or substitute provisions therefor or in the absence thereof.

 

“U.S. Government” means the federal government of the United States of America, or any instrumentality or agency thereof the obligations of which are guaranteed by the full faith and credit of the federal government of the United States of America.

 

“Underwriters” means the Loan Participants originally party to the Facility Agreement.

 

“Unpaid Sum” means any sum due and payable but unpaid by the Borrower under the Operative Documents.

 

 

“Unscheduled Prepayment” means [**].

 

“War Risk Insurance” has the meaning assigned to such term in Paragraph C of Schedule 1 to the Mortgage.

 

“Warranty Bill of Sale” means, for the Aircraft, a full warranty bill of sale in favor of the Borrower from the Aircraft Manufacturer in respect of the Aircraft.

 

“Wet Lease” means any arrangement whereby the Borrower or any Lessee agrees to furnish the Aircraft, Airframe or Engine to a third party pursuant to which the Aircraft, Airframe or Engine shall at all times be under the operational control, and full ownership, of the Borrower or such Lessee and shall be maintained, insured and otherwise used and operated in accordance with the provisions hereof, provided that such insurance with respect to legal liabilities for passenger and cargo may be on a contingent basis for the duration of any such arrangement as long as such wet lessee under such arrangement maintains primary coverage for such insurance in favor of the Secured Trustee and the Borrower in accordance with the terms and conditions of this Mortgage, provided further that the Borrower’s obligations under this Mortgage (except with respect to legal liability insurance as set forth in the preceding proviso) shall continue in full force and effect notwithstanding any such arrangement and the Aircraft remains registered in the United States.

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